COMMISSION STAFF WORKING DOCUMENT THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA Report 2015 Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS EU Enlargement Strategy

EN EN
EUROPEAN
COMMISSION
Brussels, 10.11.2015
SWD(2015) 212 final
COMMISSION STAFF WORKING DOCUMENT
THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA
Report 2015
Accompanying the document
COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL
COMMITTEE AND THE COMMITTEE OF THE REGIONS
EU Enlargement Strategy
{COM(2015) 611 final}
{SWD(2015) 210 final}
{SWD(2015) 211 final}
{SWD(2015) 213 final}
{SWD(2015) 214 final}
{SWD(2015) 215 final}
{SWD(2015) 216 final}
Offentligt
KOM (2015) 0611 - SWD-dokument
Europaudvalget 2015
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Table of Contents
1. INTRODUCTION....................................................................................................... 4
1.1. Context .............................................................................................................. 4
1.2. Summary of the report....................................................................................... 4
2. POLITICAL CRITERIA............................................................................................. 6
2.1. Democracy ........................................................................................................ 6
2.2. Public administration reform........................................................................... 10
2.3. Rule of law ...................................................................................................... 12
2.4. Human rights and the protection of minorities................................................ 20
2.5. Regional issues and international obligations ................................................. 22
3. ECONOMIC CRITERIA.......................................................................................... 25
3.1. The existence of a functioning market economy............................................. 25
3.2. The capacity to cope with competitive pressure and market forces within
the Union......................................................................................................... 30
4. ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP...................... 33
4.1. Chapter 1: Free movement of goods ............................................................... 33
4.2. Chapter 2: Freedom of movement for workers ............................................... 34
4.3. Chapter 3: Right of establishment and freedom to provide services............... 34
4.4. Chapter 4: Free movement of capital .............................................................. 35
4.5. Chapter 5: Public procurement........................................................................ 35
4.6. Chapter 6: Company law................................................................................. 37
4.7. Chapter 7: Intellectual property law................................................................ 38
4.8. Chapter 8: Competition policy ........................................................................ 38
4.9. Chapter 9: Financial services .......................................................................... 39
4.10. Chapter 10: Information society and media .................................................... 40
4.11. Chapter 11: Agriculture and rural development.............................................. 41
4.12. Chapter 12: Food safety, veterinary and phytosanitary policy........................ 41
4.13. Chapter 13: Fisheries....................................................................................... 42
4.14. Chapter 14: Transport policy........................................................................... 43
4.15. Chapter 15: Energy.......................................................................................... 43
4.16. Chapter 16: Taxation....................................................................................... 44
4.17. Chapter 17 Economic and monetary policy .................................................... 45
4.18. Chapter 18: Statistics....................................................................................... 46
4.19. Chapter 19: Social policy and employment .................................................... 47
4.20. Chapter 20: Enterprise and industrial policy................................................... 49
4.21. Chapter 21: Trans-European networks............................................................ 49
4.22. Chapter 22: Regional policy and coordination of structural instruments........ 50
4.23. Chapter 23: Judiciary and fundamental rights................................................. 51
4.24. Chapter 24: Justice, freedom and security ...................................................... 61
4.25. Chapter 25: Science and research.................................................................... 66
3
4.26. Chapter 26: Education and culture.................................................................. 66
4.27. Chapter 27: Environment and climate change ................................................ 67
4.28. Chapter 28: Consumer and health protection.................................................. 69
4.29. Chapter 29: Customs union............................................................................. 70
4.30. Chapter 30: External relations......................................................................... 71
4.31. Chapter 31: Foreign, security and defence policy........................................... 71
4.32. Chapter 32: Financial control.......................................................................... 72
4.33. Chapter 33: Financial and budgetary provisions............................................. 74
Annex I – Relations between the EU and the Former Yugoslav Republic of Macedonia 75
Annex II – Statistical Annex ............................................................................................. 77
4
1. INTRODUCTION1
1.1. Context
The European Council granted the status of candidate country to the former Yugoslav
Republic of Macedonia in December 2005. The Stabilisation and Association Agreement
between the former Yugoslav Republic of Macedonia and the EU entered into force in April
2004. The Commission first recommended to the Council the opening of accession
negotiations with the country in 2009.
The reporting period was dominated by a serious political crisis in the country. On 2 June and
15 July, the European Commission and Members of the European Parliament facilitated an
agreement between political parties on ending the crisis and the European Commission
presented “Urgent Reform Priorities” on the systemic institutional failings arising out of the
crisis that the government and all other political actors committed to implement.
1.2. Summary of the report
Concerning the political criteria, serious challenges reported in previous years have been
underscored by the country's most severe political crisis since 2001 with intercepted
communications, apparently involving senior government officials, suggesting breaches of
fundamental rights, interference with judicial independence, media freedom and elections, as
well as politicisation and corruption. Concerns about all of these issues had been signalled in
previous Progress Reports. The breakdown of political dialogue and difficulties in arriving at
consensus on issues highlighted once again the divisive political culture in the country.
Based on an agreement facilitated by the Commissioner, with the help of three members of
the European Parliament, in June/ July, Members of Parliament of the main opposition party
returned to parliament on 1 September after having boycotted it for more than a year. The
boycott seriously affected the oversight function of the institution over the executive branch.
Other key bodies failed to exercise effective oversight. Work has begun on the
implementation of the political agreement. Implementation needs to continue and much more
needs to be done on the "Urgent Reform Priorities"2
to deliver results on these and other pre-
existing agreed reform targets.
The inter-ethnic situation remains fragile. The review of the Ohrid Framework Agreement,
which ended the 2001 conflict and provides the framework for the inter-ethnic relations,
needs to be completed.
Following a major police operation in an ethnic Albanian neighbourhood of Kumanovo that
claimed 18 lives, all political leaders in the country called for restoration of calm and
underlined that this incident should not be seen as inter-ethnic. Events at Kumanovo still need
to be fully investigated.
1
This report covers the period from October 2014 to September 2015. It is based on input from a variety of
sources, including contributions from the government of the former Yugoslav Republic of Macedonia, the EU
Member States, European Parliament reports and information from various international and non-governmental
organisations. As a rule, legislation or measures which are under preparation or awaiting parliamentary approval
have not been taken into account.
2
The 'Urgent Reform Priorities': http://ec.europa.eu/enlargement/news_corner/news/news-
files/20150619_urgent_reform_priorities.pdf. The recommendations of the Senior Experts' Group:
http://ec.europa.eu/enlargement/news_corner/news/news-
files/20150619_recommendations_of_the_senior_experts_group.pdf
5
Civil society organisations have played a constructive role in the context of the crisis through
demanding accountability from the political actors across ethnic lines. At the same time
organisations continue to express their concerns about the difficult climate in which they
operate and the limited government commitment to dialogue, as well as about public attacks
by politicians and pro-government media.
The country is moderately prepared in the area of public administration reform. There has
been progress on some issues. However, concerns about politicisation have been reinforced
by the content of the wiretaps, and merit based recruitment continues to be undermined.
Public trust in the functioning of the institutions has further eroded. Some steps have been
taken to reform public financial management, but a medium-term budgetary framework and
fiscal transparency still needs to be put in place and improved.
The country’s judicial system has some level of preparation. The situation has been
backsliding since 2014 because the achievements of the last decade's reform process have
been seriously undermined by actual and potential political interference in the work of the
judiciary. Indications of wrongdoings and offences arising from the intercepted
communications still need to be fully investigated. The authorities now need to demonstrate
real political will to ensure the full independence of the judicial system, including allowing
the newly-appointed Special Prosecutor to work unhindered in investigating the wiretaps and
their content.
Concerning the fight against corruption, some level of preparation has been achieved.
Legislative and institutional achievements were, however, overshadowed by a lack of political
will and political interference in the work of the relevant bodies, especially in high-level
cases. A track record of effective prosecution, especially on high level corruption, still needs
to be established.
In the fight against organised crime, the country has reached some level of preparation.
Sufficient capacity and expertise to carry out financial investigations and asset confiscations
in a systematic manner still needs to be established.
The legal framework for the protection of human rights is broadly in line with European
standards. However, implementation is lacking, in particular in the areas of prison reform,
Roma integration, rights of the child and persons with disabilities. The lesbian, gay, bisexual,
transgender and intersex (LGBTI) community continues to suffer from discrimination and
homophobic media content. The country shows some level of preparation regarding freedom
of expression. Exercising this freedom, however, is a serious problem in the current media
culture and political climate, and the country continued to backslide in this area. Attempts to
limit media reporting on matters of public interest are worrying.
The country generally maintains good relations with other enlargement countries and plays an
active role in regional cooperation. Steps have been taken to improve good neighbourly
relations. The 'name issue' with Greece needs to be resolved as a matter of urgency.
As regards the economic criteria, the former Yugoslav Republic of Macedonia is at a good
level of preparation in developing a functioning market economy. The country benefits from a
stable macroeconomic environment, supported by sound monetary policy, favourable
conditions for market entry, and a sound legal system. There was some backsliding in public
finance management. Medium-term fiscal targets were relaxed, the composition of public
spending remains tilted towards transfers and subsidies and the development of overall public
debt, as well as its transparency, remain a concern. The budget should be more geared
towards growth and employment, while its overall design, transparency and implementation
6
should be improved. A high level of non-performing loans has constrained credit supply and
needs to be addressed by further policy action. Unemployment remains high at 28%.
The economy is moderately prepared to cope with competitive pressures and market forces
within the Union. There was some progress in diversifying the export structure as a result of
direct investment; trade and investment links with the EU strengthened further. However, the
country needs to improve the employability of people, in particular the youth, by better
aligning education with labour market needs, upgrade linkages between foreign direct
investors and the domestic economy, and better prioritise investment.
As regards its ability to take on the obligations of membership, the country has a relatively
good level of alignment with the acquis. More focus is needed on administrative capacity and
effective implementation. In most areas, the country is moderately prepared, including in the
areas of public procurement, statistics and, financial control. Further efforts are needed across
the board, in particular in those few areas where the country is at an early stage of preparation.
Mixed-migration flows increased dramatically, creating a substantial burden on the country's
asylum and migration framework. The authorities have taken measures to provide for safer
passage of third country nationals over its territory and provided shelter and humanitarian
supplies, with EU support as well as the support of others.
2. POLITICAL CRITERIA
2.1. Democracy
This year the former Yugoslav Republic of Macedonia has faced its worst political crisis since
2001. The divisive political culture, lack of compromise and breakdown in dialogue took the
form of a continuing and protracted political crisis, including a boycott of parliament by the
main opposition party3
and further erosion of trust in public institutions. The crisis deepened
further with the publication of intercepted conversations including senior government and
governing party officials suggesting breaches of fundamental rights, interference with judicial
independence, media freedom and elections, and politicisation and corruption in various
fields. Concerns about all of these issues had been signalled in previous Progress Reports. The
Macedonian government, the parliament and relevant oversight bodies failed to react
adequately to the revelations.
In response, the Commission issued ‘Urgent Reform Priorities’ based partly on its previous
recommendations and partly on recommendations provided by a group of independent senior
rule of law experts brought in to analyse the situation. The independent experts identified
significant shortcomings in the areas of interception of communications, the judiciary and
prosecution services, external oversight by independent bodies, elections and the media4
. In
parallel, the Commissioner, with the help of three members of the European Parliament,
facilitated a political agreement in June/ July. The leaders of the four main parties committed,
inter alia, to a transitional government which will prepare early parliamentary elections in
April 2016. So far, not all elements of the agreement have been implemented and a number of
deadlines have been missed. The leaders also committed to implement all of the
Commission’s recommendations on systemic rule of law issues (Urgent Reform Priorities);
implementation of these has slowly been started, but without sufficient results to date.
Elections
3
Social Democratic Union of Macedonia (SDSM)
4
These issues and the recommendations to address the situation are referenced throughout this report.
7
Shortcomings regarding elections, previously signalled by OSCE/ODIHR, and other
suspicions, were reflected by the content of the intercepted communications. The relevant
Urgent Reform Priorities need to be implemented.
These communications included discussion of manipulation of the voter list, vote buying,
voter intimidation, including threats against civil servants and companies, and preventing
voters from casting their votes. As set out in the ‘Urgent Reform Priorities’, the outstanding
OSCE/ODIHR recommendations need to be fully implemented before early elections are held
in April 2016. Despite the commitments in the political agreement, negotiations on electoral-
related reforms were lengthy and difficult. Political and legal action rather than legislation is
needed to address the other issues which have been brought to light.
Parliament
The ongoing crisis has underlined the need for parliament to substantially improve its
performance as a forum for constructive political dialogue and representation, as well as its
legislative and oversight functions. This needs to include credible functional oversight of the
work of the intelligence services and the capacity to monitor the protection of human rights
and fundamental freedoms in the country. The absence of the main opposition party for most
of the reporting period diminished the quality of reforms and hindered the operation of checks
and balances.
Parliament’s work continued to be seriously hampered by the political crisis, including the
absence of the largest opposition party, SDSM, for 16 months before returning to parliament
on 1 September. As a result, parliament failed to provide the necessary checks and balances
on the executive’s power, most obviously on oversight of the intelligence services at the heart
of the interception of communications. During the summer, the two relevant oversight
committees were reactivated, now under opposition leadership, but an Inquiry Committee into
the interception of communications still needs to be established (Urgent Reform Priorities).
The recommendations made in August 2013 by the committee of inquiry into the events in
parliament of 24 December 2012 were not finalised because of the withdrawal of SDSM from
the relevant working group in October 2014, and work still needs to restart (Urgent Reform
Priority). Implementing these recommendations would significantly improve the functioning
of parliament and the scheduling of its work. Consultations on proposed legislative and
constitutional changes were carried out through several public debates with the participation
of civil society organisations and academia. The Committee on European Affairs reviewed 11
laws under the National Programme for EU Integration. However, frequent changes to
recently adopted legislation, including its suspension, point to shortcomings in policy
preparation, consultation and legislative processes. A constructive meeting of the National
Council for European Integration took place on 18 September, on the occasion of a meeting of
the High Level Accession Dialogue.
Governance
The governance of the country was strained by the ongoing political crisis and called into
question by revelations of unethical behaviour, illegal activities and even potential criminal
offences. Only limited political responsibility was taken through the resignation of two
ministers and the head of the intelligence service. Failures of oversight by key bodies need to
be addressed and all independent regulatory, supervisory and advisory bodies need to be able
to carry out their functions proactively, effectively and free from political pressure. Inter-
ethnic tensions underlined the need to fully implement the Ohrid Framework Agreement.
8
The government coalition of the VMRO-DPMNE5
and DUI6
remained stable, though severely
strained by the crisis. In May it lost its two-thirds majority, required for key decisions, with
the defection of an MP from the DOM7
party from the VMRO-DPMNE coalition due to
political fall-out from the revelations. The Minister of Interior and the Minister of Transport
and Communications, as well as the head of the intelligence service, resigned after the
intercepted communications were revealed.
Since May, the opposition organised several demonstrations to protest against the lack of
transparency and level of state capture by the government. There have also been an increased
number of demonstrations protesting at the lack of consultation in government policy-making
on laws which have been repealed or suspended.
The inter-ethnic nature of the government coalition was a factor that contributed to inter-
ethnic stability. The leaders of the four main political parties committed, in the 2 June
political agreement, to fully implement the Ohrid Framework Agreement, which ended the
conflict of 2001 and provides the framework for preserving the multi-ethnic character of the
society. However, there remains a lack of trust between communities, and inter-ethnic
tensions persist. Further initiatives are needed to promote good inter-community relations and
an inclusive multi-ethnic society. The long-promised review of the implementation of the
Ohrid Framework Agreement, including policy recommendations, needs to be urgently
completed and followed up. As in previous years, the political and community leaders
successfully handled potential inter-ethnic incidents.
The serious events in Gošince and Kumanovo raised concerns and questions which still need
to be investigated thoroughly and transparently.
Constitutional changes were proposed by the government in a broad range of areas, despite
the absence of the main opposition party from parliament. Neither the proposed changes, nor
related implementing legislation, have been adopted by parliament as the two-thirds majority
could not be reached. Although there was wide public consultation and debate on the
proposals, the concerns expressed by the European Commission about their compatibility
with the acquis have not all been addressed yet.
The decentralisation of government is of particular importance as it is a key element of the
Ohrid Framework Agreement (see also 2.4. Ohrid Framework Agreement). One municipality
(Plasnica) has still not completed the second phase of fiscal decentralisation. Some progress
has been made with the adoption of the strategic decentralisation programme for 2015-2020
and its action plan. However, the decentralisation process needs to be better coordinated and
efforts are required to ensure that especially rural municipalities have the financial
sustainability to carry out responsibilities transferred to them. Distribution of capital funds to
municipalities needs to be carried out in a more transparent and coordinated manner. Multi-
annual budget planning and improved collection of statistical data at local level is also
needed. It is an issue of concern that some opposition-run municipalities were subject to a
disproportionate number of inspections.
