1. THE WELL-BEING OF
CHILDREN AND YOUNG PEOPLE
IN DIFFICULT ECONOMIC TIMES
unite for
children

2. THE WELL-BEING OF
CHILDREN AND YOUNG PEOPLE
IN DIFFICULT ECONOMIC TIMES
UNICEF Country Office, Skopje
October 2009

3. This study has been prepared by Maja Gerovska Mitev, Ph.D, Institute of
ACKNOWLEDGMENTS
Social Work and Social Policy, Faculty of Philosophy, Skopje
Field Research: Centre for Research and Policy-Making
The views expressed are those of the author and do not necessarily reflect the The author would like to thank all collaborators in the realization of this study,
policies or views of UNICEF. particularly the staff at the Centre for Research and Policy Making: Zidas
Daskalovski, Nikola Stalevski, Ana Mickovska and Bashkim Bakiu. The author
is especially grateful to the external experts engaged by the CRPM—Professor
Sasho Kozuharov, Professor Maria Donevska and Svetlana Trbojevic—for
their thorough and systematic analysis in relation to the UNICEF regional
CIP – Каталогизација во публикација questionnaire on the impact of the crisis. Finally, the author is thankful for the
Национална и универзитетска библиотека „Св. Климент Охридски“, Скопје practical guidance and support provided by the UNICEF Country Office. Last
but not least, special gratitude is extended to all surveyors and respondents
364.4-053.2/.6(497.7)”2008/09”
to the field questionnaire and participants in the focus groups engaged in the
process of this study.
GEROVSKA Mitev, Maja
The well-being of children and young people in dificult economics times / [by Maja
Gerovska Mitev]. - Skopje : UNICEF, 2010. - 82 стр. ; 21см
Библиографија: стр. 68-70. - Содржи и: Annex
ISBN 978-9989-116-54-4
а) Социјална заштита на деца и млади – Македонија – 2008-2009
COBISS.MK-ID 82515978 3

4. ACRONYMS CONTENTS:
CCT – Conditional Cash Transfers Acronyms 4
Executive Summary 7
EU – the European Union
Introduction 11
FES – Friedrich Ebert Foundation
GDP – Gross Domestic Product PART ONE: 15
THE ECONOMIC AND SOCIAL DIMENSIONS
IMF – the International Monetary Fund OF THE ECONOMIC CRISIS
MDG – Millennium Development Goals
The economic dimension of the current crisis and its 15
MICS – Multiple Indicator Cluster Survey
impact on households
MKD – Macedonian Denar (currency) The social dimension of the economic crisis and its 18
NBRM - National Bank of RM impact on households
The Government’s response to the economic crisis 23
NPF – New Pension Fund
PAYG – Pay-as-you-go PART TWO: 29
KB – Komercijalna Banka THE WELL-BEING OF CHILDREN AND YOUNG PEOPLE
DURING ECONOMIC CRISIS - RESEARCH RESULTS
UNICEF – United Nations Children Fund
UNDP – United Nations Development Programme Methodology 30
Standards of Living 34
VAT – Value Added Tax
Education 41
Health and Nutrition 46
Housing 50
Leisure Time 53
PART THREE: 61
KEY FINDINGS AND RECOMMENDATIONS
Key Findings 61
Recommendations 66
References 68
4 Annex 70
5

5. EXECUTIVE SUMMARY
The main objective of this study is to engage in additional economic activities
identify and analyse the effects of the to supplement reduced household in-
difficult economic times and the cur- comes. These assumptions were made
rent economic crisis on the well-being on the basis of changes that have oc-
of children and young people through- curred among households, children and
out the former Yugoslav Republic of young people in twelve month period
Macedonia. An additional objective is (from September 2008 to September
to provide an assessment of the vul- 2009).
nerability of those families most at risk
in difficult economic times. The methodology employed in this
study involved a combination of quali-
For the purposes of this study, the fol- tative and quantitative research. The
lowing key assumptions were made as qualitative research methods included
to the probable impacts of the financial a review of policy and research litera-
crisis on the well-being of children: ture, a summary of all available statis-
(i) a rise in unemployment, a reduction tical data, and consultation with focus
in salaries, and greater irregularity in groups. The focus groups were com-
the payment of wages—all of which posed of 5 targeted categories of the
have a negative impact on the ability population:
of households to provide children with (i) families with members recently
regular access to basic needs and serv- made redundant from the textile and
ices; metal industries;
(ii) reduced access to education and (ii) families living on remittances;
poorer educational performance; (iii) families depending on agriculture
(iii) a reduction in children’s exercise as their main source of income;
of their right to basic healthcare and (iv) larger families with five or more
a corresponding deterioration in chil- members; and
dren’s health; (v) families receiving child allowance.
(iv) a reduction in household expendi-
ture on housing and the needs of chil- The quantitative research involved a
dren; and primary field survey based on a nation-
(v) a decrease in children’s leisure-time ally representative, stratified sample of 7
and recreation as a result of the need to households with children. The sample

