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MACEDONIA


 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 4,705 3,712 3,400 118
         
GNI per capita
 US $ 1,980 1,700 1,690 111
Ranking is given out of 208 nations - (data from the World Bank)

Books on Macedonia




Update No: 120 - (30/05/07)

Unemployment is the scourge
There is no doubting what is the major problem in Macedonia today. Unemployment afflicts one third of the work force - and is rising again. According to the latest statistics from the State Employment Agency, 372,078 people were without jobs in February 2007, compared to 361,335 in October 2006 -- an increase of nearly 11,000. This in a country of only two million.

Officially, the unemployment rate is estimated at 37%, putting Macedonia at the top of countries in Europe for this unwelcome trophy. However, many local experts believe the figures are unrealistic. They argue that the way official statistical records are kept does not provide objective results. 

The key problem is that unemployment data are based on the number of people who register at the employment agency so they can receive health insurance "blue cards". But many Macedonians work in the informal or "grey" economy, or at enterprises where they are paid under the table. Even though they are generating income, they register as unemployed for the purpose of gaining access to the state health insurance system. 

Similarly, farmers often register as unemployed, again for the purpose of getting a blue card. 

Unemployment relief functions as a sort of job subsidy and statistics are not to be taken at face value. Indeed, if more than one third were genuinely unemployed, there would surely have been a revolution by now, such as brought Hitler to power in Germany in 1933.

Successive governments have tried to address the problem, but without result. When President Branko Crvenkovski was prime minister, his administration offered tax relief to companies as an incentive to come clean, but the effects were miniscule. 

Subsequently, former Prime Minister Vlado Buckovski tried to update the list of unemployed by erasing those who had not reported for more than six months. Around 85,000 people were dropped from the lists in 2005 and 2006, but many have started reporting again. 

The most recent idea is to have the Health Fund issue the blue cards instead of the Employment Agency. That way, farmers and temporary employees would not have to list themselves as jobless. As a result, the unemployment level is expected to drop by about 100,000. 

According to unofficial estimates, the actual unemployment rate -- that is, representing people who do not have an income or steady work -- is closer to 20%. This figure is still high, and the government of Prime Minister Nikola Gruevski is under pressure to make good on campaign promises to boost employment. 
The government hopes the introduction of new tax rates -- the lowest in Europe -- will spur investment and create opportunities. 

New Keynes needed for Macedonia
This is the conventional approach, ratified by the zeitgeist. Leave everything to private enterprise, with the state as a night watchman and provider of the right fiscal incentives. The thought of it doing anything more is abhorrent to the Macedonians. They had enough of that under communism.

Actually, there is a Third Way, not that associated with Tony Blair, which to most has always seemed hot air, but that proposed by a rather more substantial figure, John Maynard Keynes, perhaps the most brilliant economist ever. In the 1930s and the 1920s he advocated essential public works financed by loans, even if this involved budget deficits, so as to stimulate private enterprise by the corresponding and multiplying boost to aggregate demand. Had his advice been taken in Germany the world could have been spared Hitler.

There are plenty of social and infrastructural matters that need urgent attention in Macedonia. It is the lack of funds that is one main reason for the government to hold back. The international community needs to step in here and help. The other is a lack of trained personnel such as made the Marshall Aid programme such a success after the war in the late 1940s in Europe.

But there is a sorry story to tell. The rest of the world is wary of intervening in the Balkans - unless tragic events unfold so that it has to. The US finally finished off the Bosnian Civil War in 1995 because of the massacre of Muslims by the Serbs at Srebrenica. It then intervened in the case of Kosovar Albanians in 1995, an affair whose denouement is nigh. This transformed Albania for the better with a massive inflow of aid, personnel, know-how and whatever. 

Well, Macedonia has its Albanians too, nearly 30% of its population. Many are unemployed, almost certainly more as a proportion than in the country at large. They are restive and are concentrated in the northern regions adjacent to Kosovo. If that goes independent, as looks increasingly likely, might they not be tempted to join up with their ethnic twins?

The Keynesian Revolution was really only put in practice by the Second World War, when it had to be. Let the Balkans, which set off the First World War, be the scene in Macedonia of a prospective, not retrospective, act of social redemption by the only saviour feasible, the West. 

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FOREIGN COOPERATION

Bulgaria signs social deals, to fix milk plant


Bulgaria's Social Minister, Emiliya Maslarova, and her Macedonian counterpart signed an agreement for cooperation between the two countries' Social Ministries, Sofia News Agency reported. 
The agreement provides for joint actions in the area of labour market, the problems of social security and social assistance. The countries will exchange experts; normative documents and the two ministries will organize joint discussions and meetings. "Signing this agreement means we continue the good cooperation traditions between the two ministries," Minister Maslarova said. The agreement is a very important document for Macedonia, as Bulgaria is already an EU member state, Macedonia's Social Minister, Ljupco Meskov, said. It was also reported that four Bulgarian companies will repair the milk-processing factory in Macedonia's town of Bitola. The companies will invest more than one million Euro in the Bratindol factory. The repaired plant will have the capacity to process between 100 and 120 tonnes of milk per day. The project is part of Macedonia's government for attracting foreign investors. Macedonia's Agriculture Minister Ace Spasenovski met with the representative of the Bulgarian companies Stefan Vassilev and factory's owner Tode Ivanovski to discuss the issue. The four investors said they believe the business climate in Macedonia is good and this will encourage the development of country's agriculture.

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FOREIGN LOANS

Grant agreements

The World Bank's Country Manager, Sandra Bloemenkamp, and Macedonia Finance Minister, Trajko Slavevski, signed two grant agreements worth seven million Euro, MRTOnline reported. 
The first grant agreement worth 4.55 million Euro will finance the implementation of the actions specified in the Country Strategy and Action Plan on Corporate Financial Reporting. The second grant aims to assist the necessary preparations for the launch of a project on conditional cash transfer. The strategy was developed by the Macedonian Steering Committee which was established in 2005 and comprised key public and private stakeholders with an interest in corporate sector financial reporting. The World Bank supported Macedonia reform in the context of the Road to Europe - Programme of Accounting Reform and Institutional Strengthening (REPARIS). Besides, the Bank also assisted the Macedonian Steering Committee in its drafting of the Action Plan, which aims to implement the World Bank's ROSC recommendations.

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