The report by senior rule of law experts pointed to the failure of independent oversight and
control bodies to follow up effectively on the interception revelations (Urgent Reform
Priority). More generally, all of the independent regulatory, supervisory and advisory bodies
should be able to exercise their powers in a proactive and effective manner, without external
pressure and without exercising inappropriate political self-restraint or interpreting their own
5
Internal Macedonian Revolutionary Organisation — Democratic Party for Macedonian National Unity
6
Democratic Union for Integration
7
Democratic Renewal of Macedonia
9
mandate in an excessively formal way. These bodies include the State Election Commission,
the State Commission for the Prevention of Corruption, the Agency for Audio and
Audiovisual Media Services, the Office of the Ombudsman, the Judicial and Prosecution
Councils and the State Audit Office.
Civil society
Although some progress was made, civil society organisations (CSOs) have continued to
express serious concerns about the difficult climate in which they operate. They report being
subject to harsh criticism by politicians and pro-government media, and a limited government
commitment to dialogue. During the political crisis of 2015, CSOs often played a constructive
role by organising numerous peaceful protests across ethnic lines, and demanding greater
accountability of politicians. Civil society also demonstrated cross-ethnic unity in the
aftermath of the tragic Kumanovo events of spring 2015. At the same time, political
polarisation and divide can still be observed between CSOs supporting the government and
those opposing it. The national authorities should involve civil society in policy-making and
legislation in a more regular and effective manner.
An empowered civil society is a crucial component of any democratic system and should be
recognised and treated as such by state institutions. The binding framework of rules for state
financing of civil society has not been, however, adopted, and the system for allocating state
funds to civil society remains ineffective and inefficient.
Insufficient administrative capacity and the lack of a specific budget in the Government Unit
for NGO Cooperation are hampering implementation of the 2012-2017 strategy on
cooperation with civil society. The relevant 2015-2017 action plan has not yet been adopted.
The working group for monitoring the law on associations and foundations has not been
established by the Ministry of Justice. The Council for Cooperation between government and
civil society is not yet established, and neither is the working group for monitoring the law on
associations and foundations has not been established by the Ministry of Justice.
The Secretariat for European Affairs continues to consult civil society, including on financial
assistance-related matters, the preparation of the High Level Accession Dialogue being a good
example. In general, however, CSOs’ involvement in policy-making and legislative drafting
remains insufficient. The single electronic register of legislation is not used for online
consultations for most draft legislation. The minimum period for consultations and the
obligation to provide feedback on comments are not fully complied with. The code of good
practice for CSOs’ participation in policy-making processes is implemented inconsistently.
Local government lacks the capacity to ensure cooperation with CSOs is undertaken.
Oversight of the intelligence services
In theory, the country has a system of oversight in place, which has not functioned in practice
in the case of the security and intelligence services. The parliamentary committees which are
responsible for the oversight of the security and intelligence services on the one hand, and the
interception of communications for intelligence and law enforcement purposes on the other,
have met infrequently or not at all in recent years. They had not complied with their statutory
reporting duties, had not conducted inspections (until this autumn) and had not compelled the
Minister of Interior or the head of the intelligence service to appear before them. Sufficient
responsibility has not been taken for the serious failings within the intelligence service to
prevent the illegal interception of individuals' private communications over a significant
period of time. The clear recommendations on both oversight and reform of the intelligence
services in the ‘Urgent Reform Priorities’ must be implemented.
10
2.2. Public administration reform
The country is moderately prepared with the reform of its public administration. It made
some progress on legislation and improvement of service delivery to citizens and businesses.
Concern about politicisation has been heightened by the content of the leaked wiretaps and
delay in fully implementing the new legal framework. Strong political will is necessary to
guarantee the independence of administration and respect for the principles of transparency,
merit and equitable representation. In the coming year, the country should in particular:
→ address serious concerns about the politicisation of public service; ensure full
implementation of the principles of accountability, transparency and merit (Urgent Reform
Priority, including introduction of an improved human resources management information
system);
→ suspend and review the implementation of the Law on Transformation of Temporary
Positions into Permanent Contracts until the principle of merit is fully observed (Urgent
Reform Priority);
→ adopt a public administration reform strategy and a public financial management reform
programme, which will address the weaknesses identified, including budget transparency.
Public service and human resources management
Tailor-made, political and arbitrary recruitments took place on a large scale. The new legal
framework, comprising the Law on Administrative Servants and the Law on Public Sector
Employees, which entered into force in February, should combat this trend as it created
uniform rules for public sector employees at both central and local level. All implementing
legislation has been adopted, including the methodology on equitable representation. The laws
represent an improvement by regulating merit-based recruitment, promotion and dismissal
of public servants at lower positions, but they fall short in relation to senior public servants.
Concerns continue over the transparency of staff mobility and possible misuse of dismissal
procedures.
The public sector has been further inflated with the practice of creating new posts on political
or social grounds, in particular before the new laws entered into force. The Law on
Transformation of Temporary Positions into Permanent Contracts was adopted in February by
a fast-track procedure and without prior public consultation nationally or with the EU partners
only a few days before the entry into force of the framework laws. This law circumvents the
principles of merit-based recruitment by converting thousands of temporary contract staff into
permanent civil servants or public employees without open competition.
While recruitment from the biggest non-majority community is increasing, smaller
communities remain under-represented. Efforts to meet targets for equitable representation
did not always take account of institutions’ real staffing needs and the principle of merit. The
number of public employees not required to turn up to work has increased.
The Ministry of Information Society and Administration’s (MISA) responsibility for
coordination and monitoring of human resources management has been extended to cover
all public sector institutions. It is in charge of providing real-time data on the entire public
service. The total numbers of permanent and temporary employees, of all types, should be
made public regularly (Urgent Reform Priority). There is no uniform civil service
remuneration system across the public sector, leading to inconsistent levels of pay and
hindering mobility. Close monitoring of the application of the legislation is of key importance
to address its shortcomings.
11
The right to continuous professional development of civil servants is partially covered, and
the use of e-learning systems increased. There is, however, no centralised database of training
offered by various institutions and no cumulative data on training already provided.
Legislation promoting integrity in public service has had relatively limited impact.
Policy development and coordination
The legal framework and institutional structures are in place to ensure a coherent policy-
making system, including for European integration. However, staffing in the core
coordination functions is inadequate. A system for medium-term policy planning is in place
but sectoral planning is not well developed and strategies are usually not costed.
Only some elements of inclusive and evidence-based policy and legislative development
have been laid down. Ministries do not generally have internal rules laying down processes to
draft policies and legislation. A large proportion of civil servants focus on implementation of
policies, affecting negatively policy development and the administration’s capacity to draft
policy and legal documents, including those needed to comply with the acquis. The obligatory
inter-ministerial and public consultations process on policies and legislation is often
insufficient and public participation is inconsistent. This has, for example, led to widespread
protests and the eventual suspension of legislation (See Chapter 26). The obligatory
regulatory impact assessments for legislative and policy proposals are not always carried out
in practice or with sufficient quality. Financial impact assessments are usually not prepared,
which is a significant shortcoming.
Public scrutiny over government work is ensured in theory, as the government is under a
legal obligation to monitor and report on implementation of its programme. Most of the
reports are not made public, however. Also, the reports focus more on quantitative outputs
than on qualitative assessment whether policy objectives are achieved.
Accountability of the administration
The organisation of the Macedonian administration does not yet ensure effective lines of
accountability, neither between institutions nor within institutions. Supervision would need
to be clarified, as some institutions have to report parallel both to the relevant ministry and the
government. Managerial accountability is not implemented systematically, and there is little
delegation of responsibility to middle management. (See Chapter 32 – Financial control)
The relevant internal and external oversight mechanisms are in place to ensure the citizens'
right to good administration. However, the opposition’s long-term absence from parliament
undermined parliamentary oversight. The Ombudsman continues to function efficiently, and
around 87 % of his 2014 recommendations were implemented by the administration.
However, better follow-up by a number of central institutions is still needed. (Urgent Reform
Priority / see also Governance) .The right to access public information is regulated in the
Law on Free Access to Information of Public Charter but the scope of exemptions is too
broad. The independent commission that reviews appeals does not have sufficient capacity to
monitor compliance with proactive disclosure of information, and is not empowered to
impose penalties to encourage better enforcement of legislation.
Regarding the right to administrative justice, the law on general administrative procedures
ensures the right of appeal. A new body reviewing internal administrative appeals against
inspection and misdemeanour proceedings was established, but has not become functional.
Efficiency in the administrative courts increased but there are delays in enforcing court
rulings and the appeal procedure remains too onerous. The right to seek compensation and
the liability of public authorities in cases of wrongdoing is regulated, but data on
compensation for damages is not available.
12
Public financial management
The medium-term budgetary framework is not yet in place. The parliament does not have the
resources to monitor the use of public funds. There is also no efficient mechanism to monitor
the budgetary impact of government proposals. Implementation of the public internal
financial control strategy is in its initial phase.
A comprehensive public financial management reform programme, addressing the
identified shortcomings and linking and sequencing different areas and reform measures, is
currently being developed. Budget transparency is not ensured as comprehensive, timely
and reliable budgetary information is not publicly available. Moreover, the 2015-2017 fiscal
strategy and the 2015 budget were adopted without adequate parliamentary discussion.
Service delivery to citizens and businesses
A user-oriented administration, among other things by developing e-services, is a
government priority. The inter-operability framework is being developed. Equal access to
public services is partially established. An increasing range of services is offered to business
through one-stop-shops or online, albeit at a slow pace. However, the number of services
provided to the public through the e-government portal is limited, especially those with
transaction possibilities. The use of quality assurance tools is encouraged and currently 16 %
of the central government institutions measure public satisfaction. A newly adopted law on
general administrative procedures, to enter into force in 2017, is a good step towards
simplifying administrative procedures. Substantial training at central and local level is
needed to ensure it is applied uniformly. Considerable efforts are also needed to reduce the
estimated 130 special administrative procedures hampering modernisation of service delivery
before the new law enters in force.
Strategic framework for public administration reform
A comprehensive public administration reform strategy is in place but will expire at the
end of 2015. It focuses mainly on outputs, not targets and indicators. The 2016-2020 strategy
is yet to be developed including an action plan, linked to medium-term and annual budget
planning. MISA's capacity to ensure efficient co-ordination of the strategy's implementation
should be strengthened. Political support is ensured through the public administration reform
committee chaired by the Prime Minister. However, the declared commitment to
transparency, accountability and merit in public administration has been compromised by ad-
hoc measures allowing public employment as a social measure or the mass conversion of
temporary staff to permanent status. This also limits financial sustainability of a wider
public administration reform agenda.
2.3. Rule of law
Functioning of the judiciary
The country’s judicial system has some level of preparation. However, the situation has been
backsliding. Achievements of the last decade's reforms are being undermined by real and
potential political interference in the work of the judiciary. Outstanding issues already
identified in previous reports remain to be addressed. The ‘Urgent Reform Priorities’ set out
what the country needs to do to avoid further backsliding. The legislative and institutional
structures which are already in place need to be put to use, in good faith and in the spirit
intended. In the coming year, the country should in particular:
→ depoliticise the appointment and promotion systems in practice, not only in law;
→ provide full support and resources to the Special Prosecutor;
13
→ reform the existing discipline and dismissal system for judges;
→ adopt a new Judicial Reform Strategy and action plan addressing remaining shortcomings
in a sustainable manner;
→ improve strategic planning, needs assessment, resource management and allocation within
the judiciary.
Strategic documents
A number of judicial reforms were already carried out under the judicial reform strategy
and its accompanying action plans from 2004 to 2010. A new strategy and action plan
focusing on a number of specific areas, including alternative dispute resolution and access to
justice, are still at an early stage of development.
Management bodies
The Judicial Council, established in 2006, is composed of 15 full-time members, of whom
eight are judges designated by their own ranks and five are lay members (three designated by
parliament and two by the President) from the ranks of university law professors, lawyers and
other eminent legal experts. The President of the Supreme Court and the Minister of Justice
are ex officio members, the latter without voting rights. The President of the Judicial Council
is designated by its members every three years. Four of the five lay members are elected
under the ‘Badinter rule’, ensuring equitable representation of the communities. As well as
carrying out core responsibilities — deciding on the appointment, evaluation, dismissal,
termination, detention and immunity of judges — the Judicial Council cooperates closely with
the Academy of Judges and Prosecutors and also oversees statistical data collection through
the automated court case management system. It maintains an accessible website and
publishes annual reports online. The Judicial Council’s sessions are public, but their records
are not. The Council of Public Prosecutors, established in 2008, is still lacking its own
budgetary allocations, appropriate IT support and enough staff.
Independence and impartiality
The independence of judges is enshrined in law. In the large majority of ‘ordinary’ cases,
courts are able to act independently. Relatively few complaints are made to the Judicial
Council over bias or partiality and none have been upheld. However, there are repeated
reports of selective justice and political interference in certain high-profile or politically
sensitive court cases. This casts a shadow over an otherwise functioning judicial system. The
random allocation of cases has been required by law since 2006 and is implemented through
the electronic case management system since 2009. However, the Judicial Council does not
monitor the system systematically and there are concerns that it is sometimes be circumvented
in key cases. The criminal and civil procedure legislation provides clear recusal-mechanisms
for judges in cases of conflicts of interest. Concerns about judges’ security of tenure still
need to be addressed due to the high number of dismissals in recent years: since 2007, there
have been 59 dismissal proceedings, resulting in 44 dismissals. While the numbers of
dismissals have fallen drastically in the past two years, the legislative framework still needs to
be revised, particularly regarding the often vague grounds for dismissal and the narrow scope
for imposing less severe disciplinary measures.
Accountability
The codes of ethics for judges (2006) and prosecutors (2004) were both updated in 2014.
Since 2010, the entrance criteria for the Academy of Judges and Prosecutors include integrity-
testing. The two-year initial training programme for judges and prosecutors and the final
exam also include a component on judicial and prosecutorial ethics. There are multiple
14
complaints mechanisms for the public to use. Complaints can be lodged via, among others,
the Ministry of Justice, the Office of the Ombudsman and the Supreme Court. Aside from the
disciplinary framework which is in place, there have in the recent past also been criminal
prosecutions against judges and prosecutors and the principle of immunity does not pose any
practical obstacle, as it is revoked by the Judicial Council in such cases. The State
Commission for Prevention of Corruption has also regularly sought misdemeanour fines
against judges who fail to submit asset declarations or statements of interest and the system
works smoothly in practice.
Professionalism and competence
Although the entrance criteria for the judicial profession were toughened in 2010, as were the
professional experience pre-requisites for promotion to higher courts, concerns persists about
how the rules are applied in practice. There are no transparent means to assess whether the
objective, merit-based criteria are in fact applied in decisions on judicial appointments and
promotions, especially when comparing multiple candidates. The system of professional
evaluation is based almost exclusively on numerical benchmarks relating to the numbers of
cases processed per month and the procedural deadlines met. It does not include any features
of qualitative assessment, such as the clarity of reasoning in judgments or level of
specialisation. It takes negligible account of contributions to jurisprudence, academia or
teaching and it includes unjustified criteria such as the number of cases overturned on appeal.
This can also have knock-on consequences for both promotions and dismissals given that they
are closely linked to the results of the evaluation procedure. Despite repeated criticisms, no
improvements have yet been introduced. The lack of clear reasoning in court judgments
remains a significant problem still to be addressed.
Quality of justice
The Academy for Judges and Prosecutors was established in 2006 and has so far produced
four graduating classes of 80 candidates in total, of whom 78 have been appointed as first-
time judges and prosecutors. In addition to the two-year pre-service training programme, the
Academy provides ongoing in-service training for all judges, prosecutors and court staff. This
also covers relevant aspects of EU law and European Court of Human Rights (ECtHR)
jurisprudence. It operates e-training through its web portal and decentralised training outside
the capital. The Academy is financed from the state budget and by donors. It still lacks
sufficient support staff. Its ability to provide high-quality training, both from experienced
national professionals and international guest trainers, needs to be secured and monitored on
an ongoing basis. All courts produce quarterly and annual activity reports. The Judicial
Council monitors these, as well as the annual report of the Supreme Court. The Automated
Court Case Management Information System (ACCMIS) allows court activities to be
followed up daily, and has also been used to compile data in specific areas, such as pre-trial
detentions and the identification of ‘old cases’.
ICT systems are in use in all courts but some public prosecutors’ offices still lack equipment.
