Macedonia vs. Unemployment - Proposal Submitted to the Government - Part III

By: Dr. Sam VakninFormer Economic Advisor to the Government of the Republic of Macedonia

Administrative Measures: Public Education and Dissemination of Information – The Functioning of the Employment Bureau

The dissemination of information regarding employment practices, opportunities, market requirements, etc. should be a prime component of the activity of the Employment Bureau. It must transform itself from a mere registry of humans to an active, computerized exchange of labour. This can be done through computerized employment exchanges and intermediation.

To change the image of the Employment Bureaus from places where the unemployed merely registers and receive benefits to a labour exchange can be done by publishing examples of successful job placements.

I recommend to prominently display and disseminate information regarding the rights of the unemployed, their obligations and services available to them and to publish weekly or daily employment bulletins.

I recommend to place computer terminals in all bureaus with the latest data regarding jobs offered and sought. Both employers and the unemployed should be able to directly access and update the system from PCs or laptops or by submitting forms.

To organize seminars for the unemployed and to employers in which the rights of the unemployed, their obligations and the services offered to them and to their potential employers will be described. This can be combined with employment fairs. Separately, the unemployed should be taught in these seminars how to find a job, prepare a curriculum vita (biography), entrepreneurial skills, preparation of business plans, marketing plans, feasibility studies, credit applications and interview skills.

The Employment Bureaus in collaboration with the local authorities should organize job clubs, labour exchanges and employment fairs – places where employers can meet potential employees, currently unemployed. These should not be one-off, haphazard events. They should be periodic, regular, and predictable.

I recommend to oblige the mass media by law to dedicate at least an hour weekly (could be broken to as many as 4 segments of 15 minutes each) to unemployment: disseminate information, organize a televised labour exchange, a televised entertainment show (where employers will offer a job to a winner) and so on.

I recommend to link by a Wide Area Network (WAN) or Intranet with firewalls the National Employment Bureau, the Health Fund, the Pension and Disability Insurance Fund and the Social Security Office. To cross and compare information from all these bureaus on a real time basis (to specifically cater to the needs of an unemployed person) and on a periodical basis for supervision and control purposes.

The National Employment Bureau should maintain a regular presence in employment fairs abroad. Many fairs are global and work can be obtained in them for Macedonian workers (especially the more skilled).

I recommend the creation of a special office within the Ministry of Labor and social Work with the aim of actively soliciting employment abroad for qualified and skilled Macedonians (from construction workers to computer programmers). This office will:

- Scan for job offers in foreign countries

- Make contact with government structures, public sector, and private sector employers abroad

- Sign agreements with said employers and negotiate with them all employment terms and conditions. These terms and conditions are bound to be better than anything individual laborers can obtain by themselves.

- Advertise for workers in Macedonia, based on the agreements afore signed.

- Match workers with job offers abroad, based on the signed agreements.

- Self-finance by collecting a commission based on a the first pay of every placed worker.

A National employment Contract

A “National Employment Contract” should be signed between the government, the trade unions, the employers (Chamber of Commerce) and the Central Bank. All parties will have to concede some things.

The Employers will guarantee the formation of new work places against a freeze on employee compensation, a separate treatment of part time labour (exclusion from collective bargaining), flexibility on minimum wages and with regards to job security, hiring and firing procedures, social and unemployment benefits, indexation of wages and benefits, the right to strike and the level of salaries.

The employers will obligate themselves to fixed quantitative targets over a number of years against the receipt of the unemployment benefits of the newly hired (or another form of subsidy or tax incentive) and/or a discount in social contributions.

The National Employment Contract should aim to constrain inflation by limiting wage gains to productivity gains (for instance, through dividends on the shareholdings of the workers or through stock options schemes to the workers).

In return, the trade unions will be granted effective control of the shop floor. This is the neo-corporatist approach.

It means that the tripartite social contract will increase employment by moderating wage demands but the unions will control policies regarding unemployment insurance, employment protection, early retirement, working hours, old age pensioners, health insurance, housing, taxation, public sector employment, vocational training, regional aid and subsidies to declining and infant industries.

In Sweden and Germany there is co-determination. Workers have a quasi-constitutional shop floor representation even in non-wage related matters (such as the work organization).

Many countries instituted an “Incomes Policy” intended to ensure that employers, pressurized by unions, do not raise wages and prices. In Sweden, for instance, both labour and management organizations are responsible to maintain price stability. The government can intervene in the negotiations and it can always wield the whip of a wage freeze, or wage AND price controls. In Holland the courts can set wages. Wages and unemployment benefits are perceived as complementary economic stabilizers (contra the business cycle).

Another possibility is a Guaranteed Wage Plan – Employers assure minimum annual employment or minimum annual wages or both to those employees who have been with the firm for a minimum of time.

Firms and trade unions must forego the seniority treatment (firing only the newly hired – LIFO, last in first out). The firm should be given a free hand in hiring and firing its employees regardless of tenure.

Labour Disputes Settlement

The future collective agreements should all be subordinated to the National Employment Contract. All these agreements should include a compulsory dispute settlement through mediation and arbitration. All labour contracts must include clear, compulsory and final grievance procedures. Possibilities include conciliation (a third party bring management and labour together to try and solve the problems on their own), mediation (a third party makes nonbonding suggestions to the parties) and arbitration (a third party makes final, binding decisions), or Peer Review Panels – where the management and the employees together rule on grievances.

A strike will be allowed only AFTER the failure of OBLIGATORY arbitration, mediation, or conciliation procedures.

I recommend allowing out of court settlement of disputes arising from the dismissal of employees through arbitration, an employees' council, trustees or an employer-employee board.

Unconventional Modes of Work

Work used to be a simple affair of 7 to 3. It is no longer the case.

In Denmark, the worker can take a special leave. He receives 80% of the maximum unemployment benefits plus no interruption in social security providing he uses the time for job training, a sabbatical or further education, or a parental leave. This can be extended to taking care of old people (old parents or other relatives) or the terminally ill – as is the case in Belgium (though only for up to 2 months). It makes economic sense, because their activities replace social outlays.

In Britain, part time workers receive the same benefits in case of layoffs and wrongful dismissals and in Holland, the pension funds grant pensions to part time workers.

Special treatment should be granted by law and in the collective agreements to night, shift and weekend work (for instance, no payment of social benefits).

All modes of part-time, flextime, from home, seasonal, casual and job sharing work should be encouraged. For example: two people sharing the same job should be allowed to choose to be treated, for tax purposes and for the purposes of unemployment benefits, either as one person or as two persons and so should shift workers. In Bulgaria, a national part time employment program encouraged employers to hire the unemployed on a short term, part time basis (like our Mladinska Zadruga).

The law should be altered to remove the current upper limit of 6 months imposed on temporary employment. Employers and employees should be allowed to contract freely, for any length of time they find appropriate (and providing they register their contract lawfully).

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