Overview

Macedonia suffered from chronically high unemployment: rates hovered above 30% throughout the 1990s, partly due to rigid employment laws. In 2003, the government decided that it was time for a major reform. Part of the cure was a new labor law that could better respond to the economy’s needs.

Macedonia passed the Labor Relations Act on 22 July 2005, the first significant labor law reform since 1993. Major reforms in labor and employment law are uncommon—largely because of the extraordinary political will required. Livelihoods are at stake. This case study finds that Macedonia’s new law was a success for 2 key reasons: stakeholder participation and political support.

Main Findings

• The new law brought greater flexibility to employment contracts.
• In the second quarter of 2006, employment rates among youths (ages 15 - 24) climbed from 13.4% to 17.4%, compared to the previous year.
• Over the same time period, youths’ unemployment rates dropped from 59.8% to 54.6%.
• The number of job contracts concluded in Macedonia increased 5.9% for January - October 2006 over same period a year before, with a 30.6% increase for fixed-term contracts.