Minister of Family, Labor and Social Protection L.Enkh-Amgalan recently revealed that 72.3 percent of the country’s welfare expenditures fail to reach the intended recipients, highlighting inefficiencies in the system. Despite this, just days earlier, he praised the country’s food stamp program, calling it a “unique” initiative and an “international standard”. These contrasting statements reflect the ongoing debate over the effectiveness of Mongolia’s welfare programs. The minister’s positive remarks about the food stamp system came during a social security forum co-hosted by the ministry and the Asian Development Bank (ADB), where the program was lauded as an innovative solution to food insecurity. Mongolia’s model has garnered international attention, with the Philippines planning to adapt it to assist its own vulnerable populations.

However, Minister L.Enkh-Amgalan also acknowledged significant challenges in the program’s execution, particularly the leakage of benefits to unintended recipients, which reduces its overall impact. He warned that any country looking to replicate Mongolia’s food voucher system must address these implementation issues to ensure the aid reaches those who truly need it. In a separate development, the minister announced that food stamps will no longer be issued to working-age individuals as part of a broader reform to prioritize assistance for vulnerable groups, such as children, the elderly and people with disabilities. While the decision aims to improve the efficiency of welfare spending, it has sparked debate over its potential impact on working-age individuals facing economic difficulties.

Ministers of social protection often “demonstrate” their commitment to welfare programs by announcing cuts, seeking to gain public approval. However, since 2008, the number of food voucher recipients has remained relatively stable, and in many years, it has even increased. According to the ministry statistics, in 2021, 2,572,581 citizens - representing 73.5 percent of the population - received food vouchers in a country with just over 3.5 million residents. Historically, the food and nutrition support budget for households with incomes below the subsistence level has often been criticized for inefficiency and wasteful spending. Currently, each eligible family member receives a fixed amount of 10,000 MNT per month, regardless of age or status, meaning that both adults and children receive the same amount. For instance, a family of eight could receive 80,000 MNT each month, which is sometimes allocated for purchases such as alcohol, tobacco and luxury vegetables and fruits - items not typically considered basic food needs.

While citizens argue that such support is reasonable, particularly during times of financial hardship, there are ongoing concerns about the allocation and oversight of these funds. There is a growing perception that the welfare system may still be vulnerable to inefficiencies and potential misuse, with reports suggesting that even welfare workers and their families, as well as individuals with connections to the system, continue to benefit disproportionately from the food voucher program. These concerns warrant further investigation and potential reforms to ensure that the support is used more effectively to meet the needs of the most vulnerable members of society.

According to a 2022 survey, 1,808,994 citizens received food vouchers, and a total of 21.6 billion MNT was spent from the state budget on this program. Previously, the food voucher system was referred to as a “golden paper”, distributed to individuals and households below the subsistence level. Beneficiaries were limited to purchasing food products from authorized stores. However, the program’s name was later changed to “Food and Nutrition Support Service”, and a special blue card system was introduced, allowing recipients to purchase only food items. In 2022, food and nutrition support services allocated 17.3 billion MNT to 1,445,726 citizens.

A closer examination of the last three years of survey data reveals that the majority of food voucher recipients (28 to 31 years old) are of working age. The National Audit Office has flagged this as a potential issue, indicating that the current distribution system may not be targeting the most vulnerable citizens effectively. Specifically, the 2022 performance audit report on the country’s food security system and its budget expenditures highlighted several concerns. According to the report, food support should be allocated to eligible citizens based on the Unified Household DataBase and the Income Substitute Calculation Methodology, in line with the provisions of the Law on Social Welfare. 

The report also pointed out that while the average age of food voucher recipients is 30, a significant portion (47.7 percent) is of working age, which raises questions about the eligibility criteria and the adequacy of the methodology used to assess household incomes. The report recommends that the Income Substitute Calculation Methodology be revised to better align with regulations, and that the standard of living criteria for households should be updated annually to reflect changing economic conditions.

Additionally, the government’s action plan for 2024, under Section 2.5.9, outlines plans to improve the livelihoods of low-income households, including training and skill development for unemployed adult members of these households. By focusing on creating pathways to employment for working-age citizens receiving food support, the government aims to reduce reliance on welfare programs and generate savings in the state budget over time. 

