Chapter 2
Labour Market During Socialism
The country lacked any form of modern industry apart from a few small artisanal gold and coal mines. The monetisation of the commodities market was insufficient, and there was no official national currency; Russian and Chinese banknotes, silver bullions, tea bricks, and sheep were used as a medium of exchange. Thus, according to the above descriptions and in line with Kornai (1992), Mongolia was indeed a ’backward, slow-growing’ economy that made ’poor use of their resources’ when the socialist system assumed power.
Botvinnik (1928)12 estimated the national income at MNT 51 million or approximately 34 million gold roubles13 in 1927. Per capita income was estimated at 49 gold roubles, compared to 114 for Russia, 670 for the U.S., and 486 for Great Britain.
According to one of the few accounts dating back to pre-revolutionary Mongolia (Maiskiy, 1921), the population stood at approximately 648 thousand people, including 100 thousand Chi- nese and 5 thousand Russians. Maiskiy’s discernible ethnocentric account focused primarily on the country’s male population and analysed their social stratification. According to his calcula- tions, less than 6 per cent of males were of noble status, almost 45 per cent were lamas, 17 per cent were serfs (khamjlaga ard) and the commoners ard made up 26 per cent.
Thus, considering the above-mentioned initial conditions, building a socialist economy in Mongolia was an extremely difficult task. The transformation of the Mongolian economy and society under socialism continued for seven decades since the 1921 revolution (Table 2.1).
First, in 1921-1940, under the stage of ’general economic transformation’, the government forcibly attempted to collectivise herders, but such measures were met with fierce opposition fol- lowed by widespread public apathy. The state focused on the development of industry based on animal husbandry products and crop raising in state farms and simultaneously nationalised trans- portation, communications, domestic and foreign trade, banking and finance industries which
12In Murphy (1966, p. 30).
13Gold rouble - the monetary unit of the Russian Empire, introduced by the monetary reform of 1897 in connec- tion with the establishment of the gold standard.
were placed under direct government control and cooperative organisations of Mongolian-Soviet joint-stock companies. Ulaanbaatar was selected to become Mongolia’s industrial centre.
During the second stage of ’construction of the foundations of socialism’ (1940-1960), agri- culture was finally collectivised owing to extensive programmes that increased the benefits of negdel memberships while also employing strategies and policies that reduced the viability of private livestock. The industrial sector diversified into mining, timber processing and consumer goods production. Ulaanbaatar remained the major industrial centre, however, some economic decentralisation started after the construction of the Trans-Mongolian Railway and the develop- ment of food processing plants in aimag centres.
Under the third stage started in 1961, Mongolia joined the CMEA and started to receive fi- nancial and technical assistance from the Soviet Union and East European countries for the construction of material and technical basis of socialism. New industrial centres were built in Baganuur, Choibalsan, Darkhan and Erdenet and industrial output grew significantly. In the late 1980s, the government proclaimed that Mongolia turned into agricultural-industrial economy.
The share of industrial sector increased from 9.8 per cent in 1950 to 24 per cent in 1980, while the share of agriculture declined from 59.4 to 12.3 per cent. The growth of national income was the highest during the 1980s (NSO, 2012).
Nevertheless, according to socialist-country standards, industrial development in Mongolia was slow compared to other socialist economies. Regardless of the central government’s claims about the nation’s achievements, the pattern of industrialisation was very different from the typical path taken by other socialist countries. According to Ulaan (2021), industrialisation pri- marily happened in the livestock industry, in which the total output per person in 1973 exceeded by 26 per cent that of the USSR average. This is extremely evident on the example of labour market analysis.
The historical development of the Mongolian labour market has not received much attention.
Year Population Urban population National income Employment Female Life Literacy (’000) (% of total) (million tug.) ratio* workers (%) expectancy rate
1940 738.6 1.5 638.8 50.8 9.7a - 20.8
1950 758.9 7.3 879.3 56.7 12.6a 39.6 59.7
1960 936.9 21.6b 1,978.4 67.4g 30.8 45.0 71.5b
1970 1,230.2 44.0 3,449.4 63.7 40.3 52.7 81.5c
1980 1,639.7 51.0 6,817.3 58.5 46.2 55.6 92.1d
1990 2,153.5 57.0 8,327.5 65.7 52.4f 58.8 96.5e
Table 2.1: Economic and social indicators, 1940-1990
Source: NPC (1951), NSO (1988), NSO (2012), UN data
*- Employment ratio was calculated for total population aged 15 and up, except 1940 and 1950 - 18 and over, using employment numbers from NSO (2012);
a- estimates, for details see 2.2;b- for 1956;c- for 1963;d- for 1969;e- for 1979;f - for 1987;g- for 1989.
This is especially true for international scholarship. During the socialist period, Mongolian scholars published works on the formation of the working class (Tudev, 1963) and the social structure (Urtnasan, 1984); however, as sociologist Gundsambuu (2021) critiques, ’... histori- ans, philosophers, economists, and sociologists who specialise in the study of class structure make the mistake of exaggerating the working class in Mongolia and its leadership role without investigating the true origins and development trajectory’ (p.278, author’s translation). Indeed, academic literature on the economy, society, and politics of the late nineteenth and early twen- tieth century Mongolia, particularly the ones published under the socialist regime, need to be viewed and interpreted with caution, as they often tend to denigrate the circumstances of the pre-revolutionary conditions while magnifying the achievements of the socialist regime.
Meanwhile, Gundsambuu’s seminal work (2021) examines the formation and evolution of Mongolian social stratification from the early twentieth century to the early twenty-first century.
However, thus far, little research has been conducted on the labour market. We argue that an understanding of contemporary social and economic problems requires a historical perspective.
Hence, the goal of this chapter is to paint a broader picture to lay the historical groundwork for future chapters that will analyse the Mongolian labour market during the 1990s market transi-
tion. While doing so, this chapter aims to clarify the different periods of the state’s economic, social, and population policies that have shaped the trajectory of the country’s socialist develop- ment, which will inadvertently aid in identifying the distinctive characteristics of the Mongolian socialist labour market.
The next section aims to accomplish this goal by describing the economic and labour market developments during the socialist era and highlighting the salient features of the socialist labour market. The subsequent section attempts to relate these traits to institutions and policies that had the highest effects on how the labour market functioned. This chapter is summarised in the final section.