Online access to law and jurisprudence is available in principle but is inconsistent in
practice. Despite several initiatives to promote alternative dispute resolution, including
under the 2009 Law on Mediation, there is a low level of uptake by the public of the options
available. The country has observer status in the European Judicial Training Network.
Efficiency
Most courts at all levels maintain a clearance rate of 100 % or higher, meaning that they are
able to process at least as many cases as they receive in one year. Backlogs have not been an
issue for several years. Individual stages of court proceedings are generally concluded within
15
the legal deadlines; however, the overall length of court proceedings from initiation to final
judgment remains a concern in some categories of cases. Amendments were made to both the
criminal and civil procedure legislation several years ago, addressing the problem of repeated
referrals and re-examinations following appeals (so-called ‘ping pong’ appeals). However, the
improvements benefit only cases started after the amendments entered into force which has
created a confusing procedural landscape and a category of increasingly lengthy ongoing
proceedings which still labour under the old rules. This needs to be addressed. The European
Court of Human Rights has confirmed that the Supreme Court provides an effective domestic
remedy for length of proceedings complaints.
The 2015 budget for the courts is EUR 30.2 million and EUR 7 million for the prosecution
service. In terms of budgetary spending per inhabitant, this is significantly lower than the
European average. The number of both judges and court staff per 100 000 inhabitants is
significantly above the European average. There is still no dedicated human resource
management system or any strategy aimed at improving resource allocation.
Fight against corruption
The country has some level of preparation in the fight against corruption, having set up the
necessary legislative and institutional framework over the last decade as well as developing a
track record on both prevention and prosecution. No progress has been achieved in the past
year on the outstanding issues identified. Corruption remains widespread. The capacity to
effectively address it is currently being undermined by a lack of political will and political
interference in the work of the relevant bodies, which is hampering their ability to act
proactively and non-selectively, especially in high-level cases (Urgent Reform Priorities). In
addressing the shortcomings outlined below, the country should pay particular attention in the
coming year to:
→ demonstrating real political will in the fight against corruption in the form of autonomous
and effective measures by law enforcement and supervisory bodies, notably the State
Commission for Prevention of Corruption;
→ increasing the visibility of anti-corruption measures and the results achieved to improve
public awareness and trust;
→ developing a credible track record on fighting high level corruption;
→ creating an effective framework for the protection of whistle-blowers, in line with
European standards and best practices (Urgent Reform Priorities).
Track record
Significant efforts have been made in recent years by the state bodies involved in the fight
against corruption to collect the data needed to properly monitor investigations, prosecutions
and convictions in this field. Over 220 criminal proceedings have been launched in the past
six years and over 30 high-level cases in the past 12 years. While the track record is strongest
on combating corruption connected with serious and organised crime activity, as well as
abuse of office by low to medium level officials, it is weak on high-level political
corruption. Serious allegations against senior government officials have yet to trigger
thorough investigations. This selective passivity raises concerns over the independence of the
police, the Public Prosecutor’s Office and the State Commission for the Prevention of
Corruption (SCPC).
Widespread allegations of politicisation and of political interference by the executive and the
ruling political parties in the work of the law enforcement agencies and the judiciary need to
be addressed. The content of the intercepted communications has implicated members of
16
the government and senior officials in abuses of power and corruption in public procurement,
urban planning, political party financing and public employment, as well as in interfering in
the independence of the judiciary, the media and elections. The reluctance of the relevant law
enforcement bodies, including the Public Prosecutor’s Office, to follow up on these
revelations in a swift and decisive manner is of concern. The effective fight against corruption
requires not only the pro-active efforts of enforcement, regulatory and oversight bodies but
also the political will of all other actors to allow them to carry out their functions fully, as
intended by law (see also the ‘Urgent Reform Priorities’).
Financial investigations and asset confiscation are still used quite rarely in corruption cases.
The track record on control of party and campaign financing indicates that the existing
penalties under the Law on Prevention of Corruption and the Electoral Code need to be
applied much more systematically and visibly in practice.
The SCPC regularly initiates misdemeanour proceedings for failure to declare assets or
submit statements of interest, with over 700 cases launched in the past five years. It also
investigates potential conflicts of interest (over 680 cases in the past five years) and refers
asset discrepancies to the Public Revenue Office for further investigation (over 230 cases in
the past five years). Data collection and monitoring in this area is at an advanced stage.
The implementation of the Law on Free Access to Public Information remains ineffective
and in practice penalties are not imposed for failure to comply. Political parties are still
excluded from the list of holders of information, and thus remain outside the scope of the
enforcement regime. Whistleblowing does not occur in practice due to the lack of any
comprehensive protection. Proposed legislation on the topic needs to be aligned with
European standards.
Institutional framework
The SCPC is the main institution on the prevention side. It was established in 2002 and has
responsibilities in the areas of political party and campaign financing, asset declaration and
conflicts of interest. It carries out systematic and ad hoc verifications and acts on complaints
from the public. All of its annual reports are published on its website, some also in English.
The SCPC has limited enforcement powers of its own, mainly issuing public warnings.
However, it regularly institutes misdemeanour proceedings before the courts (resulting in
fines) for failure to comply with various reporting obligations, and also refers cases of
potential corruption directly to the Public Prosecutor. Where asset discrepancies are found,
the SCPC refers cases for further investigation to the Public Revenue Office, which has the
power to impose a punitive 75 % tax rate on undeclared income. While it has competent staff,
the SCPC still lacks the adequate human and technical resources to function effectively.
Although formally independent, the SCPC is regularly criticised for its members’ lack of
political will to fight corruption in a proactive, independent and non-selective manner. Public
awareness of the SCPC’s activities is quite low and awareness-raising on its role should be
strengthened.
On the law enforcement side, most corruption cases are handled by the specialised Basic
Public Prosecution Office for Organised Crime and Corruption in Skopje. Since 2007 this has
special competence for public sector corruption as well as organised crime, while cases of
private sector corruption are handled by the local prosecution offices around the country. The
new Law on Criminal Procedure which applies since December 2013 aims at strengthening
the role of the prosecutor in the pre-trial phase and improving the capacity to tackle complex
organised crime and corruption cases. Despite many activities undertaken to prepare for the
entry into force of the new system, the capacity of the prosecution service to lead criminal
17
investigations and effectively direct law enforcement agencies still needs to be strengthened.
The Ministry of Interior’s Sector for fighting corruption still needs to be reinforced with
adequate staff and equipment. The Agency for Management of Confiscated Property does not
have sufficient powers and continues to be under-resourced.
Legal framework
The Criminal Code penalises active and passive bribery in both the public and private sectors,
active and passive trading in influence, illicit enrichment and abuse of funds for campaign
financing. It provides for prison sentences ranging from six months to ten years. In practice,
sentences imposed are most commonly of three to four years, but heavier sentences of seven
or eight years have also been given regularly, depending on the circumstances of the case.
The 2004 Law on the Financing of Political Parties and the recently amended 2006 Electoral
Code contain both criminal and misdemeanour provisions on funding and election-related
corruption. Fines range from EUR 500 to EUR 5 000 for breaches relating to party and
campaign financing, donations, reporting and pre-election payments from the state budget.
However, the enforcement regime is not being put to full use, as the penalties foreseen are not
imposed on political parties in practice, despite complaints and media reports of breaches. The
respective control powers and responsibilities of the State Audit Office, the SCPC and the
State Election Commission are unclear under the legislation, leading to a mutual abdication of
responsibility which needs to be addressed.
The legal framework for prevention is provided by the 2002 Law on Prevention of Corruption
(covering asset declarations), the 2007 Law on Preventing Conflicts of Interest, the 2006 Law
on Free Access to Public Information and the 2008 Law on Lobbying. The first two have been
amended several times, notably in response to successive rounds of GRECO (Group of States
against Corruption) evaluations. There is still no comprehensive system for protecting
whistle-blowers.
The country is party to the UN Convention against Corruption since 2007 and the Council
of Europe Criminal and Civil Law Conventions since 2002 and 2003 respectively. While
legislation penalises illicit enrichment in line with Article 20 of the UN Convention against
Corruption, there is no indication that the provisions are used in practice.
Strategic framework
The country is implementing its 2011-15 state programmes for preventing corruption and
conflicts of interest and their respective action plans. However, the programmes lack visibility
and the relevant state institutions do not treat implementation as a priority. Implementation
costs, and how these costs are shared among the institutions, are not clearly set out. Several
important anti-corruption measures have still to be implemented.
Fight against organised crime
The country has achieved some level of preparation in the fight against organised crime. No
progress has been made. The legislative framework is broadly in line with European
standards. The general capacity to deal with organised crime was increased by establishing
specialised units both in the police and the public prosecution office. However, more still
needs to be done to improve the effectiveness of law enforcement in this area. In addressing
the shortcomings outlined below, the country should pay particular attention in the coming
year to:
→ establishing a sound track record on combating money laundering, and improving capacity
and expertise to carry out financial investigations and asset confiscations on a more
systematic basis;
18
→ stepping up efforts to improve cooperation between the various law enforcement agencies
by bringing the National Coordination Centre for the Fight against Organised Crime into full
operation;
→ revising the legal and technical framework for intercepting communications, and
increasing the effectiveness of special investigative measures for genuine law enforcement
purposes (Urgent Reform Priorities).
Track record
Significant efforts have been made by the authorities to collect data needed to monitor
investigations, prosecutions and convictions in the fight against organised crime. In the past
seven years, almost 500 criminal proceedings have been launched against over 2 000
defendants. The largest groups of cases concern people smuggling, human trafficking and
trafficking in drugs. This also reflects the country’s position on the Balkan route for these
crimes. A number of criminal networks and routes have been destroyed in recent years thanks
to cooperation with neighbouring countries and EU Member States through Eurojust.
Effective implementation of anti-money laundering legislation by all relevant institutions,
including banks, is still needed. There are relatively few cases, and the data collection needed
to track them effectively needs to be stepped up to the same level as for other areas of
organised crime. This requires improved coordination among the relevant anti-money
laundering institutions, and in particular the cooperation of the Financial Intelligence Unit.
The use of special investigative measures is quite common in organised crime cases, but
more efforts are needed to ensure both that this technique is applied more effectively by law
enforcement agencies and that the appropriate oversight is carried out. The expertise of law
enforcement and prosecution services and their capacity to conduct serious financial
investigations should be strengthened. The precautionary freezing of assets during the initial
phase of the investigation is rarely applied, which leads to poor confiscation rates at the end of
criminal procedures. More systematic cooperation between the Agency for Management of
Confiscated Assets and law enforcement agencies is needed.
The level of sentencing by courts appears on the whole to be appropriately strict, although
efforts are still needed to ensure greater consistency. The principle of presumption of
innocence of the accused is not always ensured in practice. Some high-profile organised crime
cases have been criticised as highly politicised, and have even led to the dismissal of judges
who were not considered to have reached a ‘correct’ decision.
Institutional and operational capacity
A major police reform started 15 years ago and reforms continue in specific areas. The
Ministry of Interior has specialised units dealing with economic organised crime, money
laundering and financial investigation, corruption, drug trafficking, criminal intelligence
analysis, interception of communications, witness protection, trafficking in weapons and
dangerous substances, human trafficking, cybercrime investigation, digital forensics and
terrorism respectively. The general level of police equipment in terms of vehicles, premises,
IT and radio communication systems is relatively good (for example, TETRA
communications technology is well established and in operation). The Sector for Internal
Control and Professional Standards is well established and handles hundreds of police
complaints effectively. However, independent, external and transparent oversight of the police
needs to be established and the existing complaints mechanism must be implemented in a
consistent manner. While clear criteria for recruiting and evaluating police officers exist, there
are persistent allegations of politicisation. According to the most recent Eurostat figures, the
country has over 500 police officers per 100 000 inhabitants.
19
The Basic Public Prosecution Office for Organised Crime and Corruption has special
competence for crimes committed by organised groups, cross-border crimes, drug trafficking,
money laundering, terrorism, human trafficking and smuggling of migrants, among other
things. Relations between prosecutors and police still need to be improved for the
prosecution service to fully play its lead role in investigations, as provided for by the new
Law on Criminal Procedure. Investigative centres are being set up within the public
prosecution offices, where members of the Judicial Police, the Financial Police and the
Customs Administration will work under the direction of the Public Prosecutor. There is no
electronic inter-connection between the police and the Public Prosecutor’s Office, which
would allow information to be shared efficiently. The National Coordination Centre for the
Fight against Organised Crime, which will bring together a multi-disciplinary staff to optimise
inter-agency cooperation, is established by law but not yet operational.
The National Committee to Combat Human Trafficking and Illegal Migration has operated
since 2001 as an inter-ministerial body coordinating various activities. Since 2003 it has
included a sub-group on the trafficking of children. A National Reporter on human trafficking
was appointed by the government in 2009. The Office of the National Referral Mechanism
operates within the Ministry of Labour and Social Policy and provides coordinated assistance
and protection to victims of human trafficking, especially women and children. The Council
for Witness Protection, which includes representatives of the Supreme Court and the
prosecution service, was established in 2005 and is authorised to put witnesses in the
protection programme and provide changes of identity. The Ministry of Interior has several
forensic units, including for biological and DNA identification. The national DNA database,
established in 2007, contains around 13 000 identified and 3 500 unidentified DNA profiles.
The powers and resources of the police, the Public Prosecutor’s Office, the courts and the
Agency for Management of Confiscated Property still need to be strengthened so they can
take measures to seize and confiscate assets more frequently.
An operational agreement with Europol has been in place since 2011 and the country is the
only one in the region to have a cooperation agreement with Eurojust, in force since 2010.
Close cooperation in the fight against organised crime continues with international and
regional bodies such as Eurojust, Europol, the Southeast European Law Enforcement Centre
and the US Drug Enforcement Agency, as well as police services in several other countries.
Legal framework
The country’s Criminal Code is largely in line with European standards. The Law on
Criminal Procedure was overhauled completely in 2010 to modernise and optimise the
criminal procedure, especially for complex investigations, under the central guidance of the
Public Prosecutor. It has applied since December 2013. A special Law on Witness Protection
has been in place since 2005. The 2006 Law on Interception of Communications was
amended in 2012 to address the potential for special investigative techniques to be abused.
Nevertheless the content of the intercepted communications has brought to light serious
shortcomings in the practical application of the law, which need to be addressed. The ‘Urgent
Reform Priorities’ include separating the mandate, regulations and technical facilities for
interception in criminal investigations, on the one hand, from those for security and
intelligence purposes on the other. The police, Customs Administration and Financial Police
need to be given the technical means to carry out interceptions without having to rely on the
intelligence services. Legislation on the seizure and confiscation of criminal assets needs to be
improved and its implementation stepped up. Extended confiscation is provided for by the law
since 2010 but rarely used in practice.
20
Strategic framework
Activities are under way to draw up both national and regional threat assessments for serious
and organised crime, inspired by the EU SOCTA methodology.
National strategies are in place to combat human trafficking and illegal migration (2013-16),
drugs (2014-20), and terrorism (2011-15). Work continues on the new cyber-security strategy.
Fight against terrorism
The country has been affected by the phenomenon of foreign terrorist fighters and
radicalisation. A comprehensive and effective strategy is needed to prevent and counter
radicalisation, in close cooperation with religious leaders and communities, social and front-
line workers, the education system and youth organisations. The phenomenon of foreign
terrorist fighters needs a dedicated approach by the intelligence and law enforcement
community and a coherent judicial policy towards offenders.
2.4. Human rights and the protection of minorities
Overall situation
The legal framework for protecting human rights is broadly in line with European standards,
but more focus needs to be placed on implementing it. The various bodies involved in
protecting and promoting human rights lack sufficient staff and financial resources and
sometimes coordinate poorly. General weaknesses in the implementation of human rights
standards affect the most vulnerable and marginalised groups in society, including children
and juveniles, disabled persons, the Roma and the LGBTI community.
Shortcomings particularly affect the following areas:
• The prison system continues to be heavily underfunded, understaffed and mismanaged,
which leads to systemic breaches of international human rights standards.
• Police impunity needs to be addressed by establishing an independent oversight mechanism
and investigating complaints of ill-treatment seriously and thoroughly.
• Despite improvements to the legislative framework, problems in the area of the freedom of
expression persist in practice.
A detailed analysis of freedom of expression follows below. For a detailed analysis of
developments on other human rights and the protection of minorities, see Chapter 23 —
Judiciary and fundamental rights. For developments in trade union rights, anti-discrimination
and equal opportunities, see also Chapter 19 — Social policy and employment.