An analysis of the demographic, health and employment status of individuals receiving food and nutrition support reveals a substantial group of recipients who may no longer need to be part of the welfare system. Of the 1,445,726 citizens who received food vouchers in 2023, 113,000 were disabled, and 66,000 were over the age of 55. Additionally, when excluding children under the age of 18, there were 543,706 individuals of working age and in good health who were still receiving food support. This suggests that more than half a million working-age, healthy individuals are continuing to rely on state support rather than contributing through employment, which raises concerns about the sustainability and fairness of the system. These individuals are able to work but are still drawing from a budget funded by taxpayer contributions, often leading to public discontent.

In the discussions surrounding next year’s state budget, the Minister of Family, Labor and Social Protection presented an alarming increase in welfare spending, projecting a total of 4.6 trillion MNT for the sector. Public reaction to this increase has been largely negative, with widespread criticism that “the entire budget will be consumed by welfare services in the coming year”.

Minister L.Enkh-Amgalan responded by outlining the government’s policy and action plan for the next four years. He pointed out that welfare expenditures alone account for 2.2 trillion MNT annually. The minister also emphasized that previous social security policies, such as child allowances, benefits for mothers with medals, and old-age allowances, were legislated under the Welfare Law and thus could not be easily criticized for being overly broad or indiscriminate.

To address these concerns, the minister announced plans to reform the current system of welfare and social security policies. He noted that, in 2023, only 28.7 percent of welfare expenditures were directed toward the intended target group, with even the World Bank criticizing the country’s welfare policies for not effectively reaching those who need it most. In response to these critiques, the government is working on a new project to revise the Law on Social Welfare, with a focus on prioritizing assistance to low-income citizens, disabled individuals, at-risk children, homeless people and those affected by natural disasters. This proposed shift aims to ensure that welfare benefits are better targeted, more effective, and more sustainable, reducing the number of people who are able to work but continue to rely on state support.

In recent months, concerns have emerged regarding the duplication of welfare benefits, where a single household is receiving multiple forms of assistance. This has been highlighted by findings in certain districts, such as Bayanzurkh and Songinokhairkhan, where a significant number of households were identified as benefiting from various forms of social support. For instance, it was discovered that 325 households in Bayanzurkh District and 155 households in Songinokhairkhan District were receiving multiple welfare benefits simultaneously.

To address this issue, government officials have acknowledged the need to eliminate these duplications. In response, they announced plans to publicly disclose the names of those households that have been receiving food vouchers but are found to be ineligible, or those who will be excluded from the program. This transparency measure is intended to increase accountability, prevent abuse, and ensure that welfare benefits are distributed to those who truly need them.

The government is working to streamline the welfare system by cross-checking data more effectively to avoid such instances of multiple benefit claims by the same households. The hope is that by making this information public, the authorities will not only reduce inefficiency but also promote a more equitable distribution of social support, ensuring that resources are allocated to the most vulnerable members of society.

Many countries around the world have faced similar challenges to Mongolia when it comes to inefficiencies and duplication in welfare systems, and they have adopted various measures to address these issues. In the UK, for example, the introduction of Universal Credit consolidated multiple welfare benefits into a single, streamlined payment. This system also integrates with the country’s national insurance and tax records, allowing authorities to cross-check eligibility and avoid duplication. This approach could serve as a model for Mongolia, where the government could consider consolidating various forms of welfare support (such as food vouchers, housing assistance and child allowances) into a single, unified benefit. By integrating welfare data across different programs into one central system, the country could more easily track recipients and prevent multiple claims from the same households.

Similarly, in Australia, the government created the MyGov portal, an online platform where citizens can access a range of public services, including welfare, healthcare and taxation. This digital platform helps to reduce administrative complexity and ensures that individuals can manage all their government services in one place. For Mongolia, implementing a digital platform for managing welfare services could be a practical solution. Such a platform would allow citizens to apply for and manage their benefits online, while also enabling the authorities to track and verify eligibility in real time, reducing instances of fraud or duplication.

In addition to these international examples, there are some general strategies that could help improve Mongolia’s welfare system. First, welfare policies should be more targeted, with clear and transparent eligibility criteria to ensure that benefits reach those who truly need them. Regular audits and cross-agency data sharing would help to identify and eliminate duplication. Public awareness campaigns could also educate citizens about eligibility requirements and the importance of reporting welfare fraud. Lastly, regular evaluations of welfare programs would allow for ongoing adjustments to ensure they are meeting the needs of the most vulnerable members of society while preventing wasteful spending. By learning from these international experiences and implementing similar reforms, the country can create a more efficient, fair, and sustainable welfare system that better serves its population.