Background Paper on Unemployment Issues in the Republc of Macedonia

Goce Petreski

BACKGROUND PAPER ON UNEMPLOYMENT ISSUES IN THE REPUBLC OF MACEDONIA

Despite the significant reform efforts, the macroeconomic indicators of Macedonia are unfavorable. Macedonia belongs to countries with highest unemployment rates in Europe. The persisting high unemployment, rather than low income is one of the key factors of poverty. Practically all known types of unemployment are present. The unemployment is of predominantly structural character discernible by a high rate of long-term unemployment and a low level of education of the unemployed. There is large gap between labor supply and demand and market is severely distorted. Low rate of economic growth is the main cause for high unemployment. Sharp contractions in economic activities during the transitional period have increased the level of informal employment. The central problem, which persists, is the lack of labor demand for formal jobs. The overall economic setting has important implication on the implementation of the second wave of reforms.

ECONOMIC SITUATION AND SHORT TERM OUTLOOK

Economic situation in Macedonia is still unsteady. Serous weaknesses in functioning of the economy, business climate, competitiveness and property rights enforcement are growing challenge for successful transition. Foreign direct investment is insufficient and there are no serious reasons to expect that significant upturn would occur. Low rate of restructuring of the economy gives a depiction of economic stagnation. One of indications is the rise of employment in agriculture which displays reversed structural trend (over 20%). The key macroeconomic aggregates and social indicators reveal unsatisfactory pattern of development. After the long lasting consecutive downward trend, the output is still below the 1990 level. Employment is below the 1990 level and the rate of unemployment is amongst highest in Europe. Not only that poverty has not been reduced, but the poverty level is rising. However, despite several external and domestic shocks, in the last decade Macedonian economy demonstrated considerable resilience, taking into consideration the political and other circumstances.1

1The Stabilization and Association Agreement following the process launched in 2001 between Macedonia and the European Union has been ratified by all European countries and entered into force on 1 April 2004. The implementation of the agreement should further accelerate the much needed reforms to ensure stable, functioning institutions, the rule of law and economic development. The Republic of Macedonia submitted an application for membership in the European Union on 22 March 2004. Economic growth Economic growth in the overall transition period has been sluggish and volatile. The persistence of low rates of real growth accompanied by significant fluctuations raises concerns about the real capacity of the overall economy to generate growth. Although some attempts have been done to compare the actual level of economic activity, it is difficult to estimate the potential product of Macedonian economy.

GROWTH OF GDP 1992-2003

6 4 2 0 -2 -4 -6 1996 1997 1998 1999 2000 2001 2002 2003 2004

Further reason for concern is the fact that the rate of real growth in the last years fluctuates within a narrow range stationery trend. It is a worrisome indication that even the modest rates of growth, within the positive area of growth are not sustainable on a cumulative, incremental basis. This feature further urges the necessity the vicious circle of low growth to be tackled in a more systematic way by a coherent set of instruments. This situation becomes even more complex if latest indicators showing sharp decline in industrial production are taken into account.

Growth accounting – sources of growth

Analysis of actual and potential sources of growth faces the problem of under- identification.2 Empirical studies of growth in Macedonia are scarce. One of the reasons is inadequate and limited statistical data (quality, comparability, continuity and desegregation). Therefore any more ambitious analytical attempt is seriously constrained.

One of the infrequent efforts to identify sources of growth in the Macedonian economy (Roberts, 2002) utilizes proxy- values for α (determined at the level of 0.4 from the experience of developing countries, which is fairly real assumption) in the Cobb- Douglass production function, or the Solow growth model. The conclusion is that – contrary to developed countries where the physical capital participates with 50% - in Macedonia, in the period 1997-2001, the share of physical capital is only 14%. According to the author, the reasons are associated with the low rates of investment. To the total factor productivity (TFP) is attributed 40%, and to the raise in employment 45%. Estimated potential rate of growth is 2.8%.