Freedom of expression
The country has some level of preparation regarding freedom of expression. The legislative
framework has been overhauled in recent years and is aligned with both the acquis and
international standards. Nevertheless, the freedom of expression and the media remains a
serious challenge in the current media culture and political climate. The country continued to
backslide over the past year. In addressing the shortcomings outlined here, in the coming
year the country should in particular:
→ ensure full transparency on government advertising and develop a mechanism for unpaid
public service announcements of a true public interest character (Urgent Reform Priority);
→ enforce, at political level, the exercising of appropriate self-restraint by politicians and
public officials not to resort to defamation actions, in line with ECtHR case law (‘Urgent
Reform Priority’);
21
→ ensure that the public has access to objective and accurate reporting and a variety of
viewpoints through the mainstream media, particularly the public service broadcaster.
Intimidation of journalists
There were several reports of intimidation and harassment of journalists, two reports of
property damage and two death threats against journalists in 2015. Journalists continued to
report a general climate of self-censorship and the publication of intercepted telephone
conversations confirmed that journalists had been under extensive and unlawful surveillance
for several years.
Legislative environment
The Criminal Code was amended in 2012 to decriminalise defamation and insult. A Law on
Civil Liability for Insult and Defamation was adopted, among other things setting out
maximum levels of damages which could be awarded in cases involving the media. The 2013
Law on Media regulates basic obligations, protections and freedoms relating to the media.
Blasphemy is not a criminal offence. The legislation on hate speech is largely in line with the
acquis but data collection on the reporting, investigation and prosecution of hate speech and
hate crime is not yet systematic. Training of law enforcement, prosecutors, judges and media
employees needs to be increased in this field. Regulations on registration of journalists and
access to information follow international standards. However, according to journalists there
is a tendency by public authorities to over-use the ‘classification’ of documents, most notably
those relating to the costs of the Skopje 2014 project, to prevent public access to information.
Implementation of legislation/institutions
The regulatory regime was reformed in 2013 with the adoption of the new Law on Audio and
Audiovisual Media Services, and the Broadcasting Council has been replaced by the Agency
for Audio and Audiovisual Media Services. Legislation provides for the Agency’s formal
and financial independence but there are concerns about its political independence in practice
(see also Chapter 10 - Information Society and Media).
The content of the intercepted communications brought to light revelations which confirmed
existing concerns about the media environment. The corollary rights of the media to impart
information and ideas which are of public interest and of the public to receive them, as
foreseen by the ECtHR, are undermined by regular political interference in the editorial
policies of the media, in particular mainstream nationwide broadcasters. This has extended as
far as direct control over the content and timing of news reporting.
The tendency of politicians and public officials to sue each other for defamation instead of
engaging in open debate needs to be addressed urgently as it has a chilling effect on freedom
of expression.
As regards online freedom of expression, legislation prohibits operators from controlling
internet traffic, except to protect network connections against becoming overloaded. In
practice operators do not block, slow down, alter, degrade or discriminate against any internet
content. The interception scandal has, to some degree, had the effect of increasing the self-
confidence of various segments of society, allowing them to express their reactions and
opinions without self-censorship, particularly on social media.
The Media Ethics Council, established in 2014, is a self–regulatory body that receives
complaints about media content. It publishes all its decisions on its website. A large number
of the complaints received so far were made by media against other media, emphasising the
persistent polarisation and lack of solidarity within the media itself. Both the Council and the
22
relevant journalists’ associations have a responsibility to contribute towards improving
professional and ethical standards through training and awareness-raising.
Public service broadcaster
Regulation of the public service broadcaster MRT is in line with EU standards. Financing is
not independent of the government and despite measures to improve license fee collection,
this revenue source is not sufficient. Other means to ensure financial independence have been
discussed, but no decision has yet been reached. MRT’s full editorial independence is still
not ensured. Its failure to inform the public on issues of public interest, including the
interception affair, in a balanced and non-selective manner continues to undermine its role as
a public broadcaster (see also Chapter 10 - Information Society and Media).
Concerns about a lack of balance in reporting could be addressed, for instance, by
broadcasting more regular debates involving more than the governing parties.
Economic factors
The Law on Audio and Audiovisual Media Services regulates media ownership, setting out
limitations and prohibitions relating to conflicts of interest.
The largest television outlets with concessions to broadcast nationally (SITEL, KANAL5,
ALFA and MRT, the public broadcaster) favour the government and report selectively on
opposition or civil society activities.
Government advertising provides the largest single source of funding and has a major
influence on the media market at both national and local level. There is no systematic or
detailed reporting on government advertising. Moreover, the content of the intercepted
communications revealed close links between government and media owners with the highest
viewership and circulation, who also receive most of the funding allocated to government
advertising campaigns. The ‘Urgent Reform Priorities’ include a commitment to ensure full
transparency on government advertising and to develop a mechanism for unpaid public
service announcements of a truly public interest character.
Professional organisations/ professional conditions
Representation of journalists is divided between two associations, the Association of
Journalists of Macedonia (AJM) and the Macedonian Association of Journalists (MAN).
Here too, polarisation occurs along political lines, with the recently reactivated MAN tending
towards pro-government stances on most issues. The older of the organisations, the AJM, has
continued to draw attention to a number of important issues such as the impact of government
advertising on the diversity of the media and the role of the media during the political crisis.
Job security is fragile and labour rights are still inadequately enforced, contributing to the
continuing problem of self-censorship.
2.5. Regional issues and international obligations
The former Yugoslav Republic of Macedonia continued to cooperate fully with the
International Criminal Tribunal for the former Yugoslavia. There are no remaining cases
or appeals pending in The Hague.
The country still maintains a 2003 bilateral immunity agreement with the United States,
granting exemptions for US citizens from the jurisdiction of the International Criminal
Court. This is not in compliance with the EU Common Positions on the integrity of the Rome
Statute, nor with the related EU guiding principles on bilateral immunity agreements. The
country needs to align with the EU position.
23
As of 1 January 2015, there were 869 Roma refugees from Kosovo∗
registered in the country
and 119 internally displaced persons. There are currently 536 people under subsidiary
protection. In 2014, 83 people were voluntarily repatriated to Kosovo and Serbia. The
Ministry of Labour and Social Policy continues to provide financial support to families for
rented housing and utilities, under the integration strategy. Court procedures concerning
internally displaced persons, relating to claims for damages resulting from the 2001 conflict,
are still under way and most of those affected remain housed with host families.
The number of third country nationals crossing the border from Greece into the country
reached unprecedented numbers, with peaks in August and September. A total of 296 550
persons transited the country from January until mid-September. Over 178 900 people -
mainly Syrians, Afghans and Iraqis – registered their intention to apply for asylum after new
legislation was adopted in June. Only a fraction of them effectively applied for asylum. On 4
September, the former Yugoslav Republic of Macedonia signed a Memorandum of
Understanding with Austria, Hungary and Serbia to extend joint border controls between
signatory states to the country's border with Greece and to include the country in a joint
investigation team on people smuggling.
Regional cooperation and good neighbourly relations form an essential part of the
country’s process of moving towards the EU. The country has continued to participate
actively in regional initiatives, including in the South-East European Cooperation Process, the
Regional Cooperation Council, the Energy Community Treaty, the European Common
Aviation Area Agreement and the Central European Free Trade Agreement. It assumed the
rotating presidency of the Central European Initiative in January 2015. Its priorities include
advancing the sustainable development of the region by developing the necessary energy and
transport infrastructure and promoting tourism and the agricultural sector. Fresh impetus has
been given to regional cooperation by the Berlin Process, with the Western Balkan Six
(WB6) intensifying cooperation among themselves and with the EU. In April, WB6 countries
reached an agreement on the South East Europe core regional transport network, which
extends the EU corridors to the region to improve connectivity within the Western Balkans as
well as with the EU. At the WB6 meeting in Vienna in August, the WB6 countries committed
to abstain from misusing outstanding bilateral issues in the EU accession process and
discussed other urgent problems, including the migratory pressures on Europe.
The former Yugoslav Republic of Macedonia has continued to play a generally constructive
role in bilateral relations with other countries seeking to join the EU and with
neighbouring EU Member States. However, a bilateral convention on regional cooperation,
under Article 12 of the Stabilisation and Association Agreement, has not yet been concluded
with Serbia.
Bilateral relations with Albania remained generally good. A memorandum of understanding
on defence was signed in January. An agreement to jointly recognise respective social
insurance schemes and a protocol on cultural cooperation for 2015-2020 were signed in
March. The Albanian government reacted to the Kumanovo incident by calling for calm and a
transparent (international) investigation into the events, while defending the territorial
integrity of the country. The Albanian government has reiterated its concerns about the full
implementation of the Ohrid Framework Agreement.
∗
This designation is without prejudice to positions on status, and is in line with UNSCR 1244/99 and the ICJ
Opinion on the Kosovo declaration of independence.
24
Relations with Bosnia and Herzegovina continued to develop. Agreements on the exchange
and mutual protection of classified information with Sarajevo were signed and entered into
force on 1 September 2015.The country continued to contribute to the EUFOR ALTHEA
operation in Bosnia and Herzegovina and, as of June 2015, has two staff in the operation’s
Operational Command.
Cooperation with Montenegro was further strengthened. In September 2014, the two
countries signed an agreement on mutual recognition of driving licences. In February, they
signed a protocol on the collocation of their diplomatic and consular offices in Paris, France.
A meeting of the joint committee on EU affairs was held in March in Skopje, during which
the two countries exchanged their experiences of the accession process.
Relations with Serbia are good and continue to deepen. Regular political dialogue continued
at the highest level. At the two governments’ second joint session, Several cooperation
agreements were signed in the field of economy, culture, the environment, tourism, education,
science and technology, together with an agreement on a border-crossing point. The Serbian
authorities condemned the attacks in Kumanovo in May. The Serbian government condemned
the violent incident in Kumanovo.
Relations with Kosovo continued to develop. A memorandum of cooperation between the
public prosecutors of both countries in combating cross-border crime and terrorism was
signed in late December. In January, the two countries signed an agreement on the promotion
and mutual protection of investment.. In response to allegations that the attack on the border
police station in Gošince was instigated from Kosovo and that Kosovo citizens were involved
in the incidents in Kumanovo, the government of Kosovo called for the country’s territorial
integrity to be respected and condemned the violence. The government in Kosovo has also
called for the full implementation of the Ohrid Framework Agreement.
Close relations with Turkey were maintained, as demonstrated by the Turkish Prime
Minister’s visit to Skopje in December 2014.
Relations with Bulgaria continued to be affected by differences, primarily about the
interpretation of history. A number of high-level visits took place. Negotiations on a bilateral
agreement on good neighbourly relations continued. Open issues remain, however. The
countries continued to cooperate on defence issues. Good cooperation continued on cross-
border matters, as well as on sectoral and trade relations, including infrastructure priorities.
People-to-people contacts continued normally.
Good relations with Croatia continued, promoted by high-level visits. An agreement on the
Euro-Atlantic Partnership entered into force. Amendments to the agreement on economic
cooperation and trade were signed, as was the joint declaration on the adoption of the 2014-20
regional strategy for research and innovation development.
Relations with Greece continued to be affected by the name issue. There were no formal talks
on this issue under the auspices of the UN during the reporting period. Regular meetings at
official and expert level took place in June 2015 in Skopje. The Greek Foreign Minister took
the initiative to visit Skopje for the first time in 11 years. On this occasion, the two sides
agreed on a number of important confidence-building measures. Economic and trade relations
continued normally.
25
3. ECONOMIC CRITERIA
Key economic figures 2013 2014
Gross domestic product per capita (% of EU28 in
PPS)
35.6 36
GDP growth (%) 2.7 3.8
Unemployment rate (female; male) (%) 29 (29; 29) 28 (28.6; 27.7)
Economic activity rate for persons aged 20–64:
proportion of the population aged 20–64 that is
economically active (female; male) (%)
70.4 (57.1; 83.4) 70.8 (56.8; 84.5)
Current account balance (% of GDP) -1.8 -1.3
Foreign direct investment (FDI) (% of GDP) 3.3 3.3
Source: Eurostat
In line with the conclusions of the European Council in Copenhagen in June 1993, EU
accession requires the existence of a functioning market economy and the capacity to cope
with competitive pressure and market forces within the Union.
The Monitoring of these economic criteria should be seen in the context of the increased
importance of economic governance in the enlargement process. In order to improve their
economic governance, in 2015 the enlargement countries were asked to prepare Economic
Reform Programmes (ERPs), which set out a medium-term macro-fiscal policy framework
together with key structural reforms aimed at supporting the framework and boosting
competitiveness. The ERPs were the basis for country-specific recommendations jointly
adopted by the EU and the Western Balkans and Turkey in the Economic and Financial
Dialogue meeting on 12 May 2015.
3.1. The existence of a functioning market economy
The former Yugoslav Republic of Macedonia has a good level of preparation in developing
a functioning market economy. Overall, no progress was made. On the one side positive
developments were recorded particularly as regards the business environment. The
macroeconomic environment strengthened further, despite key vulnerabilities. However, this
was counterbalanced by backsliding in the management of public finances. The government
continued to promote growth and employment through major public infrastructure investment
and foreign direct investment (FDI). This contributed to improving the structure of exports
and job creation. However, the development of a competitive private sector remained
hampered by weak contract enforcement and the large informal economy.
In line with the 2015 ERP recommendations and in order to support long-term growth, the
former Yugoslav Republic of Macedonia should pay particular attention to:
→ improving medium-term budget planning and execution, and adhering more rigorously to
the medium-term fiscal strategy;
→ continuing with structural reforms to improve the business environment and establishing
an efficient bankruptcy procedure;
26
→ taking further measures to repair the bank lending channel.
Economic policy essentials
The government remained committed to pursuing market-based economic reforms,
attracting FDI and developing the private sector. In January 2015, the authorities
submitted their Economic Reform Programme (ERP), outlining key economic, fiscal and
structural reforms and policies for 2015-2017. The government has made little progress on
structural reforms of the labour market and there was even backsliding on fiscal discipline.
Efforts to strengthen medium-term budget planning and execution and the employability of
workers should therefore be strengthened. The government should take further measures to
implement the ERP recommendations, which are set out below.
The government continued to engage actively with the international financial institutions. In
November 2014, the IMF concluded its fourth and last post-programme monitoring mission
related to the country’s 2011-2013 precautionary liquidity credit line. In February 2015, the
government repaid in advance all outstanding loans to the IMF.
Macroeconomic stability
The macroeconomic environment strengthened further, but key vulnerabilities
remained a source of concern. The economic recovery continued, with domestic demand
becoming the sole driver of growth. Output expanded by 3.8 % in 2014 and solid growth
continued in the first quarter of 2015. Investment picked up markedly in 2014 due to public
road, rail and energy infrastructure projects and
new FDI. Import demand, mainly investment-
related, increased accordingly.
The recovery of industrial production from its
2012 trough continued, driven by the
manufacturing sector, which accounts for about
three quarters of industry, although performance
in the first quarter of 2015 disappointed. Overall,
sustainable development of the economy can
only be achieved if the domestic private sector
continues to develop and contribute more to
growth.
The stability of the external sector relied increasingly on public borrowing abroad. The
current account deficit has declined steadily since 2009 and stood at a moderate 1.3 % of GDP
in 2014. This development has been driven by an improvement in the merchandise trade
balance, spurred largely by exports made by
foreign investors in the automotive components
sector. Current transfers from abroad fell, but
remained significant. FDI inflows (3.3 % of
GDP) remained markedly below their 10-year
average (4.3 % of GDP). External debt stood at
70 % of GDP at the end of 2014, up by more
than 5pp from a year earlier, mainly due to an
increase in public debt and, somewhat less, in
FDI-related intercompany lending. Hence,
movements in foreign exchange reserves were
increasingly driven by public borrowing abroad,
rather than by private investment.
27
Risks to the domestic economy from the economic situation in Greece, via trade, investment
and financial linkages appear limited at this point. The share of Greece as a destination of the
country's exports has fallen from 10 % in 2008 to 5 % in 2014, yet fuel imports have risen
markedly. In the medium term, a sustained crisis in Greece may, however, impact on the
economy through a protracted loss in consumer and investor confidence, lower exports and
more costly external government financing.
Labour market conditions remained burdened by structural impediments. The
unemployment rate has steadily fallen since 2008 (34 %), to 28 % in 2014. Significant gender
differences persist with economic activity rates of women being considerably lower than
those of men (56.8 % compared to 84,5 % for 2014). Job creation returned to average speed in
2014 after a surge in 2013. New jobs were created mainly in low-productivity sectors and
agriculture, supported by public subsidies and active labour market measures. It is estimated
that the public sector accounts for 20 % of total employment. Prices remained stable;
monetary policy successfully defended the currency peg. Lower prices for food and for
energy contributed to a fall of 0.3 % in the consumer price index (CPI) in 2014. Annual
average inflation has steadily decreased since 2011, when it stood at 3.9 %. Since April 2015,
headline inflation has registered positive gains again. The central bank kept the key policy
rate unchanged in 2014.