6. was stratified as follows: according under consideration, with the conse- Although this study does not assert a di- This study further concludes that a
to ethnicity, with an equal number of quence that more than half (56.4%) rect and significant relationship between child-friendly policy during economic
households from the country’s Mac- were unable to fully provide for the the economic crisis and children’s right crisis should be based on a more ex-
edonian, Albanian, Turkish and Roma schooling needs of their children (this to education and basic healthcare, it is pansionary fiscal policy, including in-
communities; according to region, with applies primarily to the cost of school important to note that financial difficul- vestment to generate greater employ-
an equal number of households per re- supplies, but also to travelling and oth- ties during the period under considera- ment, investment in basic services and
gion; and according to location, with er expenses). In addition, the economic tion led to 8.8% of children experienc- incentives to increase consumption in
an equal number of households in ur- crisis contributed towards a reduction ing problems with access to education, terms of housing, goods and services.
ban and rural locations. This stratifi- in the incomes of approximately one while 9.3% lacked access to regular
cation made it possible to analyse the third of households, further restricting health check-ups. This study signals the need for more
impact of the economic crisis on those their ability to mitigate the effects of diverse, improved and regular official
households generally considered to be the crisis and provide for their children Similarly, while the economic crisis statistics on households, with data
most socially vulnerable: Roma fami- may not have directly caused a dete- relating to health, housing and leisure
lies, families living in less developed While the economic crisis may not rioration in the housing conditions of time. Such data would provide a more
regions, and families living in remote have contributed directly towards an children, this study shows that more accurate insight into different aspects
than 40% of children were living in of household standards of living, in the
locations. increase in poverty among children,
overcrowded dwellings in the year of form of disaggregated data in relation
this study indicates that 48.1% of the
the economic crisis, sharing premises to all household members (including
The study acknowledges the difficulty households interviewed were living be-
with several other families. Lack of suf- children and youth). An improved da-
of establishing a clear and direct link low the poverty line in terms of their
ficient rooms—and lack of privacy, in tabase would also enable comparisons
between the economic crisis and the household monthly incomes over the
particular—can have a negative effect over and between years.
well-being of children. This difficulty twelve-month period. This figure for on children’s development, especially
arises from the following causes: the poverty differs from the official figure of on their learning capacities. The study The study also indicates the need to
lack of available national baseline data 28.7% for 2008 primarily because the also found that 57.4% of households raise awareness amongst the socially
concerning regular households in a official calculation is based on house- reduced expenditure on their children’s vulnerable population of their basic
number of important areas (e.g. the hold expenditure while the figure in our needs over the 12-month period un- rights to social protection and the obli-
lack of specific data on health, hous- study is calculated according to house- der consideration, primarily in the ar- gations which stem from these rights.
ing, and leisure time)—data which hold income per month.1 Another rea- eas of clothing, entertainment, pocket- Awareness-raising should serve both to
could be compared over and between son for this difference lies in the strati- money, and school supplies (including expand the coverage of health protec-
years; the difficulty of separating the fication of households in the sample expenses for extra-curricular activities tion among children and increase their
impact of pre-existing unfavourable so- employed in our study, comprising an such as foreign language classes, com- access to education.
cio-economic conditions in the country equal number of households from eth- puter courses, etc.).
(i.e. high rates of unemployment and nic groups, an equal number of house- Finally, on the basis of the trends ana-
poverty) from the impact of the global holds from rural and urban families, and In light of the trends observed in the lyzed, the study proposes a set of rec-
economic crisis; and specific challeng- an equal number of households per sta- well-being of children in the year of ommendations for greater financial sup-
es related to surveying the well-being tistical regions—a stratification which the economic crisis, this study sug- port and active measures to improve
of children—such as changes in health allowed a greater focus on households gests that government support should youth employment opportunities, to
and nutrition conditions. generally considered to be most at risk. be more specifically targeted towards prevent child poverty and child labour,
It is also disturbing to note that 21.7% helping the most vulnerable households and to enable the development of bet-
Despite the above mentioned chal- of the households interviewed for this with children. ter housing and living conditions.
lenges, this study outlines important study were living without any income
information as well as baseline data in or in conditions of extreme poverty.
relation to the living standards, educa- The significant number of households
tion, health, housing and leisure time living in poverty implies that many chil-
of families during times of economic dren lacked essential financial resourc-
crisis. es and adequate living standards dur-
ing the period of economic crisis. This
This study shows that the well-being of especially applies to younger children,
children and their access to goods and as the highest proportion of children
services during a period of economic living in poor households were aged be-
crisis is most affected by increases in tween 0 and 6. As a consequence, the
household living expenses due to infla- right of children to basic social services
tion. Rising living expenses affected such as education and healthcare was
89.3% of households in the period placed at risk.
8 1
The Eurostat calculation of poverty is also based on household income. 9

7. INTRODUCTION
The pressures and threats arising enrolment of children in education and
from the global financial and econom- a rise in the occurrence of child aban-
ic crisis—most visible in the period donment (Harper et al., 2009). The
2008/2009—had diverse effects in Asian economic crisis of 1997–98 saw
different places. In countries already a decline in birth rates, an increase in
undergoing difficult economic times, malnutrition amongst children under the
such as the former Yugoslav Republic age of five, and a rise of up to seven
of Macedonia, the global financial cri- per cent in child mortality rates (ABC,
sis exacerbated pre-existing problems 2009). Also during the Asian economic
such as limited foreign investment and crisis, it was found that young work-
high rates of unemployment and pov- ers aged between 15 to 29—especially
erty, all of which contribute to high young female workers—were the ones
levels of social insecurity. In such an who suffered most from job losses
environment, finding appropriate cop- (Lee and Rhee, 1998). In such circum-
ing strategies at both national and in- stances, the behaviour and activities
dividual (household) levels proves very undertaken by parents and other adult
difficult. family members are extremely impor-
tant for children’s mental, physical and
In times of economic constraints, chil- material well-being. The challenges of
dren can be particularly adversely af- financing education and finding appro-
fected. Their regular activities and their priate employment, moreover, become
access to goods and services may be far greater for young people during pe-
restricted or even totally halted, with a riods of economic crisis.
negative effect on their overall develop-
ment, health and comfort. As depend- The purpose of this study is twofold.
ent family members, children cannot It will attempt to analyse the overall
individually contribute to the mitigation wider economic and social implications
of such negative influences. Evidence on children caused by the difficult eco-
from Central and Eastern Europe and nomic conditions in the country, and the
the Commonwealth of Independent response of the government to the cri-
States (CEE/CIS) shows that economic sis. In addition, it will attempt to assess
transition has led to reductions in the the most recent changes in standards 11

