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

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

The Workforce Survey

Macedonia has executed a workforce survey for the first time in 1996.

In this survey the following definitions were used:

Economically Active

The combined numbers of the employed and the unemployed

Employed

People aged 15 or more who worked for a wage (in cash or in kind) or had income during at least one hour during the reference week

Or

Were temporarily absent from work with a formal job assignment

Or

Were helping on the family property or enterprise without wages

Self Employed

An employer who operates his or her own enterprise or engages independently in a profession or trade or owns a farm and employs other people

Or

An employer who works for a private or public employer

Or

Own account worker – a person who operates his or her own enterprise or engages independently in a profession or trade but does not employ other persons

Or

An unpaid family worker – a person who works without pay in an enterprise, a trade, or on a farm owned by another member of his or her household.

Unemployed

Was without work during the reference week and …

Was seeking work, i.e. has taken specific steps to find a job and …

Was prepared to accept a job in the reference week or in the following week

Changes in the Labour Force

The activity rate as the ratio of the labour force in the total population above the age of 15 years

The employment rate as the ratio of the number of workers employed to the total population above the age of 15 years

The unemployment rate as the ratio between the numbers of the unemployed to the total labour force.

As of 4/97:

The total activity rate was 53.7% (66.5% for men and 41.2% for women).

But this number hides major disparities in age groups. For instance: the activity rate of the age groups 35-39 was as high as 80.5% while for adolescents between the ages of 15-19 it was only 22.7% and for people between the ages 55-59 it was 36.5%.

The total employment rate was 34.4% (44.6% men and 24.4% women).

Again, there were great disparities between age groups. The employment rate for ages 40-44 was 62.6% - while for ages 15-19 it was only 4.4% and for ages 20-24 it was a meager 18.2%.

The total unemployment rate was 36% (33% for men and 40.8% - women).

More than 80.4% of the population aged 15-19 was unemployed, but only 20.2% of 40-44 and only 12% of 55-59.

The total population above the age of 15 at the time of the survey was 1,489,625 (men – 736,977 and women – 752,648).

The total labour force was 800,513 (men – 490,122, women – 310,392).

The total number of unemployed was 288,213 (men – 161,717, women – 126,496).

The total number of employed people was 512,301 (men – 328,404, women – 183, 896).

Outside the labour force there were 689,112 people (men – 246,856, women – 442,256).

To summarize in terms of percentages:

Ages 15-19 – 11% of the population – 4.6% of the labour force – 1.4% of the employed – 10.3% of the unemployed – 18.3% of those outside the work force.

Ages 20-24 – 10.3% - 12.4% - 5.5% - 24.8% - 7.9%

Ages 25-29 – 9.7% - 13.8% - 10% - 20.7% - 5%

Ages 30-34 – 9.5% - 13.8% - 13.4% - 14.3% - 4.5%

Ages 35-39 – 9.8% - 14.7% - 16.8% - 11% - 4.1%

Ages 40-44 – 9.7% - 14.1% - 17.6% - 7.9% - 4.5%

Ages 45-49 – 9% - 12% - 15.4% - 6% - 5.5%

Ages 50-54 – 6.9% - 7.3% - 9.8% - 2.8% - 6.4%

Ages 55-59 – 6.2% - 4.2% - 5.8% - 1.4% - 8.5%

Ages 60-64 – 6.7% - 1.8% - 2.6% - 0.4% - 12.4%

Ages 65-69 – 5.1% - 0.5% - 0.8% - 0% - 10.4%

Ages 70-80 – 0.4% - 0.3% - 0.3% - 0.2% - 0.6%

In the population above the age of 15 years as a whole, there were c. 104,000 without education, 199,000 with incomplete education, 474,000 with primary education, 151,000 with 3 years or less of secondary education, about 369,000 with 4 years of secondary education and c. 55,000 with a higher education. There were 81,100 with university degrees, 2,400 masters, 1,200 doctorates and 53,400 “other”.

Yet, the numbers in the labour force were very different and reflected the absolute disadvantage of the uneducated, unskilled, semi skilled and even those with only secondary education.

