1. A CONCERTED, COMPREHENSIVE
GOVERNMENT EFFORT AS THE SOLUTION TO
MACEDONIA’S YOUTH UNEMPLOYMENT
ISSUE
Team name: Kumanovo2
Country: Macedonia
L'Institut d'Etudes Politiques de Paris; University of Cambridge

2. THE PROBLEM – TRENDS
Youth unemployment in the Republic of Macedonia
Our team will focus on the problem of youth (15-24) unemployment in the Republic of Macedonia. As a
country with one of the most badly performing economies in Europe, it also has a fairly high unemployment
rate of around 30%. The ratio of unemployed youth to unemployed adult is 2:1. Both the rate of
unemployment and the ratio of young to older has remained more or less constant over the past decade or
so.
The chart below summarizes the prevalence of the problem of youth unemployment. Research conducted by
the think tank Reactor has come to the conclusion that youth unemployment equally affects not only males
and females (as the data confirms) but also members of most ethnic groups. The only markedly (further)
disadvantaged group are the Roma youth.
Youth Unemployment in Macedonia (source : Indexmundi ) Further problems not visible from the graph
1. A significant portion of unemployed youth is
obscured by the prevalence of low-skilled
jobs in the primary sector – thus fostering the
underutilization of human capital
2. The problem of brain drain is a serious issue
in Macedonia; 45% of Macedonia’s secondary
school students see their future in another
country in 10 years (http://www.ereporter.com.mk/mk-
mk/Details.aspx?Title=15062)
3. The situation has not improved in the past
decade, which leads to long unemployment
spells for youth – who resort to either
informal employment or become de-
motivated to join the labour marker

3. CAUSES
Overall economic environment
 Almost 30% of the Macedonian population live under the poverty line
The unemployment rate stands firmly over 30%
Studies show that the educational attainment and development of human capital does not improve an individuals’
chances of finding work in Macedonia, it is rather the social status of their parents
Macedonia’s economy is characterised by a low demand for labour, and even jobs that are available severely
underutilise human capital by placing people in low-skill positions
References:
Economy Watch. Macedonia (Former Yugoslav Republic of Macedonia) Economic Statistics and Indicators . 2013.
http://www.economywatch.com/economic-statistics/country/Macedonia/ (accessed February 2013).
Korunovska Srbijanko, Jana, Neda Korunovska Avramovska, and Tanja Maleska. GENERATION “GETTING NOWHERE”:
The transitions of unemployed youth in transitional Macedonia. Reactor – Research in Action, Macedonia, nd.
Lehmann, Harmut. Macedonia’s Accession to the EU and the Labor Market: What Can Be Learned from the New
Member States? IZA Policy Paper Series, IZA, 2010.
Skills mismatch Loss of motivation among job-seeking youth
A major problem for youth seeking employment in
A major problem for youth seeking employment in Since young people are rarely considered by employers
Since young people are rarely considered by employers
Macedonia is their lack of employable skills and
Macedonia is their lack of employable skills and when seeking for their first job, the time spent waiting
when seeking for their first job, the time spent waiting
relevant previous experience.
relevant previous experience. by the 63% of the unemployed is longer than four years!
by the 63% of the unemployed is longer than four years!
The theoretical skills that graduates possess do not
The theoretical skills that graduates possess do not (http://www.wsws.org/en/articles/2011/08/balk-a23.html)
(http://www.wsws.org/en/articles/2011/08/balk-a23.html)
prepare them for work in the real world and
prepare them for work in the real world and Furthermore, when youth do find jobs, it is usually in
Furthermore, when youth do find jobs, it is usually in
employers recognize that. Thus, in the rare
employers recognize that. Thus, in the rare the informal economy or in a low-skilled position on a
the informal economy or in a low-skilled position on a
occasions that a new job opens up, employers tend
occasions that a new job opens up, employers tend temporary, unregulated basis. Such job conditions and
temporary, unregulated basis. Such job conditions and
to prefer people who already have work experience
to prefer people who already have work experience lack of job security are demotivating and the
lack of job security are demotivating and the
in the field. The costs of training are not justifiable
in the field. The costs of training are not justifiable involvement in the informal economy makes it harder to
involvement in the informal economy makes it harder to
when they can employ someone they do not need
when they can employ someone they do not need integrate into the formal labour market later on.
integrate into the formal labour market later on.
to train.
to train. Thus, Macedonia’s youth are becoming demotivated
Thus, Macedonia’s youth are becoming demotivated
This way, recent graduates are passed up in the
This way, recent graduates are passed up in the about their prospects of finding work and either leave
employment process. about their prospects of finding work and either leave
employment process. the country or stop looking.
the country or stop looking.

