16th July 2023, Skopje – “The Government has never been the “opposing party” in the wage negotiations with the Unions, but rather a manager in the process towards finding the optimal outcome. Negotiations were driven by active participation of all stakeholders, but what was important was to offer adequate solution to the International Monetary Fund, so as for they to recognize the fiscal sustainability of the proposal, causing no pressure on macroeconomic stability”, Minister of Finance, Fatmir Besimi, wrote in his latest column, dedicated to the establishment of a system for indexing public sector wages to average wage. As the Minister emphasized, for the first time since the country’s independence, systemic solution for public sector wages has been agreed upon, which is in the interest of both the employees, with their wages continuously increasing, and the fiscal sustainability and maintaining macroeconomic stability.

“The crucial decision we reached last week is the systemic solution for indexing public sector wages to the average wage as per the nominal GDP growth. Starting March 2025, public sector wage will be indexed by multiplying the average wage by a relevant coefficient. Such step will provide for a realistic system of wages, in compliance with the labour market developments, which will be just and transparent for the whole public sector. Transition period for implementation of this solution will take around two years, quite sufficient considering it is a substantial reform requiring impeccable implementation of all related activities, including amendments to the respective legislation, the General Collective Agreement and defining the coefficient”, Besimi wrote, pointing out that we will most probably be the first country worldwide to index public sector wages to the average wage, thus ensuring a continuous wage adjustment by closely following the labour market developments and productivity.

Goal of the Government, as he wrote, is for wages to rise in both the public and the private sector, coupled by productivity growth and GDP growth. He also pointed out that over the past five years, considering the demands and the needs of the public sector, wages were increased in several instances throughout the whole public sector, as were the wages of education personnel, childcare staff, health institutions, judiciary and culture employees, Army of North Macedonia personnel, MoI and State Audit Office staff, IPA structures employees, state administration personnel, etc. Wages in the private sector also rose in the last 5 years, as notably evident from the data on average wage, which increased by 50% in the respective period.

“Public sector, in particular the state administration, can and should be a key factor in making changes geared towards economic development happen. Public sector serves the private sector and it is its duty to ensure conditions for private sector development and competitiveness. Hence, optimization is necessary alongside with a system for decent valuing of public employees, i.e. a functional analysis for optimal utilization of capacities and improvement of quality of services offered by the public sector. Rationalization does not imply layoffs, but rather a well- devised program with favourable and attractive measures for redeploying the employees to the private sector, where high labour force demand already exists, on one hand, contributing to the competitiveness and the growth of the economy, on the other”, Besimi emphasized.

Under the solution the Government agreed upon together with the Unions, all public sector employees will have their wage increased by 10% with the September wage, after having their wages adjusted by 5% in March on the basis of the minimum wage. All public sector employees will be paid vacation allowance for 2023 in the amount of Denar 10,000 by the end of this year, whereby as of 2024 onwards, vacation allowance will be set in the amount of at least 30% of the average net wage under the General Collective Agreement.

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