Covid-19 impact and responses: North Macedonia

Updated on: 7 April, 2021

What is the current situation?

General information

After nearly a year of COVID -19 crisis in North Macedonia, the future is still uncertain. While the various vaccines give some reason for optimism, mutations in the virus and new information from the World Health Organization about the likely persistence of the pandemic in 2021 are causes for concern. The last wave of COVID -19 hit much harder and the number of Macedonian citizens infected increased exponentially, putting enormous pressure on the health system to treat patients.

By the 7th of April 2021, the total number of diagnosed since the beginning of the epidemic is 132.728 (6,7% of the total population), the number of cured patients is 111.765, the number of deaths is 4.073 and the number of active cases is 21.891.

The measures active as of November 3, 2020 are the mandatory facemasks in indoor and outdoor public spaces, the restriction of public assembly of more than 4 people, restriction of the closing time of catering establishments to 21:00 each day. Social distancing (2 meter) and hygiene measures remained the same. However, these measures showed to be ineffective and additional measures have been introduced on April 5, 2021: closure of coffee bars and restaurants; training/sport jams and gambling houses. A restriction on free movement (curfew) is extended and now is enforced between 20:00 and 05:00. These measures are enforced for the period between 6-20 April.

The rapid spread of the pandemic in early March 2020 interrupted the growth momentum abruptly. Measures to prevent the spread of COVID-19 have slowed economic activity, which in turn has had a negative impact on 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.

The pandemic has had a negative impact on overall economic activity in North Macedonia, where average GDP fell by -5.4% in 2020. According to the State Statistical office, North Macedonia’s economic output shrank by an estimated 4.5% year-on-year in 2020. Exports of goods and services fell by 10.9% in nominal terms in the year under review, while imports declined by 10.5%. Household final consumption decreased by an estimated 5.6% last year. The unemployment rate declined throughout 2020, reaching 16.1% in the fourth quarter, which is 0.5 % points lower than last year. In a recent interview, the Minister of Economic Affairs, said the government’s stimulus packages had saved around 80,000 jobs.

Even with government support, businesses are facing serious and unprecedented cash flow, supply, and operating problems. The economy will not be able to return to pre-crisis levels (or the counterfactual scenario without the pandemic and without new government reforms). Cumulative output losses for 2020 and 2021 are estimated at EUR 3.7 billion. Based on more recent projections, the National Bank forecasts a 17.1% decline in exports of goods and services in real terms.

The situation with factory production

The new wave of COVID-19 cases and the introduction of strict closure measures in all European countries has led to a worldwide decline in the consumption of textile products. The consequences of the decrease in sales throughout the European market have triggered additional challenges for Macedonian textile companies. The trend of reduction and cancellation of orders from abroad is evident again in early 2021, given the additional current closures of European countries, especially Germany.

In fact, companies are expecting a 50% drop in sales and additional order cancellations in the coming period, but the situation is already devastating, with the employers’ association stating that production facilities have been working almost not at all since January. According to the latest statement by the Textile Industry Employers’ Association in Macedonia, production has almost come to a standstill and the textile industry is facing serious challenges to survive.

According to the latest research reports since the crises began, in 2020; 7,000 textile workers lost their jobs; up to 18% of the total number of textile workers are registered as newly unemployed. The most common reason for termination of employment in the textile industry is the expiration of their fixed-term contract as a result of decreased production orders. However, in 2020, this basis has increased by 123% compared to 2019. Workers on fixed-term contracts are the ones who have suffered the most.

The situation is more critical compared to last year, especially because factories are facing challenges without any government support available during this current period. At this moment, the country is facing troubles to pass a law to financially support workers’ wages. If this law is not passed, the employers association warns that 20% of the workers in the textile industry will remain out of a job.

The textile and garment industry accounts for 12.82% of the country’s total industrial output and covers about 10% of the country’s exports. Experts say that if the government does not work harder to save this industry, the consequences will be devastating.

What are government policies to support local businesses?

On 16 February 2021, the Government announced the launch of the 5th package of support aimed at mitigating the negative impact of the pandemic on the economy. This package consisted of 29 measures with an estimated cost of EUR 160 million. This will bring the total of the North Macedonian aid up to over EUR 1 billion. Unfortunately, this measure is not yet effective due to the blocking of some opposition parties in Parliament. The previous four packages included the following measures:

  1. Aid for the payment of wages (measure 1): this measure was further extended for the last quarter of 2020. 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 delays for repayment.
  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 and 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 authorized 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 5th package of measures also includes support for payment of the salaries of workers in the private sector at the level of 14.500 (minimum wage) per employee for April and May 2021 or 50% of salary contributions, which would protect a large number of jobs. Companies and employees in the textile, leather and shoe industries will be able to use funds from the key measures of the package. Due to the delay in adoption of this measures many employees that are dependent on this support, still have not received wages for February. 

