MONGOLIA'S INFORMAL SECTOR Size and Trends 12 25. In summary, the official employment and unemployment statistics demonstrate a large decline in official employment, concurrent with an expansion of the working age population, and relatively low official unemployment rates. But due to the perception that work in the informal sector is not "employment," participants in the informal sector are counted as neither employed nor unemployed. The informal sector surveys conducted by the author support this notion, finding that 75-85% of informal employment is not reflected in official statistics. The SSO household survey also supports the contention that informal income is more important, and informal activities are more prevalent, for households in which the head considers himself to be "unemployed," and for households with a greater number of unemployed adults.<sup>23</sup>

# **The Current Situation: Employment in Ulaanbaatar's Informal Sector**

26. The previous section discussed the trends in informal employment. We now turn to the issue of the current size of informal employment in Ulaanbaatar. Statistics derived from the Annual Labor Force Balance will be combined with the results of the informal sector surveys to estimate that 70,000 to - 100,000 people are engaged in Ulaanbaatar's informal sector as their primary occupation including part-timers, moonlighters, and working pensioners, an estimated 105,000 to 130,000 people are engaged in informal activity, equal to roughly 34-42% of the "able-bodied population of working age" in Ulaanbaatar.<sup>24</sup> An analysis of the data from the SSO household survey generates similar estimates, finding that 30-33% of the working age of population are engaged in informal activities.

27. The estimates of employment in the informal sector are derived from a combination of official employment statistics and the informal sector surveys conducted as part of this study. The informal sector surveys suggests that for every informal who reports to the _duureg/soum_ that they are employed, there are 2 to 6 informals who report that they are not employed?<sup>5</sup> Specifically, for the taxicabs, kiosks, and general informals, there were 2, 3, and 6 unaccounted informals for each accounted informal?<sup>6</sup> Under various scenarios of the relative proportions of similar informals, it is estimated that the true number of informals counted as not-employed was between 3 and 4.6 per informal counted as employed.<sup>2 7</sup> 28. Mongolians who respond that they are employed during the Annual Labor Force Census are further required to specify the legal form of organization for which they work. At the end of 1996, there were 17,706 working age residents of Ulaanbaatar who said they worked for sole-proprietorships. These can be considered the proportion of informals who report to the _duureg/soum_ that they _are_ employed?<sup>8</sup> Weighting by the ratio of not-employed informals to employed informals, yields an estimate of 70,000 to 100,000 people in Ulaanbaatar engaged in the informal sector as their primary means of earning a living.<sup>2 9</sup> 29. The informal sector surveys conducted as part of this study further present estimates of the number of moonlighters and pensioners as a percentage of other informals. Using the same procedure outlined above, it is estimated that an additional 15-21,000 people engage in informal activity as a supplemental means of income, and a further 13-14,000 pensioners engage in informal activity in Ulaanbaatar. All told, then, between 105,000 and 130,000 people in Ulaanbaatar engage in informal activities?<sup>0</sup> To put these numbers in perspective, the inclusive estimate is roughly 34-42% of Ulaanbaatar's population that is "able-bodied and of working age," or roughly 30-37% of the total working age population.<sup>31</sup>