Finance Think published the study “Labor mobility preconditions for the regional economic integration: Pros and cons from Macedonian perspective”.
The aim of this study is to assess the potential for labor mobility for deeper regional economic integration, through a quantitative analysis of the gaps in occupations and wages, from the perspective of North Macedonia. The main finding of the study is that deeper regional integration of labor markets in the Western Balkans brings advantages but also threats.
Free movement of workers is one of the principles underlying all previous and current initiatives for regional economic integration in the Western Balkans, and may be of significant interest given the labor and skills shortages these countries face. However, whether and to what extent economic integration between the Western Balkans can fill these gaps depends mostly on two aspects: 1) the current state of the labor market in terms of skills and occupations that are demanded and offered and 2) the difference in wages between the integrating countries.
The results of the study show that on the Macedonian labor market, on the one hand, there is a surplus of workers in professions with higher qualifications, with the exception of workers from information and telecommunications activities, reaching a maximum in educational (pedagogical) occupations, where in one vacant position there are up to 71 unemployed people. On the other hand, there is a shortage of workers for six out of eight occupations with lower qualifications, which is especially pronounced for service and basic workers. The latter is also related to the fact that almost 60% of registered unemployed persons are without a specific occupation, with low or no education. Hence, deeper regional labor market integration can encourage mobility that will increase the available skill set in the market, and for persons in surplus occupations with higher skills, offer more opportunities for employment and earnings.
The results further focus on wage differences between North Macedonia and Serbia, given that higher wages are one of the main reasons for labor mobility. The calculations showed that in neighboring Serbia the wage premium in relation to North Macedonia is very small, almost insignificant and, therefore, will not cause significant mobility of Macedonian workers. However, for sectors that are seasonal in nature and have a cyclical need for workers, significant differences in wages may occur. Given that occupations with lower skills are simultaneously in short supply in the Macedonian labor market, deeper regional integration may lead to a deepening of the shortage of such workers.
Although regional economic integration has its advantages in terms of labor mobility, it is more important to make structural reforms in the domestic economy, with the aim of reducing the differences in the supply and demand of labor and meeting the needs of the labor market, above all. with domestic workers. For this purpose, our recommendations are aimed at adapting labor market policies to prevent the increase of workers in surplus occupations, and creating educational policies in order to direct workers in deficit occupations.
In general, regional economic integration based on the four basic principles of free flow of capital, goods, services and people helps countries to overcome the constraints to economic growth created by poor infrastructure, inefficient policies, geographical affiliation and demographic changes. Free movement of workers is one of the key freedoms of regional economic integration that increases labor mobility regionally and/or internationally, in search of access to the labor market in the country of departure. According to the latest figures, almost 162 million people have moved to another country in search of employment, and this trend is expected to continue, mainly due to the wage gap between countries, the rapidly aging workforce in some countries and technological developments that make it easier for expatriates to stay connected with their family.