Fiscal discipline slipped again in 2014
and 2015, pointing to a need to improve
medium-term expenditure planning. The
government adopted a supplementary
budget in autumn 2014, due both to
revenue shortfalls and to earlier and higher-
than-expected expenditure on
infrastructure. The supplementary budget
revised the deficit target upwards, from 3.4
% to 3.6 % of GDP. However, the actual
budget deficit was even higher, at 4.2 % of
GDP, on account of ad hoc increases in
spending on pensions, social benefits and
subsidies, as well as additional resources
required for the construction of the
Corridor X motorway.
In July 2015, the government adopted again a
supplementary budget, raising expenditure in
particular for social welfare assistance, police
wages, and budgeted capital expenditure. The
2015 deficit target was raised from 3.4 % to 3.6
% of GDP despite increased revenue
projections. GDP growth expectations reduced
for 2015, by 0.5pp to 3.5.
The composition of public spending did not
improve. In 2014, investment accounted for
only 10 % of the budget and even less of actual
spending. Some 45 % of total spending went
on social transfers including pensions, which
ERP recommendation 1: ‘Improve the
management of public finances by adhering
rigorously to the 2015-2017 medium-term fiscal
targets outlined in the ERP, and frontload
consolidation so as to be on track for the 2017
budget deficit target of 2.9% of GDP. Use any
additional fiscal space for further consolidation
measures, so as to protect growth-enhancing capital
spending in case of unexpected budget pressures.
Keep tight control on the development of transfer
payments, pensions, and public wages. Introduce a
medium-term expenditure framework. Inform in a
timely and regular manner on the size of the
government workforce and payroll.’
28
the government had increased, as in the previous year, beyond what was required by law and
despite falling prices. Public sector wages and agricultural subsidies were also raised beyond
statutory requirements in 2014.
The government's commitment to the
medium-term fiscal strategy weakened -
the 2015-17 strategy provides for a gradual
decline in the general government deficit to
2.9 % of GDP by 2017, relaxing the
previous target of 2.6 %. Given the 2015
supplementary budget, and in anticipation
of a further increase in entitlement
spending in the upcoming pre-election period, reaching the 2017 target seems overly
ambitious. Overall, the link between the medium-term framework and the annual budget
process remains weak, leading to further retrenchment of fiscal space needed to absorb
unexpected spending pressures or revenue contraction.
Public debt levels have risen markedly in recent years and amendments to the public
debt law raise concerns about transparency. The general government debt ratio is still
comparatively moderate, but has been rising continuously since 2008. The increasing
financing needs of state-owned enterprises, which carry out major infrastructure works, have
contributed to a marked rise in overall public debt, which stood at 46 % of GDP at the end of
2014, compared with 38.6 % at the end of 2013. This is likely to rise further in the short to
medium term, given the scale of planned investment projects. In the summer of 2014, the
government amended the public debt law
to restrict the scope for borrowing by state-
owned enterprises with state guarantees,
while encouraging non-guaranteed
borrowing. As a result, the public debt
figure will be less transparent. The
government should improve the
management and the transparency of public
finances, practise more rigorous fiscal
discipline and improve fiscal transparency
as recommended in ERP recommendations
1, 2 and 3.
Interplay of market forces
The public sector’s share of the economy remained largely unchanged. In 2013, the
government sold its minority stake in two companies. However, the number of fully state-
owned enterprises remained unchanged at 15. In January 2013, the Public Enterprise for State
Roads (PESR), which is state-owned, started operations. In October 2014, the government
decided to postpone full liberalisation of the electricity market, planned on 1 January 2015,
for five years. Administered and regulated prices accounted for some 15 % of the CPI basket.
Most are regulated prices that usually cover production costs. Electrivity prices for
households and small companies as well as prices for natural gas and oil remain subject to
regulation by the Energy Regulatory Commission (ERC).
Market entry and exit
Setting up a business became slightly easier, but market exit remained cumbersome. The
implementation of measures under the ‘regulatory guillotine’ project progressed further, with
a view to facilitating business registration. However, the ‘one-stop-shop’ procedure is
ERP recommendation 2: ‘Improve the
composition of spending, by prioritising investment
projects according to their productive potential, and
be more transparent on the cost-benefit analysis
underlying transfer and investment spending items
on the budget. Provide more timely and detailed
data on planned and executed capital expenditure.’
ERP recommendation 3: ‘Improve the fiscal
transparency by including more comprehensive
data on the debt of public companies and
contingent liabilities in the government’s debt
management strategy and inform about arrears.
Speed up transition to ESA 2010 reporting and
resume fiscal notifications. Continue to keep tight
control on guaranteed and non-guaranteed
borrowing by state-owned enterprises and
municipalities.’
29
advancing only slowly. Conditions for obtaining public support and administrative fast-track
procedures implicitly favour (bigger) foreign firms, as local firms can rarely meet the
investment size criteria. Connections between the more technologically advanced foreign
companies and the domestic private economy are poor, which is a particular concern. Progress
in simplifying market exit is more limited; the bankruptcy law was amended to shorten
procedural deadlines and allow out-of-court settlement in the event of insolvency.
Legal system
Frequent legal changes, uneven implementation of laws and difficult contract
enforcement burdened business operations. Since 2011, the government has adopted a
number of judicial reforms to speed up procedures and improve capacity, e.g. by upgrading
information and electronic delivery systems, which accelerated certain court procedures and
improved the handling of backlog cases. No major new reforms were undertaken in 2014 and
beyond. Protection and enforcement of
intellectual property rights remain a
concern. The large informal economy
continued to hamper competition and
private sector development. The Labour
Ministry regularly updates its action plan
on reducing the shadow economy, but the
indicators and measures presented are not
fully coherent, and there is no results-based
assessment of previous measures.
Government arrears still affected domestic
companies’ liquidity, despite the recent
adoption of the Law on Payment
Discipline. The business environment
should be improved in accordance with ERP recommendation 8.
Cooperation between the government and the business sector has declined in recent
years. The proportion of draft laws published on the electronic register (ENER) fell
significantly over recent years, and the number of laws that undergo frequent changes or are
adopted with too short consultation deadlines has increased. In many cases, there is little ex
post consultation with stakeholders on the laws’ impact and effectiveness once they have been
implemented (see also political criteria – Policy development and co-ordination).
Financial sector development
The banking sector remained stable despite high levels of non-performing loans (NPL).
The financial sector remains dominated by banks which account for roughly 90 % of the
financial system’s total assets. Foreign
ownership of banking assets remains high,
at about 70 %, and concentration levels
have not declined much over recent years –
the three biggest banks hold 60 % of the
sectors assets, compared to about 66 % in
2010. The main funding source of banks
are deposits, which have kept growing since 2013. Financial stability indicators, such as
regulatory capital ratios, point to the system’s continued resilience. Profitability improved in
the second half of 2014, after a lacklustre performance in the preceding two years partly due
to the high share of bad loans. Since 2013, the central bank has managed to gradually reduce
ERP recommendation 8: ‘Improve the business
environment by implementing the Master Plan for
Competitiveness and the related Government
Action Plan. These should include measures
affecting competitiveness, such as a more
predictable legal and regulatory environment,
enforcement of contracts, respect of IPRs, payment
discipline, labour legislation, quality and integrity
of inspection services, etc. Ensure regular and
structured dialogue with social partners regarding
the implementation and review of the Master Plan.
Step up efforts to fight against corruption and
informalities in the economy.’
ERP recommendation 6: ‘Increase efforts towards
facilitating the disposal of non-performing loans by
banks, involving all key stakeholders including the
central bank as necessary, with a view to removing
potential obstacles to credit extension in the context
of a sustained pick-up in credit demand.’
30
the share of outstanding loans denominated in foreign currency, hence decreasing exchange
rate risks. Further measures should be taken to implement ERP recommendation 6.
Roughly one fifth of the domestic banking sector's assets and liabilities are held by two
subsidiaries of Greek banks. Both are financially sound and their funding is assured mainly
through domestic deposit-taking. In addition, the central bank put in place prudential
measures aimed at containing possible repercussions from the banking crisis in Greece. As a
temporary emergency measure, it also prohibited residents from exporting capital related to
capital transactions such as debt and equity purchases and long-term lending to Greece.
Liquidity in the banking sector remained ample in 2014 and beyond, and bank lending to the
private sector continued to rally. While lending to non-financial companies picked up
noticeably, these funds were used mainly for working capital purposes, rather than for new
investment. The ratio of non-performing to total loans to the non-financial sector remained
elevated, at 11.5 %, at the end of the second quarter of 2015, and only somewhat lower than a
year earlier. The ongoing establishment of a modern and comprehensive land registry
(cadastre) is expected to help inform lenders about the value of real estate as collateral. The
setting up of a private and public credit registry should also boost the quality of lending.
Bank lending remains by far the dominant
form of company financing, with the
development of a wider financial market
stalled - equity financing by public listing
has even declined in recent years. To
support the restoration of credit flows, the
government should take further measures to facilitate the write-off of bad claims. To improve
access to finance for companies under ERP recommendation 9, the government should
support the development of venture capital and equity financing, leasing and factoring, among
other measures.
3.2. The capacity to cope with competitive pressure and market forces within
the Union
The economy is moderately prepared to cope with competitive pressures and market
forces within the Union. Some progress was made particularly as regards addressing
prevalent shortcomings in human capital and physical infrastructure. However, businesses
remained concentrated in low-productivity activities and it is necessary to increase the value
added in productive sectors. Further investment is needed to boost labour productivity growth
and speed up the transformation of the economy. Overall, the state’s influence on
competitiveness increased.
In line with the 2015 ERP recommendations and in order to support long-term growth, the
former Yugoslav Republic of Macedonia should pay particular attention to:
→ improving the employability of workers by better aligning education with labour demand
needs, and improving the basic and transversal skills of students at all levels of education;
→ upgrading linkages between foreign direct investors and the economy and encouraging
investment in capital goods and innovation;
→ better prioritising investment and aligning the transport strategy with the regional agenda
on connectivity.
ERP recommendation 9: ‘Improve access to
finance for SMEs and speed up bankruptcy
procedures. Continue with the implementation of
the innovation strategy, and step up the use of
instruments foreseen by the Innovation Fund.’
31
Human and physical capital
The share of highly qualified workers in the economy is rising, but structural factors
limit an increase in labour productivity. Recent reforms have led to greater participation in
education. The number of early school leavers has dropped and pre-school enrolment has
increased in the past three years. The overall proportion of tertiary education graduates in the
workforce rose by 4 % to 18 % of the workforce between 2009 and 2013. However, one
quarter of university graduates were unemployed, as most new jobs were concentrated in low-
productivity sectors.
The main challenges remained the low labour market participation (particularly among
women), skills mismatches, and limited job opportunities in advanced industrial sectors.
Hence, labour productivity has remained at around 18 % of the EU average for a number of
years. The structure of employment remained focused on low-productivity sectors, and
agriculture (19 % of total employment). The government continued to address labour market
challenges primarily through a wide variety
of active measures, including an array of
employment subsidies to incentivise
recruitment. These measures did not
adequately address the underlying
structural causes of unemployment, and
were not sufficiently subjected to
performance evaluations. This weakened
their impact. Implementation of the 2013-
2020 vocational education and training strategy is lagging behind in many areas. Several
measures have been adopted, but their effectiveness is insufficiently monitored. Overall,
worker employability could be improved by following ERP recommendation 4. To achieve
marked improvements in labour productivity, the education system would benefit from closer
ties between education programmes and employers, including foreign investors operating in
higher value added sectors.
Public infrastructure is in need of modernisation. The state of transport and energy
infrastructure continued to hamper economic development. The government is addressing this
challenge through large-scale public investment projects. As a result, total investment
volumes rose sharply in 2013 and again in 2014, with public projects accounting for about
one fifth of total investment in the manufacturing and construction industries.. It makes it all
the more important to base the development of infrastructure on a reviewed transport strategy
aligned with the regional agenda on connectivity, in accordance with ERP recommendation 7.
Private sector investments remained subdued. Domestic firms did not sufficiently invest in the
renewal of their capital assets and in innovation. As a result, there is an emerging dichotomy
in the country’s capital stock, with foreign
investment increasingly focused on higher-
productivity, technology-intensive sectors
(mostly concentrated in special economic
zones), while capital stock in the local
economy remains low and relatively
outdated.
ERP recommendation 4: ‘Improve the
employability of workers, by better aligning skills
with labour demand needs notably by developing
the education system. Strengthen performance
evaluations of active labour market policies with a
view to better targeting skills development, and
inform on their methodology and results in a timely
manner.’
ERP recommendation 7: ‘Review the transport
strategy in order to align it with the regional agenda
on connectivity, with a particular focus on the core
investment priorities (core network) and establish a
credible planning and funding mechanism. A single
sector pipeline would help prioritise investments.’
32
Sectoral and enterprise structure
The sectoral structure of the economy remained largely stagnant. Manufacturing
contributed some 12 % to gross value added in 2014, the same as in 2009. Agriculture’s share
of the economy declined only slightly during that period, to 10 %, while trade and services
increased by 4.5 % and contributed almost
half of the country’s value added. The
structure of business also remained largely
unchanged, with micro-enterprises and
small businesses accounting for more than
98 % of all companies. However, in the last
three years, the number of large companies has more than doubled, mainly due to foreign
investment, although their share remained below 1 %. SMEs provided the bulk of jobs (80 %
of total employment). The sectoral structure of the economy would benefit from following
ERP recommendation 5.
State influence on competitiveness
While the government’s share of economic assets remained moderate, its influence on
private sector competitiveness through regulations and subsidies is rising. The state’s
ownership of economic assets remained relatively moderate at about 15 % of GDP. However,
the large share of state-owned land remained an obstacle to the development of the
agricultural sector and to bank lending to companies and households, which is based on
property as collateral. There is a wide range of policy instruments through which the
government increasingly has an impact on the economy’s competitiveness, such as direct
subsidies and tax exemptions, in particular for foreign investors; unpredictable inspections of
firms and sanctions; public guarantees for loans to state-owned enterprises; public
infrastructure projects; and active labour market programmes. While the legal framework for
state aid was strengthened in recent years, the information provided about the amounts and
beneficiaries of state aid and about ex post evaluation has been limited.
Economic integration and convergence with the EU
Further progress was made in developing closer trade and investment links with the EU.
Trade openness is relatively high given the state of economic development of the country.
Trade in goods remained buoyant in 2014, at about 129 % of GDP. Exports rose by 5pp to 52
% of GDP, compared to a year earlier. The EU remained by far the most important trade
partner in both exports and imports. In the first seven months of 2015, 77 % of total exports
went to the EU, broadly stable from the same period in 2014, and 4pp higher than in this
period in 2013. At 63 %, the share of the country's imports which originated in the EU also
remained elevated.
With foreign investors increasing production, the structure of exports shifted somewhat
towards products with higher value added — machinery and transport equipment exports
accounted for 21 % of the total in 2014 (7 % higher than in 2013). Exports have diversified in
recent years, but remain highly concentrated — iron and steel, metal ores, clothing and food
accounted for about 40 % of all exports in 2014, compared with 56 % in 2010. EU companies
are the main foreign direct investors in the economy. Their share of total FDI stock increased
further in 2014, for the second year in a row, by 1.5 %, to 83 %.
ERP recommendation 5: ‘Step up efforts to create
supply linkages between foreign and domestic
companies with a view to enhancing productivity
and employment in the domestic economy.’
33
4. ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP
4.1. Chapter 1: Free movement of goods
The free movement of goods ensures that many products can be traded freely across the EU
based on common rules and procedures. Where products are governed by national rules the
principle of the free movement of goods prevents these creating unjustified barriers to trade.
The country is moderately prepared in the area of free movement of goods. Some progress
was made, in particular on strengthening administrative capacity. However, there was no
further progress last year in eliminating non-tariff barriers to trade. In the coming year, the
country should in particular:
→ complete the adoption of measures to remove non-tariff barriers to trade;
→ further align itself with provisions on conformity acceptance so that an agreement on
conformity assessment acceptance can be negotiated.
With alignment with the EU acquis already well advanced in this area, no additional progress
can be reported on general principles. Of 42 legislative amendments required to eliminate
non-tariff barriers to trade, in line with Articles 18 and 19 of the Stabilisation and Association
Agreement (SAA), nine still need to be adopted. Concerning horizontal measures, the
Institute of Standardisation adopted 26 649 standards and standardisation documents, of
which 22 893 are European standards. The sale of standards increased by 24 % compared
with 2013. The institute's capacity improved with the appointment of new staff reaching a
total of 25. It began issuing certifications under ISO 9001 standards and improved
cooperation with EU standardisation bodies.
