This information is derived from the State Department's Office of Investment Affairs’ Investment Climate Statement. Any questions on the ICS can be directed to EB-ICS-DL@state.gov.
Last Published: 8/17/2017

Foreign investors, especially those in labor-intensive industries, find Macedonia’s competitive labor costs and high number of English speakers attractive.  The average net wage in 2016 was USD $400 per month, but reportedly about 60 percent of workers receive wages lower than that average.  The minimum wage in 2017 is 10,080 MKD (USD $183) per month except for the textile and leather industry, where the minimum wage for 2017 is 9,590 MKD (USD $174) per month.  The new government has committed to raise the minimum wage to MKD 12,000 (USD $218) in all industries within the first year of its mandate, and to MKD 16,000 (USD $290) by the end of its mandate.

As of March 2017, Macedonia’s labor force consisted of 952,644 people; 734,043 people (43.7 percent) were employed and 218,601 (22.9 percent) were unemployed.  Employment and unemployment ratios by gender are similar to the ratio of the active labor force, i.e., roughly 61 percent male and 39 percent female.  The unemployment rate for youth (15 to 24 year olds) was 44.4 percent, down by 2.9 percentage points from the end of 2016.  About 20 percent of the unemployed have university-level education; the rest have only completed a secondary school or lesser level of education.

Despite the relatively high unemployment rate, foreign investors sometimes report difficulties in recruiting and retaining workers.  Positions requiring technical and specialized skills can be especially difficult to fill due to a mismatch between industry needs, the educational system, and graduates’ aspirations.  Many well-trained professionals with marketable skills, such as IT specialists, choose to work outside Macedonia.  To address shortages of factory workers, the government encourages the dispersal of labor-intensive manufacturing investments to different parts of the country and companies often bus in workers from other areas.  Migrant workers have bypassed Macedonia for higher wages and better opportunities in more affluent Western European economies.

Relations between employees and employers are generally regulated by individual employment contracts, collective agreements, and labor legislation.  The Law on Working Relations is a general act that regulates all forms of employment, relations between employees and employers, retirement, lay-offs, and union operations.  Severance and unemployment insurance are covered by the Law on Working Relations and the Law on Employment and Insurance in cases of unemployment.  Most labor-related laws are in line with international labor standards, and generally within recommendations of the International Labor Organization (ILO).  Labor laws apply to both domestic and foreign investments and employees in both segments are equally protected.

Employment of foreign citizens is regulated by the Law on employment and work of foreigners.  There is no limitation on the number of employed foreign nationals or the duration of their stay.  Work permits are required for foreign nationals, and an employment contract must be signed upon hiring.  The employment contract, which must be in writing and kept on the work premises, should address the following provisions: description of the employee's duties, duration of the contract (finite or indefinite), effective and termination dates, location of the work place, hours of work, rest and vacation periods, qualifications and training, and salary and pay schedule.  Many international businesses report that the process of obtaining visas and work permits can be challenging.

The law establishes a 40-hour workweek with a minimum 24-hour rest period, paid vacation of 20 to 26 workdays, and sick leave benefits.  Employees may not legally work more than an average of eight hours of overtime per week over a three-month period or 190 hours per year.  According to the collective agreement for the private sector between employers and unions, employees in the private sector have a right to overtime pay at 135 percent of their regular rate.  In addition, the law entitles employees who work more than 150 hours of overtime per year to a bonus of one month’s salary.  Although the government sets occupational safety and health standards for employers, those standards are not enforced in the informal sector, which accounted for an estimated 22 percent of the employed.

Trade unions are interest-based, legally autonomous labor organizations.  Membership is voluntary and activities are financed by membership dues.  About 20 to 25 percent of legally employed workers are dues-paying union members.  Although legally permitted, there are no unions in the factories operating in the free economic zones.  Most unions, except for a few branch unions, are generally not independent of the influence of the government officials, political parties, and employers.

There are two main associations of trade unions:  The Union of Trade Unions and the Confederation of Free Trade Unions.  Each association is comprised of independent branch unions from the public and private business sectors.  Both associations, along with the representatives of the Organization of Employers of Macedonia and representatives from relevant ministries, are members of the Economic-Social Council.  The Council meets regularly to discuss issues of concern to both employers and employees and reviews amendments to labor-related laws.

There are two main agreements for the public and private sectors on the national level.  National collective agreements in the private sector are negotiated between representative labor unions and representative employer associations.  The national collective agreement for the public sector is negotiated between the Ministry of Labor and Social Policy and labor unions; currently the government and unions have still not agreed on a collective agreement for the public sector.  Separate contracts are negotiated by union branches at the industry or company level.

An out-of-court mechanism for labor dispute resolution was introduced in 2015 with assistance from the ILO, financed by the EU.

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Macedonia Economic Development and Investment Law