Covid-19 impact and responses: North Macedonia

Updated on: 11 November, 2020

What is the current situation?

General information

Between the ends of August and September, North Macedonia saw a steady decrease in Covid-19 cases. As of 30 September, the economy had 857 active cases per 100,000 inhabitants (17,786 in total, with 737 deaths reported) and ranked 38th in the world. This trend did not last for long as from mid-October the second wave hit much harder with an exponential increase in the number of infected citizens, thus putting huge pressure on the health system.

By 8 November 2020, the total number of positive diagnoses since the beginning of the epidemic is 39,760 (2% of the total population), the number of cured patients is 23,035, the number of deaths is 1,136 and the number of active cases is 15,589.

The newest measures active as of 3 November is the mandatory wearing of face masks in open and enclosed areas, the restriction of public gatherings of more than 4 people after 21:00 and the requirement of catering facilities to close by 21:00 each day. Social distancing (2 m) and hygiene recommendations remain the same.

The declared state of emergency by the President of R. N. Macedonia was in force from 18 March until 22 June 2020 and gave the government the right to issue decrees with the force of the law. During that period, various government curfews restricted the movement of people and public life. Since May 2020, the government has been conducting a de-confinement plan, which is, however, sporadically accompanied by temporary re-confinement measures.

The rapid spread of the pandemic in early March 2020 interrupted the growth momentum abruptly. Measures to prevent the spread of the virus have slowed economic activity, which in turn has begun to negatively impact the national budget.

The ongoing crisis is expected to:

  1. Result in a short-term, but severe economic downturn;
  2. Put an upward pressure on unemployment and poverty in R.N. Macedonia, and
  3. Cause social and psychological problems (a rise in domestic violence, anxiety, depression). Ultimately, the pandemic will also slow down the country’s progress in achieving the Sustainable Development Goals (SDGs) in 2020.[2]

The decline in GDP for the second quarter of 2020 is 12.7% but more affected is the manufacturing sector with a decline of 29.4%.

Overall, the IMF forecasts that the economy of R.N. Macedonia will shrink by almost 5.5% in 2020 (or by 3.5% according to the forecast of the National Bank of the Republic of R.N. Macedonia).

The unemployment rate was decreasing for almost 14 years and was projected to reach 16.8% this year. However, the rapid spread of the pandemic interrupted the growth momentum. Since the pandemic outbreak (between 29 February and 31 May 2020), 16,778 labour layoffs were registered at Employment Service Agency of R. N. Macedonia (ESA) (affected by Covid-19), resulting in a 16.1% increase of the total number of unemployed in only three months, and affecting more women. Due to labour layoffs and exceptionally low job creation, it is forecasted that unemployment will increase to 20.4% at end of 2020. These trends will inevitably affect the poverty rate, which according to our forecasts, will increase to 21%. Even with government support, companies are facing serious and unprecedented cash flow, supply, and operational problems, and the economy will not be able to reach the pre-crisis level (or the counterfactual scenario without the pandemic and without new government reforms). The cumulative output losses for 2020 and 2021 are estimated at EUR 3.7 billion. Based on more recent projections, the National Bank forecasts a fall in exports of goods and services of 17.1% in real terms.

The situation with factory production

Export-oriented industries, including the textile sector, are already affected by the Covid-19 pandemic and it is expected to be the hardest hit after the tourism industry in the country. Although at the moment most of the textile factories in the country are continuing with their work, the factories are facing order cancellations predominantly affecting those who sew fashion items.

Macedonian textile production is mainly export-oriented and constitutes the largest part of the national exports of Macedonia, accounting for up to 13% of total exports. About 93% of the production is CM or CMT (Cut, Make & Trim) for foreign markets. Around 37% of employees in the Macedonian manufacturing industry works within the textile industry (36,877 out of 111,559 workers) (Source: Fair Wear Macedonia Country Study 2017)

Apart from cancelled orders from international buyers, the factories that continue with regular production are facing a workforce shortage, leading to delayed delivery of orders. Big financial losses are anticipated in paying wages to the workers while they are absent from work due to different reasons related to the coronavirus (self-isolation, symptoms of the virus, right to stay at home take care of children, etc.). The textile sector faced a contraction of its production capacities during this period and according to the employer’s textile association it is estimated that around 30% of the workers in this sector were staying at home due to the previous government preventive measures. This is reflected in delayed order delivery due to the incapacity of the factories to respond to production orders.

