“Economic crises. Low income. Inflation, unemployment, gasoline price hikes ... many Mongolian families are affected mentally and physically. As a result, a lot of people are leaving Mongolia to begin a better life,” reflects Tuul Chimed, a 26-year-old accountant who lives in Mongolia’s capital, Ulaanbaatar.
The cost-of-living crunch is hitting people all over the world, but there’s no doubt the Mongolians have it hard. Over the past two years, inflation in the country has been in the double digits. It moved as high as around 16% in 2022. The average salary, meanwhile, is approximately $450 per month, with a low-level manager on average expected to make toward $480. Apartment rentals cost around $200 to $500 per month.
Among Mongolians there is a tremendous variance in income, with the minimum wage only $142 per month. So, for most young people, there is no option but to remain living in their parents’ home. Marriage is now typically delayed. Prior to 1990, the average age at marriage was 21.6 years-old. Today, the average is 24.2 for women and 26.2 for men. The number of children per couple is at the same time dropping. In 1993, there were 3.5 children per woman; today that figure is 2.9. In urban areas, the birthrates are even lower.
Mongolia's fertility rate showing total births per woman (Credit: World Bank).
Udval Battulga, 22, is typical of a growing demographic of young college graduates in Mongolia who speak English fluently. Shortly after graduating from a foreign university programme in finance, she found work at a consulting company, where her salary was $340 per month. “When it comes to marriage, it’s obviously hard to even imagine that I’m getting married with this low income. Getting married means that we will have to buy an apartment, and raise kids,” she says.
Homes in Ulaanbaatar are extremely expensive. The price ratio is now 10.8 times the average annual disposable income. And, where 90 square metres is considered as the size of a normal apartment in much of the world, the Mongolian government mortgage programme only provides attractive mortgages for apartments of up to 80 sqm. If you use the 90 sqm figure, then the ratio becomes 11.99 times the average disposable income. This is higher than in New York or San Francisco.
Udval explains: “In order to prepare ourselves for marriage, we must save money and have multiple incomes. To buy an apartment, we will have to take a loan, and pay interest in return. But in today’s society, it’s impossible to save even a small amount of money from our salaries because taxes are too high. My personal income tax rate is 22.5%. After tax, I am receiving around $263 a month. Other expenses are also high and paying a home loan would be even more difficult.”
A wedding in Chinggis Square, Ulaanbaatar (Credit: Zazaa Mongolia, cc-by-sa 4.0).
Twenty-five-year-old Indra Sergelen, is a university graduate and marketing manager, whose salary is just over $700 per month, says: “It’s hard to live in today’s society with a high inflation rate and tax rate. I don’t have a car, but I took a loan and got an apartment two years ago to live alone without my parents, and to be independent financially. Even though my salary is pretty high and I have multiple income sources, it is still hard to cover all the monthly expenses.”
When asked about her plans for marriage, Indra replies: “I actually don’t have any plans to live as one of a married couple in Mongolia. If you ask other young adults, they also will answer the same way. It’s impossible to live on only one salary. In order to get married, and build a life together, we must take a loan, buy an apartment and raise kids, which means we should be stable financially.”
An additional burden for a lot of Mongolia’s young people, like Indra, is that they are helping to support their parents or pay the tuition fees for younger siblings.
Another professional, 30-year-old Anujin Amar, who works as a senior business consultant, says that despite her current large salary of $800 per month, she found it much easier to live five years ago. “When I look at the price of gasoline and daily products, it makes me realise that inflation has gone up a lot during the last few years. It’s getting harder to buy what I want with a tiny budget,” she said.
Unlike the others, Anujin has already married, a fact she attributes to the better economic climate she experienced when she was younger. “When I got married seven years ago, it was obviously difficult to build our lives together. On the other hand, the inflation rate was low, and our monthly salary was enough to keep life stable. In contrast, taxes and higher inflation now make me realise that it’s getting harder for us to pay all the expenses every month.”
Mongolia has free education and free healthcare, but Anujin complains that quality is lacking. “Every Mongolian has a right to use government services if we pay our taxes. The main problem is that the government doesn’t provide those public schools and hospitals with good equipment and management in return for the high tax we pay.”
Anujin has two children, as is typical of an urban family in Mongolia. She says she’d consider having more children, but has no plans to as things stand. “It’s expensive to raise kids. There are many parents who let their children go to public school because it’s free. I’m not saying that every public school is bad compared to private schools, but there’s a huge difference,” she determines.
About 39% of children in Ulaanbaatar attend private schools. And those families who can use private hospitals. Education and healthcare are clearly two substantial additional expenses that working families must cope with.
Mongolia is having a rough time amid global economic headwinds as shown by the decline of its FX reserves (Credit: IMF).
With a Mongolian working population of only 1,158,245 and an average income tax rate of 10% and low salaries not set to pick up any time soon amid global economic headwinds, government tax revenues are minimal, making it difficult to provide social services for everyone. Overall, 27.8% of Mongolians live below the poverty line, while in the countryside the percentage is closer to 38%. Roughly half of the population is receiving some form of government assistance, such as food stamps or other payments.
Approximately 85% of all children qualify for Mongolia's Child Money Programme. Prior to covid, the payment was 20,000 tughrik ($5.70) per child, per month. During the pandemic, it was raised to 100,000 tughrik ($28.50) and it remains at this level. Despite government health expenditure accounting for 3.7% of GDP, infant mortality is extremely high. For every 1,000 babies born, 15 do not reach their fifth birthday.Weighing up these economic issues, accountant Tuul Chimed says: “If you ask people who live in Mongolia, they will all say that they want to go abroad, live there and make money because it’s safer, and the salary is higher.”
Over 70,000 Mongolians emigrate each year. It is hoped that economic development will, however, encourage more young people to remain in the country. But the economic outlook is mixed. The economy grew by a modest 2.5% last year, while the tughrik lost around 18% of its value.
Mongolia exports raw materials, metals and coal, with China the largest purchaser by a long shot. This year, with the world facing a sluggish economy, demand on the China horizon remains uncertain, as does Mongolia’s near-term economic growth.
Antonio Graceffo, PhD, China-MBA, is an economist and China analyst. He has spent over 20 years living in Asia, including seven years in China, two and a half in Taiwan and three in Mongolia. He conducted post-doctoral studies in international trade at the School of Economics, Shanghai University, and holds a PhD. from Shanghai University of Sport, and a China-MBA from Shanghai Jiaotong University. Antonio is the author of seven books about Asia, with focused on the Chinese economy. For the past 10 years, he has been reporting on the Chinese economy, the US-China trade war, investment, geopolitics and defence. In recent years, he has written a diverse range of articles on Mongolian economics and society.