8. of living amongst households in order regarding the socio-economic effects
to identify the major threats posed by of the crisis on children in the country.
the current economic crisis to the well- The sources for the data considered
being of children and young people in this first chapter are mainly govern-
throughout the country. mental institutions such as the State
Statistical Office, the National Bank
Beyond these two goals, the study will of the Republic of Macedonia (NBRM),
also aim to illustrate how macroeco- the Ministry of Labour and Social Poli-
nomic measures and social policies cy, and the Employment Agency. The
in times of crisis can be highly effec- timeframe of the analysis spans from
tive in mitigating the difficulties faced 2007 to mid-2009.
by vulnerable households. As noted
by other authors (de Vylder, 2004), Due to the scarcity of more recent
the adoption of a pro-child strategy in data, particularly regarding the well-
times of financial crisis does not entail being of children and young people in
the pursuit of imprudent policies lead- the period of economic crisis analysed
ing to high rates of inflation. Indeed, here (Q4/2008 and Q1–Q3/2009), the
the effects of high inflation on income study employed a primary research tool
distribution tend to be worst for poorer in the form of a national stratified sam-
households, as the rich have greater ple in order to assess the impact of the
opportunities than the poor to diversify economic crisis on children during the
their assets and activities as a safe- last 12 months. The results of this re-
guard against inflation. search are given in the second part of
the study, organised into the following
On the other hand, monetary policies five sections: living standards; educa-
designed to control inflation, such as tion; health and nutrition; leisure time;
the imposition of higher interest-rates, and housing. In addition, this second
can be labelled child-hostile since they part provides an analysis on the basis
have a direct bearing on the afford- of focus group discussions. The house-
ability of acceptable dwellings. Unde- holds which participated in these dis-
veloped financial markets and lack of cussions are generally considered to be
access to credit for poor families also those most at risk during economic cri-
have a negative impact in areas related sis: households with members recently
to housing and to the development of laid-off or recently unemployed; house-
small-scale and micro-enterprises. For holds dependent upon remittances;
this reason, moderately inflationary households with numerous members;
policies tend to have a less negative agrarian households; and households
impact on young families with chil- receiving child benefits. These house-
dren—families, that is, which are often holds were selected because they tend
indebted. As indicated by de Vylder, an to be under-represented in most official
erosion of such families’ debts through nationally representative samples.
inflation may be in their interest. Apply-
ing de Vylder’s theory, this study will Finally, the study ends with a set of con-
analyse whether current government clusions and policy recommendations
measures in response to the economic based partly on an analysis of official
crisis can be defined as pro-child, child- government data and partly on results
neutral, or negative child policies. On from the primary field research and the
the basis of this analysis, the study will focus group discussions. In this way,
offer recommendations for child-friend- the study delivers concrete baseline in-
ly policies that can be implemented in formation and data on the well-being of
times of economic crisis. children and young people during the
economic crisis in the country, while
This study is structured in three parts. also offering policy proposals to address
The first part provides a review of pol- these problems in periods of global and
icy and research literature, as well as national economic constraints.
12 a recap of the available statistical data
13

9. PART ONE:
THE ECONOMIC AND SOCIAL
DIMENSIONS OF THE CRISIS
The economic dimension of the
crisis and its impact on households
The global financial crisis increased eco- the middle and upper income groups,
nomic insecurity in the country. This mainly due to the higher demand for
had both a general negative impact in less-skilled workers on lower wages.
terms of the reduced macroeconomic However, a study of social spending
stability of the country and specific during economic crises in seven Latin
negative impacts at the level of house- American countries has shown that
holds in terms of increased uncertainty every 1 percent decline in GDP was
as to future income, purchasing power associated with a decline in spending
and financial capacity. per poor person of about 2 percent (De
Ferranti et al., 2000; Alderman and
Although GDP growth in 2008 amount- Haque, 2006). Comparative forecasts
ed to a substantial 5%, quarterly analy- of real GDP growth rates for 2011 put
sis shows growth dropped significantly the country’s growth rate close to that
in the last quarter of 2008 to 2.1%. In of Romania, higher than that of Croatia,
2009 GDP continued to decline and the but lower than the rates of Bulgaria and
year ended with a negative growth of Turkey (Table 1).
-0.7%. The rate of inflation for 2009
was -0.8%.1 Monetary policy was tightened during
2008 by raising the reference interest
While it is widely recognized that a de- rate on several occasions. As indicat-
cline in GDP leads to an overall wors- ed by the NBRM (2009), such upward
ening of household welfare, not all pressure on interest rates combined
households are equally affected. Sahn with increased inflationary pressure,
(2002), for example, argues that the especially on prices for food and ener-
welfare of the poor in such situations is gy products, had an adverse effect on
reduced much less than the welfare of the purchasing power of households
1
State Statistical Office official data
15

