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Shrinking Labour Force Squeezes North Macedonia’s Economy

The size of North Macedonia’s labour market has declined by 100,000 workers in just three years, mostly likely due to emigration – and key sectors, like agriculture, construction and health, are suffering.

Since the 19th century, Macedonian folk songs and stories have talked about people going abroad to make a living. But if old songs narrated tales of the village sending someone on the “steamer” [meaning the steamships to the US for example], now the problem is of nobody staying behind in rural villages, as busloads full of people leave.

In the last three to four years, 13 out of a total of 19 sectors for which the State Statistics Office, SSO, keeps records recorded a double-digit decrease in the size of their workforce.

Agriculture, the service sector, construction and industry lost the most workers, but significant declines were also recorded in the energy sector, administrative services, health and the public sector.

Data from 2011 to 2022 found in the SSO’s mak-stat database show that most sectors follow similar trends.

The number of employees in them increased steadily until a milestone year was reached, and then rapid decline followed. Depending on the sector, that milestone years occurred between 2018 and 2021.

The same curve can also be seen in the total number of employees in the country, which grew from 645,000 in 2011 to 798,000 in 2019. Decline here began in 2022, when the number dropped back to 692,000. In just three years, in other words, the country’s labour force lost more than 100,000 workers.

Of that lost 100,000, 42,000 were lost to agriculture and forestry, 22,000 to industry, 15,000 to trade professions and 11,000 to construction. For a larger number of sectors, the fall began in 2019. For others, such as in administrative services and the public sector, it began in 2021.

Only two sectors had more employees in 2022 compared to previous years, the information and communications sector and finance. Others, such as education, sustained small declines.

Migration is the likely suspect

Many factors could be behind the reduction in the number of employees in each sector, ranging from retraining to job losses or emigration. Statistics do not have precise data on what exactly contributed to the decline in the number of workers.

But as the figures make it clear people are “disappearing” from virtually all sectors, retraining can be ruled out.

As the number of workers falls, so does the unemployment rate. It has halved in the last decade, from 31.4 per cent ten years ago to 14.4 per cent currently. In 2018, before the turning point years in most sectors, unemployment ran at 20.7 per cent; it continued to decline significantly in the following period.

This shows that those who left those jobs did not remain unemployed. Therefore, emigration is left as the most likely factor behind workers leaving these fields.

Low wages blamed for shortages in sectors

This trend cannot only be observed from statistical figures. It is also seen in the testimonies of many people involved in economic activities.

The president of the Construction Trade Union, Ivan Peshevski, said recently on television that his sector is 12,000 workers short, adding that the biggest reason for that is low wages.

“We cannot expect a productive worker with a [monthly] salary of 18, 20 or 25,000 denars [300 to just over 400 euros],” Peshevski said.

The hospitality sector constantly complains about a shortage of workers, which can be especially problematic for businesses in summer, when Macedonian workers go to Croatia and other countries that pay more.

Demand is also high for qualified technical staff and accountants. Almost all associations of employers or businessmen in every sector complain, formally or informally, about this trend.

Govt insists it’s creating more jobs

Prime Minister Dimitar Kovacevski, however, claims the fall in unemployment is the result of jobs being created at home rather than emigration abroad.

On April 26, he told a summit of the organization Macedonia 2025: “During the term of this government, we have a reduced the unemployment percentage by 8 per cent and we have an increased the employment percentage of 9.8 per cent.”

Kovacevski added that 10,000 jobs had been created in free industrial zones. This investment is expected to create another 4,000 jobs, in addition to the expected employment of around 8,000 people to work on the highways of corridors 8 and 10-d.

Data from state statistics confirm that the employment rate is increasing. However, the employment rate is not a measure of the total number of employees in the country.

According to the definitions published on the website of the SSO, the rate mentioned by Kovacevski only indicates the percentage of the working population in employment.

When emigration rises, a higher percentage of employment is obtained, because the total number of the able-bodied population in the country declines and is available to actually work.

Meanwhile, even the reduced unemployment rate is still quite high. Data from the last published annual report of the Employment Agency, for 2021, shows that about 130,000 citizens were looking for work that year. As many as 75 per cent of them had waited longer than 12 months for a job.

This shows that more people are waiting for employment compared to those who have left the domestic labour market already.

Mathematically, it would seem a simple task to replace those who have left with them; unemployment would then practically disappear, if it wasn’t for an important factor – education and qualifications.

Of those 130,000 seeking employment, two-thirds are without significant educational qualifications; they only have a primary education or unfinished high school degrees.

The concern is that the country has entered a vicious cycle in which skilled workers are being lost and cannot be replaced with the country’s unemployed who do not have the right skills.

It may necessitate new solutions for which North Macedonia has no experience, such as importing skilled workers from abroad.

Source: Balkan Insight