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 / 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, it started during the period of the early parliamentary elections and affected the newly formed technical government, which aroused the interest of stakeholders and the public in the impact of these measures.

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

Relevant measures from previous Governmental set of measures to support the business sector aimed at reducing the economic damage caused by proclaiming a coronavirus pandemic – COVID 19:

  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 subsidised 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 April and May 2020 – This measure was a subject of various violation 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 child under 10 years, pregnant woman), and there are cases when the employee did not paid the minimum wage to all workers. More on this in following sections. Workers who are laid off as a result of the crisis were eligible to receive monthly government compensation equal to 50% of their average salary in the past 24 months.
  3. 3rd package introduced on 17 May 2020: 1 million euros was supposed to be allocated for the introduction of a digital platform for new markets for textile companies.
  4. 4th package introduced on 27 September 2020: Support in the payment of salaries for the last quarter of the year (14,500 MKD – EUR 250), payment cards for certain categories of citizens most in need of assistance, subsidies for the most affected sectors, reduction or abolition of parafiscal charges, increase in the grace period for interest-free loans and additional deferral of loan repayment by companies.

What are local stakeholders doing to lobby their government?

  • ILO supported the Organization of Employers of Macedonia (OEM) and Business Confederation of Macedonia (BCM) in conducting a second countrywide enterprise survey, with the aim of tracking business challenges and needs, as a result from the protracted COVID-19 crisis in the last quarter of 2020.  The survey helped to assess the effectiveness of economic emergency measures implemented through the four support packages launched by the Government. Additionally, the survey sought to identify the type of support expected under the 5th support package. Wage subsidy initially discarded by the Government was assessed as the most sought-after type of support by the enterprises. The evidence collected through the survey was crucial in influencing the Government’s decision to extend the wage subsidy schemes for enterprises, which was included in the new support package, initiated in February 2021.
    • 83% of the companies resumed their operations in the fourth quarter of 2020.
    • 86% of the companies recorded a decline in revenues due to COVID-19 compared with 2019.
    • 64% mainly used their own reserves to make up for inconsistent or insufficient cash flow resulting from the pandemic.
    • 52% offered new products and services or made modifications to existing ones.
    • 12% resorted to dismissing workers despite the massive economic challenges brought by the pandemic.
    • 9% of enterprises have implemented teleworking, an option that was very rarely used prior to the pandemic.
    • 61% of enterprises showed relative dissatisfaction with the adequacy of the Governmental measures to tackle the negative effects of COVID-19 on the economy.
    • 47% held the view that the Government had incorporated the main demands of the business community in designing the fourth package of economic support measures.
  • Federation of Trade Union SSM has initiated measures to be taken by the competent state bodies and institutions to ensure protection of the health and life of workers and citizens. SSm participates in the work of the Economic and Social Council. SSM advocacy made 4th governmental packages for all employers who will use financial support for payment of salaries for the employee, is obliged to pay his salary 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 of funds 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 10,000 euros and criminal liability are envisaged for employers who will misuse the funds received from the financial support for payment of salaries.

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

In practice, in the labour market and especially in the private sector, there have been a number of violations especially in the area of payment of the minimum living wage and release of the 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, violence on their labour rights. They are using intensive media campaign through social media channels to address the support for the workers in daily shows, contact programmes etc. Glasen tekstilec is publicly exposing the names of the garment factories that 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. 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.

Project “Responding to the socio-economic effects of KOVID-19 by supporting vulnerable groups of low-paid workers, workers who are part of the informal economy and temporary workers” funded by Foundation Open Society Macedonia was implemented by several grass route organisations.  

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 7000 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 organization (MOSHA) is actively working on raising awareness on extended measures for workers safety. Many of the activities include translating fighting corona virus guidance, or how to act in situation of contracting corona virus. MOSHA has issued guidance’s for production facilities on how to adhere to the recommendations for workers protection. In cooperation with the MOT National Office, made the translation and technical editing of the publication “Faced with a pandemic: Care for occupational safety and health.  Within 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 in this situation.

Macedonian Occupational Safety and Health Association (MOSHA) and PHI Institute of Public Health (IPH) of the Republic of Northern Macedonia established the Knowledge Center “EPI KOVID-19 Center for Occupational Safety and Health”.

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

  • Employers’ organizations 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 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 has been issued to support the private sector to deal with the crises.
  • 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 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