10. Table 1: Comparative real GDP growth rates of the former Yugoslav Republic Graph 1: The structure of household loans in 2008 (by type of interest rate)
of Macedonia, other EU candidate countries, and the EU-27
1.4%
2007 2008 2009 2010 2011
Former Yugoslav Republic of Macedonia 5.9 4.9(f) - 0.81 1.5 (f) 2.5(f) 11.3%
European Union (27 countries) 2.9 0.8 - 4.2 0.7 (f) 1.6(f) Fixed Interest Rate
Croatia 5.5 2.4 - 5.8 (f) 0.2 (f) 2.2(f)
Variable Interest Rate
Turkey 4.7 0.9 - 5.8 (f) 2.8 (f) 3.6(f)
87.3%
Romania 6.3 6.2 - 7.1 0.5 (f) 2.6(f) Adjustable Interest Rate
Bulgaria 6.2 6.0 - 5.0 - 1.1 (f) 3.1(f)
(f) = forecast Source: Eurostat, 2010
Source: NBRM (2009), on the basis of data submitted by the banks
and restricted their ability to negoti- report for 2008 suggests that the ten-
ate the servicing of existing debts or dency of banks to transfer interest
further decrease the profits of both pri- outlook for their improvement (NBRM,
the arrangement of new loans from the rate and currency risks to their clients
vate pension funds. The risk to financial 2009, p.21). Furthermore, private
banks. represents an additional risk for the
stability and the threat to the house- transfers covered only 53.6% of the
household sector in terms of increased
hold sector from negative rates of re- trade deficit in 2008, as opposed to
The expenditure of households on indebtedness and reduced capacity to
turn on investments in pension funds is 84.1% in 2007, with a tendency for
personal consumption exceeded their repay debts (2009, p. 31). The cur-
currently mitigated by the fact that the further decline. The lower inflow of
disposable income in 2008. Essential rency risk and the possibility of further
first important liabilities for payment private transfers has an impact on the
products accounted for approximately changes in interest rates directly con-
out of these funds will only fall due in primary sources of existence for many
73% of such expenditure in this period, tribute to an increase in the financial
twenty to thirty years. However, this is families and their children. This im-
almost half of which comprised expens- liabilities of households, leading to a
an important signal for pension policy pact is especially strong among certain
es for food and beverages. This finding decline in the wealth and standard of
which should be taken into considera- ethnic communities, such as Albanian
is mirrored by the average value of the living of households and a threat to
tion so as to diminish risks to future and Turks, who rely on these transfers
consumer’s basket for food and bev- their credit worthiness.
pensioners. more than other ethnic communities in
erages in December 2008, at 72.4%
the country. A statement by the presi-
of the average net salary in the same Many households suffered a loss of
Although there are no reliable statistics dent of the Chamber of Commerce of
period. Bearing these figures in mind, capital in this period due to negative
on the precise percentage of the Mac- North-Western Macedonia confirms
together with the fact that changes in annual rates of return on pension fund
edonian population working abroad, this observation: referring to the im-
food prices accounted for some 70% assets and, to a lesser extent, reduced
the reduced inflow of private transfers pact of the financial crisis, he stated
of average inflation in 2008, it is clear capital gain from securities traded on
during 2008 indicates that the global that the two major problems in the re-
that any future rise in the prices of es- the official market and the market for
recession resulted in a loss of jobs for gion were the low demand for services
sential products will trigger an increase public companies. Annual rates of cap-
a large number of Macedonian citizens and the reduced transfer of funds from
in household expenditure with the po- ital gain on securities were negative
working abroad and a reduction in the abroad.3
tential to decrease standards of living for almost every month of 2008. The
incomes of those who remained em-
and reduce household funds set aside annual nominal rate of return on pen-
ployed. Research from other countries Particularly exposed to the negative
as savings (NBRM, 2009, p. 27). sion funds became negative from May
shows that the largest percentage of impacts of the crisis were those house-
2008 and registered the most negative
received remittances is spent on ele- holds with members employed in the
Tightened conditions of lending intro- level of 9.9% toward the end of 2008.
mental needs such as food and cloth- sectors most affected by the economic
duced by domestic banks resulted in a In 2009, members of the NPF private
ing, while a significant share is also downturn, such as the metal and textile
lower demand for credits on the part pension fund lost all the profits they
spent on education and healthcare.2 industries. Low demand has affected
of households in late 2008 and early had gained over the preceding three
The inflow of private transfers was espe- all industrial sectors, especially those
2009. This tightening of credit condi- years. According to data from March
cially low during 2008, falling by 5.8% which are export-oriented, but it is the
tions weakened the coping strategies 2009, insured persons from NPF suf-
compared to 2007, with a worsened metal industry that was hit hardest as
of some categories of the population— fered a loss in the amount of -0.05%,
e.g. middle income groups—who use while persons insured by the other pri-
loans as a means of paying essential vate pension fund, KB, increased their
2
For more information please see: “Dynamics of Remittance Utilization in Bangladesh”(2005), IOM;
Acosta, A. (2005). Remesas de la Emigracion y su Impacto Socioeconomico, mimeo, Ecuador Field
bills and for services (household mort- deposits by only 2.16%. The duration Office, UNICEF; Bryant, J. (2005). Children of international migrants in Indonesia, Thailand, and
gages, utility bills and summer holi- and severity of the financial crisis will the Philippines: A review of evidence and policies. Innocenti Working Paper, UNICEF; Coronel, E.
& Unterreiner, F. (2005). Social Impact of Remittances on Children’s Rights. The Philippines case.
16 days). In addition, the NBRM financial continue to impact upon and probably UNICEF, Manila. 17
3
Interview on TV – A1, 29.04.2009

11. a result of last year’s fall in the prices the already difficult social conditions of Table 2: Activity, Employment & Unemployment Rates among Youth in the
of metals on international markets—a those households which are generally country in the 2nd Quarter of 2009
fall which led to many companies being considered the most vulnerable, such
unable to cover their production costs. as households with no employed mem- 2009/II Activity rate Employment Rate Unemployment Rate
The companies in this sector attempt- bers, multi-member households, and
ed to avert the need to lay off work- those living on subsistence agriculture. Total (15-24) 35.7% 16.1% 54.9%
ers by sending over 2,000 employees It may be assumed that children from
Female (15-24) 28.2% 11.4% 59.4%
on mandatory leave of absence while these types of households experienced
maintaining the production process at difficulties in terms of regular school Male (15-24) 42.8% 20.5% 52.2%
minimum capacity and working to com- attendance, regular health check-ups,
plete deals commissioned before the lower possibilities for extra-curricular Source: State Statistical Office, 2009
start of the global economic downturn. activities, as well as increased demand
The situation is similar in all export- for extra household work. of unemployment in the country. Al- al employment, the unemployment rate
oriented sectors, such as the textile though high unemployment affects all rose again in the 4th quarter of 2008 to
and food industries. The construction
sector, meanwhile, has suffered from The social dimension age categories, it is particularly dev-
astating among young people aged
0.5 percent more than the 3rd quarter
of 2008. In these two critical quarters
falling investments and the restrictions
placed by banks on access to loans.
of the crisis and its between 15 and 24. Rates of youth of 2008, the first and fourth, the ma-
participation in the labour market show jority of jobs were lost by workers in
impact on households that young females are the category the 50–64 age-group. In the last quar-
Overall analysis of the economic con-
ditions in the country in 2008/2009 and children most affected by high unemployment:
their rates of activity, employment
ter of 2008, a rise in unemployment
is also noticeable among young people
implies that the global economic crisis and unemployment are not only lower aged 15–24. However, it seems that
has worsened the economic position Unemployment
than average but also lower than these the overall unemployment rate stabi-
of households by limiting their sources rates among males aged 15–24. The lized thereafter, remaining at 31.9% in
of income, increasing their difficulties Although there is a very thin line be-
reasons for this may be connected to the second quarter of 2009.
in servicing household debts, reducing tween the economic and social dimen-
ethnic and cultural factors, as young
their possibilities for borrowing, and sions of the crisis, with a number of
females of Roma, Albanian and Turk- According to ethnicity, and on the ba-
exacerbating already difficult condi- overlapping features, this part of the
ish origins tend to be more included in sis of data given by the Employment
tions for employment. Analysis of the study seeks to outline the additional ef-
family obligations at a much younger Agency, the majority of jobs losses in
official data shows that the worst-af- fects of the global economic crisis on
age than ethnic Macedonian females. the period between January and April
fected households are those with at the labour market, poverty, social wel-
Lower educational attainment among 2009 were among Bosniacs, Roma and
least one member employed in one of fare, the living standards of vulnerable
women, particularly from the minority Albanians (Table 4). The educational
the export-oriented industries, such as groups, housing, and other factors.
ethnic communities, may be an addi- status of the registered unemployed
the metal, mining, textile, and food in- tional factor in their lower employment shows that the rise in the number of
dustries, and those households whose One of the major threats arising from
and unemployment rates. unemployed from January to April
income depends mostly on remittanc- the global economic crisis is the risk
2009 was highest among those with-
es. Similarly, the crisis has exacerbated of a rise in the already high rate
According to official statistics, unem- out education, those with 3 years of
ployment rose by only 0.1 percent in secondary education, and also among
Graph 2: Private transfers (in Millions of Euro) the first quarter of 2008 compared to those with university degrees.
350 the last quarter of 2007 (Table 3). Af-
ter a more stable period in the 2nd and 3rd Despite the stabilisation of unemploy-
300 quarters of 2008, probably due to season- ment figures in 2009, the critical peri-
250 Table 3: Unemployment rates in selected quarters of 2007 and 2008
200 Unemployment rate Unemployment rate
150 Age 2007 / IV 2008 / I 2008 / III 2008 / IV
15-24 61.3 58.4 53.9 57.4
100
25-49 32.1 32.5 31.2 31
50 50-64 28.3 28.6 26.5 28
0 65+ 1.2 11.7 3.5 8.2
Q1.07 Q2.07 Q3.07 Q4.07 Q1.08 Q2.08 Q3.08 Q4.08 Total 34.7 34.8 33 33.5
18 Source: NBRM, 2009 Source: Employment Agency 2009 19

