Covid-19 impact and responses: North Macedonia

Updated on: 21 May, 2020

What is the current situation?

General information

North Macedonia has been under lockdown since 18 March due to the Covid-19 outbreak. An initial state of emergency was declared on 18 March for the entire territory of North Macedonia, and it was later extended. Currently, the state of emergency will last at least until the 31 May, 2020. Since the first recorded case of the coronavirus in February, the number of cases in North Macedonia has reached 1,858 as of 21 May, with 110 related deaths.

The schools remain closed until the next school year, starting in September 2020. Three people are now allowed to be together in a group, but individuals must practice two metre social distancing in public and wear a protective face covering in all closed public spaces, as well as in open spaces where it is not possible to maintain a two metre distance. The nationwide curfew imposed since March it still in effect daily from 7:00 p.m. until 5:00 a.m. for all ages.   

In view of the current situation and the relative stabilisation of the curve of newly diagnosed cases in North Macedonia, on 12 May 2020, a three-phase plan for the reduction of virus prevention measures was adopted by the Macedonian government.

The first phase allowed big shopping malls to open since 13 May and foresees a gradual reduction of the curfew. The second ‘transitional phase’ will be the re-establishment of work activities with respect to the recommended measures and strict health protocols. The third phase will be a full return to the regular work process with respect to the basic anti-epidemic measures for maintaining personal hygiene and physical distance.

As for now the country borders are still closed, and international travels are banned, however those limitations are part of the three-stage release plan announced by the government and will therefore be subject to gradual relaxation in the coming weeks.

Measures to prevent the spread of Covid-19 have slowed economic activity, which in turn has begun to negatively impact the national budget. As of 20 March, a sharp decline of tax revenues by around 25% per day was observed. This translated into a decline of total tax revenues by 11% in March as compared to the previous year. According to the updated IMF forecast from 14 April 2020, due to the outbreak, GDP growth is expected to fall to -4% in 2020 and pick up to 7% in 2021, subject to the post-pandemic global economic recovery.

Unemployment is also affected by the negative economic impact of the pandemic. The IMF estimates an increase of unemployment up to 20.4% in 2020 and slight decrease to 19% in 2021. According to the National Agency for Employment, more than 8000 people lost their jobs between 11 March and 30 April. According to the latest data available from the World Bank, 5.2% of the population is estimated to live below the national poverty line.

The situation with factory production

  • Indicators for the first two months of 2020 signal growth in the first quarter, but the first readings for March 2020 indicate that the pandemic containment measures are taking a toll on economic performance. The industrial production index increased by 1.9% y-o-y in January and February 2020 but suffered a heavy decrease in March (-13.4% y-o-y), leading to a drop of 3.7% in the first quarter. Manufacturing output declined by 2%. On average in the first three months, trade turnover amounted to 2.7%, due to strong increases in January and February 2020 but fell in March (-9.4% y-o-y).
  • 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 )
  • Export-oriented industries, including the textile sector, are already affected by the Covid-19 pandemic and it is expected to be hit hardest 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 for the month of April.
  • In April, a survey on the impact of Covid-19 on Macedonian businesses was conducted by the Employers Association of Macedonia. According to the statement of the president of the Association, 46% of the interviewed companies reported a decrease in economic activities of over 50% in recent months, and 85% of the businesses reported decreased sales volumes due to declined orders from foreign buyers. Only 4% of the companies reported to have not been impacted by the outbreak and 10% of those interviewed have shut down their business. Layoffs of workers are reported by 10% of the interviewed companies, and the rest of the companies kept the workers with reduced working hours or are using annual or forced leave.
  • According to the same survey, businesses have suffered due to different reasons: Some have lost many working hours due to long absences from work because of delays to the supply of raw materials, some have sent their ready-produced garments to their clients but reported delays in payments or non-payments for more than 90 days, and unfortunately, about 10% of the companies had to shut down their business and lay off workers. Big financial loses 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 and the like). This will be reflected in delayed order deliveries due to the incapacity of factories to respond to production orders. One thing that is clear is that there will no company left unaffected by the situation caused by this pandemic. 
  • The Minister of Finance shared optimistic information reporting that Macedonian textile companies showed the capacity for fast adaptation to the international market needs and has started producing mask and protective medical equipment. According to the analyses, there is an increase in the exports of medical protective equipment produced by the textile factories for 300% compared to previous year. Protective equipment (mainly facial masks) is exported to Germany, Qatar, the Netherlands, Belgium and Austria.
  • Logistics (transport and export) are exceedingly affected due limited routes of movement for trucks and challenges over export limitations between countries.
  • The local organisations for workers’ rights Glasen Tekstilec reported the violation of the workers’ rights over the pandemic, mainly referring to unfair dismissals and falsified documents for contractual dismissals. A series of cases have been reported in which workers that are using government measures for parental leave have not been paid in line with the government requirements for payment of legal minimum wage. According to the president of this organisation textile factories have already dismissed workers, and this is expected to continue. 90% of the Macedonian textile sector deals in CMT (cut, make, trim) production are contracted by foreign companies who normally place orders regularly, but now they too are affected by the same isolation measures in countries where citizens’ last concerns are what to wear and which fashion trends to follow. From informal interviews with a small number of employers, it is estimated that the crisis is yet to spread, orders for the coming season have been cancelled and this is directly linked with the fact that Macedonian textile sector depends on international buyers. Those most affected are workers with temporary contracts.
  • From interviews with Fair Wear suppliers, the less affected textile factories are those which are producing workwear.