4. ATTEMPTED SOLUTIONS AND THEIR PROBLEMS
ALMP What went wrong?
Promoting self-employment There are several significant problems with the
There are several significant problems with the
 Training and providing subsidies to 980 operational plan of the government.
operational plan of the government.
people in 2012 to start a business While it does involve significant social forces
While it does involve significant social forces
Promoting wage-employment: (employers), it does nothing to ensure universality
(employers), it does nothing to ensure universality
 Subsidizing firms to open 90 new places of qualifications or incentivising employers to give
of qualifications or incentivising employers to give
in 2012 proper training to trainees
proper training to trainees
A significant problem is the miniscule proportion
A significant problem is the miniscule proportion
 Subsidizing the employment of 600
of the unemployed people these policies affect.
of the unemployed people these policies affect.
unemployed people in 2012
Specifically regarding youth unemployment,
Specifically regarding youth unemployment,
Training and re-training these policies do not target the young explicitly
these policies do not target the young explicitly
Subsidizing firms to employ 233 new interns for
Subsidizing firms to employ 233 new interns for (except for the training policies – the first one
(except for the training policies – the first one
c-ca 80EUR/month for a period of six months
c-ca 80EUR/month for a period of six months targets people of up to 27 years of age, the second
targets people of up to 27 years of age, the second
Subsidizing 600 unpaid internships in 2012 for a
Subsidizing 600 unpaid internships in 2012 for a one people up to 33 years of age)
one people up to 33 years of age)
period of six months
period of six months The operational plan does not include substantial
The operational plan does not include substantial
public employment service reform to streamline
public employment service reform to streamline
further job search among the people who are
further job search among the people who are
affected by the policies
affected by the policies
Facilitation of entry into labour marker
Subsidizing firms to train 600 people in 2012 in
order to facilitate labour market entry Thus, the main problem with the current approach
Thus, the main problem with the current approach
Training 216 people in 2012 to alleviate the skills is that it relies on disjointed policies, does not target
is that it relies on disjointed policies, does not target
mismatch (for low-skilled positions) youth specifically, does not address the failings of
youth specifically, does not address the failings of
the education system in preparing graduates for the
the education system in preparing graduates for the
Training 2000 people to start a business in 2012
labour market and it underutilizes funds available
labour market and it underutilizes funds available
(http://www.zvrm.gov.mk/WBStorage/Files/OPzan
aVlada2012.pdf)

5. PROPOSED SOLUTION - 1
Our approach A multi – pronged approach
In proposing our solution, we are envisioning
ourselves either as persons responsible for
developing governmental policy or proposing policy
solutions to the Macedonian government.
Thus, our approach will focus on what the
government can do to alleviate the problem of
youth unemployment. The main reason behind this
is that the problem is so widely spread that smaller-
scale solutions will simply not make any meaningful
difference.
Tripartite collaboration Outline of the approach
Our approach is different from what is currently in place in
Macedonia because it avoids pitfalls which usually arise.
It focuses on developing a multi-pronged, mutually
reinforcing policy package which will address several of the
key problem areas related to youth unemployment (diagram
above). The approach is in line with ILO reccomendations
It relies on the involvement of social forces in ‘tripartite
collaboration’ which will ensure the compatibility of the
policies both with the employers and employees (diagram
left)
It makes full use of the resources available to the
Macedonian government, realising that youth
unemployment should be a priority issue considering the
impact of resolving even a part of the problem

6. EDUCATION & TRAINING
Education & Training
Some countries focus their training policies exclusively
Some countries focus their training policies exclusively
One of the main causes of the low level of youth on education curricula reform, while others focus on
on education curricula reform, while others focus on
employment is the skills mismatch between what work-based training.
work-based training.
applicants can offer and what employers are Both of these approaches, however, only address one
Both of these approaches, however, only address one
looking for. A common reason for rejecting the aspect of the problem.
aspect of the problem.
applications of first-job seekers is that they have do What we propose is the following:
What we propose is the following:
not satisfy the condition of having prior relevant A combined school/work approach to developing
A combined school/work approach to developing
experience. However, this causes a cycle where employable skills among Macedonia’s youth
employable skills among Macedonia’s youth
applicants have no experience and cannot gain  A good example of a successful combined
 A good example of a successful combined
experience because they do not have it already. model is Germany’s dual system which,
model is Germany’s dual system which,
studies have shown, is comparatively more
studies have shown, is comparatively more
effective than other models (O’Higgins 2001,
effective than other models (O’Higgins 2001,
Thus, concerted governmental action is needed to ILO)
ILO)
facilitate the entry of first time applicants and
The model would require a standardisation and
The model would require a standardisation and
young job-seekers into the labour marker by nationwide recognition of qualification certification in
providing them with opportunities to develop nationwide recognition of qualification certification in
order to a) make monitoring easier and b) increase
order to a) make monitoring easier and b) increase
employable skills. A significant portion of applicants receptiveness of employers
receptiveness of employers
have general secondary education and/or a
The model hinges on the involvement of social
The model hinges on the involvement of social
university education with little to none practical partners (workers’ associations, the government and
partners (workers’ associations, the government and
experience. employers) to ensure a constant relevance and
employers) to ensure a constant relevance and
applicability of the curricula
applicability of the curricula
Creating graduate entry schemes and reforming the The costs would be shared between employers, the
The costs would be shared between employers, the
educational curricula will allow for the systematic government and youth
government and youth
development of employable skills, thus fostering The model should be explicitly targeted to recent
The model should be explicitly targeted to recent
generations of young people with relevant, graduates and highly educated young people in the first
graduates and highly educated young people in the first
marketable skills. instance to secure maximum market penetration
instance to secure maximum market penetration