2 Some empirical studies have come to a conclusion that in the case of newly industrialized countries in East Asia the total factor productivity has virtually no influence (Kim and Lau 1994)

2 Recent empirical analysis shows that the average growth rate of GDP per capita in the period 1996-2004 has been 1.796%, and the rate of productivity growth 2.156%. Capital- labor ratio has decreased for 0.899%. Under the assumption of (  0.4 ) in the Cobb- Douglas production function, the contribution of capital is estimated to -0.3596, the share of TFP in the rate of growth is 2.156, clearly indicating that diminishing capital-labor ratio has reduced the growth rate of output per worker for 0.3596. 3 Double-logarithmic econometric model for the period 1997-2004, based on estimates for variance of 0.00962 and standard error for  0 (parameter before K/L) of 0.16414 shows that increase of the K/L ratio for 1% would increase output per worker (Y/L) for 1.54 %. The results undoubtedly display that Macedonian economy is effectively constrained by relative scarcity of capital. Besides the overall GDP growth implications, the shortage of capital and investment has strong impact on employment creation. The increased total factor productivity (TFP) share is the main factor of long term growth. Until the economy reaches its equilibrium level capital formation remains as main source for job creation.

RECENT TRENDS IN UNEMPLOYMENT

There is large data inconsistency when using the unemployment records from different sources- the State Statistical Office and the Agency for Employment.

Number of employed and unemployed persons (in thousands)

700 600 500 400 employed 300 unemployed 200 100 0 6 7 8 9 0 1 2 3 4 9 9 9 0 9 0 0 0 0 9 9 9 0 9 0 0 0 0 1 1 1 1 2 2 2 2 2

Source: State Statistical Office (2005) Number of employed and unemployed persons (in thousands)

Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 employed 542 506 531 538 543 583 549 545 523 unemployed 257 287 284 261 261 263 263 316 309

Source: State Statistical Office, LFSs.

The trend of growth of unemployment continued in 2004 with moderate intensity. The unemployment rate in 2004 is 37.2%, which present a rise of 0.5 percentage points.4 The total number of unemployed in 2004 is 309.286 persons. Total active population (labor 3 Estimates of the author

3 force) in 2004 is 832.281, and has fallen annually for 3.3%. The total number of employed (the share of employed persons in the total population aged over 15 years) decreased for 4.15 in 2004 and has been 522.995. In February 2004, the unemployment

Unemployment in the Republic of Macedonia (01.01.2003 31.03.2005)

Month Unemployed Index Unemployed 2003 2004 2004 / 2003 2005 2005 / 2004 37849 39353 January 3 6 103.97 394260 100.18 38028 39560 February 9 7 104.03 394087 99.62 38073 39523 March 2 6 103.81 389412 98.53 38389 39511 April 6 9 102.92 38429 39569 May 4 3 102.97 38227 39572 June 5 4 103.52 38320 39530 July 0 8 103.16 38402 39290 August 5 9 102.31 38440 38878 September 3 2 101.14 38775 38925 October 2 1 100.39 39078 39061 November 8 9 99.96 39036 39107 December 1 2 100.18 Source: Labor Force Survey

Long term unemployment rate 2003 2004 Long term unemployment rate 31.2 31.7 Unemployment share5 85.1 85.4 Very long term unemployment rate6 27.9 27.6

Source: Agency for Employment of the Republic of Macedonia, (2005)

4According to the labor force survey for 2004. The survey has been carried out by the State statistical Office on a sample of 10.000 households on the overall territory. It is according ILO methodology and EUROSTAT recommendations. Stating from 2004 the survey is implemented as continuous activity during the year and the data processing is done on an annual basis but the publishing is done quarterly. 5 The long-term unemployment share is the total number of long-term unemployed (at least 12 months) as a percentage of the total number of unemployed. 6 The very long term unemployment rate is the total number of very long-term unemployed (at least 24 months) as a percentage of the total active population.

4 rate, according to the Labor Force Survey using ILO standards, increased to around 37% of the labor force, up from 32% in the previous year. This was due to higher participation rates in the labor force, the absence of new job creation and the dismissal of workers linked to the restructuring of large state owned enterprises.

