Republic of North Macedonia

Inclusive and sustainable economic growth in the six Western Balkan (WB6) economies depends on greater economic competitiveness. Although the gap is closing gradually, the standards of living in WB6 are well below those of the OECD and EU. Accelerating the rate of socio-economic convergence will require a holistic and growth oriented approach to policy making. This is the fourth study of the region (formerly under the title 'Competitiveness in South East Europe') and it comprehensively assesses policy reforms in the WB6 economies across 15 policy areas key to strengthening their competitiveness. It enables WB6 economies to compare economic performance against regional peers, as well as EU-OECD good practices and standards, and to design future policies based on rich evidence and actionable policy recommendations. The regional profile presents assessment findings across five policy clusters crucial to accelerating socio-economic convergence of the WB6 by fostering regional co-operation: business environment, skills, infrastructure and connectivity, digital transformation and greening. Economy-specific profiles complement the regional assessment, offering each WB6 economy an in-depth analysis of their policies supporting competitiveness. They also track the implementation of the previous 2021 study's recommendations and provide additional ones tailored to the economies’ evolving challenges. These recommendations aim to inform structural economic reforms and facilitate the region’s socio-economic convergence towards the standards of the EU and OECD.

Public sector remuneration systems are shaped by an intricate interaction of administrative culture, economic conditions, and political systems. This paper discusses critical considerations to bear in mind when designing, planning and implementing reforms of public service wage systems. It explores key concepts such as job evaluation, pay structures, performance-related pay, market analysis for competitive pay levels and wage bill planning. It provides guidance on the process of reforming public sector salary systems to enhance their competitiveness, equity, transparency and affordability. The paper offers insights drawn from the reform efforts of several EU Member States and SIGMA partners in the Western Balkans, Moldova and Ukraine, presenting real-life examples and updated guidelines for effective, sustainable salary system changes. The primary focus is on reforms of wage systems within central government administrations, acknowledging the complexity arising from diverse classifications of civil service and public employees, and the varying scope and structure of salary systems. This paper serves as a practical guide, presenting options along with their advantages and disadvantages to aid policymakers in aligning reforms with their national public administration context and strategies.

Supreme audit institutions (SAIs) are a critical part of public accountability systems. They ‘watch’ over governments’ use of public money and report about it publicly, helping to increase transparency. SAIs have an interest in strongly engaging with external stakeholders – including citizens – to make sure that their work is relevant, understood and used to hold governments to account. This paper provides a compilation of European SAIs’ practices on communication, co-operation and collaboration with external partners and is intended to provide inspiration to SAIs of EU candidate countries and potential candidates to further strengthen their engagement with their non-governmental stakeholders.

Parliaments have a unique role in ensuring that adopted laws, regardless of who initiated them, are evidence-based and fit-for-purpose. For the executive branch, laws are vital instruments through which they deliver public policy. Governments therefore rely on parliaments to scrutinise and adopt legislation in a timely, well-planned and co-ordinated manner. Parliamentary scrutiny of government lawmaking and its role in ex post evaluation of law implementation helps the legislature hold the executive to account. Evidence-based lawmaking is especially critical to EU integration processes as they involve adoption of many new laws. This paper reviews how laws are planned, initiated, prepared, scrutinised and evaluated by the parliaments of six Western Balkan administrations. The report discusses the concept of lawmaking within a parliamentary system of government. It considers how parliaments and governments co-operate and co-ordinate their legislative activities throughout the lawmaking cycle, providing a comparative analysis of existing rules and procedures as well as lawmaking practices. A set of key findings and policy recommendations are provided to support the Western Balkan administrations to plan and implement future reforms.

Subnational governments play a significant role in ensuring good public governance. The way that they are organised and function has a direct impact on the economic and social well-being of citizens and public trust in government. This report presents the system of multi-level government in the six Western Balkan economies, comparing them both with one another and in the context of broader international trends in multi-level governance. The report covers territorial and institutional organisation, competences of local governments, human resources and accountability, public financial management and vertical and horizontal co-ordination, in each case identifying key characteristics and recent trends.

Small and medium-sized enterprises (SMEs) are essential drivers of sustainable economic growth in the Western Balkans and Turkey, where they make up 99% of all firms, generate 65% value added and account for 75% of employment. Nevertheless, SMEs across the region continue to face obstacles such as difficulties accessing financing, low levels of digital uptake, regulatory barriers and relatively low participation in international trade. The situation has been further exacerbated by the COVID-19 pandemic: SMEs found themselves fighting for survival amidst reduced demand, lockdowns and travel restrictions, and supply chain disruptions.  This report provides an overview of the implementation of the Small Business Act for Europe during the period 2019-22. It is designed to help policy makers design, implement and monitor policies to support the recovery of SMEs from the pandemic, boost their competitiveness based on OECD and EU good practices, and further enhance the region’s economic growth and resilience.  

The Western Balkans region has come a long way over the last two decades in achieving economic and social progress. Its people are the region’s greatest asset. Yet faced with a lack of opportunities many, particularly the young, decide to emigrate. To make the most of its future the region must invest in its attractiveness as a place to live, work and invest in. This report comes as a follow-up to the earlier publication Multi-dimensional Review of the Western Balkans: Assessing Opportunities and Constraints. It builds on an extensive peer-learning process that brought together experts from across the region and beyond. The report provides suggestions and recommendations for three strategic priorities that can help create opportunities and boost the quality of life. First, better education and more competencies are the basis for raising productivity, creating jobs, encouraging civic participation and making the region an attractive destination. Second, social cohesion is the bedrock of resilient societies and requires stronger labour market policies and effective social protection that can cushion people’s hardship and provide them with new opportunities. Third, cleaner air and more sustainable energy are indispensable for boosting the region’s quality of life and economic opportunities.

Good governance of public agencies requires the application of a set of regulatory and managerial tools to find the right balance between autonomy of agencies and adequate oversight from portfolio ministries and other actors. This paper provides insights from EU and OECD good practices, with a detailed analysis of EU acquis requirements for national regulatory agencies. New empirical evidence shows that public administrations in the Western Balkans and European Neighbourhood area lack clear policies and regulations for agency governance and misinterpret the EU acquis. This leads to a proliferation of agencies, duplication of functions and waste of public resources, a lack of accountability to portfolio ministries and generally a governance vacuum. Implementation of government policy is blocked and democratic accountability generally undermined. Finally, recommendations for better organisation of public administration are provided, based on the empirical analysis and lessons learned from SIGMA's engagement in such reforms.