PROBLEM

Macedonia faces serious labour market challenges, including low labour force participation (57% in 2014, 46% for women); a lack of mobility of workers between sectors; skills mismatching; slow reforms of the training and education system; unresponsive innovation activity by firms; and low labour productivity.

The unemployment rate (28.2% in the second quarter of 2014) gradually fell from an average of 29% in 2013, yet it remains the biggest hurdle for the Macedonian economy. The youth unemployment rate of 51.9% (aged 15-24) in the Republic of Macedonia represents a major cost to the country in economic, political and societal terms. The high youth unemployment rate – among the highest in the world – means a loss of investment in education and training, a reduced tax base and higher social costs. Furthermore, the brain drain is one of the biggest challenges for the economic growth of Macedonia. In the period from 1993 to 2002, an estimated brain-drain of 12,000 to 15,000 young, educated and highly skilled persons occurred in Macedonia.