The alignment of conformity assessment with the acquis remains advanced but not yet
sufficient to allow an agreement on conformity assessment acceptance to be negotiated.
On accreditation, there were no legislative developments. The European Co-operation for
Accreditation completed its first supervisory assessment of the Institute of Accreditation,
whose capacity is adequate and was further strengthened. It now has a staff of 25, 93 external
assessors and 60 external experts. The Institute is an active member of the European Co-
operation for Accreditation, the Multilateral Agreements Committee, as well as a full member
of the International Laboratory Accreditation Cooperation. The institute issued 17
accreditations during the reporting period, and has withdrawn 19 since it started operating.
There are now 130 accredited bodies in the country, including nine institutes with new
accreditation for ISO/IEC17025 and EN/ISO 15 189.
The Bureau of Metrology issued 13 calibration and measurement options for weight, volume
and flow in the database of the International Bureau of Weights and Measures. It continued to
cooperate with the European Association of National Metrology Institutes on flow,
temperature, electricity and liquid pressure and joined the European Programme for research
in the field of metrology (EMPIR).
In 2014, the State Market Inspectorate significantly increased its inspections under the Law
on Product Safety (to 777, from 147). Inspections under the Law on Construction Products
declined to 112 from 360. It carried out 1 287 joint inspections with the Bureau of Metrology,
identifying 123 abuses. Overall, product quality infrastructure is advanced.
Regarding the 'Old Approach' and the 'New and Global Approach', a new Law on
Construction Products was enacted in June to align with the acquis, and the rulebook on
single approval of vehicles was amended to meet European technical specifications on the
34
import and marketing of vehicles. No additional progress on aligning with 'New and Global
Approach' product legislation or on procedural matters can be reported.
4.2. Chapter 2: Freedom of movement for workers
Citizens of one Member State have the right to work in another Member State and must be
given the same working and social conditions as other workers.
Preparations in the area of freedom of movement for workers are still at an early stage, but
some progress was made in the past year.
The capacity for cooperating with EURES, the European jobs network, was developed further
by training the administration.
On coordination of social security systems, the parliament ratified agreements on
coordinating social insurance with Slovakia, Italy and Hungary. Negotiations continued with
Albania, Serbia and Turkey. The country signed agreements with eight Member States on
using the European Health Insurance Card and negotiations with Croatia are ongoing.
4.3. Chapter 3: Right of establishment and freedom to provide services
EU natural and legal persons have the right to establish themselves in any Member State and
to provide cross-border services. For certain regulated professions, there are rules on mutual
recognition of qualifications. Postal services are gradually being opened up to competition.
The country is moderately prepared on the right of establishment and freedom to provide
services. Some progress was made. In the coming year, the country should in particular:
→ continue aligning national legislation with the EU acquis, notably on the mutual
recognition of professional qualifications and the Services Directive;
→ complete liberalisation of the universal postal service.
On the right of establishment, the simplification of documentation procedures continued, the
IT system was strengthened and its use expanded.
On freedom to provide cross-border services, some progress was made towards
establishing a Point of Single Contact by developing one-stop shops for setting up companies.
Restrictions remain in force on certain services, including veterinary medicine, and regulated
professions. The Law on Services is yet to be enacted.
Amendments to the Law on Postal Services limited the validity period of the universal
service provider's licence and regulated the application of fines for misdemeanours.
Shortcomings remain on financing of the net costs of the universal service obligation. The
regulator issued licences for other postal services and established a register of licences. It
needs to strengthen its monitoring capacity.
On mutual recognition of professional qualifications, registers of regulated professions
were updated and the number of regulated professions fell. A moderate level of acquis
alignment has been achieved. A new national coordinator was appointed to make progress
towards full alignment. Legislation from 2010 needs to be updated and legislation on
commercial agents and professional use of toxic products still needs to be aligned further.
Certification under the ISO 9001 standard is a minimum requirement for public
administrations, but can currently be provided only by companies accredited by the relevant
national institute, and not yet by EU certification bodies.
35
4.4. Chapter 4: Free movement of capital
In the EU, capital and investments must be able to move without restriction and there are
common rules for cross-border payments. Banks and other economic operators apply certain
rules to support the fight against money laundering and terrorist financing.
In the area of free movement of capital, the former Yugoslav Republic of Macedonia is
moderately prepared. Some progress was made, in particular in the fight against money
laundering and financing of terrorism. The capacity of the Financial Intelligence Unit was
further strengthened but it still needs to develop a consistent track record.
Limited progress took place on capital movements and payments. The country already
meets the requirements of the first stage of the SAA, and further liberalisation depends on
moving to the second stage. Restrictions on capital movements remain, in breach of the
acquis, and EU citizens are not yet allowed to purchase agricultural land. In June, the central
bank introduced temporary capital controls to prevent spillover from the Greek economic
crisis.
Under the National Payment System Council's action plan for implementing the 2013-17
strategy for developing payment systems, further steps were taken to harmonise payment
systems with EU requirements and increase their capacity.
Concerning the fight against money laundering and financing of terrorism, the Financial
Intelligence Office was strengthened by seven new staff and an integrated financial
intelligence and reporting system. The number of suspicious transactions referred to the
Financial Intelligence Unit continued to fall. In 2014, the unit submitted 31 notifications to
law enforcement bodies related to money laundering and financing of terrorism (25 in 2013)
and 14 people were prosecuted and seven convicted for money laundering.
4.5. Chapter 5: Public procurement
EU rules ensure public sector procurement of goods and services in any Member State is
open to all EU companies on the basis of non-discrimination.
The country is moderately prepared in this area, which is an area particularly vulnerable to
corruption. Some progress was achieved, especially through the mandatory use of
e-procurement, but recent amendments to the procurement law reduced the level of alignment
with the acquis. More efforts are needed to prevent corruption during the procurement cycle.
Significant efforts are needed to ensure an efficient and effective public procurement regime.
Allegations of serious conflicts of interest and abuse of public office have not yet been
investigated. In the coming year the country should in particular:
→ increase the transparency of public spending by publishing real-time information on all
public procurement contracts;
→ remove inconsistencies with the acquis including on blacklisting companies, conditions for
using awarding criteria; ensuring harmonisation with EU procurement rules on defence and
security as well as the 2014 EU procurement Directives, especially on concessions;
→ ensure that reports of irregularities are properly investigated.
Institutional set-up and legal alignment
On the legal framework, the 2007 Law on Public Procurement is broadly aligned with the
acquis, but the level of alignment has been reduced through frequent amendments since 2013.
The country has not yet achieved alignment with the EU Directive on Defence and Sensitive
Security Procurement or the 2014 EU rules on public procurement. The generalised use of the
36
'lowest price' criterion and the obligation for contracting authorities to obtain approval from
the Public Procurement Council in case they wish to use non-price criteria when awarding
contracts is not in line with the acquis and has detrimental effects on the quality of the offers.
Keeping records on professional misconduct by businesses and excluding them from future
tenders is equivalent to 'black-listing' and not in line with European Court of Justice case-law.
The Procurement Council started operation in May. The obligation for contracting authorities
to obtain consent from the Public Procurement Council before publishing a contract notice
gives them access to specialised expertise when drafting terms of reference but makes the
procurement process more complex, expensive and time-consuming. Insufficient cooperation
between the Public Procurement Council, the Public Procurement Bureau, the State
Commission for Protection of Competition and the State Commission for Prevention of
Corruption undermines the way that procurement principles are implemented and the fight
against corruption.
A strategy for developing the public procurement system is in place but includes only the
strategic priorities of the Public Procurement Bureau. Moreover, there is no overall
supervision of implementation and reporting mechanisms. After the Public Procurement
Council was set up in 2014, the Public Procurement Bureau saw part of its staff transferred to
the Council, and the Bureau’s director was not appointed, weakening the Bureau’s capacity to
perform its supervisory and institutional role.
Implementation and enforcement capacity
The country’s public procurement market is at 12 % of GDP and 34 % of the state budget in
2013 including the 'Skopje 2014' public infrastructure project. The use of e-procurement
increased transparency. Procurement plans are adopted annually but contracting authorities
are not obliged to publish them. Often annexes are not drafted until after contracts have been
awarded and not included in the e-procurement system. The information made available
should include changes in contracted amounts, from the initial tender amount to the final
amount paid. The country has not yet established a centralised procurement body for certain
types of procurement. Joint procurement is done on an ad hoc basis. Tender requirements
remain too complex for small and medium-sized enterprises to participate widely in public
tenders. Negotiated procurement procedures without prior publication accounted for 5.5 % of
the total value of procurement in 2014.
No monitoring of the contract award process is in place, nor is contract implementation
monitored by a centralised inspection system. The State Audit Office carries out only an
annual external audit of the contracting authorities and there are no ad hoc audits. There has
been no investigation of the alleged irregularities reported by the municipality of Centar about
the ‘Skopje 2014’ project, of allegations of serious irregularities in the award of some large
infrastructure and health contracts, or of other allegations of serious conflict of interest and
abuse of public office. The strengthening of the internal audit function is vital to improve
contract implementation and monitoring (see Chapter 32 on financial control).
The Ministry of Economy's weak administrative capacity hampers implementation of the
legal framework on concessions and public-private partnerships. Data on concessions
awarded and public-private partnerships is patchy; notable omissions are the airport and
Skopje City concessions. Integration of data on concessions and public-private parnerships in
the system for e-procurement, managed by the Ministry of Economy, will increase
transparency. The Public-Private Partnership Council has not yet started work.
Contracting authorities’ capacities to manage public procurement processes improved.
Training and certification programmes, administered by the Public Procurement Bureau,
37
increased the professionalism of both contracting authorities and businesses. Contracting
authorities are obliged to employ certified procurement officers in the tender evaluation
processes. A help desk operates at central level, and frequently asked questions are regularly
updated on the website of the Public Procurement Bureau.
There is a regulatory and institutional framework on integrity and conflict of interest
mechanisms in public procurement. However, a risk indicator system to better identify
potential integrity problems is not yet in place and the number of integrity-related reports
remains low.
Efficient remedies system
As concerns the right to legal remedy, the structure of the legal remedy system formally
complies with the acquis and includes the State Appeals Commission, whose members are
appointed by parliament for five years and whose decisions can be challenged in the
Administrative Court. However, full alignment with the Remedies Directive is not yet
achieved. Misdemeanours occurring during the review process are subject to disproportionate
sanctions and make decision-making highly formalistic. In 2014, the State Appeals
Commission upheld complaints in 190 of the 638 cases it reviewed and the court delivered 66
judgments on cases brought against decisions of the commission, ruling against it in 13
instances. This high rejection rate remains an issue of concern. On implementation capacity,
the capacity of the commission and the court to deal with an increasing number of appeals
needs to be strengthened. Appointments to both institutions need to be freed from political
interference. Improving access to the commission’s decisions would increase transparency.
4.6. Chapter 6: Company law
The EU has common rules on the formation, registration, and disclosure requirements of a
company, with complementary rules for accounting and financial reporting, and statutory
audit.
The country has a good level of preparation in the area of company law. Some progress was
achieved, particularly on auditing. The Central Registry has also been updated and now refers
only to active companies. In the coming year, the country should in particular:
→ continue efforts towards alignment to the latest acquis on accounting and auditing.
The legislative framework for company law was amended to regulate the relations, rights and
the obligations between stakeholders. 30 010 inactive entities were removed from the Central
Registry. Alignment with the Directive on cross-border mergers is not yet completed,
particularly on employees’ participation in the management bodies of companies established
as a result of cross-border mergers.
In the area of corporate accounting, the relevant Ministry of Finance unit was strengthened.
The Institute of Chartered Accountants is still not operational, preventing professional
accountants from receiving in-service training. Alignment with the Directive on annual
financial statements, consolidated financial statements and related reports of certain types of
undertakings is not yet done.
Following new rules adopted in September 2014, the legislative framework for auditing was
further aligned with the provisions of the Directive on statutory audit of annual accounts and
consolidated accounts regarding the performance of quality assurance reviews, their
transparency and disciplinary measures. The Council for Audit Promotion and Supervision
adopted a new statute and guidelines on preparation of audit reports on transparency.
38
4.7. Chapter 7: Intellectual property law
The EU has harmonised rules for the legal protection of copyright and related rights. This
covers, for instance, computer programs, broadcasting and trademarks, designs,
biotechnological inventions and pharmaceuticals.
The country is moderately prepared in this area. Some progress was made on customs
enforcement. The commitment and capacities of the institutions responsible for enforcing and
protecting intellectual property rights and the acquis vary, but remain insufficient. A
satisfactory track record on investigation, prosecution and judicial handling of piracy and
counterfeiting is lacking. Public awareness campaigns are not yet well developed. In the
coming year, the country should in particular:
→ step up efforts to investigate and prosecute infringements of intellectual property.
On copyright and neighbouring rights, the Ministry of Culture adopted a rulebook on
record-keeping of authors’ rights and holders of related rights. The Ministry of Culture and
the Ministry of Information Society and Administration jointly established a system for
electronic recording of broadcast music works. The government has not yet approved the
tariff schemes of collective rights management societies and the capacity of the Ministry of
Culture to deal with copyright and neighbouring rights is still insufficient.
On industrial property rights, the State Office for Industrial Property cooperated with the
Office for Harmonisation in the Internal Market and with the European Patent Office on
several projects, but the trademark databases of the first two should be better integrated. The
State Office does not have enough staff to provide good quality services or training to the
public and the business community, nor to cooperate internationally.
Some progress was made on enforcement of intellectual property rights. The Coordination
Body for Intellectual Property has had a positive impact but the level of commitment differs
between law enforcement institutions and sharing responsibility between 11 different law
enforcement bodies hinders more efficient investigation and legal actions. The State Market
Inspectorate lacks basic equipment, IT and training to ensure effective enforcement. The
Agency for Audio and Audiovisual Media Services issued 10 orders to broadcasters to
prevent further violations of copyright and neighbouring rights. Some 30 misdemeanour cases
were lodged with the courts, but the absence of a credible enforcement record hinders
information on the follow-up action taken. The three public laboratories are still not legally
authorised to detect and analyse counterfeit medicines, so their evidence is not accepted in
court. Public awareness of the threats posed by counterfeit goods to health and safety remains
limited.
4.8. Chapter 8: Competition policy
EU rules protect free competition. They include anti-trust rules against restrictive agreements
between companies and abuse of dominant position. EU rules also prevent governments from
granting state aid which distorts competition.
The country is moderately prepared in the area of competition policy. Some progress was
made in this field. However, the budget and the administrative capacity of the Commission
for the Protection of Competition (CPC) remain insufficient. In the coming year, the country
should in particular:
→ strengthen the enforcement record of the CPC.
In the area of antitrust and mergers policy, new guidelines on vertical restraints and on
horizontal agreements were adopted in June 2015. The CPC and the Public Procurement
39
Bureau adopted joint guidelines on detecting bid rigging. The overall budget of the CPC in
2014 was EUR 275 000, which is not enough for it to fully carry out its mandate.
The CPC adopted 11 decisions on state aid in 2014. State aid represented 0.08 % of the
country’s GDP in 2014, which appears very low. Aid under the de minimis regime ranged
from EUR 13 000 up to EUR 93 000, i.e. below the EUR 200 000 ceiling, which indicates
restrained use of the de minimis aid tool. The State Commission for Prevention of Corruption
issued a public warning about conflict of interest on one of the regional state aids provided by
the government. The systems for reporting on the use of state aid are not used by all state aid
providers, which hampers effective monitoring. State aid continued to be provided for air
transport without being notified to the CPC. The state aid register has not yet been established
and the regional aid map has not yet been drawn up in accordance with EU guidelines on
regional state aid.
4.9. Chapter 9: Financial services
EU rules aim at ensuring fair competition between and the stability of financial institutions,
namely banking, insurance, supplementary pensions, investment services and securities
markets. They include rules on authorisation, operation and supervision of these institutions.
The country is moderately prepared in the area of financial services. Some progress was
made, particularly on improving the implementation and enforcement capacities of financial
market regulators. The concerns expressed by the European Commission and the Venice
Commission, about the acquis compatibility of the proposed international financial zones, still need to
be adequately addressed.
On banks and financial conglomerates, the law was amended to comply with the new Basel
principles of effective banking supervision and on specifying capital buffers, as required by
the acquis. The central bank updated the banking regulation on own funds to further align
with the Capital Requirements Directive IV. The liquidity risk management regulations were
amended to introduce a new liquidity ratio and to amend the definitions of own funds. The
credit bureau law was amended to allow exchange of information with other administrations.
The law on the deposit insurance fund was also amended to cover certificates of deposits.