12. Table 4: Numbers of registered unemployed at the Employment Agency Table 5: Social financial assistance recipients during 2008
in January and April 2009, according to ethnic affiliation
NUMBER OF RECIPIENTS OF SOCIAL FINANCIAL ASSISTANCE IN 2008
Growth / decline in
January 2009 April 2009 absolute numbers Growth / decline in %
Total 348,369 349,879 1,510 0.43 70.000
Macedonians 220,232 219,798 - 434 - 0.20 60.000
Albanians 84,787 86,356 1 569 1.85
Turks 13,665 13,758 93 0.68 50.000
Roma 17,929 18,208 279 1.56
Serbs 2,850 2,892 42 1.47 40.000
Vlachs 377 380 3 0.80 30.000
Bosniacs 352 384 32 9.09
Other 8,177 8,103 -74 - 0.90 20.000
Source: Employment Agency 2009 10.000
0
JANUARY
FEBRUARY
APRIL
MARCH
MAY
JUNE
JULY
AUGUST
SEPTEMBER
OCTOBER
NOVEMBER
DECEMBER
ods of late 2008 and early 2009 show Social Assistance
that the economic crisis mostly affected
the jobs of the following social groups: A similar trend was noticeable in the
older workers; those affiliated with number of people receiving social as-
ethnicities other than Macedonian; and sistance in the same period. While this Source: Ministry of Labour and Social Policy, 2009
those with lower levels of education. number fell from 62,019 in January to
Children living in these types of house- 50,714 in October 2008, the figure The actual amount of money provided 29.70 EUR) shows that social financial
holds are more likely to experience in- rose again in November and December in the form of social assistance is also assistance is almost three times low-
creased tensions and problems in their to 52,507 and 53,105 respectively, a very important factor, both in terms er than the official poverty threshold.
everyday lives due to reductions in representing 9.4 % of all households of the extent to which it enables recipi- Such low amounts of social financial
their families’ financial capabilities and in the country. This rise is consistent ents to maintain an adequate standard assistance certainly do not serve to al-
resources brought about by one or both with the increase in the number of reg- of living in difficult economic periods leviate poverty or help people out of
of their parents losing employment. The istered unemployed for the same pe- and the extent to which it potentially poverty. Efforts thus need to be made
economic crisis also increased youth riod (see Tables 4 & 5). In addition, it contributes towards the reduction of to increase the amount of social finan-
unemployment, thus contributing to a can be estimated that the social pro- poverty. Judging by the amount of so- cial assistance so as to enable those
greater exclusion of young people from tection scheme does not fully cover a cial financial assistance currently pro- living below the poverty line to attain
the labour market. Young women were number of social categories, such as vided in the country , however, it is an adequate standard of living. This is
particularly affected by these factors— the unemployed and the elderly. Com- difficult to claim that such assistance especially important in times of eco-
especially young women from Albanian prevents poverty or helps substantially nomic crisis when vulnerable groups
paring the numbers of registered un-
and Roma ethnic backgrounds. improve the living standard of its bene- are even more exposed to the negative
employed people (343,363 in Decem-
ber 2008) with the numbers of social ficiaries. The monthly amount of social effects of increased prices for essential
The rise in the number of people ap- financial assistance is low, amounting goods and services as well as reduced
financial assistance recipients (53,105
plying for unemployment benefits at to 35.5 EUR for an individual in 2009, employment opportunities.
in December 2008), it seems that al-
the end of December 2008 and in early equivalent to 10% of the average net
most 85 percent of those who are reg-
2009 further indicates that the impact salary paid in May 2009 (20,112 MKD; The increased rate of inflation was not
istered unemployed are not covered by
of the global economic crisis was at its equivalent to 329 EUR) and 22% of accompanied by a corresponding in-
the social protection system. Even if
most severe in these months. There the average pension in January 2009 crease in the amount of social financial
the number of recipients were double
were 300 more unemployment ben-
(presuming that there are two unem- (9,865 MKD, equivalent to 161 EUR). assistance. From the beginning of 2008,
eficiaries in December 2008 than in
ployed persons per household receiv- This amount of social financial assist- year-to-date inflation grew steadily,
November, making a total of 23,565.
ing social financial assistance), the fig- ance is much lower than the poverty reaching 10.2 percent in March before
Following a brief stabilisation of these
ure still implies that around 70% of the threshold. In 2008, the poverty line fluctuating and finishing at 8.6 percent
figures in January 2009, an additional
registered unemployed do not receive (calculated as 70% of median equiva- in August. Higher prices for food and
increase was noted during the months
social financial assistance.4 In addition, lent household expenditure) was set at fuel were the greatest contributing fac-
of February and March 2009, when the
older individuals are not covered by the 65,398 MKD, equivalent to 1,066.79 tors to this rise in inflation. In this con-
number of beneficiaries rose to 24,515
social protection system, as only 2.9% EUR per year. A comparison between text, it is important to note the effects
and 25,380 respectively. The major-
of the recorded beneficiaries are above the poverty line (5,449 MKD or 88.83 of inflation on living standards in 2008.
ity of these were people who had lost
61 years of age. EUR) and the amount of social finan- Although nominal salaries increased for
their jobs due to redundancy.
cial assistance provided for individu- some sections of the population, real
According to the Law on Social Protection, those eligible for social financial assistance include als per month in 2008 (1,825 MKD or salaries did not keep up with inflation;
20 21
4
persons who are fit to work but are not socially provided for.