Out of total number of employed 3260.640 (61.3%) are male, consequently the unemployment rate of male population is 40.2%. The number of female employed persons in 2004 is 202.355, and the employment rate is 25.4%. The rates of unemployment of male and female population are 36.7% and 37.8% respectively.

Regional and ethnic differences - The rate of unemployment, particularly long term unemployment and GDP per capita point out to large regional disparities. The unemployment rates of various ethnic groups move between the lowest of 25.3 percent among the Vlachs and the highest of 78.5 percent among the Roma population. These disparities are a result of the influence of several factors, but the educational level, age, and place of residence may be considered as the most important ones. Rates of activity by ethnic groups Total Macedonians Albanians Turks Roma Vlachs Serbs Bosniaks Others Rate of activity 54.6 63.2 32.3 42.4 50.4 62.0 59.8 47.8 51.5 Unemployment 38.1 32.0 61.2 58.2 78.5 25.3 30.9 60.3 40.8 rate Source: State Statistical Office

Age structure The highest employment rate is registered with population aged from 35-39 years (51.2%, 40-45 (56.2%) and 45-49 years (55.6%. highest unemployment rates belong to younger population. Unemployment rate of population of 15-19 years, 20-24 and 25-29 are 72.8%, 62.5% and 49.4% respectively.

Population trends and participation rate

According to the LFS, the absolute number of working age population (15-64) in 2003 reached 1.389 million up from 1.337 million in 1999. Relatively low participation rate in Macedonia reflects a very low number of employed, which is only partially compensated by a high incidence of unemployment. The average growth rate is 0.96%. The share of working-age in total population in 2003 has risen from 66.3% in 1999 to 68.7%.

The LFS estimated the labor force at 861,000 in 2003. Labor force participation rate increased from 59.7% in 1999 to 61.3% in 2003, with a variation in-between in both directions. Data show no strong trend in participation in recent years – fluctuating within the range 60-62%.

Youth and old age dependency rates represent the so-called ‘demographic burden’. While age-dependency in Macedonia is relatively low the youth dependency is high. The youth dependency ratio inn 1999 was 37.3, meaning 37 children aged fewer than 15 per 100 working-age population (LFS) and it declined to 32 in 2003.

5 The degree of urbanisation has remained stable in the last decade. The urban/rural distribution of population estimated at approximately 60/40, with a low level of internal migration. Inland migration flows are following the pattern from rural regions (hill and mountain areas) to urban, mainly the capital city of Skopje.

Female participation Female participation) is by tradition lower than that of males, partially due to the special role women play in society.

Participation rate by ethnicity Data from the 2002 Census of Population show that participation rate differs among different ethnic groups. Macedonian ethnic population has the highest participation rate of 53.5%. It is followed by the Vlachs (48.3%), Roma (47.6%), Serbs (47.3%), Bosniacs (43.3%), and ethnic Turks (38.1%). Ethnic Albanians have the lowest participation rate of 29.3% which is mainly due to the extremely low activity of female population.

Results from Labor Force Survey, 20047

The survey is conducted on a sample of 10000 households on the whole territory of the country, which is near 1.8% of the total number of households in the country. In 2004, the active population (labor force) in Republic of Macedonia numbered 832281 persons. In comparison with 2003 their number decreased by 28695 persons, or 3,3%. From the total labor force, 522995 persons are employed persons or 62,8%8 and 37,2% or 309286 persons are unemployed. Inactive population in 2004 notes increased of 6,1%, in comparison with 2003.

