Enterprise development and job creation

Is small still beautiful? ILO supports FYR Macedonia in coming out with new small enterprise strategy

In April 2018, the Macedonian Government adopted a new 5-year strategy to support the growth of small and medium sized enterprises (SMEs). The ILO assisted the Ministry of Economy in the development of the strategy and the accompanying action plan 2018-2020 as SMEs are a major job creation engine.

News | 29 June 2018

©UNDP

Like in the European Union Macedonian SMEs account for more than 99% of all firms. However, these firms provide even more of the existing jobs in the small landlocked country of Western Balkans than in the EU (77% vs. 66% in EU) and produce a significantly higher share of national value added than elsewhere in Europe (67% vs. 57%in EU). In difference to EU, Macedonia cannot realise the potential of SMEs for creating additional jobs. While in the EU SME employment grows almost 50% faster than total employment, SME employment in Macedonia is more or less stagnant. In this context, the government asked for a strategy that would help to tap the job creation potential of SMEs in the country. This is much needed as unemployment in Macedonia is still high (22%) and the employment rate is far beyond the EU average (44% vs. 71%).

The new strategy goes for a state-of-the-art approach integrating efforts to improve the business environment, to increase the competitiveness of SMEs, and to promote entrepreneurship. In line with the latest research on contribution of SMEs to job creation the strategy goes for a differentiated response as SMEs are also in Macedonia a very heterogeneous group of enterprises. The strategy foresees specific measures to promote young, high-growth enterprises because they make disproportionally high contributions to employment. But, the policy document also covers micro or family enterprises since they play an important role in providing incomes and livelihoods, especially when there is a lack of sufficient wage employment like in Macedonia.

Important part of the strategy is the government’s commitment to enhance its coordination of policies and SME support services. This will include an evaluation of SME support agencies and institutions to consider their mandates, functions, budgets, and impact.

The full version of the new strategy can be found here (in Macedonian)