Macedonia's Controversial New Labor Law

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The labor force in Macedonia is only one part of the Macedonian economy that could bring investment into the country. The country first must settle other regulations, taxes, to create a good judicial environment," he said.

Several economists and analysts refused to comment, saying they had not yet read the law. But off the record, some agreed with labor leaders that the changes would give employers far more rights than obligations.

"It is especially frightening because there are simply no protective mechanisms for the rights of the workers, and it will certainly not contribute to more foreign investment, when there are so many other things that should be resolved first in order to create a good business climate for foreign investment," said an economics professor.

"There is no mechanism that functions in Macedonia, in terms of protection of employees' rights," said one legal adviser who insisted on anonymity. "There's the possibility of taking a case of abuse of labor to the courts, but it's expensive and offers no guarantees. Employers can do pretty much anything they want with their employees for a lot of reasons, one of which is the huge unemployment rate. That creates a situation in which anybody is seen as easily replaceable, regardless of his personal qualities."

The head of an association of British investors said he had not had time to study the new law.

"During this time of transition it is sometimes a little difficult to keep up with the pace of change in laws, which is a complication on one hand but a sign of progress on the other," said Ray Power, the president of the British Business Group in Macedonia. He said the country's business climate is generally improving but is still hamstrung by bureaucracy.

"We need to start paying closer attention to the actual realization of deals, as investors are starting to complain about the time it takes to do business and are taking their business north of the border to Kosovo, which does give us some cause for concern," Power said.

ROOM FOR IMPROVEMENT

According to the UN Conference on Trade and Development's most recent World Investment Report, in 2007 Macedonia ranked 63rd of 141 economies in inward foreign direct investment and still lags well behind its potential. Last year the country took in $320 million in FDI, putting it at the bottom of the heap in southeastern Europe.

The World Bank gives Macedonia low marks for relative inflexibility in hiring and firing workers, ranking it 125 of 181 countries surveyed in its Doing Business 2009 report. As part of the government's Invest in Macedonia campaign, the prime minister boasts of a low-cost labor force, but social contributions inflate labor costs by an additional 65 percent.

The only indicators where Macedonia fared more poorly in the World Bank survey were dealing with construction permits and closing a business.

Particularly inflexible, the report showed, are regulations governing working hours. It is also more difficult to hire workers in Macedonia than in neighboring countries; it is easier, however, to fire them.

The opposition leftist Social Democratic Party of Macedonia has said it will introduce a new version of the law with strengthened rights for workers, but the government says it's too late for that.

Last month several towns in Macedonia saw workers' protests. The union coalition estimated that about 10,000 people participated but other estimates put the number at around 5,000. Either way, labor leaders called the protests a success, considering that they took place during working hours.

The unions took the matter to the Constitutional Court last month, arguing that it violates a constitutional provision that prohibits employers from cutting vacation time below a certain range, depending on time worked.

Whatever happens, things will likely remain as they are for workers like 50-year-old Mirjana B., who works in a large company that she would not name for fear of losing her job.

Mirjana said she works two shifts and regularly on Saturdays even though she and her colleagues are not supposed to work then. She receives no premium for the Saturday work because her bosses record it as night work. With the limits on night work now gone, employers could be encouraged to step up such practices.

Mirjana said her family depends on her salary, so she stays put.

Meanwhile, D.K. is looking for another job or hoping to get a scholarship somewhere out of Macedonia.

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