Central Europe Review find out about advertising in CER
Vol 3, No 9
5 March 2001
 CER INFO 
front page 
overview 
our awards 
CER cited 
subscribe 
advertising 
classifieds 
submissions 
jobs at CER 
internships 
CER Direct 
e-mail us 
 ARCHIVES 
year 2000 
year 1999 
by subject 
by author 
EU Focus 
kinoeye 
books 
press 
news 
search 
 MORE 
ebookstore 
pbookshop 
music shop 
video store 
find books 
conferences 
diacritics 
FreeMail 
papers 
Crowns 
links 

 

Sam Vaknin Unemployment:
The case of
Macedonia

The final part of a six-part series
Sam Vaknin

Read part one of Sam Vaknin's unemployment series of articles first.
Read part two of the series.
Read part three of the series.
Read part four of the series.
Read part five of the series.

Unconventional modes of work

In Central and Eastern Europe, work used to be a simple "seven-to-three affair. This is no longer the case.

In richer countries, such as Denmark, the worker can take special leave. He receives 80% of the maximum unemployment benefits plus no interruption in social security, providing he uses the time for job training, a sabbatical, further education or parental leave. This can be extended to taking care of old people (old parents or other relatives) or the terminally ill—as is the case in Belgium (though only for up to two months).

It makes economic sense, because their activities replace social outlays. In Britain, part time workers receive the same benefits in case of layoffs and wrongful dismissals, and in Holland pension funds grant pensions to part time workers.

Countries in transition cannot yet afford this largesse, but special treatment is granted by law and in collective agreements to night shift and weekend work (for instance, no payment of social benefits in some countries and, of course, a multiple of the regular hourly wage paid for each hour of overtime, night shift and so on).

All modes of part-time, flexitime, seasonal, casual and job-sharing work, as well as working from home, are encouraged. For example: in some countries, two people sharing the same job are allowed to choose to be treated, for tax purposes and unemployment benefits, either as one person or as two persons. Shift workers should be treated the same. In Bulgaria, a national part-time employment program encouraged employers to hire the unemployed on a short-term, part-time basis (like the Macedonian equivalent program Mladinska Zadruga).

One can safely say that—quite surprisingly in view of their Socialist heritage—labour markets in the countries in transition are less arthritic than their West European counterparts. One shudders at the thought of the outcomes of the forthcoming onslsaught of the EU's acquis communautaire and the Social Chapter on these efficient labour markets.

Macroeconomic policies

The macroeconomic policies of Macedonia are severely constrained by its international obligations to the IMF and the World Bank. Generally, a country can ease interest rates, or provide a fiscal boost to the economy by slashing taxes or by deficit spending.

Counter-cyclical fiscal policies are lagging, and, as a result, they tend to exacerbate the trend. Fiscal boosts tend to coincide with booms and fiscal contraction with recessions.

In view of the budget constraints of the Macedonian government (more than 97% of the budget is "locked in"), it is not practical to expect any employment boost either from the monetary policy or from the fiscal policies of the state.

Macedonia is considering the introduction of a "full employment budget." A full employment budget adjusts the budget deficit or surplus in relation to effects of deviations from full or normal unemployment. Thus, a simple balanced budget could be actually contractionary. A simple deficit may, actually, be a surplus on a full employment basis and a government can be contractionary despite positive borrowing.

Apprenticeship, training, retraining and re-qualification

The current labour laws allow for apprenticeship and training with training sub-minimum wages. Mandatory training or apprenticeship is a beneficial rigidity because it encourages skill gaining. Germany is an excellent example of the benefits of a well-developed apprenticeship program—and so, though to a lesser extent, is the Czech Republic.

Most of the unemployed can be retrained, regardless of age and level of education. This surprising result has emerged from many studies.

The massive retraining and re-qualification programs needed to combat unemployment in Macedonia can be undertaken in collaboration with the private
Send this article to a friend
sector. The government will train, re-train or re-qualify the unemployed worker—and the private sector firms will undertake to employ the retrained worker for a minimum period of time following the completion of his or her training or retraining. Actually, the government should be the educational sub-contractor of the business sector, a catalyst of skill acquisition for the under-capitalized private sector. Small business employers should have the priority in this scheme.

There should be separate retraining and re-qualification programs according to the educational levels of the populations of the trainees and to the aims of the programs. Thus, vocational training should be separated from teaching basic literacy and numeracy skills. Additionally, entrepreneurship skills should be developed in small business skill training programs and in programs designed to enhance the management skills of existing entrepreneurs.

All retraining and re-qualification programs should double as advisory services. The instructors/guides/lecturers should be obliged to provide legal, marketing, financial, sales-related or other consulting. Students who volunteer to teach basic skills will be eligible to receive university credits and scholarships.

Entrepreneurship and small businesses

Small businesses are the engine of growth and job creation in all modern economies. In the long run, the formation of small businesses is Macedonia's only hope. The government encourages the provision of micro-credits and facilities to set up small and home-based businesses by the banking system. Despite the absence, until recently, of reaction from or collaboration with the banking system, the state itself has (justly) refrained from stepping in to provide the needed funds and facilities (physical facilities and services).

But the state has encouraged small businesses through microcredits and incubators. It is now considering the introduction of tax credits, the encuragement of intrapreneurship (entrepreneurship within big and estasblished enterprises) and giving preference to small businesses in government procurement.

Sam Vaknin, 5 March 2001

The author:

The author is General Manager of Capital Markets Institute Ltd, a consultancy firm with operations in Macedonia and Russia. He is an Economic Advisor to the Government of Macedonia.

DISCLAIMER: The views presented in this article represent only the personal opinions and judgments of the author.