Several garment factories started producing medical masks for local health institutions at their own cost and initiative, trying to help the country to deal with the crisis. Also, some of the factories have contracted export for face masks, but this was only temporary and has not been seen as a sustainable source of income.

The Macedonian production volume saw a serious decline in January – September 2020 compared to the same period in 2019 for the following sectors:

  1. Industrial production volume was 87.9%;
  2. Manufacturing was 87.6%;
  3. Manufacture of textiles was 83.5%;
  4. Manufacture of wearing apparel was 86.1%;
  5. Manufacture of leather and related products was 56.9%.

The employment rate for the period of January-June 2020 is decreasing, and the economy was mostly negatively impacted in April, May and June. For example: The manufacture of textiles (-62.5%, -44.9% and -20.6% respectively compared to the previous month); Manufacture of wearing apparel (-44.7%, -35.8% and -23.5% respectively compared to the previous month) and manufacture of leather and related products (-69.9%, -58.9% and -40.6% respectively compared to the previous month).

Employers’ associations in the country already alerted that many factories will face bankruptcy and closures during the inactive period, affecting over approximately 35,000 textile workers.

Several factories have already laid-off workers without providing any notice or severance pay. Delays in payments are being observed in some cases and the sector fears the possible bankruptcy if they do not receive any support. The lesser affected textile factories are those who are producing workwear.

What are government policies to support local businesses?

On 27 September 2020, the government announced the launch of the 4th package of measures aimed at mitigating the negative impact of the pandemic on the economy. This package (the estimated cost of which is EUR 470 million), taken as a direct extension of the three previous ones, will bring R.N. Macedonia’s aid up to EUR 1 billion. It consists of 31 measures:

  1. Aid for the payment of wages (measure 1): this measure is further extended for the last quarter of the year. Support will be determined gradually according to the income losses suffered by the company and will vary between 14,500 (equivalent to the minimum wage in MKD; around EUR 240) and 21,776 MKD (around EUR 350). Eligible companies will be subject to a strict employment protection obligation until 31 July 2021.
  2. Support loans (measures 3, 4, 14, 15 and 16): Individuals and businesses will benefit from new loans, preferential interest rates, regulated penalties, state guarantees or additional repayment postponements.
  3. Support of local consumption: payment cards (measure 2) and VAT refunds: Extension of the measure on payment cards for citizens for in-home consumption.
  4. Measures on taxes (measures 17, 22, 23 and 27): Increases in income tax payment deadlines, lowering of tax base thresholds and the modulation of payments were announced. The government also introduced measures affecting VAT: (Measures 12, 18, 19 and 20) VAT will be reduced for food and beverage services (10% against the previous 18%) and craftsmanship (reduced VAT from 18% to 5%), and occasionally refunded VAT during targeted commercial actions (measure 31) – ‘Weekends without VAT’
  5. Reduction of Para fiscal charges (measure 8, 10 and 21): including various fees, licenses, permits.
  6. Tourism (measures 5, 6 and 7): direct payments to tourist guides (21,776 MKD about EUR 350) and a total subsidy aid of EUR 1.9 million to travel agencies and reimbursement of the tourist tax to all operators in this sector (estimated around EUR 2 million).
  7. Agriculture (measure 28): Support for wine production: through the purchase of grapes from the 2020 harvest, for which EUR 6.7 million is foreseen.
  8. Catering (measure 9): ‘Grants to restaurants for weddings’ – support will be given to all entities registered and authorised for this activity, for a total value of EUR 1 million.
  9. Import duties (measure 26): Reduction of import duties on raw materials, provides support for the most affected processing industries, as well as an incentive for the development of processing facilities.

What are the government policies and regulations to protect employees – the workers?