On administrative and supervisory capacity, cooperation continued between the central
bank and the supervisory authorities of the parent banks of domestic subsidiaries. Local
subsidiaries passed the stress test, better than their parent banks, proving the solidity of the
banking system. The central bank actively participates in the regional group of supervisors.
Together with the other financial supervisors, it launched a financial literacy campaign.
Amendments to the insurance supervision law introduced new classes of insurance. The
legislation authorising the Ministry of Finance to set premiums for motor vehicle insurance is
still is not aligned with the acquis and prevents competition in the motor insurance market.
The track record of the Insurance Supervision Agency improved. It issued new standards on
risk management and on the internal audit and control system of insurance companies. It also
made 11 on-site visits resulting in 73 corrective measures and 48 procedures, including
payment of fines and misdemeanour procedures. The use of visible ‘vignettes’ for motor
vehicles that have been registered and insured seems to have reduced the number of
unregistered vehicles, but reliable data on uninsured vehicles is still lacking. Quality control
procedures for supervising voluntary pension insurance schemes were upgraded. The 50 %
limit on investing in non-domestic securities is not in line with the acquis.
On financial market infrastructure, alignment with the Financial Collateral Directive
remains incomplete, while alignment with the Settlement Finality Directive has not yet begun.
40
On securities markets and investment services, amendments to the securities law
introduced a new definition of certificates for deposits. The commitments of brokerage houses
when dealing with clients’ orders were more precisely regulated. The Securities and Exchange
Commission continues to cooperate actively with the other members of the International
Organisation of Securities Commissions.
4.10. Chapter 10: Information society and media
The EU supports the good functioning of the internal market for electronic communications,
electronic commerce and audio-visual services. The rules protect consumers and support
universal availability of modern services.
There is a good level of preparation in the field of information society and media. In the past
year, some progress was made. In the coming year, the country should in particular:
→ ensure proper implementation of the newly adopted legislation on electronic
communications and audiovisual media services;
→ strengthen the independence and capacity of the audiovisual media regulator and the public
service broadcaster.
In the area of electronic communications and information and communications technologies,
amendments to the Law on Electronic Communications were adopted, further aligning it with
the 2009 EU regulatory framework, although some concerns remain. The scope of universal
service was extended to basic broadband access. Fixed broadband penetration remained at
23% of the population, while mobile broadband, including 3G, reached 66%. The 4G
telecommunication network continued to be expanded across the country.
The credibility of the telecom regulator continues to be undermined by the allocation of
surplus funds for purposes other than developing electronic communications. Spectrum fees
were lowered but remain high. Public consultation procedures with operators need to
improve. The administrative capacity of the Ministry of Information Society and
Administration needs to be strengthened. The introduction of the 112 emergency phone
number is overdue, due to a lack of financial resources.
The agreement of 29 September 2014 signed by the former Yugoslav Republic of Macedonia,
Bosnia and Herzegovina, Montenegro and Serbia on reducing the prices of mobile roaming
services came into force on 1 July 2015.
As regards information society services, a new law on e-Signature was adopted. A National
Centre for Computer Incident Response (as a CERT) was established. An ICT strategy as well
as strategies on cyber security and broadband were developed. There are still barriers to e-
commerce, such as higher customs duties.
In the field of audiovisual policy, the Law on Audio and Audiovisual Media Services was
amended, but with limited stakeholder consultation. Through the alignment with the EU's
Audiovisual Media Services Directive, the country can now access the MEDIA sub-
programme under the EU programme "Creative Europe". The regulatory authority, the
Agency for Audio and Audiovisual Media Services, adopted implementing legislation on
ownership, conditions for awarding a broadcasting licence and protection of minors. The
regulator still needs to demonstrate that it works in an independent, non-discriminatory and
transparent manner. Serious concerns continued over selective reporting and the public
service broadcaster’s lack of editorial and financial independence.
41
4.11. Chapter 11: Agriculture and rural development
The Common Agricultural Policy supports farmers and rural development. This requires
strong management and control systems. There are also common EU rules for quality policy
and organic farming.
The country is moderately prepared in the area of agriculture and rural development. Some
progress was made. The new strategy for agriculture and rural development for 2014-2020
provides the framework needed to tackle key constraints on the sector’s development. In the
coming year, the country should in particular:
→ focus on more effective use of IPARD funds.
Some progress has been made on general cross-cutting issues with the strengthening of
institutional capacity. Further efforts are needed to ensure the integrated administration
control system functions properly, to develop organic farming and the use for policy
formulation of the Farm Accountancy Data Network.
In the area of common market organisation, closer economic cooperation between farmers
is needed for value chains to work more effectively. Improving quality and marketing in
strategic sub-sectors such as fresh vegetables, fruit and milk is a recognised priority.
The 2014-2020 national strategy for agriculture and rural development was adopted. To
implement land consolidation and land privatisation successfully, the Ministry needs greater
administrative resources. Greater transparency is needed on budget allocations for the national
programme for agriculture and rural development. The capacity to implement, monitor and
evaluate the national programme needs to be strengthened. Concerns remain about the
effective use and maintenance of irrigation facilities. Direct payments to farmers need to be
developed, as do policy objectives, and their impact monitored.
Significant steps have been taken to address major implementation issues related to the
Instrument for Pre-accession Assistance for Rural Development (IPARD) where, despite an
increase in applications, EUR 15.6 million was returned unused to the EU budget in 2014.
The administrative capacity of the Agency for Financial Support in Agriculture and Rural
Development was strengthened and progress was made towards accrediting new IPARD
measures. The new 2014-2020 IPARD Programme was adopted in January 2015.
Organic farming and quality protection policy saw some progress. Marketing of organic
products and protection of their quality improved. Preparations were made to register two
products under the Protected Geographical Indication label. Administrative capacity,
however, remains insufficient.
4.12. Chapter 12: Food safety, veterinary and phytosanitary policy
EU hygiene rules for foodstuff production ensure a high level of food safety. Animal health
and welfare and the safety of food of animal origin are safeguarded together with quality of
seed, plant protection material, harmful organisms and animal nutrition.
There is some level of preparation in the area of food safety, veterinary and phytosanitary
policy. Some progress was made, particularly on food safety. In the coming year, the country
should in particular:
→ increase administrative capacities, in particular in inspection services and laboratories;
→ step up efforts on phytosanitary policy.
On general food safety, the Law on Food Safety was further aligned with the EU acquis.
Memoranda of understanding and communication procedures were signed between the
42
relevant food and feed safety bodies. Procedures to verify the effectiveness of official controls
were put in place. The Food and Veterinary Agency was certified as ISO 9001-compliant for
having met quality management standards. The agency took on 47 more employees.
On veterinary policy, the agency continued to update systems for controlling imports of live
animals and animal products and improved controls on the identification, registration and
movement of animals. The agency continues to vaccinate foxes against rabies. Additional
legislation on non-commercial movement of pets and zoo-technical issues was enacted, as
well as new legislation on animal welfare. Accumulated payment arrears to authorised
veterinary associations and the Faculty of Veterinary Medicine jeopardise the agency’s ability
to implement animal health programmes.
Regarding the placing on the market of food, feed and animal by-products, rulebooks
were issued on hygiene, controls and animal by-products. Collection and treatment systems
for animal by-products have not yet been established.
Some progress has been made on food safety rules. Following changes to the acquis, the
veterinary and food agency revised implementing legislation on food contact materials,
labelling, food supplements and food for particular nutritional use. The agency upgraded its
information system to include the register of business operators with food of non-animal
origin and processing of consumer complaints. The agency, however, remains understaffed
and lacks equipment. The annual monitoring programme for food safety is only partially
implemented.
There was some progress on phytosanitary policy. Implementing legislation was adopted on
plant health and plant protection products. Inspection plans and guidelines were developed for
the phytosanitary inspectorate. The State Phytosanitary Laboratory hired new staff and 15
additional laboratory methods were accredited under ISO 17025. However, harmful
organisms and plant protection products are only partially monitored and a phytosanitary
information system has not yet been established. Implementation of international standards
for phytosanitary measures, particularly for export certification and determining pest status, is
needed. The Phytosanitary Directorate is still understaffed and lacks training and equipment.
Coordination between the competent authorities remains poor and ineffective.
4.13. Chapter 13: Fisheries
The Common Fisheries Policy protects living resources of the sea and limits the
environmental impact of fisheries. This includes setting catch quotas, managing fleet
capacity, rules for aquaculture as well as support for fisheries and coastal communities.
There is a moderate level of preparation in the area of fisheries. Some progress was made
on monitoring catches. In the coming year, the country should:
→ make further efforts to align market policy with the acquis.
Fish production in the country is based on aquaculture and commercial lake fishing. The
acquis on resources and fleet management, inspection and control is only marginally
applicable to the former Yugoslav Republic of Macedonia. The Law on Fisheries and
Aquaculture was amended to monitor fish catches more effectively. The 2015 state aid
budget for fisheries and aquaculture remained stable at EUR 1.5 million, but only 20 % of the
amount allocated to financially support fisheries and aquaculture in 2014 was used.
Alignment is less advanced on market policy. Only health-related product labelling rules
exist. The national authorities need to prepare to implement Regulation 1379/2013 on the
common organisation of the markets in fishery and aquaculture products.
43
4.14. Chapter 14: Transport policy
The EU has common rules for technical and safety standards, security, social standards, state
aid and market liberalisation in road transport, railways, inland waterways, combined
transport, aviation and maritime transport.
The country remains moderately prepared in this area. Some progress was made but
additional efforts are needed to align road safety and railway legislation with the acquis. In
the coming year, the country should in particular:
→ take further steps to strengthen administrative capacity on road and rail transport safety;
→ accelerate the process of fully re-opening the rail market;
→ ensure rail and air accident and incident investigation bodies work better.
In road transport, priority needs to be given to further aligning road safety legislation with
the acquis. The Roads Safety Council continued its campaigns to reduce fatalities. To
adequately implement the acquis, particularly on roadside inspections, operational and
administrative capacity needs to be strengthened. Further alignment is needed in rail
transport. Changes to bring infrastructure charges for international freight to competitive
levels were introduced. Licensed operators are still unable to fully access the railway market.
Staffing of the Accident Investigation Committee remains unclear. A cross-border agreement
with Serbia was concluded.
In the area of inland waterway transport, further work is needed to regulate recognition of
certification and transportation of goods. No measures were taken on intermodal transport
after one potential location was selected for a multimodal node. Priority needs to be given to
developing a balanced intermodal transport and mobility system that is environment-friendly
and competitive.
The Law on Contractual and Real Rights Relations in Air Transport was amended, bringing
national legislation further into line with the acquis. The 2013-2018 national aviation strategy
was amended to allow the establishment of a national airline carrier. Concerns remain over
financial incentives granted to air operators to apply requirements under phase I of the
European Common Aviation Agreement. The technical and administrative capacity of the air
navigation services provider was strengthened. The aviation investigation, accidents and
incidents body needs to be more transparent. The country actively participates in the Joint
Service Provisional Area (JSPA) initiative.
4.15. Chapter 15: Energy
EU energy policy covers competition and state aids, equal access to resources, the internal
energy market, energy efficiency, nuclear energy and nuclear safety and radiation protection.
The country is moderately prepared in this area. Some progress was made on security of
supply but not on the opening of the electricity market. Obligations undertaken under the
Energy Community Treaty are not fully implemented. In the coming year, the country should
in particular implement the following obligations undertaken under the Energy Community:
→ open the electricity market;
→ participate in the regional electricity Coordinated Auction Office;
→ prepare and adopt the national energy efficiency and national renewable energy action
plans.
44
As regards security of supply, a new Law on Mandatory Oil Reserves was enacted to apply
as of January 2016. The current levels of oil reserves were increased to 71 days. The
government postponed full implementation of the Law on Energy, delaying the opening of the
electricity market until 2020, causing the Energy Community Secretariat to open a dispute
settlement case for this breach of obligations. The state-owned gas transmission operator
started construction of the Klecovce-Štip gas transmission pipeline, expected to be completed
by the end of 2016. Construction of the new 400kV electricity line with Serbia and activities
to prepare construction of the Bitola-Elbasan (Albania) section of the electricity transmission
network are under way. The Energy Department in the Ministry of Economy, as well as the
Energy Agency are understaffed.
On the internal energy market, the government launched a procedure in November 2014 for
awarding public-private partnership contracts to finance and develop the gas distribution
system in the eastern and western regions of the country. In November and December 2014
the Energy Regulatory Commission adopted grid codes for transmission and distribution of
electricity and amended the Electricity Market Rules. The Energy Community Secretariat
opened an infringement procedure for failure to participate in the activities of the regional
Coordinated Auction Office.
The natural gas market was opened for competition on 1 January 2015. The Energy
Regulatory Commission adopted implementing legislation on natural gas prices for the
supplier of last resort and grid codes for natural gas distribution. The dispute over the
ownership of the gas transmission pipeline has not been resolved.
The national action plan on renewable energy has not yet been adopted and the deadline for
submitting it to the Energy Community Secretariat was missed. The Law on Biofuels and
related implementing legislation and the national action plan for biofuels was prepared. The
second action plan on energy efficiency has not yet been adopted. Systems for monitoring the
implementation of energy efficiency measures are not yet developed. Implementing
legislation on energy audits was adopted. Any further development of hydropower should
take place in conformity with EU environmental legislation.
On nuclear energy, nuclear safety and radiation protection, the Radiation Safety
Directorate revised the nuclear safety and protection strategic plan for 2015-2017 on the basis
of international standards for physically protecting nuclear materials and facilities.
4.16. Chapter 16: Taxation
EU rules on taxation cover value-added tax and excise duties as well as aspects of taxing
income from savings of individuals and of corporate taxes. They also deal with cooperation
between tax administrations, including information exchange to prevent tax evasion.
The country is moderately prepared in the area of taxation. Some progress was made. The
Law on Special Zones for Technological and Industrial Development is still not compliant
with the EU Code of Conduct for Business Taxation. In the coming year, the country should
in particular:
→ continue to fight tax fraud, tax evasion and the informal economy;
→ further develop the Public Revenue Office’s compliance risk management system and
strengthen its audit capacity and function;
→ bring fiscal provisions on technological development zones into line with the EU Code of
Conduct for Business Taxation.
45
On indirect taxation, amendments to the Law on Value Added Tax (VAT) came into force
in January 2015. The legal basis for ‘e-invoices’ was established. Processing of VAT refund
requests within the legal deadline improved. Regarding excise duties, a duty was introduced
on petroleum coke and cigarette taxes were increased. A new law on prohibiting and
preventing unregistered activities was enacted in December 2014 to reduce the informal
economy and strengthen cooperation between different authorities.
There was progress on direct taxation. The profit tax law was amended so that since
1 January 2015 taxation is based on annual profit and no longer on distributed profit. Taxation
of gains from games of chance and betting was further improved with the introduction of
obligatory automated IT tracking of payments. Amendments to the Law on Personal Income
Tax enacted in July include the regulation of the fiscal treatment of capital gains on sale of
real estate.
Progress was made in administrative cooperation and mutual assistance. The country was
assessed as largely compliant with phase 2 of the peer review conducted under the OECD
Global Forum on Transparency and Exchange of Information for Tax Purposes. The
recommendations of the peer review report should be adequately followed up. Further
progress was made through double taxation agreements. The agreement on the country’s
participation in the EU’s Fiscalis 2020 programme was ratified.
Progress was made on administrative and operational capacity. Revenue collection
increased. The Public Revenue Office (PRO) continued to develop the compliance risk
management system and a Council for Compliance was established. The efficiency of the
internal audit and control system improved. The PRO further improved work processes based
on the ISO 9001/ 2008 quality management system. The tax inspectorate’s capacity was
strengthened by new methods to prevent tax evasion. As of 2015 cash registers are
compulsory and the PRO now monitors online cash turnover in real-time. ‘E-tax’ services
have been further expanded. The law on prohibiting and preventing unregistered activities
aims to reduce the informal economy through stronger control mechanisms, such as joint
inspections with other control bodies, increased information sharing and controls.
Modernising the IT system should be a priority and part of an overall modernisation strategy.
4.17. Chapter 17: Economic and monetary policy
EU rules require the independence of central banks and prohibit them directly financing the
public sector. Member States coordinate their economic policies and are subject to fiscal,
economic and financial surveillance.
The country is moderately prepared in the area of economic and monetary policy. Some
progress was made but the capacity of the country’s institutions to draft economic policy
remains insufficient. In the coming year, the country should in particular:
→ improve economic policy coordination within government and with relevant stakeholders;
→ introduce expenditure benchmarks and fiscal rules to improve public finance management.