Poverty profile

The prolonged transition along with lagging economic growth to a large extent was accompanied by impoverishment and social exclusion of a significant portion of its citizens. The poverty profile reflects these features of the transition process. The human poverty index shows that, on average, 55.1 percent of the total population is suffering from various forms or flaws of human poverty. The high human poverty index is a result of the high rate of long-term unemployment and the high percentage of population illiterate in functional terms. The labor market proved to be the most sensitive sphere of economic transition. Whereas all participants in the labor market, i.e. both the employed and the unemployed, felt the social consequences of the changes, it is the unemployed, who became one of the highest-risk population groups. 9

7Up to 2003, the Labor Force Survey done by the State statistical Office was conducted with annual periodicity. Since 2004 the Labor Force Survey is a continuous quarterly. 8 Employment rate as a participation of the number of employed in the working age population, aged 15 years and over (according to the recommendations of International Labour Organization - ILO) (according to the recommendations of Europe Statistical Bureau - EUROSTAT)

9 Life expectancy at birth, 2001/2003 totalmalefemale73.2170.875.74

6 Level of poverty 1997 1998 1999 2000 2001 2002 2003 19.0 20.7 21.0 22.3 22.7 30.2 30.2 Poverty rate10

Poverty depth11 4.6 5.1 5.7 6.0 5.4 9.3 9.4 Regional 12 disparities in GDP per capita n/a n/a n/a n/a n/a 25.7 n/a Gini coefficient

Source: State Statistical Office, Household Consumption Survey. MSED Project: Mapping Socio-economic Disparities between Municipalities in Macedonia

Social assistance

The basic intention of the financial social assistance is to ensure a minimum living standard for individuals and households with income below a certain minimum. Following the approval of the methodology of measuring relative poverty in 1997, the Government passed a decision according to which the level of social assistance is to be determined in accordance with the level of relative poverty. Since 1999, there is a trend of increase of the number of households as social assistance beneficiaries. The structure of financial social assistance beneficiaries points to the unemployed (92.1 percent) as the most numerous group.

Wages and llabor costs

The trend of continuous real wage growth started in 1996 and it has continued until 2004. Nominal wage growth is due to increasing share of private sector in the overall wage structure. Low on wages limits wage growth in the public sector and all entities with the level of privatization below 51% ha been kept on force in 2004. It effect however diminishes because the privatization takes more ground. Wages in the public sector are formed according to marked determined and business policy enterprises. A wage policy in 2004 is characterized by one decompression of wages of state employees in order to increase efficiency and work quality of the public administration.

Average paid net wages per worker in 2004 is 12.293 denars, representing nominal annual growth of 4%. In the overall increase, sectoral distribution shows that except agriculture hunting and forestry and real estate activities, renting and business activities. In the processing industry, education and health and social protection sectors (share of 54.75 in the total employment) is higher for 4.6%, 0.5% and 1.5 percent respectively. Highest net wage (25.208 denars is paid in financial intermediation. The lowest average net wage per worker of 9.353 is paid in construction sector.

10 Share of the population living below the 70 percent of the medial equivalent consumption. 11 Poverty depth index (frequency by depth of poverty). 12 GDP in the poorest region, as a share in the GDP of the richest region.

7 By assumption flexibility of relative prices assures full utilization of resources along the path of potential output. Still existing high exit barriers (legally imposed) deliver high transaction costs and inhibit labor market flexibility. One of the aspects is linked to real exchange rate after the stabilization period. One of the reasons of real wage growth is the low competitive exchange rate, since the exchange rate has been for a longer period main stabilization anchor.

Statistical research for Labor costs survey is conducted on every two years. The data for Labor Costs Survey is based on a sample, from total of 4174 statistical units, out of which 1546 in private ownership and 2628 in other ownership (social, mixed, state, and collective). From total of 4174 statistical units 2866 have provided responses, 843 privately owned and 1820 are in other ownership (social, mixed, state collective). The collected data had been expanded to the level on all country applying appropriate mathematical-statistic procedure. In the Labor Costs Survey, wages and another labor costs are understand as employer's cost, and not as employee’s payments.

In 2004 the average real wage has registered higher increase than the nominal (for 0.4 percentage points which is the result of costs of living decrease in 2004. of 0.4%. The average net wage per worker on a yearly basis (December 2004/December 2003) is nominally higher for 4.8%. Real increase of average net wage per worker is 6.8% reflecting the costs of living decrease.