The 4th package of measures also includes support for payment of the salaries of workers in the private sector at the level of 14,500 to 21,776 MKD per employee during the entire fourth quarter of 2020, which would protect a large number of jobs (€70 million allocated to support 250,000 jobs). Companies and employees in the textile, leather and shoe industries will be able to use funds from the key measures of the package, but also from a number of other measures. In addition, state aid for purchasing domestic products was provided for about 280,000 citizens through the payment card system (€27.6 million).

The protocol for preventive measures for all jobs, arising from the plan to reduce restrictive measures to prevent the spread of coronavirus, defines activities to be undertaken in working environments:

  • Hand hygiene;
  • Respiratory hygiene;
  • Physical distancing (1.5-2m in working locations);
  • Reduce and organise work-related trips;
  • Regular cleaning and disinfection of the working environment;
  • Communication, training and risk education;
  • Managing people with Covid-19 or their contacts.

The previous governmental support packages have not been implemented consistently by the beneficiaries. To make matters worse, this started during the period of early parliamentary elections and affected the newly-formed technical government, and has raised the interest of the stakeholders and the public on the effect of those measures.

Thus, the possibility for timely and efficient action during the pandemic turned into rapid adoption of some of the decrees with legal force without proper and public debate, as well as an analysis of the manner and form and legal solutions to be achieved by adopting these decrees, measures and recommendations. If some of the decrees with legal force are carefully analysed, i.e. if some of the institutes of labour law are analysed, it will be possible to see their opposition to part of the labour law, but also the ILO conventions and recommendations. The private sector is only given the recommendation to adhere to the adopted measures, conclusions, recommendations, but the recommendations themselves are not mandatory and cannot be legally enforced. Simply, the employees from the public and private sector were not placed in the same position, but the public sector is now in a privileged position, which in itself contradicts the Constitution as the highest body in R.N. Macedonia and contrary to all conventions.

The less-than-ideal situation in the textile, leather and shoe industry before the pandemic was reflected after the declaration of the pandemic in the R.N. Macedonia and it further deteriorated. Government decrees, measures and recommendations were vague, confusing, and it can be said that some of them were contrary to the positive labour legislation. Only a small part of the decrees, measures and recommendations have substantially reached the labour market in labour-intensive and low-wage industries in a positive way for workers. However, in practice in the labour market, especially in the private sector, there have been a number of violations, especially in the release of these vulnerable categories of workers.

Relevant economic relief measures from the previous governmental package:

  1. 1st package introduced in March 2020: subsidising compulsory social insurance contributions in the sectors of tourism, transport, hospitality and all other companies affected by the government measures for April, May, and June, up to 50 % of the compulsory social insurance contributions, in the amount of an average salary paid in 2019; Public Revenue Office will not undertake any additional measures and will not submit decisions on the enforced collection of all taxes and other public charges (fines, court fees), for all taxpayers who have not settled its obligations with the Public Revenue Office.
  2. 2nd package introduced in April 2020: Government will subsidise 50% of the social contributions for employees in the coronavirus-affected firms; financial support to private companies enabling them to pay salaries in the amount of minimum wage (14,500 MKD / EUR 250) to their employees in next two months, April and May – This measure was the subject of various violations due to the fact that this measure was affecting all employees, including those which were released from conducting the work process (chronically ill, elderly, workers with a child under 10 years, pregnant woman), and there are cases when the employer did not pay the minimum wage to all workers. More on this in following sections.
  3. Workers who are laid off as a result of the crisis will get monthly government compensation equal to 50% of their average salary in the past 24 months.
  4. 3rd package introduced on 17 May 2020: EUR 1 million will be allocated for the introduction of a digital platform for new markets for textile companies.

What are local stakeholders doing to lobby their government?