7. TRANSITION
Transition assistance
A significant problem of the Macedonian To provide proper transition assistance to youth,
A significant problem of the Macedonian the Macedonian government needs to expand both
economy is the long period of transition
economy is the long period of transition the range and reach of the policies currently in
between obtaining a degree/qualification and
between obtaining a degree/qualification and place.
entering the labour market. A comprehensive
entering the labour market. A comprehensive In our view, the main tenets of a successful
approach must cover this crucial phase.
approach must cover this crucial phase. transition policy are the following:
Establishing government funded career centres at
educational institutions (universities and vocational
schools) where students would receive advice on
preparing CVs, cover letters and job applications
while simultaneously having access to a list of
available positions
Facilitating job searching by streamlining the
Public Employment Service which would provide
said list (this is a relatively minor investment with a
high return rate)
Creating a youth employment market where
employers specifically seeking youth would be able
to recruit them
 The success of transition assistance
policies is contingent on effective
nationwide research and targeting

8. ACTIVE LABOUR MARKET POLICIES 1
Providing wage employment
Active labour market policies are aimed at making Promoting wage employment is usually achieved
Active labour market policies are aimed at making
the market more receptive to new people. Policies through state subsidies provided to companies.
the market more receptive to new people. Policies
usually go down along one of two paths: providing These subsidies are meant to cover part of the
usually go down along one of two paths: providing
wage employment and promoting self-employment. wages or the costs of re-training, if necessary.
wage employment and promoting self-employment.
Both approaches depend on:
Both approaches depend on: The relevance of such policies in Macedonia is that
Carefully defining the problem
Carefully defining the problem its labour market is characterised by low outflow
Localised and decentralised implementation, and low labour demand. The economy is unable to
Localised and decentralised implementation,
create enough new jobs and old jobs are not open
keeping in mind the often discrepant nature of skills
keeping in mind the often discrepant nature of skills to people with long unemployment spells or lack of
needed and offered (the approach Chile took in the
needed and offered (the approach Chile took in the relevant experience.
late 1990s could be an example)
late 1990s could be an example)
Thus, ALMPs that deal with providing wage
Universal qualifications
Universal qualifications
employment are the way forward, as opposed to
Integrated policies
Integrated policies direct job generation in the public sector.
Monitoring
Monitoring

9. ACTIVE LABOUR MARKET POLICIES 2
Promoting self-employment
An effective policy on promoting self-employment
Considering the state of the Macedonian
Considering the state of the Macedonian cannot rely simply on providing grants. Our team
economy , simply facilitating wage employment
economy , simply facilitating wage employment considers the following policies necessary:
and helping youth find such jobs is not enough
and helping youth find such jobs is not enough
Expanding the range of policies currently in place
to solve the problem. Promoting self-
to solve the problem. Promoting self- to reduce bureaucratic obstacles to starting a
employment is a way to tackle both the lack of
employment is a way to tackle both the lack of business
jobs and the issue of youth unemployment.
jobs and the issue of youth unemployment.
Further promoting schemes that provide start-up
funds in the medium term, while simultaneously
working on reforming the banking sector to
independently accept grant applications for
promising projects
Establishing training centres for prospective
business owners and support centres that would
minimise the risk of people successfully completing
the courses and failing to start a business
Promoting self-employment as viable, attractive
alternative and developing skills at an earlier stage
 This step should be taken by co-opting
self-employed professionals to hold talks
and by encouraging firms to sponsor
competitions designed around creating
business models by youth

10. CONCLUSIONS
Feasibility
The approach we propose is a marked improvement of the disjointed policies currently in place. While it
will require significant amounts of work, it is feasible.
Macedonia has the human capital to further develop and implement these reforms
The funding is available from the following sources
 As a candidate for EU membership, Macedonia is entitled to IPA assistance and funding from
the PROGRESS funds as well as Twinning programmes – the EU prioritises youth unemployment
 The Agency of Youth and Sport in Macedonia currently focuses on sport alone; diverting some
funds to youth unemployment will make a significant difference
 Diverting government spending from inefficient policies, considering the high priority of youth
unemployment as an issue will provide further funds
Impact Timeline
The impact of our policy proposal is a crucial aspect Obviously, the progress will be in increments. What
of the innovative approach. Current policies in we hope our policies would achieve is exponentially
Macedonia target a mere fraction of the decrease youth unemployment by creating an initial
unemployed youth. pool of trained, experienced young professionals
Our proposal aims to target at least 15,000 people and new business owners, which in turn would
annually through direct training programmes and create new jobs and stimulate the overall economy
ALMPs, while the dual system of education and thus enabling it to create more jobs on its own.
training will reach most students in secondary
education as will the reforms for PES. The impact will not be visible for several years, but
The multi-pronged approach paired with the active we consider it crucial to persist in the investment
involvement of social forces is designed to ensure and development of good policies which will be
maximum impact and effectiveness of the policies. effective.