Skills supply and demand in Macedonia: deriving lessons for future policy interventions

Abstract

During the past two decades the unemployment rate in Macedonia has constantly remained above 30 per cent. In addition, long-term unemployment has significantly contributed to an erosion of the skills and motivation of unemployed workers. Significant sectoral shifts have occurred on the demand side of the Macedonian labour market during the past two decades, but these need to be accompanied by changes on the supply side, consisting of appropriate reforms in the education system and active labour market policies that would lead to an improved match between supply and demand. We are interested in this article in assessing the implications of the skill mismatch for the unemployment rate and the degree to which structural imbalances contribute to high and sustained unemployment. Our aim is to assess the potential supply side deficiencies and to propose appropriate policy recommendations to improve the match between supply and demand of skills as a strategy for fighting persistent unemployment in Macedonia.