- Press release -
Skopje, 10 February 2021
Providing employment and skills in line with labor market requirements and overcoming the trend of continuous outflow of workforce is the main challenge for RNM Government in dealing with labor market risks
The State Audit Office conducted performance audit on the topic "Government planning - Effectiveness of measures in dealing with labor market risks and planning of funds to overcome risks", covering the period 2017-2020.
The performance audit is consistent with SAO 2020 Annual Work Program and is part of the activities of the international parallel audit on the topic: "Workforce 2030 - Is your country ready?" Eight supreme audit institutions are participating in this audit - Israel, Finland, Italy, Bulgaria, Poland, Republic of Northern Macedonia, European Court of Auditors and South Korea.
The auditors found that measures and activities taken by competent institutions for dealing with labor market risks are not effective enough. There is a need of coordinated action and strengthening activities of competent institutions in relation to creating employment policies and measures, promotion of skills in line with labor market demand and retaining workforce by offering quality employment opportunities.
This performance audit covered several entities of the institutional framework for creating and regulating the labor market: Ministry of Labor and Social Policy; Employment Agency, Ministry of Education and Science, State Statistical Office; Chamber of Commerce, Ministry of Interior, Government of RNM, Ministry of Health and Ministry of Economy.
Basic statistical information necessary for analyzing and monitoring changes on the labor market are data on the working age population, active population, employment and unemployment in RNM. The unemployment rate in RNM in 2019 was 17.3%, which is a decrease of 5.1% compared to 2017 partly due to low activity rates. Compared to the region, the EU and the Eurozone, the unemployment rate in RNM remains high and is not sufficient to gain the status of low unemployment rate country.
The Government of RNM determines strategic priorities, development policies and measures, and the manner of financing thereof to overcome differences between demand and supply of labor, and thus to reduce unemployment.
The auditors found incomplete implementation of strategic goals set in the main strategic documents that create labor market and education system policies aimed at increasing employment and quality of jobs, due to insufficient realization of indicators in part of the planned activities under the jurisdiction of the Employment Agency and the Ministry of Education and Science.
High unemployment rate among young people (from 39.2% in 2017, 37% in 2018, 30.5% in 2019) imposes need to take measures aimed at improving their placement on the labor market, primarily by facilitating transition from education to employment. To deal with challenges faced by young people and their insufficient employment, the Government of RNM in 2018, envisaged implementation of a measure titled Youth Guarantee.
The success of this pilot measure, which provided employment or involvement in active employment measures, is as follows:
- 41.7% in 2018, i.e. out of 5266 unemployed young people, 2197 were employed or involved in active employment measures (pilot measure implemented in three Employment Centers), and
- 35% in 2019, i.e. out of 20302 unemployed young people, 7232 were employed or involved in active employment measures (pilot measure implemented at the level of RNM).
The report points out that young people in RNM face difficulties in the transition from education to labor market and significant number of them are long-term unemployed. These young people lose the acquired knowledge and skills, their productivity decreases, and so does the chance to find a job. Quality education based on analysis of needs of knowledge, skills and competencies is necessary to reduce inconsistency of skills with labor market needs. Taking into consideration all of the above, it is necessary to make efforts to further strengthen reforms at all levels of the education system for producing workforce that will meet the needs of the labor market.
The report states that RNM is characterized as a country with pronounced emigration, with continuous process of population emigration to other countries. Data from competent institutions for emigration movements, in the absence of census since 2002, are not complete and do not reflect the real situation, and it is very difficult to create proper policies to address this issue. Analysis of several strategic documents and World Bank analyses indicate that emigration of highly qualified labor force known as "brain drain" is evident, i.e. there is lack of certain profiles of workforce that most often emigrate from RNM in developed countries, such as medical staff, engineers, IT experts, professionals and scientists, students of technical and natural sciences. World Bank estimates and analyses indicate that by 2010 29.1% of highly educated workforce has moved to live and work outside RNM. According to the latest data and analysis from 2019, the rate is particularly high, almost 40% or more than one third of highly educated workforce.
The above circumstances indicate that RNM lacks adequately coordinated and systematic approach to policy making and monitoring of implementation of envisaged goals and activities aimed at overcoming the trend of continuous outflow of highly educated workforce. This outflow is becoming а serious problem that changes the labor supply and contributes to increasing non-compliance with labor demand.
The audit found that Labor Market Employment Programs, Measures and Services within the Annual Operational Plan prepared by the Ministry of Labor and Social Policy and implemented by the Employment Agency are not based on detailed analyses of sustainability and efficiency of active employment programs and measures and labor market services, which would confirm benefits or weaknesses thereof. For that reason, it is necessary to assess continuously the performance of active employment measures and labor market services, and to set targets and monitor implementation.
Auditors emphasize the need of strengthening human resources capacity in the Employment Agency, continuous improvement of the same and defining criteria for realistic planning of financial resources by measures, policies and services, which are important prerequisite for successful implementation of planned active measures and services on the labor market.
Incomplete evidence and absence of regular field controls indicate weaknesses in the functioning of control mechanisms in monitoring Labor Market Employment Programs, Measures and Services, which may have an effect on the efficiency of measures for inclusion of unemployed persons in the programs i.e. employment measures.
In addition, the audit report addresses negative effects and impact of the outbreak of COVID-19 pandemic, particularly on the labor market, which have changed significantly and gained completely new indicators. COVID-19 pandemic has intensified and expanded in terms of its global reach with huge impacts on public health and unprecedented shocks to economies and labor markets.
The report includes the Employment Agency analysis for the degree of impact of the pandemic on different sectors and the influx of unemployed from those sectors with categorization on various grounds. Out of 12580 unemployed, the percentage of unemployed (for the period 11 March – 31 August 2020) according to:
- predominant activity of the employer, the largest part or 37.7% is in the processing industry, 19.3% in wholesale and retail trade and 8.2% in accommodation and food catering; and
- basis for termination of employment, the largest part or 46% is termination of fixed-term contract , 23% is contractual termination of employment, 11% resigned, while 7% were fired by the employer.
The State Audit Office made the following performance audit conclusion:
The measures and policies set up with laws, strategic documents, program and planning documents and the activities taken by competent institutions for implementation of the employment policy are aimed at improving the employment i.e. reducing the unemployment rate.
Nevertheless, identified ambiguities in the legislation, partial implementation of strategic and planning documents, activities for improving compliance of skills with labor market requirements not achieved in line with established goals and dynamics, lack of sufficiently coordinated and systematic approach for creating policies and monitoring the process of implementation of envisaged goals and activities, insufficient human resources of the Employment Agency and the need of additional sources of funding, as well as lack of regular assessment of efficiency and effectiveness of active employment programs and measures, present quality basis for auditors to conclude that policies, measures and activities taken by competent institutions are NOT effective enough to provide employment and skills in accordance with labor market requirements and to overcome the trend of continuous outflow of workforce from the country.
Link to the Audit Report
https://dzr.mk/mk/210210-revizija-na-uspeshnost-2020-vladino-planirane-efektivnost-na-vladinite-merki-za-spravuvane
Press contact:
Mijalche Durgutov +389 70 358 486
[email protected]
Martin Duvnjak +389 75 268 517
[email protected]