  • Employers Association from R.N. Macedonia published an official statement to Fair Wear members and called for shared responsibility on partnerships to be built up together through the years. They expect global brands to commit in engaging sustainable purchasing practices and provide support in probable rapid or innovative fund mobilisation through emergency relief funds, so we can jointly work on safeguarding more than 35,000 textile workers from job and wage losses. The full statement can be found here.
  • EU funded project ‘Strengthening Social Dialogue in R.N. Macedonia‘ coordinated by ILO with the aim to support employers’ and workers’ organisations in the Economic and Social Council of R.N. Macedonia. ILO established a task team of employment and labour law specialists to come up with solutions to the world of work problems triggered by the coronavirus pandemic in R.N. Macedonia. The multidisciplinary team is led by ILO and includes national experts and representatives of the government, employers’ and workers’ organisations in the Economic and Social Council. The objectives of the Task Team are to develop knowledge, guidelines and policies that help to answer the following questions: (1) What are the likely impacts of the Covid-19 crisis over the short- and medium-term on employment and on the labour market? And (2) What are plausible policy responses that the government and its social partners should consider in order to mitigate the impact of the crisis?
  • Federation of Trade Union SSM has initiated measures to be taken by the competent state bodies and institutions to ensure the protection of the health and life of workers and citizens. SSM participates in the work of the Economic and Social Council. SSM advocacy made the 4th governmental packages for all employers who will use financial support for payment of salaries obliged to pay at least up to the amount of received financial support but not less than the amount of the minimum wage determined by the legal minimum wage. It means that the employer is obliged to pay the employee’s salary in the amount determined in accordance with the law, the collective agreement and the employment agreement. The difference between the financial support and the amount of the salary determined in the employment contract must be paid from the employer’s own funds. This decision puts an end to the abuses by unscrupulous employers who took financial support from the previous governmental measures for payment of wages and paid them less than the amount received or did not pay wages at all. In addition, at the request of SSM, the dismissal of employees for the duration of the financial support and two months after the end of the month for which the financial support was used is prevented, the number of employees in the month for which he used financial support must not be reduced. At the insistence of SSM, fines of up to EUR 10,000 and criminal liability are envisaged for employers who will misuse the funds received from the financial support for payment of salaries.
  • For the first time trade unions together with local organisations working for the protection of workers’ rights joined forces in the informal platform to protect workers’ rights and ensure income for employees during the outbreak. On 29 April, a joint statement was filed to the government to oppose the decision of the Minister of Finance regarding the possibility for companies that use financial assistance to reduce the number of employees. Upon the joint reaction on this statement, the government adopted the decree with legal force to financially support workers and employers affected by the virus, and with the new amendments the jobs of workers have been secured, as well as their rights. In order for employers to meet the criteria for acquiring the right to use the measure of financial support for the payment of salaries for April and May, they had retroactively to employ the persons whose employment was terminated in the period from 11 March to 30 April. Compensation for absence from work due to Covid-related reasons will be 100% compensated by The Health Insurance Fund and will apply to all employees in both the public and private sectors.

What are local organisations doing to support and protect the workers?

In practice, in the labour market and especially the private sector, there have been a number of violations especially in the area of wage payment and release of workers, and the vulnerable categories of workers.

Local NGO Glasen Tekstilec together with Helsinki committee for human rights is working directly on the field to protect the garment workers by providing advisory support on what the worker should do if they face job losses or a violation of their labour rights. They are using an intensive media campaign through social media channels to address the support for workers in daily shows, contact programmes etc. Glasen Tekstilec is publicly exposing the names of the garment factories which dismissed workers and submits legal charges against employers to the Labour Inspectorate. Glasen Testilec was quite active in reaching out to workers in textile and garment factories. The following cases were reported for the period 10 March-10 June 2020, and legal advice was provided to protect workers’ rights, especially the ones which were redefined with the government decisions to fight the pandemic:

  • Dismissals during the Covid-19 crisis (14 case reports for 626 workers)
  • The threat of cancellation or unpaid days (2 case reports for 20 workers)
  • Non-compliance with health measures and recommendations of the workplace (minimum distance of 1.5 m) (6 case reports for 543 workers)
  • Violation of the right to leave of one parent (12 case reports for 12 workers)
  • Reduction of working hours during Covid-19 (4 case reports for 110 workers)
  • Non-extension of fixed-term contracts (5 case reports for 157 workers)
  • The minimum distance of 1.5 meters is not observed transport by public transport (7 case reports)
  • Payment of salary less than the minimum of workers using temporary measures (parents of children up to 10 years, chronically ill, pregnant) (9 case reports for 360 workers)
  • Work during quarantine and curfew (5 case reports for 900+ workers)
  • Case reports for salaries under than the minimum for workers who regularly
  • The requirement to go to work (10 case reports for 350 workers)
  • Non-extension of fixed-term contracts (parents of children up to 10 years, chronically ill, pregnant) (4 case reports for 14 workers)
  • Workers who were forced to sign contracts cancelled (2 case reports for 204 workers)
  • Unhygienic conditions and non-compliance with protocols for protection against Covid-19 in the workplace (3 case reports for 925 workers)
  • Non-compliance with the notice period and the contract time by employers (12 case reports for 46 workers).

Various reasons were used by the employers to terminate contracts, such as cases where employees on a part-time contract were terminated prematurely, i.e. before the expiration of the fixed-term employment contract.

The Macedonian Occupational Safety and Health Association (MOSHA) has been closely monitoring the progress of the disease, offering information and resources for dealing with Covid-19 in North Macedonia and Western Balkans, in cooperation with its partners. During the pandemic, MOSHA has prepared and distributed guidelines and recommendations on infection control and prevention to more than 7,000 health workers, together with the Trade Union of Health Workers from Centre Clinic in Skopje and the Institute of Public Health. MOSHA also provided assistance to construction and factory workers for compliance with the Coronavirus Prevention Guide. The Construction, Industry and Engineering Union has 3,800 members who comply with these Guidelines in their day to day activities.

Macedonian Occupational Health and Safety organisation (MOSHA) is actively working on raising awareness on extended measures for worker safety. Many of the activities include translating fighting the coronavirus guidance, or how to act in situation of contracting the coronavirus. MOSHA has issued guidances for production facilities on how to adhere to the recommendations for workers protection. In cooperation with the MOT National Office, it has made the translation and technical editing of the publication ‘Faced with a pandemic: Care for occupational safety and health’.  Within the CIVICA Mobilitas programme, MOSHA received an emergency ad hoc grant to work on  protection of workers at risk from the crisis and will educate service sector workers about their rights and opportunities.

Macedonian Occupational Safety and Health Association (MOSHA) and PHI Institute of Public Health (IPH) of the Republic of Northern Macedonia established the knowledge centre ‘EPI KOVID-19 Center for Occupational Safety and Health.’

What have been the responses and requests of business associations to support the industry?

  • Employers’ organisations and Chambers of Commerce have been active in coming up with concrete appeals to the government for supportive measures to the local economy, such as various forms of support to companies to maintain their operations, for those that are forced to stop or drastically decrease their production/services. Employers associations have addressed the risk of insecure market demand and issued instruction for the production facilities and workers on how to implement the preventive measures against Covid-19 (Preparing your workplace- Macedonia).
  • North Macedonia’s Chamber of Commerce also seeks state aid to rescue domestic companies suffering damages due to the restrictive measures for the prevention of Covid-19.  Private Sector Information – Covid-19 Deals and Government Private Sector Package Information have been issued to support the private sector.
  • Dutch chamber of commerce in the country is supporting its members over their struggle in losing the market by addressing issues directly to the buyers and Dutch partners.
  • The business confederation of Macedonia created several tools to support the local economy: (1) Business continuity plan; (2) An Employer Handbook for Working from home in response to the COVID-19 Pandemic; (3) Manual for business enterprises for returning to work during and after COVID–19; (4) Guide for employers to manage the workplace during COVID-19; (5) Manual for the action of companies due to pandemic COVID-19.

What are international brands doing to support suppliers and protect workers?

  • No information available on any activities

Relevant links for more information

Ministry of Health
Corona virus in MK
Ministry of Labour
Macedonian chamber of doctors
Macedonian occupational safety and health association
Glasen tekstilec
Adopted economic measures for support of the business sector
Institute of public health
Employers Association from North Macedonia
Federation of Trade Union SSM
Straightening Social dialogue- EU funded project