Covid-19 impact and responses: North Macedonia

Updated on: 10 August 2021

What is the current situation?

General information

After a year and a half of COVID-19 of crisis in North Macedonia, the future is still uncertain. While the various vaccines give cause for optimism, mutations in the virus and new information from the World Health Organization about the likely persistence of the pandemic in 2021 are cause for concern.

By 8th August 2021, the total number of diagnosed since the beginning of the epidemic is 156.926 (7.5% of the total population), the number of cured patients is 150.470, the number of deaths is 5.501, and the number of active cases is 955.

The measure active from June 1, 2021, are: wearing of a protective mask in the open air is abolished, and it is preferred when persons are in a group; but on public transport, in taxis and in all enclosed spaces will continue to be compulsory; the presence of spectators at sports competitions held outdoors is allowed up to 30% of the total spectator capacity; the ban on the grouping of public spaces is lifted; it is allowed to organize weddings, celebrations, outdoor parties (summer terraces) up to a maximum of 100 people, but not more than 50% of the capacity of the space and up to a maximum of 6 people at a table; increasing the number of people at a table in catering from 4 people to 6 people by providing a space between people at the table; eliminating a measure for working in shifts and remotely used.

Beginning August 16, the Government of North Macedonia is introducing new safety measures to curb the spread of the highly contagious Delta variant:

  • A ban on all indoor celebrations in catering facilities, including restaurants, cafeterias, bars, nightclubs, and other venues holding large events.
  • Individuals over the age of eighteen must present proof of COVID-19 vaccination with at least one dose to enter any facility with a capacity of 30 or more persons. This vaccination requirement applies to catering businesses and venues holding concerts, seminars, training, workshops, conferences, cultural and sporting events, and other celebrations.
  • All other COVID-19 measures approved by the Government of North Macedonia in response to the evolving epidemiological situation remain in place

The ongoing crisis is expected to: (1) result in a short-term, but severe economic downturn; (2) put 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.[1]

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 %age 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 face serious and unprecedented cash flow, supply, and operating problems, and 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 the spread of the COVID-19 and various introduction of strict closure measures in all European countries during the summer potentially will lead to a worldwide decline in the consumption of textile products again. 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 partly closures of European countries throughout the period.

Companies are expecting a drop in sales and additional order cancellations in the upcoming period.

According to the latest research reports since the crises began, in 2020; 7,000 textile workers lost their jobs, or up to 19% 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. 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 textile and garment industry accounts for 12.82% of the country’s total industrial output and covers about 10% of the country’s exports and experts say that if the government does not work harder to save this industry, the consequences will be devastating.

Compensation for absence from work due to covid-19, isolation and self-isolation due to exposure to covid-19 shall be reimbursed at 100% by the health insurance fund and shall apply to all workers in both the public and private sectors.

What are government policies to support local businesses?

On 16 February 2021, the Government announced the launch of the 5th package of measures aimed at mitigating the negative impact of the pandemic on the economy. This package consists of 29 measures with an estimated cost is EUR 160 million, taken as a direct extension of the four previous ones, which will bring R.N. Macedonia’s aid up over EUR 1 billion[1]. Unfortunately, this measure is not yet effective due to the blocking of some opposition parties in Parliament. The previous 4 packages included the following 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 to 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 to 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 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 used funds from the key measures of the package, but also from a number of other measures. There are no active measures for supporting companies in salary payment in the period June – August.

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 (1,5-2 m in working locations);
  • Reduce and organize 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 implementation of the government’s previous packages of measures to support businesses and workers was not consistently implemented by the beneficiaries and, 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 not-so-great situation in the textile, leather and footwear industry before the pandemic, was reflected after the declaration of the pandemic in R.N. Macedonia and it deteriorated further. Government decrees, measures and recommendations were vague, confusing and it can be said that some of them were in contradiction with positive labour legislation. Only a small part of the decrees, measures and recommendations have achieved the labour market in labour-intensive and low-wage industries in a substantially positive way for workers in these industries. However, in the practice of the labour market, especially in the private sector, a number of violations occurred, especially in the area of exemption of these vulnerable categories of workers. [1]

Relevant measures from the 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: subsidizing 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 subsidies 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 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 will get a monthly government compensation equal to 50% of their average salary in the past 24 months.

  • 3rd package introduced on 17 may 2020: 1 million euros will be allocated for the introduction of a digital platform for new markets for textile companies.
  • 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 COVID-19 and additional deferral of loan repayment by companies.

What are local stakeholders doing to lobby their government?

Various stakeholders in the country [such as the Organization of Employers of Macedonia (OEM), Business Confederation of Macedonia (BCM), Federation of Trade Unions of Macedonia and many other civil society organisations] with the support of donors (such as ILO, FES and many others) were involved in conducting various surveys to capture the challenges and needs of businesses as a result of the protracted crisis COVID -19, which helped to assess the effectiveness of the emergency economic measures implemented and to identify the type of support expected. No new reports are available for the period April – August.

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

However, 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 campaigns through social media channels to address the support for the workers in daily shows, contact programs 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. Various reasons were used by the employers to terminate contracts, such as cases where employees on a part-time contract were terminated prematurely, ie before the expiration of the fixed-term employment contract.

Project “Responding to the socio-economic effects of COVID-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 organizations.  

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 their 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 coronavirus guidance, or how to act in situations of contracting coronavirus and have COVID – 19 manifestation. 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 the 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 association has 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
  • 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
Coronavirus 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