Net wages per worker Nominal Real Denars increase increase 2004 2004/03 2004/03 Average net wage, total 12.293 4 4.4 Mining 13.826 4.4 4.8 Processing industry 10.486 4.6 5 Transport and communication 15.116 2.9 3.3 Financial intermediation 25.209 7.2 7.6 Public administration 13.636 5.6 6 Education 11.606 0.5 0.9 Health and social protection 12.042 1.5 1.9 Other 12.204 1.5 1.9 December wage 12.534 4.8 6.8

Until recently wages in Macedonia were comparatively higher compared to neighboring countries. There is a tendency to level and revert regional wage differentials. It has implications on the international competitiveness of the national economy, terms of trade and foreign trade directions. In addition, this effect is augmented because these countries are the main competitors in attracting FDI.

Minimal wage

8 Macedonian economy is still undergoing microeconomic restructuring. Exchange rate is the main anchor of macroeconomic policy. From the viewpoint of efficiency of resource allocation, setting minimal wage in the outsized labor-surplus economy could decelerate the restructuring process and impose additional entry barriers to labor. Increased flexibility is necessary for the economic policy. Protection of poor workers and their families could be tackled more efficiently through social policy measures. Wage flexibility and labor market flexibility, as well as other relative prices facilitate structural adjustments of the economy.

Informal employment

In Macedonia, many have come to depend on informal employment (seasonal jobs, temporary, and part time jobs), which constitutes up to one third of the labor force. The informal work is mostly seasonal or occasional in nature and requires a long search period. Wages are low and even if close to the average wage, can only be obtained for a few months of the year. Seasonal workers have the highest poverty rates amongst all workers.

The relatively long duration of unemployment benefits in Macedonia creates a disincentive to work. The level of registered unemployment in 2000 was registered at 32% of the labor force, the number which overstates the true unemployment situation. It is likely that many of those who are registered as unemployed are performing informal sector jobs. Sharp contractions in the the largest part of economic activities during the transitional period and decline of standards of living have incresed the level of informal employment (sesonal, part time and temporary). Raise of infomal employment correlates with enlarged powerty level. Some of the reasons are related to lost jobs, but there is also a tendency of evasion of tax and labor related costs. This was among the reasons which lead to personal income tax cutback and to weakened progression in 2001. The personal income tax was lowered from 23%, 27% and 35% to 15 % and 18%.

The international definitions on informal sector, adopted in 1993, include small and unregistered enterprises, paid and unpaid workers in these enterprises and casual workers without fixed employers. According to this definition informal employment relations can occur in formal or informal sector enterprises. Registered enterprises can have informal employment relations as well as informal sector enterprises. Due to its diversity and the wide range of activities that official statistics encompasses, informal sector data is difficult to pull together.13 Informal sector activities are often recognized by local and national authorities in the context of the realities of population growth, rural-urban migrations, economic crises, and poverty in a given country with which the laws can not always keep up (Charmes, 1998).

13Official statistics generally underestimates the size and economic contribution of the informal sector, and especially women's roles in it (WIEGO, 2001). Conventional statistics of employment tend to omit or underestimate the number of persons engaged in informal employment (Mata-Greenwood, 1998).

9 The gap frequently appears when comparing the economically active population in national statistics with the registered work force data from censuses, or there is a residual when comparing the GDP data with the balance sheets of the registered enterprises. This is the statistical evidence for a phenomenon that is also called in formalization within the formal sector.

While informal economic activities are for the most part legal (own account work) they do not always comply with all official/administrative requirements. They may not be registered and they may not pay all the relevant taxes.

National Action plan for Employment

In December 2003, the Government adopted the 2004-2005 National Action Plan (NAP) with the intention to implement active labour market policies such as 1) support for the provision of jobs (information, mediation, and advice); 2) organization of training programs (qualification and re-qualification); and 3) creation of conditions and support for direct opening of new jobs. The policies and measures planned within the NAP are aimed at increasing the employment rate, reduction of the unemployment rates, and reduction of the risk of social exclusion.

