National Human Development Report 2004, FYR Macedonia Decentralization for human development National Human Development Report 2004 Team Leader Dr. Dimitar Eftimoski Co-authors Dr. Goran Petrevski Dr. Ilija Todorovski Margareta Nikolovska Dr. Renata Treneska Dr. Sasho Kjosev Contributors Dr. Abdylmenaf Bexheti Dr. Blerim Reka UNDP Support team Dr. Andrey Ivanov, Human Development Advisor, Regional Support Centre Bratislava, UNDP Dr. Brigitte Kuchar, UNDP Macedonia Jordanka Trajkoska, Project Assistant, UNDP Macedonia Katarina Kostadinova-Datalovska, Project ‘Mapping the socio-economic disparities among Macedonian municipalities’, UNDP Macedonia Vesna Dzuteska Bisheva, UNDP Macedonia Disclaimer The views expressed herein are those of the authors and do not necessarily reflect the official position of the United Nations Development Programme. The designations employed and the presention of the material including maps do not imply the expres- sion of any opinion on the part of the United Nations Development Programme or the Secretariat of the United Nations concerning the legal status or name of any country, territory, city or area or of its authors, or concerning the delimitation of its frontiers or boundaries. Mention of firm names and commercial products does not imply endorsement by the United Nations. Design Ladislav Cvetkovski Photography Andrej Ginovski Pre-press and print Skenpoint NATIONAL HUMAN DEVELOPMENT REPORT 2004 The NHDR team owes special thanks for suggestions, comments and advice to: Abdula Aliu, South Eastern European University; Prof. Dr. Marija Donevska, Faculty of Philosophy, Institute of Social work; Ace Kocevski, Mayor of Veles; Marija Kostovska, Ministry of Finance; Aferdita Imeri, Ministry of Education; Marika Karanfilova, Public Health Institute; Ajrija Causovska, State Statistical Office; Mirijana Najcevska, Institute for Sociological, Political Angelina Bacanovic, Ministry of Health; and Juridical Research; Anica Dragovic, Institute for Sociological, Political and Dr. Mirjana Dineva - Slaninka, Institute for Juridical Research; Sociological, Political and Juridical Research; Bajram Sulimani, NGO ‘Natura’, Lipkovo; Dr. Nikola Panovski, Health Insurance Fund; Biljana Gerasimova, NGO ‘Equality, Solidarity, Dr. Pance Arsov, Veles; Emancipation’; Renata Davitkova, Ministry of Finance; Dr. Blagoja Aleksovski, Public Health Institute; Risto Nedenovski, Journalist; Dr. Boris Rebac, World Health Organization; Rozalija Vrsilevska, Local Government Reform Project; Efka Indova, Ministry of Labour and Social Affairs; Ruzica Cacanoska, Institute for Sociological, Political Elena Misik, UNICEF; and Juridical Research; Elena Petkanovsa, Ministry of Local Self Government; Saso Klekovski, Macedonian Centre for International Emilija Simoska, Institute for Sociological, Political Cooperation; and Juridical Research; Slavko Lazovski, Ministry of Finance; Evgeni Najdov, World Bank; Snezana Cicevalieva, Ministry of Health; Fimka Tozija, Public Health Institute; Snezana Delevska, Ministry of Finance; Goce Milosevski, State Employment Bureau; Snezana Mihajlovska, Journalist; Gonca Kuzmanovska, Ministry of Education; Spomenka Lazarevska, Open Society Foundation; Goran Angelov, Association of local government units Tanja Kalovska, Ministry of Labour and Social Policy; (ZELS); Veljka Juran, State Employment Bureau; Ilber Mirta, Ministry of Finance; Vera Dimitrievska, Open Society Foundation; Isidora Kacarska, ESE NGO ‘Equality, Solidarity, Emancipation’; Dr. Verica Janeska, Economic Institute; Prof. Kiki Mangova Ponjevic, Law Faculty, Ss. Cyril and Verka Panovska, State Statistical Office; Methodius University; Veselinka Ivanova, Ministry of Education; Prof. Konstantin Dimitrov, Faculty of Technical Dr. Vladimir Kendrovski, Public Health Institute; Engineering, MACEF; Zaklina Muceva, Journalist; Ljupco Spasovski, Ministry of Education; Zoran Sapuric, Member of Parliament; Maja Gerovska, Faculty of Philosophy, Institute of Social work; Zoran Velkovski, Faculty of Pedagogy, Ss. Cyril and Methodius University. Maja Stevkova, Komercijalna banka A.D.; Table of contents Foreword.................................................................................................................................................................... 8 Introduction ............................................................................................................................................................. 11 Structure of the report ............................................................................................................................. 11 Methodology of disaggregated analysis and municipality sample ........................................ 12 Executive Summary.............................................................................................................................................. 13 Macroeconomic stabilization and a decline in people’s quality of life.................................. 13 The human development approach ................................................................................................... 13 Human development dimensions ....................................................................................................... 13 Poverty reduction and the challenge of unemployment ........................................................... 14 Disparities in education and health .................................................................................................... 15 Local development and local governance ....................................................................................... 16 Opportunities and threats for efficient local self-government ................................... 16 Opportunities for effective local self-government in Macedonia .............................. 16 Potential threats............................................................................................................................ 17 Chapter 1: Decentralized government and local development in Macedonia....................... 19 Why local governance? ............................................................................................................................ 19 Local self-government in Macedonia – an historical perspective............................................ 20 Local self-governance in the socialist period..................................................................... 20 Local self-government in the beginning of the transition – 1991 to 2002............. 22 Current situation – challenges to effective local self-government ......................................... 23 Municipal competencies............................................................................................................ 23 Financing ......................................................................................................................................... 26 Territorial division and composition of municipalities................................................... 27 Tiers of local self-government ................................................................................................. 27 Human resources and citizens’ awareness ......................................................................... 27 Opportunities for effective local self-government in Macedonia .............................. 28 Institutional reform and decentralization ........................................................................... 28 Chapter 2: Human Development Profile in a decentralized perspective.................................. 33 The Concept of Human Development ............................................................................................... 33 National level profile................................................................................................................................. 34 Subnational level disaggregation ........................................................................................................ 34 Gender-related disparities (GDI, Gender Development Index)................................................. 37 Chapter 3: Income, employment and local economic development from a human development perspective.......................................................................................................... 41 General economic outlook ..................................................................................................................... 41 Poverty ........................................................................................................................................................... 42 Monetary poverty and income inequality........................................................................... 42 Subjective poverty and household expenditure patterns............................................ 43 Unemployment........................................................................................................................................... 46 National level averages .............................................................................................................. 46 Subnational levels of unemployment................................................................................... 46 Developing effective responses to unemployment...................................................................... 51 Social assistance and welfare beneficiaries ........................................................................ 52 Active labour market