13. thus higher inflation eroded real dispos- increase of 7.6% in 2008), followed  A potential increase in the small tect the contributions paid into private
able household incomes, causing a de- by households in urban locations out- but significant group of children pension funds. The government should
terioration in average living standards side of Skopje (an increase of 6.2% in who are under-nourished and/or also pay more attention to addressing
and potentially pushing some families 2008). fail to thrive; the problems faced by the following
into poverty. Under these circumstanc-  A potential increase in the number high-risk social categories: households
es, the affordability of basic services, Other sources also indicate an increase of street children. with children, particularly those with
particularly for poor families with chil- both in poverty among certain types of 5 or more members elderly workers;
dren, is an issue of concern (UNICEF households and in the overall poverty There are some indications that these unemployed people who have no edu-
2009, New York) rate. For example, figures from the last negative effects of the crisis are already cation or only incomplete education;
two UNDP People-Centred Analysis Re- underway. For example, there has been households amongst certain ethnic
Poverty ports (2008 and 2009) imply a slight as increase in the number of public groups whose members are not in paid
increase in the total poverty rate. The kitchen beneficiaries and an increase in employment and who are not part of
The rate of poverty in the country first research undertaken in December the number of SOS phone calls report- the social protection system;; as well
is exceptionally high. Calculated by 2007 showed an income-based pov- ing abuse and violence against children. as households living in urban centres
relative method as 70% of median erty rate (as 60% of median equivalent According to Megjashi - The First Chil- outside of Skopje, and those in rural ar-
equivalent household expenditure, this income) of 26%, with an increase of 2 dren’s Embassy, the year 2009 saw an eas. In times of economic crisis, these
rate stood at 28.7% in 2008, which percent to 28% recorded six months increase of 9% over the previous year categories should be supported by in-
is higher than poverty rates in Roma- later in July 2008. Moreover, the re- in the number of phone-calls reporting creases in the amount and duration of
nia (18.6%), Turkey (17.8%), Croatia port in 2009 noted the exceptionally violence and abuse against children. direct social transfers, but also by the
(17.4%) and Bulgaria (14.1%). high number of children under 15 who While the economic crisis may not be adoption of a greater number of active
are at risk of poverty, noting a deterio- the primary cause, it is certainly an ex- measures to increase employment op-
Despite the fact that official data for rating trend compared to the PCA re- acerbating factor which increases the portunities.
2008 shows a 0.6 percent decrease in port from 2008. probability of the occurrence of these
the poverty rate compared to 2007, an negative social trends.
analysis of poverty by type of house- Access to Basic Services
holds reveals that there was actually All of the above suggests that there
will be an increased demand for so-
The Government’s
an increase in poverty in 2008 among Taking into account the lack of avail-
the category of ‘Other households with able and up-to-date national data on cial protection benefits and services response to the
children’ (see Table 6). This ‘Other’ other social aspects that might be neg- in times of economic crisis. The social
group is also the largest, representing atively affected by the economic crisis, protection system needs to respond to economic crisis
46.7% of the poor population. If one it can be speculated on the basis of an such increased demand in a timely and
adds couples with children, who con- alternative analysis of the effects of the pro-active manner. The duration and Economic Anti-crisis Measures
stituted 10.2% of the entire poor pop- crisis in the Western Balkans (Stubbs, amount of social protection benefits
ulation in 2008, then the total number 2009), that the following additional should be temporarily increased in or- The initial impact of the global econom-
of households with children living in social impacts may be expected in the der to mitigate the negative effects of ic crisis in November–December 2008
poverty is 56.9%, implying that the country: the crisis. The pension system should coincided with national pre-election
majority of poor people in the country also be revised and the governmental campaigns for presidential and munici-
are households with children.  A reduction in public expenditure pension supervision agency should pro- pal elections, with the consequence
which may in turn lead to a re-
Poverty amongst multi-member house- duction in expenditure on children
holds also increased in 2008 com- (child benefits, kindergarten serv- Table 6: Relative poverty by type of household (70% of median
pared to 2007. Thus, the poverty rate ices, etc.); equivalent expenditure)
amongst households consisting of five
persons in 2008 reached 33.2%, an in-  An increase in pressure on young 2007 2008
Headcount Poverty gap Composition of Headcount Poverty gap Proportion of
crease of 2.6% over the previous year. people to drop out of secondary or index index poor index index poor population
A slight increase of 0.1 percent was higher education in order to sup- Total 29.4 9.7 100.0 28.7 9.2 100.0
also noticed among households with 6 port their families; Elderly 26.7 7.9 4.6 22.8 7.3 4.9
persons and more. Couples with
 Increased pressure on family rela- children 27.1 9.6 10.4 25.5 9.9 10.2
Furthermore, the poverty level in- tions due to poverty and unemploy- Other households
with children (single
creased amongst households in rural ment, linked to higher incidences parents, unmarried 33.4 11.1 48.5 33.7 10.6 46.7
areas and in urban locations outside of of depression, alcohol abuse, and couples)
Skopje. A comparison with the data for violence—all of which may lead Households without
children 26.3 8.4 36.4 25.8 8.0 38.3
2006 shows that the households most to higher levels of child abandon-
affected were those in rural areas (an ment;
22 Source: State Statistical Office, 2009 23