What are government policies to support local businesses?

The government adopted the third set of economic measures for supporting business sector on 17 May. Firms are to be supported with the following measures and policies:

  • Support for salaries and firm liquidities: The government initiated a support programme for salaries by subsidising contributions to employees of companies in the tourism, transport and catering sectors along with other affected companies, for the months of April, May and June 2020. It will also subsidise contributions for employees up to 50% of the average salary paid in 2019, provided that the company does not reduce the number of employees below its number from February 2020. For other sectors, the measure supports employer liquidity including for the self-employed, independent performers and private media legal entities. North Macedonia will subsidise salaries for the months of April and May 2020 up to a maximum of 14,500 MKD (EUR 235) per month and per employee.

Terms and conditions to be eligible to use this measure:

  • no dividends, bonuses, annual rewards, performance bonuses to be paid,
    • to experience at least 30% reduction of revenues compared to the average from the last year/seasonal average,
    • average portion of highest net wages of 10% of the number of employees not to exceed MKD 120,000 per employee on monthly basis for the month for which the support is requested.
  • Credit support: The National Bank of the Republic of Northern Macedonia (NBRSM) has changed its methodology for credit risk management. This decision is in addition to those taken previously, mainly aimed at promoting more favourable credit standards for companies affected by the crisis and easing the standards for household and corporate loan restructuring. Each company, depending on the number of employees, can receive from 3,000 to 30,000 euros. Micro companies, with up to ten employees, are able to borrow from 3,000 to 5,000 euros, small companies with 10 to 50 employees, are able to borrow from 10,000 to 15,000 euros, and medium-sized companies with 50 to 250 employees are able to borrow from 15,000 to 30,000 euros. Loans are interest-free.
  • The Development Bank of Northern Macedonia issued a first set of 13.7 million (5.7 million + 8 million) interest-free loans for micro, small and medium enterprises, the amount of which depended on the number of employees. The loans were up to 90,000 euros. Further to this, as part of the third package of measures, the Development Bank of Northern Macedonia will unblock interest-free loans worth EUR 31 million. This credit line will be available to all micro and small companies and it will also offer a 30% grant (non-refundable) for those companies that are run or founded by women or employ young people, are export-oriented or introduce innovation and digitisation in their operations. It will further support the placement of companies in new markets and improve competitiveness, first by over EUR 25 million for the private sector through the industry competitiveness programme, and in cooperation with chambers of commerce, further by developing a digital platform for the textile, footwear and furniture manufacturing industries.
  • Additional support to the textile sector – digital platform: With financial support of EUR 1 million, the government will help the textile industry create a digital platform on which companies will place their products.
  • Reduction of instalments and reprogramming of loans to financial companies and leasing companies. Instalments in the repayment of loans by individuals will be reduced by 70% over the next three months until June 2020, and the repayment period will be extended by at least 90 days. A similar measure for legal entities will also be put in place.
  • State guarantee for commercial loans and customs debt for start-ups and small and micro companies: support for start-ups and small and micro companies through commercial banks with EUR 10 million initial capital for easier access to funds will be granted, mainly by taking part of the credit risk.
  • Bankruptcy measures: North Macedonia adopted a decree amending the Bankruptcy Law during the state of emergency. Bankruptcy debtors who meet the requirements for starting the bankruptcy procedure shall not be subject to bankruptcy proceedings for the duration of the state of emergency. Further to this, the government amended the law on obligations by regulating default interest rates.
  • Support for the development of domestic start-up products and services through the Innovation and Technological Development Fund (FITR): The already existing FITR fund will be given additional EUR 1.6 million for the development of innovative products and services.
  • The central bank has already decided to decrease the basic interest rate by 0.25 percentage points to 1.75%.

