Kozeski: Only 52 percent of the population participates in the labor force in Macedonia

Assistant at the University of St. Cyril and Methodius in Skopje Kristijan Kozeski said that poor labor productivity in the region must be viewed in the context of the consequences of structural characteristics of the economy. He noted that in North Macedonia, the main problem is that only 52 percent of the population participates in the labor force.

He believes that this phenomenon must be interpreted within a broader framework.

“We are too small as a national economy to be analyzed as a single national entity, and whenever the labor market is analyzed, it is useful to also have a regional perspective in terms of labor mobility, the level of technology used in these countries, the structure of the economy and so on. If we are talking about labor productivity, we have to understand it as a consequence, as a result of the structural characteristics of the economy. When I refer to structural characteristics, the quality of jobs, the skills and level of education of the workforce, it is important to look at the sectors that contribute to the creation of gross value added, that is, which sectors participate the most in creating gross value added and total employment, and which sectors absorb a significant amount of labor, in terms of the number of workers or working hours,” Kozeski said.

As he pointed out, this is important because these sectors differ in terms of efficiency and technological level and therefore generate lower levels of labor productivity.

“We must understand that our total gross domestic product is created by only half of the working-age population. In other words, when we look at the labor force participation rate, the latest data show that it stands at around 52 percent, which means that half of the working-age population that should be creating added value, that should be expanding the economic pie, regardless of whether productivity is recording higher or lower growth rates, simply does not participate in the creation of new added value in the economy, which in itself has and implies other consequences,” he said.

He noted that these workers are completely or partially dependent on social transfers and passive labor market measures.

“When we say partially dependent, they are activated, that is, they are engaged in work in the informal economy, which currently accounts for more than 100,000 workers. Workers are engaged in the informal sector. As a rule, the informal sector is characterized by low productivity, as well as limited prospects for creating greater value in the economy,” our interviewee explained.

Asked which productivity factors the state can influence, Kozeski said these must involve concrete measures.

“When we need to break down the different factors, some of them are also personal. We have a large pool of demotivated workers who do not want to participate in the labor market. Their skills and qualifications over time... they have not worked for a long time, they lose their skills, while technology is changing rapidly and their employability, that is, their ability to find sustainable employment, is declining on the one hand. On the other hand, as I said earlier, this is connected to the sectors, that is, to the characteristics of the jobs themselves, and this is where measures and policies to support this category of workers should be focused in order to achieve better prospects for labor productivity growth. In addition, additional sources of financing need to be made available, especially to micro and small businesses, so that they can gain easier access to additional funding. By additional funding, I mean credit lines that they can afford financially, with favorable interest rates and so on. Why? Because the largest employers in our country are micro and small businesses. They absorb the largest share of the workforce,” Kozeski explained.

In his view, activation is also necessary, as are measures that will contribute to greater participation of the young working-age population, which, according to research, incurs lower integration costs when it comes to new technologies.

“In other words, young workers who have completed secondary or university education find it easier to get jobs that are more productive and more technology-dependent because they are, in a way, up to date with technological changes. In contrast, the workforce category we are predominantly talking about, namely workers entering the older age groups of the workforce who have not been employed for a longer period of time, presents difficulties for businesses when it comes to integrating them into jobs. They need more skills and qualifications, so training is required, which in a way represents additional financial expenditure for the companies themselves. Therefore, I believe that measures and policies should be directed toward specific categories of workers or the workforce, as well as specific sectors characterized by lower efficiency. Above all, these include construction, agriculture and services that absorb a significant share of informal employment. Concrete measures should be taken in these areas, rather than unified measures that would apply equally to all sectors and activities,” Kozeski concluded.