Moving on:

After the Rain cover


After the Rain:
How the West Lost the East

Sam Vaknin's book on sale from CER as a print book and as an ebook

Read an external review

Bibliography

1. "Has Job Stability Declined Yet? New Evidence for the 1990s," NEBR working paper, December 1997.
 
2. "Job Tenure and Labour Market Regulation: a Comparison of Britain and Italy using Micro Data," CEPR discussion paper, October 1997.
 
3. "A Disaggregate Analysis of the Evolution of Job Tenure in Britain 1975-93," CEPR, October 1997
 
4. "Monetary Union and European Unemployment," CEPR discussion paper No 1485, October 1996.
 
5. "Policy Complementarities: The Case for Fundamental Labour Market Reform" by David Coe and Dennis Snower, IMF Staff Papers Volume 44, No 1, 1997.
 
6. "French Unemployment: Why France and the USA are alike" by D Cohen, A Lefranc and G Saint Paul, Economic Policy 25, October 1997.
 
7. "Minimum Wages and Youth Unemployment in France and the USA" by I Abowd, F Kramarz, T Lemieux and D Margolis, NBER working paper 6111.
 
8. "Making the Most of the Minimum: Statutory minimum wages, employment and poverty," Employment Outlook, June 1998.
 
9. "Symposium: The Natural Rate of Unemployment," Journal of Economic Perspectives, Winter 1997
 
10. "Rewarding Work," to be published by Harvard University Press.
 
11. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence"
 
12. "Job security Provisions and Employment," Quarterly Journal of Economics, August 1990.
 
13. Review essay by Paul Gregg and Alan Manning in Unemployment Policy, Eds Dennis Snower and Guillermo de la Dehesa, Cambridge University Press, 1997.
 
14. "The Dutch Model," Frits Bolkestein, By Invitation, The Economist, 22 May 1999, pp 97-98
 
15. "Beer, Sandwiches and Statistics," Economic Focus, The Economist, 12 July 1997, p 78.
 
16. "Agricultural Productivity, Comparative advantage and Economic Growth," Journal of Economic Theory 58, 1992.
 
17. "Deindustrialization," World Economic Outlook, April 1997.
 
18. "Deindustrialization: Causes and Implications" by Robert Rowthorn and Ramana Ramaswamy. IMF working paper, April 1997.
 
19. "The Grabbing Hand: Government Pathologies and their Cures" by Andrei Shleifer and Robert Vishny. Harvard University Press.
 
20. "The Chemistry of Growth," Economic Focus, The Economist, March 6th, 1999, p.80.
 
21. "The Politics of Unemployment—Europe hits a brick wall," The Economist, 5 April 1997, p 19.
 
22. "Working man's burden," Economic Focus, The Economist, February 6th, 1999, p 88.
 
23. "An Assessment of Economic Reforms and Country Competitiveness in Transition Economies: Macedonia," Compiled by Lidija Rangelovska for the Harvard Institute of International Development (HIID), July 1999.
 
24. "Statistical Yearbook of the Republic of Macedonia, 1998," Statistical Office of the Republic of Macedonia, XXXIII, Skopje, November 1998, pp 158-206.
 
25. "National Development Strategy for Macedonia—Development and Modernization," Macedonian Academy of Sciences and Arts, Skopje, 1997, pp 127-147.
 
26. "The Republic of Macedonia," SIBIS, Skopje, 996, pp 59-60
 
27. Encyclopedia Britannica, 1999 Edition.
 
28. "Aide Memoire Public Expenditure Institutional Review Mission," 19-30 July, 1999, Draft 7/30/99.
 
29. "IMF Fiscal Affairs Department—FYROM: Some Options for Restructuring Government Expenditures" by Sheetal K Chand, Calvin McDonald, Eric Haindl. November 1997.
 
30. "Program of the Republic of Macedonia for stimulating investments with a special emphasis on attracting foreign direct investments," The Government of the Republic of Macedonia, Skopje, March 1999.
 
31. "Republic of Macedonia—World Bank—Social Support and Technical Assistance Project—Labour Redeployment Program—Semiannual Report—June 1999" by The Privatization Agency of the Republic of Macedonia—Project Coordination Unit—Coordinator: Vladimir Sarac—Skopje, 31 July 1999.
 
32. ILO Convention No. 160—"Convention on the Statistics of Labour Force" (ILO 1992, p 1325).
 
33. "The Consequences of Labour Market Flexibility: Panel Evidence Based on Survey Data," by R Di Tella and R MacCullouch, Harvard Business School and ZEI, University of Bonn, 28 April 1999.

 

THIS WEEK:
Sokrat Janowicz
Writers' Bloc

Sam Vaknin
Workin' for a Living

Gusztáv Kosztolányi
Here Comes Hungary

Catherine Lovatt
Moldovans Vote

Oliver Craske
The Irish Lesson

Czech Film:
Andrew James Horton
Musíme si pomáhat

Ivana Košuličová
The Ceremony of the Everyday

Reading Hrabal

Books:
Henryk Domanski
On the Verge of Convergence

eBooks:
Štěpán Kotrba
Sow and Reap

Brian J Požun
Shedding the Balkan Skin

Martin D Brown
Czech Historical Amnesia

Dejan Anastasijević (ed)
Out of Time

Gusztáv Kosztolányi
Hungarian Oil Scandal

Sam Vaknin
After the Rain

Press Reviews:
Andrea Mrozek
The Haphazard Enlargement

News:
Albania
Bosnia
Bulgaria
Croatia
Czech
Estonia
EU/NATO
Finland
Germany
Greece
Hungary
Kosovo
Latvia
Lithuania
Macedonia
Poland
Roma
Romania
Slovakia
Slovenia

CER eBookclub Members enter here