A group of international businesses, miners and financial institutions warned that the new labor law taking effect this month could increase labor costs by 40 percent and production costs by 10 percent in mining and construction sectors. The businesses view that this makes Mongolia less attractive for investors to do business in the country.
The labor ministry is working to issue guidelines in accordance with the new law by February 1. But the ministry is unlikely to back down for pro-employee requirements.
One of the biggest challenges for mining employers is the increase in the rest of days for workers from 7 to 14 days, which makes them hire more people to run mines. This serves the interests of politicians who want more people and voters employed as the labor force participation rate has been dropping in the past few years (see the chart below).
Changes in fly-in and fly-out roster may now reduce per worker salary by up to 40 percent since workers would end up with fewer working hours. This makes employees and trade unions unhappy, which could prompt the labor ministry to rethink the guidelines and find more agreeable solutions for employers and unions.