The NAP covers a short time period. In order to ensure sustainability it is necessary to enhance the long-term active labour market policies that will continue in the same direction: -Enhancement of the assistance for individuals depending on social transfers (needy, pensioners, disabled individuals). Special programs for all risk groups of the population (elderly, disabled, and other dependents). -Reduction of the regional disparities, development of the municipalities, and reduction of poverty and unemployment at the local level. Design of educational and employment policies for the development of rural areas. -Local infrastructure development programs may provide employment for a certain period of time, and thus make the reduction of unemployment at local levels possible. In the decentralization process, the local authorities should act as the key instrument in the design and implementation of employment programs. Those programs should include active labour market policies, local infrastructure development, promotion of and support for entrepreneurship, and development of small and medium enterprises (MSEs).

The labor market operates in the conditions of a large gap between supply and demand of labor. Apart from structural misalignments, the supply of labor fundamentally overpasses the demand. The labor market is buyer’s market. Unemployment is of a predominantly long-term character. Young and lower educated are prevalent. There are regional and ethnic differences in unemployment. In addition, the labor market is disintegrated and segmented. In addition there is high incidence of informal employment. The quality of labor supply should be further improved as a prerequisite for dynamic and growing economy.

10 Low rate of economic growth is the main cause for high unemployment. Economic structure is inadequate in terms of job creation capacity: characterized by low export orientation, low technological content export (primary commodities) and low added value Gross domestic savings are low, leading to low investment rates ad vicious circle of low growth. Banking sector is not developed (interest rates are high) financial markets are underdeveloped (shallow financial market) and under resourced. Sources for financing the employment creation are limited. Passive and active policy measures give mixed results (WB, 2003). The distribution of resources to active and passive policy measures is suboptimal, biased towards passive measures for employment.

STATE OF THE LABOR MARKET

Institutional reforms and labor market policies

Tackling the unemployment which is the most serious economic and social problem requires fast changes in the Macedonian economy, dynamic economic growth, adequate social policy, and fair distribution of income and resources.

The most important for unemployment reduction is economic growth and favorable business climate which should enhance investment and create employment. In principal, lowering transactional costs and removing barriers to business are crucial for creation of favorable investment climate and attracting FDI and enhancing exports and investments (domestic and foreign), as sources of growth of the gross domestic product and the employment,

-Strengthening of the efficiency of public institutions and regulatory agencies. Market economy depends on functional and efficient institutions. In Macedonia market regulating institutions are new, understaffed, with moderate experience in their past activities. Some of them are still inexistent and yet to be established. The lack of tradition in the regulation by the state and the early life and inexperience of the Macedonian institutions in this area is a potential serious handicap. It is necessary to accelerate the reforms in the area of the market – legitimizing institutions. This area includes the pension system, schemes for assistance in case of unemployment and the remaining social funds. -Improvement of entrepreneurship at all levels, legal protection of private investment, improvement of business culture, banking sector development, finalize privatization. -Improvement of corporate governance is a precondition for the development of the private sector and growth of the entire economy. The nature of the privatization process (dominated by insider buyouts) and the inefficient banking system limited the interest of foreign investors in Macedonian companies and the capital market. -The comprehensive policy of SMEs growth is also an instrument for employment creation (guarantees for small and medium size enterprises, introduction of micro-credit schemes etc) - Reforms in all levels of the educational system, as the investment in human capital is a precondition for poverty reduction; -Reform of public administration should increase transparency and reduce corruption.

11 -Reforms in the local self-government through capacity enhancement of municipalities (by creating local development institutions), to support the local economic development.

Summary-Policy proposals

Further labor market institutional reforms should:

-establish adequate registration system and statistical record for unemployed (trough State statistical Office), the Ministry for Labor and Employment agency; Introduce basic health protection for all citizens and reconsider the need for “blue coupons” for health insurance

-Adopt the new Employment Relations Law, designed to ensure lower price of labor and, consequently, higher competitiveness of companies and enhanced interest of employers to legalize all employments The new low which is in put in parliamentary procedure should be considered with the social partners; It is aimed at promoting flexible employment modalities (part time tax reduced employment, establishment of temporary employment agencies).