14. that the Government spent significant to cover between 50,000 and 60,000 welfare, it must be emphasised that a period of broad consultation as to
time and energy on the election agen- socially vulnerable households. Once these governmental activities under- which groups were to be covered and
da. However, in this period, the Gov- implemented, this measure may prove taken in 2009 had been planned and to which domains it was to be applied,
ernment adopted two anti-crisis pack- quite beneficial for many households announced long before the onset of the this project was finally initiated in Sep-
ages: one focused on writing off the who lack sufficient resources to serv- global economic crisis. Hence they can- tember 2009 with the adoption of
debts of insolvent companies, the oth- ice their household debts. Its main dis- not be accurately defined as measures the Government Programme for Con-
er announcing plans to invest eight bil- advantage is that its realization was taken against the crisis, although their ditional Cash Transfers for Secondary
lion EUR in public works. However, as planned for the following year and thus effect in certain cases may prove ben- Education. The beneficiaries of this
these measures do not target the real the negative effects of the crisis were eficial in times of increased economic programme are to be high-school stu-
‘losers’ from the economic crisis, their felt for longer, especially as the heating constraints. dents living in families which receive
impact on the most vulnerable social season begins in mid-October. Moreo- social financial assistance, as well as
groups was negligible. ver, given that a significant proportion Other Relevant Ongoing Child-focused students in families where one of the
of the vulnerable population use wood Initatives parents is briefly engaged in a socially
A third ‘anti-crisis’ package was an- as their main heating resource rather beneficial public works project, and
nounced after the elections in April than electricity, their needs should also In 2008, the Government adopted has therefore had their social finan-
2009. This package focused on more be taken into account as part of the a Law on Textbooks whereby text- cial assistance temporarily halted. The
realistic measures, including: social anti-crisis measures. books were issued free of charge to main condition attached to this pro-
1) a new and re-balanced budget, re- all students in primary and secondary gramme is that high-school students
duced by 9% and adjusted according A second anti-crisis measure with a di- schools. This measure was seen as should demonstrate regular school at-
to the macro-economic projections of rect social impact was announced only providing support in the implementa- tendance, i.e. at least 85% of the to-
1% GDP growth and 1% inflation for a few days after the Energy Poverty tion of the government’s previous leg- tal number of classes (hours) accord-
2009; Action Plan. This measure is entitled islation on compulsory secondary edu- ing to the school programme. Fami-
2) the provision of credit support for ‘SOS Shops’ and envisages governmen- cation which came into effect in the lies will receive an amount of 12,000
firms and enterprises in the amount of tal subsidies for beneficiaries of per- school-year 2008/09. The textbook MKD (196 EUR) annually, to be paid
100 million EUR through the European manent financial assistance, enabling project will be implemented in three in four separate instalments. The to-
Investment Bank; and them to purchase essential products phases and will cost the Government tal amount of money provided though
3) additional measures for support- with a 30% discount. Social assist- over 1 billion MKD (16 million EUR). the World Bank for this project is ap-
ing firms and enterprises, including ance beneficiaries can buy discounted However, at the beginning of the proximately 19,300,000 EUR. It is es-
measures for simplifying the export of products up to the amount of the social school-year 2009/1010 there were still timated that this programme will cover
goods, cost reductions, etc. As with assistance they receive, but not more problems with the full implementation around 18,800 high-school students
the previous package, this did not in- than 5000 MKD (81 EUR) per month. of this project due to a lack of con- from households receiving social finan-
clude any direct social measures; nor These shops are planned only for Sko- tractual arrangements with the authors cial assistance. In addition, this project
did the economic measures focus on pje initially, while additional shops may of the textbooks: problems which de- should also cover health protection—
the most vulnerable groups in society. open in other cities in future according layed both the distribution of the text- i.e. regular pre-natal visits as well as
to levels of interest in the scheme. The books as well as the commencement immunization—but this has yet to be
Social Anti-crisis Measures measure is planned to cover approxi- of regular study activities. In addition, specified in detail.
mately 15,000 households that are the Government has announced that all
The first specific social anti-crisis beneficiaries of permanent financial as- damage done to textbooks will be paid As was the case with the programme
measure directed towards vulnerable sistance, or approximately 55,000 to for by parents at the end of the school for free textbooks, the CCT project is
groups was announced at the begin- 60,000 individuals in Skopje. Given year. This was described by some as complementary to the Law on obliga-
ning of September 2009, when the that Skopje is the region least affect- effectively introducing ‘delayed’ pay- tory secondary education. This meas-
Government decided to adopt an En- ed by the economic crisis, the ‘SOS ment for textbooks. Despite criticisms ure will support the financial costs of
ergy Poverty Action Plan. This meas- Shops’ measure appears to be directed and initial problems with its implemen- households with children who do not
ure sought to provide direct financial towards supporting those beneficiaries tation, however, this measure—while attend school regularly, as this irregu-
support to the poor and most vulner- who are least vulnerable to the effects not adopted directly as a result of the lar attendance is attributed primarily to
able sector who are unable to keep up of the crisis. This measure would thus crisis—may yet prove the most impor- economic factors.
regular payments on their constantly be more appropriate if it were directed tant step to have been taken by the
increasing electric bills every month. towards those cities and regions where government towards supporting house- Experiences from other countries sug-
According to the Government, this so- the majority of jobs have been lost and hold budgets with a direct bearing on gest that there are certain risks associ-
cial measure will amount to between towards those households with mem- the needs of children. ated with this programme which must
250 and 450 million MKD (between 4 bers employed in the worst affected be taken into consideration during its
and 7 million EUR) annually. Its imple- sectors of the economy. An additional measure planned since implementation. Some of these risks in-
mentation is planned for early 2010, 2007 and supported through the World clude obstacles associated with certain
after previous identification of the ben- Before taking into consideration some Bank’s ‘Social Protection Implemen- traditions and customs within particu-
eficiary categories and support levels. of the other anti-crisis measures that tation Loan’ is a project entitled Con- lar ethnic groups, e.g. early marriages
24 Initially, this programme is envisaged have been adopted in the field of social ditional Cash Transfers (CCT). After amongst Roma, the unavailability of 25

