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Republic of North Macedonia

3. Employment & Entrepreneurship

3.1 General context

Last update: 10 March 2025
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  1. Labour market situation in the country
  2. Definitions and concepts

Labour market situation in the country

 

North Macedonia’s labour market continues to grapple with structural challenges, including low participation and employment rates, persistent unemployment, and a mismatch between labour supply and demand. The labour force participation rate remains below international benchmarks, largely due to limited job opportunities and skill gaps. To address these issues, the Employment Service Agency of Republic of North Macedonia conducts regular labour market assessments, helping policymakers align workforce policies with employer needs and emerging economic trends.

Unemployment has been a persistent issue in North Macedonia, gradually decreasing from a peak of 37.3% in 2005. The latest data from the State Statistical Office shows a continued decline in unemployment, with the rate dropping from 12.9% in the first quarter of 2024 to 12.5% in the second quarter. This progress is encouraging, yet youth unemployment remains a significant challenge. As of the third quarter of 2024, the youth unemployment rate further decreased to 23.6%. While this marks continued progress in addressing labor market issues for young people, obstacles such as skills mismatches, lack of work experience, and employment practices influenced by nepotism and political patronage persist.

Despite improvements in overall labor market conditions, reflected in a labor force activity rate of 65.7% and an employment rate of 57.4% for individuals aged 15-64, a large portion of the working-age population remains outside the workforce. Youth unemployment continues to be a pressing issue, and addressing the underlying barriers to employment remains crucial to fully integrating young people into the economy.

To address these issues, the government has introduced targeted measures to boost youth employment. The Economic Reform Programme 2024-2026 prioritizes the integration of young job seekers, particularly those from low-income backgrounds receiving social assistance. Key interventions include:

  • Training and retraining programs to equip youth with in-demand skills,
  • Employment support through the Youth Guarantee,
  • Subsidized employment schemes to incentivize businesses to hire young workers.

A cornerstone of these efforts is the Youth Guarantee, launched in 2018 as a pilot and expanded nationwide in 2019. This initiative ensures that young people (aged 15-29) receive an employment, education, training, or internship offer within four months of registering as unemployed. The program has evolved over three phases:

  • Phase 1 (2018-2019): Focused on policy reform, identifying NEET (Not in Employment, Education, or Training) youth, expanding employment programs, and establishing monitoring mechanisms.
  • Phase 2 (2020-2022): Strengthened institutional coordination and expanded service delivery.
  • Phase 3 (2023-2026): Emphasizes NEET youth integration, aligns with the Operational Plan for Employment 2024, and focuses on skills development, work-based learning, and employer engagement.

Since its launch, the Youth Guarantee has yielded significant results in improving youth employment and skills development. By the end of 2023, more than 80,000 young people had participated in the program. Approximately 40% of participants successfully transitioned into employment, training, or internships. Moreover, follow-up data reveals that 40% of those placed in jobs or training remained engaged in their respective roles even 18 months later, demonstrating the program’s long-term impact on youth labor market integration. 

To further tackle youth unemployment and enhance labor market integration, the Operational Plan for Employment 2024 includes several targeted measures to support young job seekers. Key elements of the plan involve:

  • Expanded Career Guidance and Counselling: This measure aims to provide better support to young individuals in identifying career paths, understanding labor market trends, and making informed decisions about training or employment opportunities.

  • Support for NEET Youth: Special focus will be given to young people who are Not in Employment, Education, or Training (NEET), ensuring they have access to tailored interventions, such as job readiness programs and vocational training, to help them enter the labor market.

  • Enhanced Vocational Training and Apprenticeships: The plan aims to strengthen work-based learning, creating more opportunities for young people to gain practical experience and skills that match the needs of employers.

  • Stronger Employer Engagement: By offering financial incentives and other support to businesses that hire young workers, the plan encourages greater participation from the private sector in creating youth employment opportunities.

Despite these positive developments, tackling youth unemployment requires sustained efforts in education reform, skills development, and equitable employment opportunities. The Youth Guarantee remains a crucial mechanism in integrating young people into the labour market, but its success depends on continuous investment and policy innovation.

 

Definitions and concepts

In North Macedonia, the definition of employment follows the International Labor Organization's recommendations regarding key definitions and concepts. According to the State Statistical Office of the Republic of North Macedonia, individuals are considered employed if they are aged 15 or older and meet one of the following criteria during the reporting week:

  • Worked for pay (in cash or kind) or for profit for at least one hour;

  • Were temporarily absent from work (due to illness, leave, studies, or a break in the business activity), but remained formally employed;

  • Helped in a family-owned business or agricultural enterprise without pay.

The classification of employment status is based on the International Classification of Status in Employment, with the following categories:

  • Employers: Individuals who own and operate their own business or agricultural enterprise, employing others;

  • Employees: Individuals working for state institutions, public or private businesses, or employers in mixed or collective ownership;

  • Self-employed: Individuals working in their own business, professional practice, or farm for profit, without employing others;

  • Unpaid family workers: Individuals working without pay in a business or farm owned by a family member.

The State Statistical Office of the Republic of Macedonia defines unemployed individuals as those aged 15-74 who meet the following criteria:

  • Did not work during the reporting week (based on the employment criteria mentioned above);

  • Actively sought work or engaged in specific actions to find employment;

  • Were ready to accept work within the next two weeks after the reporting week.

Individuals who do not meet the criteria for either employment or unemployment are classified as not in the labor force.