Those without education were 20,000 in the labour force, 12,000 among the employed, 8,000 among the unemployed (the employed and unemployed make up the labour force) - and a staggering 84,000 outside the workforce altogether.

The respective figures for those with incomplete education:

62,300, 44,200, 18,100, 136,300

For those with primary education (notice the marked improvement in employability!!!):

220,800, 118,000, 103,100, 253,100

And for those with 3 years of secondary education:

106,100, 64,800, 41,200, 45,100

Those with only one additional year of secondary education already look much better:

263,000, 176,000, 87,000, 106,300

And those with a higher education maintain European rates of unemployment:

41,000, 32,700, 8,300, 13,400

Those with university degrees:

67,200, 54,100, 13,100, 13,900

Masters:

1,630, 1,560, 70

Doctorates:

1,156, 1,086, 70, 71

76.3% of all men were employed (82.6% of women), 4.3% were employers (1.7%), 4.9% were self- employed (2.5%), 3.4% worked in family owned businesses (7.5%), 10.8% of all men worked in agriculture (and 5.6% of women).

Men made up 62.3% of the employed (women – 37.7%), 82.2% of all employers (17.8%), 78% of the self employed (22%), 45% of those employed in family businesses (55%), 77.5% of those employed in agriculture (22.5%).

The Situation in 8/99

Economic underdevelopment, agrarian over-employment, external shocks and an unrestructured economy led to an increase in both structural and cyclical employment.

The supply side is still composed mainly of new entrants, women and unskilled or semi-skilled labour as well as educated workers.

The demand structure is incompatible with the supply. It is made of replacement jobs, new jobs (mainly in labour intensive industries), jobs generated by foreign entities.

The number of the unemployed broke yet another record in 1999 and reached 344,472 people. Of these, almost half – 154,000 – were unskilled. But the unemployed included 5 doctors, 34 holders of master’s degrees and 11,400 with higher education. About 33,000 of these numbers were made “technologically redundant” – the euphemism for being laid off due to restructuring of enterprises or their closure.

By comparison, the number of employed people was only 316,000.

In the first 8 months of 1999 alone there were 6,000 new unemployed per month versus a monthly average of 3,700 in 1998. This increase is attributed to the inclusion of people who did not bother to register with the Employment Bureau in the past.

The fiscal burden increased dramatically as contributions deteriorated to 25% of the Employment Bureau’s financing while the state budget contributed the remaining 75%, or 3 billion MKD (equal to 100 million DM or c. 1.7% of GDP). The Employment Bureau also pays health insurance for about 200,000 unemployed workers.

The Labour Unions

The Association of Trade Unions in Macedonia (ATUM or CCM in the Macedonian acronym) is a voluntary organization, which encompasses 75% of all the employed workers in Macedonia as its members.

It is organized in the level of firms and institutions and has in excess of 2600 chapters. Additionally, it has about 150 chapters in the municipalities and in the various industrial sectors (all 15 of them).

The typical Macedonian trade union is not supported by the government and is entirely financed by its membership fees (self sufficient).

The first collective agreement was signed in 1990 at which time the idea of Economic Social Council was floated as well as the idea of a tripartite (government+employees+employers) dispute settlement mechanism.

The Labour Relations act was passed in 1994 and instituted national collective agreement for the economic sector between CCM and the Board of Employers of the Economic Chamber of Commerce of Macedonia. Another general collective agreement covered all public services, public companies, state organs, local authorities and legal persons performing non-economic activities. This latter general collective agreement was signed between CCM and the Government of the Republic of Macedonia.

Yet a third set of more than 20 collective agreements between CCM and various organs of the Chamber of Commerce and ministries covered other sectors.

The Future of Unemployment in Macedonia

Public enterprise restructuring, privatization and reform are likely to increase unemployment benefits by 200-300 million MKD annually (assuming only 2,000-3,000 workers are fired, a very conservative assumption as there are 18,000 workers in the 12 major loss making state firms, whose closure was demanded by the IMF).

Unemployment is very dependent on productivity and GDP growth. The World Bank predicts that with a GDP growth of 0%, the total expenditures on unemployment benefits could equal 2.3% of GDP. Even if GDP were to grow by 4% annually, their projections show unemployment benefits equaling 1.6% of GDP.

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