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

  • Government adopted the decision to provide pecuniary allowance for the citizens who lost their job (50% of the average wage of the employee). This government economic package also includes financial compensation for people who have lost their job in the period between 11 March and 30 April. The state will pay a pecuniary allowance – monthly wage to citizens who lost their jobs due to the crisis each month in the amount of 50%, up to 80% at the most, of the employee’s average monthly net wage in the country for the last 24 months, i.e. pursuant to Article 68 of the Law on Employment and Insurance in case of Unemployment.
  • Under the latest set of economic relief measures in place since 17 May, 100,000 citizens who are unemployed or receive wages lower than MKD 15,000 (EUR 243) per month will receive a stimulus payment of MKD 9,000 each, as well as vouchers and cash to spend on domestic tourism.
  • For citizens who lost their jobs or were part of the informal economy, the North Macedonian government will provide accelerated access to the social protection system for April and May. They will receive an average of MKD 7,000 (EUR 113) per household. The estimated scope of the new measures covers about 20,000 new households from the informal economy and 30,000 existing users.
  • For employees in institutions and companies who have children up to 10 years of age, or actively in fourth grade, that need home care, one parent is released from work and work activities and the absence during this period needs to be recorded as justified by the employer. This conclusion also applies to single parents. During this absentee the employers are obliged to pay the salary as stipulated in the employment contract.
  • The private sector is recommended to contact the appropriate organisation units on human resources within their institutions and to assign them to ask the employees within the institutions and companies who use the exemption from work, in pursuance to the conclusions, measures and recommendations of the government, to submit proof/certificate for the criteria they meet to use this exemption (certificate issued from kindergartens or payment order for paid fee for kindergarten stay, copy from passport or copy from a birth certificate to prove the child’s age, certificate from educational institutions that the child regularly attends classes or copy from a record book).
  • People with chronic health issues, as well pregnant workers and elderly employees over the age of 65 are requested to stay out of any working relationship. During this absence, employers are obliged to pay the salary as stipulated in the employment contract.
  • Private and legal entities which fail to respect the recommendations shall be sanctioned under Articles 205 and 206 of the Criminal Code.
  • All social security and health insurance needs to be paid to all workers, and stoppage is not required for the production factories at this stage.
  • The Ministry of Labor and Social Policy calls on companies to adhere to recommendations for the organisation of work because the protection of workers’ health is an essential condition for the protection of the economy. The government and the economy have the same goal – in the context of measures and activities aimed at protecting and preventing the spread of coronavirus, at the same time organising the work of companies to deal more effectively with the negative consequences. All legal entities in this state of emergency are appealed to all show responsibility. The inspection services are in the field and will follow the recommendations.
  • The recommendations for organising the work process are as follows:
    • In plants where the manufacturing process is directly carried out, limit the number of employees so that workers are at a distance of 1.5 to 2 m.
    • It is mandatory to provide disinfectant for hands and work surfaces in the plant itself.
    • During the working hours, employees should comply with the general recommended measures for a higher level of personal and general hygiene (frequent hand washing and disinfection by the use of alcohol-based disinfectants).
    • To ventilate the workplaces more frequently, i.e. several times during the day, if possible, through natural and artificial ventilation.
    • Disinfect all work premises once a week, especially in plants, by an authorised service.
    • In the case of direct contact with a positive laboratory-confirmed case of Covid-19 (with or without symptoms), the person shall be immediately isolated and reported to the relevant Public Health Center.
    • Avoid contact of employees by plants with each other during the work process, and in particular with administrative staff.
    • In case of need for administrative work, the signing of paper documents should be carried out exclusively by a certain person wearing personal protective equipment (protective mask and gloves).
    • Persons responsible for securing the facility must also wear personal protective equipment.
    • Drivers who distribute finished products, raw materials, paper documents should also wear personal protective equipment.
    • No holding of meetings, work must be conducted by phone or email.