15. schools where teaching is given in the rise in demand for new housing. In ad- entire salary, but this rule is not fully aimed at agricultural workers. Howev-
languages of all ethnic communities, dition, it is anticipated that this meas- respected in practice. Specifically, em- er, many of those living on small plots
stigmatisation of CCT recipients, and ure will have a positive effect on low- ployers in the private sector frequently of land (subsistence agriculture) are not
others. ering the prices of apartments by ap- exploit the legal stipulation of a mini- able to benefit from these measures
proximately 10 to 13%. While positive mum and maximum basis for calculat- because they are usually not insured/
Social housing is an additional measure in terms of increasing the affordability ing social contributions, registering the registered, while priority is given to
undertaken by government aimed at of housing for the general population, salaries of their employees at the mini- agricultural workers who are officially
providing affordable housing for vulner- however, this measure is not expected mum base and thus paying lower social registered. As a consequence, children
able categories. The provision of social to contribute towards satisfying the contributions while paying the other and young people living in such house-
flats as a social policy measure is not a needs of the most vulnerable sectors part of the wage to employees ‘under holds are also negatively affected, as
novelty in the country, although there of the population who lack adequate the table’. This practice jeopardises the this problem contributes to a reduction
is no unified law regulating this area. standards of housing. current and future living standards of in young people’s employment oppor-
Currently, the government is planning employees as their lower social con- tunities, as well as increased mistrust
the adoption of a new Law on Housing One other measure implemented since tributions may later mean they stand in a public system that does not equally
which will regulate non-profit housing January 1, 2009, is the reform popu- to receive only minimum amounts of benefit all agricultural households.
more strictly and will also grant more larly referred to as the ‘gross wage social transfers in the event of their
rights for municipalities in this field. In reform’, which was introduced as an becoming unemployed or after their re- Conclusion
2009, according to the ‘Programme for amendment to the previously enact- tirement. The consequent reduction in
the Construction and Maintenance of ed Law on Contributions for Com- living standards amongst households In conclusion, it may be asserted that
Apartments in Public Ownership’, the pulsory Social Insurance (Official Ga- also impacts upon children and young the government’s response to the glo-
Government has announced two calls zette, 142/08). Among other changes, people by reducing these households’ bal economic crisis has not been suf-
for applications to rent social flats (102 this reform changed the previous ‘net capacity to finance their children’s es- ficiently targeted at alleviating the
flats in Skopje and 29 in Makedonska wage’ system by: sential needs, such as health, educa- effects of the downturn for the main
Kamenica).5 According to the new law, tion, etc. ‘losers’ in this process. Government
vulnerable categories of people residing 1) Integrating net salary within gross measures only rarely focused on the
in social apartments will have a right to salary and calculating social contri- The overall decrease in the amounts individuals and regions most directly
government subsidies to help them pay butions on the basis of the gross paid as social contributions for pen- affected by the crisis. Of all the anti-
their rent. The call in Skopje resulted in salary; sions, health and unemployment insur- crisis measures, only two had a direct
more than 700 applications, of which ance generated additional problems. social impact: the Energy Poverty Ac-
a majority were from individuals who 2) Introducing a gradual reduction of Although this measure was meant as tion Plan and the introduction of SOS
were children growing up without par- the social contribution base for an incentive to generate new employ- shops. These measures also lacked ap-
ents and parental care. This category pension, health and unemployment ment, it has not produced the expect- propriate and additional targeting nec-
was also the prime target of the gov- insurance by 10 percentage points ed results. On the contrary, bearing in essary to make them more effective.
ernment’s call, meaning that the major- from the current 32% to 22% be- mind the financial crisis and its impact Furthermore, of all the measures an-
ity of the flats will be given to adults tween the period 01.01.2009 and on a growing number of unemployed nounced in 2009, none were directly
who grew up parentless. Although this 01.01.2011. people, as well as the previously re- focused towards children. This high-
measure was not taken directly in re- formed PAYG6 system and the privati- lights the absence of a child-friendly
This measure resulted in an ‘artificial’
sponse to the economic crisis, it is a sation of primary healthcare, the main approach which could be adopted in
increase in the average gross salary: a
very important measure as it directly impact of this reform will be to lower times of economic constraints. The
17.7% jump in the first half of 2009
contributes towards improving one of the contributions paid into social insur- only measures that may have had a
compared to the same period from the
the biggest problems in the national ance funds, thus decreasing the total direct positive effect on children and
previous year.
social protection system, i.e. the lack financial assets available for important young people during 2009 were those
of sufficient support for young people public services and benefits such as related to the provision of free text-
Although this reform was welcomed by
without parents and parental care who health, unemployment insurance and books and preferential access to social
employers and employer associations
are leaving institutional care. pensions. Children and young people housing for individuals who grew up
as it reduces social contribution costs
are also affected by the lowering of so- without parental care. To alleviate the
and thus total labour costs, it neverthe-
Also in the area of housing, the Gov- cial contributions as many of them de- problems faced by children and young
less carries certain risks. These risks
ernment recently announced a reduc- pend upon the social benefits received people during periods of economic cri-
are associated with the way in which
tion in the VAT rate from 18% to 5% by their parents or grandparents. sis, governments need to undertake
the reform is implemented and with the
on the purchase of new apartments, a more public measures focussed on
overall context of informal economy in
measure that should bring about several Finally, agricultural workers are a target helping vulnerable households to meet
the country. The first problem arises
positive effects in the housing sector. group that has been continually sup- their overall costs of living, specifically
from the calculation of social contribu-
Firstly, it should stimulate construction ported by governmental subsidies since in the fields of housing, education and
tions: this calculation is supposed to be
companies to increase their volume of 2008. In 2009, 70 million EUR were al- health.
made on the basis of the employee’s
building in response to the expected located for different kinds of subsidies
26 5
The size of the apartments is 35–45 square metres and their rent will be 20 MKD (0.32 EUR) per 6
The Pay-as-You-Go (PAYG) is a system whereby contributions from currently employed workers are
27
square metre. used to pay the pensions of the retired employees.

16. PART TWO:
THE WELL-BEING OF CHILDREN
AND YOUNG PEOPLE
DURING ECONOMIC CRISIS -
RESEARCH RESULTS
Objectives
This study has the following general the reduced economic capacities of
and specific objectives: households.
General Objectives  To assess any increased irregulari-
ties in school attendance or deterio-
 identify the threats arising from
To ration of school performance among
the current economic crisis to the children and young people over the
well-being of children and young 12-month period. To assess the
people throughout the country. causes of such irregular attendance
or diminished performance.
 To assess the socio-economic cir-
cumstances of the most vulnerable  To assess the health status, attend-
groups of children and families dur- ance at regular health check-ups,
ing periods of economic crisis. and nutritional habits of children
over the past 12 months. To ex-
Specific Objectives plore the reasons for any decrease
identified in the quality of children’s
 assess the potential reductions
To health in this period.
in families’ living standards and lev-
els of consumption which impact  To assess the amount of free qual-
upon the well-being of children and ity time spent by parents with their
young people. To provide an anal- children over the past 12 months.
ysis of the threats and risks posed To explore the reasons for any re-
30 to children and young people by duction in such quality time.
29