Foreign investors, especially those in labor-intensive industries, find North Macedonia’s competitive labor costs and high number of English speakers attractive. The average net wage in December 2023 was MKD 31.859 ($568) per month. Тhe minimum net wage for 2023 was 20.175 MKD ($360) and was set it to 22.567 MKD ($403) effective March 2024.
In 2023, North Macedonia’s labor force consisted of 791,647 people, of which 688,296 (86.9 percent) were officially employed and 103,351 (13.1 percent) were officially unemployed. North Macedonia’s employed labor force is roughly 57.6 percent male and 42.4 percent female. The largest number of employees are engaged in manufacturing (19.5 percent), trade (15.4 percent), and agriculture (7.8 percent). The total unemployment rate for youth ages 15 to 29 years old is 29.3 percent. About 18 percent of the unemployed have a university education. Informal sectors of the economy, including agriculture, are estimated to account for 22 percent of employment. The poverty rate for 2021 was 21.8 percent.
According to the IMF and domestic experts, the informal economy is estimated at approximately 30 percent of the overall economy. In 2019 the government adopted an Action Plan for Combating the Informal Economy 2020-2021 that includes priorities such as improving, measuring, monitoring, and raising public awareness of the informal economy’s negative impact on society and strengthening the tax code. In spite of these efforts there has been little to no improvement in resolving this issue. The introduction of the planned progressive taxation of income was once again postponed due to opposition within the business community.
Despite the relatively high unemployment rate, foreign investors report difficulties in recruiting and retaining workers, both specialists and generalists, due to migration to more developed economies. Positions requiring technical and specialized skills can be especially difficult to fill due to a mismatch between industry needs, the educational system, and graduates’ aspirations. Many well-trained professionals with highly marketable skills, such as IT specialists, outsource their skills to foreign companies or choose to work outside the country. To address shortages of factory workers, the government encourages the dispersal of labor-intensive manufacturing investments to different parts of the country, and companies often bus in workers from other areas. The government continued with the Operational Plan for Active Programs and Measures for Employment and Services in the Labor Market in 2024, which defines active government measures, programs, and services for self-employment and employment to stimulate job creation. The plan also provides subsidies for new and existing jobs, internships, specialized skills training, vocational training for unemployed persons, and re-qualification or retraining. The Labor Law and accompanying measures do not discriminate against gender, race, or ethnicity.
Relations between employees and employers are regulated by individual employment contracts, collective agreements, and labor legislation. The Law on Working Relations regulates all forms of employment relations between employees and employers to include retirement, lay-offs, and union operations. Severance and unemployment insurance are also covered by the same law. Most labor-related laws are in line with international labor standards and generally align with recommendations of the International Labor Organization (ILO). Labor laws apply to both domestic and foreign investments, including those in the free economic zones, and employees under each are equally protected.
The Employment Agency ( http://www.av.gov.mk/home.nspx ) provides professional, organizational, administrative, and other services related to employment and unemployment insurance and provides support, assistance, and services to all stakeholders in the labor market.
Employment of foreign citizens is regulated by the Law on Employment and Work of Foreigners: http://mtsp.gov.mk/content/pdf/zakoni/Zakon_vrabotuvanje_stranci_21715.pdf .
There is no limitation on the number of employed foreign nationals or the duration of their stay. Work permits are required for foreign nationals, and an employment contract must be signed upon hiring. The employment contract, which must be in writing and kept on the work premises, should address the following provisions: description of the employee’s duties, duration of the contract (finite or indefinite), effective start and termination dates, workplace location, hours of work, rest and vacation periods, qualifications and training, salary, and pay schedule. The law establishes a 40-hour work week with a minimum 24-hour rest period, paid vacation of 20 to 26 workdays, and sick leave benefits. Employees may not legally work more than an average of eight hours of overtime per week over a three-month period, or 190 hours per year. According to the collective agreement for the private sector between employers and unions, employees in the private sector have a right to overtime pay at 135 percent of their regular rate. In addition, the law entitles employees who work more than 150 hours of overtime per year to a bonus of one month’s average salary. Although the government sets occupational safety and health standards for employers, those standards are not enforced in the informal sector.
North Macedonia allows workers to join trade unions if workers agree to organize themselves in such a format. Trade unions are interest-based, legally autonomous labor organizations. Membership is voluntary, and activities are financed by membership dues. About 22 percent of legally employed workers are dues-paying union members. Although legally permitted, there are no unions in the factories operating in the free economic zones. Most unions, except for a few local branches, are generally not independent of the influence of government officials, political parties, and employers.
There are two main trade union associations: The Union of Trade Unions and the Confederation of Free Trade Unions. Each association is comprised of independent branch unions from the public and private sectors. Both associations, along with representatives from the Organization of Employers of North Macedonia and relevant government ministries, are members of the Economic – Social Council. The Council meets regularly to discuss issues of concern to both employers and employees and reviews amendments to labor-related laws.
The rights of workers in industrial divisions are regulated by National Collective Bargaining Agreements, and there are two on the national level—one for the public sector and one for the private sector. Only about 25 percent of the labor force is covered by these agreements. National collective agreements in the private sector are negotiated between representative labor unions and representative employer associations. The national collective agreement for the public sector is negotiated between the Ministry of Labor and Social Policy and labor unions. Separate contracts are negotiated by union branches at the industry or company level. Collective bargaining agreements are most prevalent in the metal industry, private sector education, and court administration.
An out-of-court mechanism for labor dispute resolution was introduced in 2015 with ILO assistance. North Macedonia’s labor regulations comply with international labor standards and are in line with the ILO. In 2018, the government adopted several changes to the Law on Labor relations, most of which related to workers’ rights in procedures for termination of work contracts, severance pay, and apprenticeships. http://www.mtsp.gov.mk/content/pdf/zakoni/2018/ZRO%20izmeni%202018.pdf