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
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
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.
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.
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.