MONGOLIA: Street Vends Stave Off Liberalisation Wolf

By IPS Correspondents Reprint | | Print |

Nomin Lkhagvasuren - Terra Viva*

ULAN BATAAR, May 8 2006 (IPS) - Janchiv Dolgor (not her real name), an alert and elegant mother of five, lost her job at a state-run garment factory in the Mongolian capital, following its privatisation.

Finding an alternate situation was not easy – she was not “young enough or tall enough” for other employers. With two disabled daughters and unemployed sons and daughters-in-law Dolgor, now 59, was left with the option of starting something on her own.

The ‘rationalisation’ of public sector employment and the dissolution of state owned enterprises, removed the safety net provided by the socialist economy for thousands of people as Mongolia began a traumatic liberalisation process in 1990- with inflation quickly adding to widespread insecurity and poverty.

Luckily, Dolgor was able to borrow about 1,000 US dollars from a friend and get permission from city authorities to set up a small kiosk next to a bus station in Ulan Baatar district, where she lives.

“I’ve been running this vending business for five years now and it’s the only source of income for me, my children and their families. It feeds four families or 11 people,” Dolgor says, standing inside a three-by-four sq metre, aluminum kiosk decorated with advertisements for Belgian chocolate and U.S. tobacco.

While she never actually had any Belgian chocolate for sale, her kiosk stocks various U.S. tobacco brands, sold loose by the stick and not by the pack. ‘’Our earnings have been going down with the decline in people’s purchasing power,” Dolgor explains. ‘’People cannot afford to buy a (whole) pack of cigarettes these days.”

Bataa Sarangua, who has just bought a fruit drink for her daughter from the kiosk, finds street vends convenient because they stay open late at night and sells things loose. ‘’There are many people who cannot afford to buy female sanitary pads or cigarettes by the pack. The only place one can buy those items in small amounts are the street vends,” she says.

Ninety-nine percent of consumers regard street vending as a source of employment and income for Mongolians left unemployed and with little social cover in the transition from a centrally-planned economy to a market one in 1990, according to a 2005 study of street vendors conducted in three major cities by the Mongolian Cooperatives Training and Information Centre (MCTIC).

Estimates of how many people are in street vending in Mongolia, a country of 2.5 million, are hard to make. But the Mongolian Chamber and Commerce and Industry (MCCI) says some 400,000 people work in the informal sector (not including herders), while the Ministry of Social Protection and Labour estimates 126,000, majority of whom are in small trade. According to the MCCI, up to 20 percent of the country’s GDP is produced by the informal sector, but the ministry puts it at 10 percent.

Whatever the figure, the MCTIC study confirms that the informal sector has been helping to reduce poverty, which affects over one-third of the population.

Street vendors vary in size and earn from 40 -to 400 dollars a month. The flat tax rate of about 5 dollars imposed on all street vendors in the form of a licence hits the smaller vendors hard.

Dolgor says that her earnings just about cover monthly expenses on food and electricity, water, heating and telephone bills.

As the owner of the informal entity registered with the city, Dolgor pays about 35 dollars a year to rent the land on which her kiosk stands, about five dollars a month for the licence and a little over 5 dollars for garbage collection.

Vendors also have to grapple with unfriendly city authorities and uncertainties that come with campaigns that regard street kiosks as eyesores.

City authorities often question their sanitation, hygiene and methods of food storage. ‘’The authorities cannot put everyone into the same pool and accuse us of the same misconduct – we all are different,” argues Dolgor.

A government decision to remove the ‘ugly vendors’ from the streets and replace them with structures erected by companies has put tension and fear in Dolgor’s heart.

This is in addition to other hazards that come with street vending -collection of fines for extending work hours, fees for district anniversaries and events by policemen and district inspectors who every so often make visits under the guise of checking vendors’ compliance with the indicated work hours and sanitation rules.

“If I’m forced to move away, I wouldn’t know what to do, where to go and how to start again,” Dolgor says.

”The government is proud about managing to move the street vendors away from central locations, supposedly improving the city’s looks,” Sanjjav Baigalmaa of the MCTIC points out. “However, no alternative has been given to all those people left unemployed in the process.”

For Baigalmaa, the state policy on informal sector adopted in 2005 suffers from the old communist methodology of imposing central control, even when the economy moves toward decentralization.

According to her it’s time vendors, like other informal workers, get basic benefits. ‘’The state has to provide services such as social insurance coverage and set health and hygiene standards as the vendors are too busy working 12 to 15 hours daily.”

”The main idea of the policy of formalisation, registration and issuance of identity cards is to bring social services and protection to those who work in informal sector and ensure safety of their working environment,” says Choijiljav Erdenechimeg, labour market policy and coordination department’s officer at the labour and welfare ministry.

But many in the informal sector do not have social or medical insurances for lack of time or money, or both.

Shar Tumendemberel and Shagdarjav Urtnasan, parents of three, run a kiosk in the city centre and also live in it because they do not have a home of their own. They moved here five years ago, after the collapse of the agricultural cooperative they worked in.

Like Dolgor, they do not have any social or medical insurance because they don’t make enough money. Although it is possible to reach the level of the so-called ‘eight-item store’ that permits the sale of items like alcohol – any street vendor’s dream – high interest rates, short terms of bank loans and tough collateral demands are discouraging. And then, there is, what Dolgor calls, an ‘’incredible bureaucracy of city and district officers” to deal with.

As Urtnasan says, no initiative can progress without having a friend in the city administration or giving a bribe.

It also does not help that, as the MCTIC study revealed, more than 90 percent of small vendors say they know nothing about the government or municipal policies that affect them.

(*This story was done for the Terra Viva, an IPS publication)