-New framework for collective bargaining of social partners should be established; -Shifting the role and function of the Employment Agency from the current role of operator of passive activities to active measures. Modernize the Employment Agency and establish network of job points. -Further measures to reduce informal employment -Public media activities

The ratio between active and passive policy measures which is inadequate should be changed (increase the budget expenditures; reconsider allocation, foreign funds and privatization proceeds utilization for employment purposes). Active policy of employment should follow the European directives. Active policy measures are designed and implemented in reducing structural unemployment. They could not effectively tackle the general collapse of labor market demand. Therefore the active policy measures should be selectively implemented and targeted.

It should enable to reduce, by sequenced, regionally oriented approach the regional differences in employment. Co-financing of working posts in SMEs, introduction of subsidies for prequalification and education and establishment of structure of incentives to stimulate employment of young active population could significantly contribute to unemployment reduction. Income insecurity could be tackled by targeted measures for most vulnerable groups of unemployed within the defined criteria for qualifying for social assistance would facilitate fair and more equitable distribution of social transfers. Earmarked and targeted measures for employment of registered unemployed should be prepared at a local level.

Despite the stringent budget position, some degree of public works could contribute to reduce unemployment of less favored and long term unemployed (Fretwell and Jackman,

12 1994) on a short term (national and local infrastructure, water supply, irrigation systems, and forestry).

SELECTED REFERENCES

Azam, J. and J. Rutkowski (1998): Wages and Unemployment in the Former Yugoslav Republic of Macedonia (1992-1997), World Bank Working Paper European Commission (2001): Central European Countries’ Employment and Labor Market Review, No.1, Luxembourg, European Communities. Friedrich Ebert Stiftung (2002): Employment and Labor Market Policy in South Eastern Europe, Belgrade Ministry of Labor and Social Affairs (2004): National Acton Plan for Employment 2004-2005, Skopje Mojsoska, Nikica (2003a): What is the Optimal Level of Labor Market Flexibility in Macedonia, Bulletin of the Ministry of Finance of the Republic of Macedonia, No. 7-8. National Action Plan for employment 2004-2005, Skopje, December 2003. ETF Key Indicators, Eurostat Structural Indicators, 2003 OECD/EBRD (2003a): fYR Macedonia–Enterprise Policy Performance Assessment, Stability Pact - South East Europe Compact for Reform, Investment, Integrity and Growth, Paris Rutkowski, J. (2001): Earnings Inequality in Transition Economies of Central Europe – Trends and Patterns during the 1990s, World Bank Social Protection Discussion Paper, No. 0117, Washington, D.C. State Statistical Office: Labor Force Survey, various years, Skopje State Statistical Office (2004): The 2002 Census of Population, Households, Dwellings and Agricultural Holdings in the Republic of Macedonia, Skopje USAID (2002): Facilitating the Transition of the Macedonian Workforce to Productive, Market- Appropriate Employment, USAID. UNDP (2004): National Human Development Report 2001-fYR Macedonia-Decentralization for Human Development, Skopje World Bank: World Development Indicators, various years, Washington, D.C. World Bank (2003a): fYR Macedonia–Country Economic Memorandum-Tackling Unemployment, Washington, D.C. World Bank (2003b): fYR Macedonia–Country Assistance Strategy, Washington, D.C. World Bank (2002a): fYR Macedonia–Public Expenditure and Institutional Review, Report No. 23349- MK, Washington, D.C. World Bank (1999a): fYR Macedonia–Focusing on the Poor (Volume I-Main Text), Report No. 19411- MK, Washington, D.C. World Bank (1998c): fYR Macedonia–Country Economic Memorandum–Enhancing Growth, Report No. 18537-MK, Washington, D.C. Poverty Reduction Strategy Paper, Government of the Republic of Macedonia. Skopje, November 2000. Former Yugoslav Republic of Macedonia: Focusing on the Poor. Vol.1 (PDF), Vol.2 . World Bank Report No.1941–MK, June 1999