What are local stakeholders doing to lobby their government?

  • Employers’ and workers’ organisations in the Economic and Social Council of North Macedonia are engaged through the EU-funded project ‘Strengthening Social Dialogue in North Macedonia‘ coordinated by the ILO. The ILO established a Task Team of employment and labour law specialists to come up with answers and solutions to world of work problems triggered by the coronavirus pandemic in North Macedonia. The multidisciplinary team is led by the 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 is to develop knowledge, guidelines and policies that help to answer the following questions:
    • What are the likely impacts of the Covid-19 crisis over the short- and medium-term on employment and on the labour market?
    • What are plausible policy responses that the government and its social partners should consider in order to mitigate the impact of the crisis?
  • The Task Team makes proposals to the Economic and Social Council, which discuss the best options with the government.  An adequate framing of these policy discussions requires gauging the possible impacts and an analysis of alternative policy responses. The Task Team contribution is needed given the sense of urgency in which the government and the social partners operate and the varying degrees of information that is available to the parties.
  • Since the beginning of the crisis, the 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.
  • The Federation of Trade Unions of Macedonia demanded the adoption of a set of emergency measures that shall help workers, businesses and public services to survive the crisis regarding Covid-19 so that they can return to their normal activities when it is over. More of the work of SSM and their demands submitted to the government can be read here.
  • For the first time, trade unions together with local organisations working for the protection of workers’ rights joined forces on the informal platform to protect workers rights and ensure income for employees during the Covid-19 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.
  • In response to the joint statement, the government adopted the Decree with legal force to financially support workers and employers affected by Covid-19, and with the new amendments, the jobs of workers have been secured, as well as their working 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.

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

  • The local non-governmental organisations demonstrated strong capacity and leadership in drafting various initiatives for workers’ rights during the outbreak. With a great awareness of the need for joint forces of unions and local NGOs in lobbying and advocacy, for the first time a joint platform for the protection of workers’ rights was established together with the trade unions. This resulted in a decree with legal force to financially support workers and employers affected by Covid-19, and with the new amendments. Local organisations like Glasen Tekstilec and Helsinki committee for human rights are recognised as a relevant partner in advocating workers’ rights. They are participating in weekly meetings with the Ministry of Labour and Social Policy and are consulted in drafting the preventive measures for workers’ rights protection during the pandemic.  
  • The informal platform of unions and local organisations on 19 May publicly expressed disagreement with the third set of government economic measures and called the government to reconsider the measures. This in particular refers to the government decision for the two month monetary compensation measure for those who lost their jobs during the crisis, which is not aligned with the agreement reached at the 30 April meeting between the government and participants of this platform. Then, it was agreed that workers that lose their jobs would be covered by the systemic solution for unemployment insurance, i.e. to receive compensation in a period that depends on their length of service, and not just two months. By failing to keep its word, the government has been criticised for not respecting workers and trade unions as their advocates.
  • 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.
  • 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.

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

  • Employers association is alerting the risk of complete breakdown of the textile factories if they are not financially supported by the government, as during the global pandemic the full supply chain is put in danger. Foreign buyers are cancelling orders until end of May, and most of the factories will be forced to close down. No specific international initiatives are addressed.  Employers association has addressed the risk of insecure market demand and issued instructions 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.

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