On monetary policy, acquis alignment of the legal framework is well advanced. The
functional and institutional independence of the central bank is ensured. The law on the
central bank forbids both monetary financing of the public sector and privileged access by the
public sector to financial institutions. It also establishes price stability as the primary objective
of the central bank, in line with the primary objective of the European System of Central
Banks (ESCB). The central bank has inflation forecasts, but no official target.
46
On economic policy, further alignment with Directive 2011/85 on requirements for budgetary
frameworks is needed. The lack of expenditure benchmarks or fiscal rules has allowed loose
management of public finances (see economic criteria).
Economic policy is drawn up essentially by the central government with limited involvement
of decentralised administrations or external stakeholders. The 2015-2017 Economic Reform
Programme was submitted on time but appears to have involved limited input from line
ministries and external stakeholders. Better internal coordination and external consultations
should be ensured. Further steps were taken to improve central institutional capacity on
macroeconomic forecasting and analysis, in line with the Directive on requirements for
budgetary frameworks. The country has made some progress in adopting the 2010 European
System of National and Regional Accounts (see Chapter 18 — Statistics).
4.18. Chapter 18: Statistics
EU rules require that Member States are able to produce statistics based on professional
independence, impartiality, reliability, transparency, and confidentiality. Common rules are
provided for the methodology, production and dissemination of statistical information.
The country is moderately prepared in the area of statistics. Some progress was achieved in
the past year, notably in the alignment of sectoral statistics with EU standards.
Continued efforts are needed to improve the quality of data in the areas of macro-economic
and social statistics as well as for full harmonisation with the EU acquis. In addressing the
shortcomings outlined below, in the coming year, the country should in particular:
→ further strengthen human and financial resources of the State Statistical Office;
→ further align statistics with the European System of Accounts 2010;
→ transmit tables for the Excessive Deficit Procedure (EDP) to Eurostat.
As regards statistical infrastructure, the legal framework is broadly in line with the
European statistics Code of Practice. The State Statistical Office (SSO) is the main producer
and coordinator of statistics. Its professional independence is enshrined in law but needs to be
strengthened in practice, including through adequate resourcing. Other producers of statistics
are the Central Bank and the Ministry of Finance, which have signed Memoranda of
Understanding with the SSO. The main classifications are in compliance with the EU acquis
and upgraded regularly. The availability and quality of administrative data sources remains a
problem. Data transmission to Eurostat increased in terms of coverage.
In the field of macro-economic statistics the SSO currently compiles annual and quarterly
gross domestic product (GDP) data in current and constant prices. Annual sector accounts and
supply/use tables are compiled. Further efforts are required to harmonise government finance
statistics and produce quarterly sector accounts. Excessive deficit procedure notifications are
not yet transmitted and financial accounts are not yet produced. Statistics on the balance of
payments and on foreign direct investment are compiled by the Central Bank according to the
latest standards (6th Balance of Payments Manual). The harmonised index of consumer prices
and purchasing power parities are aligned.
Structural business statistics and short-term statistics for the sectors of industry and
construction are well developed but additional quality improvements are needed as well as the
introduction of short-term statistics for services and overall, an increased coverage of
variables. The business register represents a good basis for sampling and data delivery but
needs more frequent updating. Foreign affiliates statistics are not available. Further alignment
47
is needed in tourism and transport statistics. Research and development data and ICT statistics
are sufficiently aligned with the EU acquis.
In the field of social statistics, in May 2015 the SSO started preparing an up to date sample
frame for social surveys by collecting data on the number, type and territorial distribution of
dwellings and households, as well as the number of persons living in the recorded households
in selected enumeration areas. The main deficiency continues to be the lack of reliable and
recent population data, affecting the quality of household surveys and per capita data.
Migration statistics need to be developed. The survey of income and living conditions is
implemented and there was progress in implementing social protection statistics. Labour
market statistics are broadly aligned with the EU acquis. Crime, education and public health
statistics are not yet aligned.
Statistics on agricultural production are partially produced according to the EU acquis. The
farm structure survey is conducted regularly. Agro-monetary statistics according to EU
standards are in place but supply balance sheets are not yet produced.
Energy statistics are largely in line with the EU acquis. Short-term energy statistics and
energy balances are produced. Statistics on waste, water and on environmental protection
expenditure are published. Material flow balances are not yet produced.
4.19. Chapter 19: Social policy and employment
EU rules in the social field include minimum standards for labour law, equality, health and
safety at work and anti-discrimination. They also promote social dialogue at European level.
The country is moderately prepared in the area of social policy and employment. Some
progress was made in the last year. However, labour market conditions remain very difficult,
with continuing high unemployment rates, alarming levels of youth and long-term
unemployment and very low participation rates of women. Although policy measures are
being taken to promote social inclusion, poverty remains a serious problem, in particular for
Roma. The Law on Anti-Discrimination needs to be amended to comply with the acquis.
Anti-discrimination mechanisms need to be strengthened. In the coming year, the country
should in particular:
→ tackle unemployment, in particular among youth and the long-term unemployed;
→ improve bipartite and tripartite social dialogue, particularly in the private sector and
especially for collective bargaining;
→ ensure appropriate institutional and financial resources are made available to implement
the social inclusion and poverty alleviation strategies already adopted.
Amendments to labour law were enacted, regulating publication of job vacancies and
compulsory social insurance. Efforts to enhance the capacity of the various institutions in
charge of enforcing labour law, and improve cooperation among them, remain fragmented.
Alignment with the acquis remains at an early stage.
On health and safety at work, the Law on Occupational Safety and Health was amended and
two relevant rulebooks were adopted. However, this was done without consulting the National
Council for Occupational Health and Safety or assessing their impact on alignment with the
acquis. The division of responsibilities and coordination between the relevant institutions still
needs to be improved. Administrative capacity remains insufficient to ensure proper
implementation and enforcement of the legal provisions. Overall, the country remains
moderately prepared on aligning with the acquis in this area.
48
The role of the Economic and Social Council as the lead institution for tripartite social
dialogue was strengthened. A tripartite social dialogue was established in 12 municipalities.
Amendments to the Law on Peaceful Settlement of Labour Disputes introduced external
mediators and arbiters but implementation is slow and partial. The trust in social dialogue
both among employers and employees should be strengthened as well as the capacity of social
partners in shaping policy. Overall, consultation of social partners in the policy-making
process remains limited. The influence of trade unions and employers’ organisations is limited
and their capacity remains weak.
Regarding employment policy, the unemployment rate remains high at 27.4% % in Q1/2015.
The public sector remains the main employer. Labour market participation remained very
low, especially among women (38.8% in Q1/2015) and Roma. Amendments to the Law on
Employment and Insurance in Case of Unemployment and implementation of new tax reliefs
provide additional assistance. Development of a profiling system of the unemployed
continued. In December 2014, the country launched the employment and social reforms
programme to address the high unemployment rate, poverty and inequalities. The
Employment Service Agency continued to modernise its electronic services.
Preparations for participation in the European Social Fund continued with EU assistance.
The lack of strategic guidance and planning and poor inter-institutional coordination reduced
the effectiveness of the human resource development programme. Due to delays in
procurement planning, substantial EU funding was returned unused to the EU budget. (See
Chapter 22).
Some progress has been made on social inclusion. The capacities of the relevant institutions
are weak, as is cooperation between them. The reform of social services at local level is being
piloted in four municipalities. Implementation of the 2011-2021 national programme for
developing social protection is nonetheless limited. Measures under the national strategy
against poverty have had limited impact and poverty levels remain high, particularly among
Roma. Data on poverty has not been regularly updated. Implementation of the 2010-2020
national strategy for elderly people has improved care of the elderly. The amended Law on
Child Protection introduced a special allowance for children and young disabled persons.
Lack of commitment and resources hampered implementation of the 2010-2018 national
strategy on equal rights for persons with disabilities. Labour market access for persons with
disabilities is inadequate. The national coordinating body to monitor implementation of the
relevant UN convention remained inactive. The administration’s capacity to promote social
inclusion did not improve and remains inadequate at municipal level.
Amendments to legislation on social protection introduced subsidies for private sector
employers hiring workers from vulnerable groups. The amended Law on the Pension and
Disability Insurance improved the recording of data on insurance and salaries. The
administrative capacity of the relevant institutions remains weak.
Moderate progress was made on implementation of the 2011-2015 anti-discrimination
strategic plan. The Commission for Protection against Discrimination improved its
cooperation with civil society organisations and municipalities. Data collection and analysis
improved but remains limited, with more systematic collection needed of data disaggregated
according to gender. (See also Chapter 23 – Judiciary and Fundamental Rights)
The Law on Equal Opportunities for Women and Men was amended to establish a unified
reporting system and a deputy coordinator for equal opportunities in ministries and the gender
units. There is progress on developing institutional capacity at local level and an increasing
number of municipalities are developing local action plans. The use of gender-responsive
budgeting tools continued under the 2012-2017 Strategy. However, further measures are still
49
needed to address pay inequality between men and women. (See also Chapter 23 – Judiciary
and Fundamental Rights)
4.20. Chapter 20: Enterprise and industrial policy
EU industrial policy enhances competitiveness, facilitates structural change and encourages
an enterprise friendly environment that stimulates small and medium sized enterprises.
The country is moderately prepared in the area of enterprise and industrial policy. Some
progress was made, particularly on the Fund for Innovation and Technological Development,
which began operating. In the coming year, the country should in particular:
→ continue adapting the legal framework and take measures to facilitate SMEs’ access to
finance.
On enterprise and industrial policy, the National Council for Entrepreneurship and
Competitiveness contributed to the 2015 programme for competitiveness and
entrepreneurship. This aims to improve the business environment and simplify licensing and
permitting requirements in line with the principles of the Small Business. The Agency for
Promotion of Entrepreneurship still has no resources to carry out its main mandate. Enforcing
contracts, especially those between public bodies and the private sector, remains difficult and
requires further capacity-building at the administrative court level.
Concerning enterprise and industrial policy instruments, the 2014-2020 national strategy
on entrepreneurial learning was adopted to promote entrepreneurship and set up a system of
lifelong entrepreneurial learning. Financing for implementation of the numerous measures is
not yet secured. The Late Payment Directive still needs to be fully reflected in the Law on
Financial Discipline. The Enterprise Europe Network (EEN) 2015-2020, part of the COSME
Programme, was established in 2015. It will follow up the EEN activities carried out in the
country under the predecessor programme of COSME, the Entrepreneurship and Innovation
Programme (EIP).
Activities to attract foreign investors continued: 10 new technological industrial development
zones were prepared and, to attract investment, the relevant law was amended to allow the
sale of land and buildings in the zones. However, the conditions of sale/lease for individual
investors remains at the government’s discretion and there is an overall lack of transparency.
An EIB-co-funded loan instrument is operating to facilitate much-needed access to finance for
small companies. A set of new measures to promote employment was introduced in May.
Under these measures, companies may receive state subsidies for social benefits for new
employees. No developments were noted on sectoral policies. The number of tourist in the
country grew by 5.1% in 2014.
4.21. Chapter 21: Trans-European networks
The EU promotes trans-European networks in the areas of transport, telecommunications and
energy to strengthen the internal market and contribute to growth and employment.
There is a good level of preparation in the area of trans-European networks. Good progress
was made in the reporting period. In the coming year the country should:
→ further improve inter-institutional communication and strengthen the technical capacity of
all management and stakeholder institutions dealing with transport infrastructure.
Regarding transport networks, the country continued to participate in the South-East Europe
Transport Observatory (SEETO). The country played an active role in the Western Balkans 6
connectivity agenda by endorsing the agreement on the regional core transport network in
50
Brussels in April, and the further agreement (in Riga in June) on the core network corridors
and on the list of projects to be implemented by 2020 (in Vienna in August).
The government adopted the 2014-2020 sector operational programme for transport.
Motorway construction, co-financed by EU funds, along the extension of Orient East-Med
core corridor in the Western Balkans (former Corridor X) is under way and reconstruction of
two sections of motorway and 11 railway stations along the same corridor began.
Construction of the first phase of the Corridor VIII railway towards Bulgaria, financed by the
Western Balkans Investment Framework and a loan from the European Bank for
Reconstruction and Development, is progressing. The administrative and technical capacity of
all of the institutions and bodies involved needs to be strengthened further.
On energy networks, construction of the new 400kV interconnection overhead line with
Serbia (Štip-Niš) is under way, as are preparations for the construction of the Bitola-Elbasan
(Albania) section of the electricity transmission network.
4.22. Chapter 22: Regional policy and coordination of structural instruments
The EU funds regional development in the Member States. Implementation is the
responsibility of the Member States that must have adequate administrative capacity to ensure
the good handling and sound financial management of the projects.
The country is moderately prepared in the area of regional policy and coordination of
structural instruments. No progress can be reported. In the coming year, the country should
focus on:
→ building the administrative and financing capacity needed for procuring and implementing
EU funds properly and in timely fashion;
→ addressing shortcomings in the financial management, control and audit system.
Regarding the legislative framework, the law on regional development is not fully
implemented. The budget preparation process must be improved to ensure overall financing
capacity is adequate and contracted work is paid for on time. Regional and municipal
development is lagging behind.
Programmes relating to the institutional framework need to be better prepared and
implemented. Inter-ministerial coordination and stakeholder consultation need to be
improved, including civil society and donors.
Administrative capacity must be strengthened. Progress in this area is still insufficient. Even
if staff turnover has decreased, a proper policy to encourage staff to stay, including training,
must be put in place.
Implementation of sector-based programming is slow. All procurement-related processes,
from identifying projects to evaluating tenders and contracting, still need major improvement.
Efforts are needed to prepare programmes in timely fashion.
Systematic follow-up is needed of monitoring and evaluation findings, recommendations,
project and programme indicators, and the sustainability of results. Full use needs to be made
of the management information system. EU funding needs to be made more visible.
Further efforts are needed to strengthen financial management, control and audit (See
Chapter 32 — Financial control). Systematic monitoring, on-the-spot checks and internal and
external audits are needed to prevent irregularities.
51
4.23. Chapter 23: Judiciary and fundamental rights
The EU's founding values include the rule of law and respect for human rights. A proper
functioning judicial system and effective fight against corruption are of paramount
importance, as is the respect for fundamental rights in law and in practice.
The former Yugoslav Republic of Macedonia has some level of preparation for applying the
acquis and European standards in this area. The legal and institutional framework is largely in
place. However there has been no progress in the past year. The current lack of political will
to tackle the remaining challenges at the highest level is holding back the capable
administration from reaching its full effectiveness. The de facto de-politicisation of judicial
appointments and promotions, overhaul of the professional evaluation system and reform of
the disciplinary provisions are still outstanding. A credible approach to fighting high level
corruption is needed and public trust in the relevant institutions needs to be strengthened.
Adequate staffing, funding and coordination are required in the field of fundamental rights. In
the coming year, the country should in particular:
→ demonstrate real political will to ensure the full independence of the judicial system;
provide full support and resources to the Special Prosecutor appointed to look into the making
and content of the intercepted conversations;
→ strengthen the institutions in charge of preventing and fighting corruption and desist from
any political interference in their work;
→ ensure full freedom of expression and the media and take strong measures to address
police impunity and sub-standard conditions in the prison system;
→ restore public confidence in delivery of justice especially for the politically sensitive cases
through increased transparency of court procedures and consistency of jurisprudence.
(See also the specific recommendations on the judicial system, the fight against corruption
and freedom of expression in sections 2.3 and 2.4.)
Functioning of the judiciary
Strategic documents
Preparation of the 2015-2020 strategy and action plan for judicial reform is at an early stage.
Six working groups have been established, including on access to justice, administrative law
and IT and e-justice. The process requires stronger political support and far better
coordination between different stakeholders, which could be achieved by using the Council
for Judicial Reform more effectively. Recent changes to the legal framework suffered from
inadequate consultation with the legal professions and international bodies in the field.
Management bodies
The Judicial Council’s election of its new President and Deputy President in March triggered
widespread criticism, given that both are lay members appointed by parliament who do not
have judicial experience. The legal requirement that lay members should come from the ranks
of university law professors, lawyers or eminent legal experts is not honoured in practice:
three of the five current lay members were previously career officials in the public
administration and two were previously acting judges. This undermines the professional
balance and high level of competence foreseen by the legislation. Additional criteria added by
April amendments to the Law on the Judicial Council did not significantly clarify the
situation. In October 2014, the Council of Public Prosecutors elected an appropriately
experienced President.
52
Independence and impartiality
The extent of previously suspected political interference in both the appointment of judges
and the outcome of court proceedings was confirmed by the content of the intercepted
communications. In order to restore public confidence, professional bodies such as the
Judicial Council and the Association of Judges need to be proactive in visibly promoting
judicial independence and defending the judicial profession from any form of explicit or
implicit pressure, both external and internal. Long-standing concerns about the security of
tenure of judges were not addressed by the recent creation of a new ‘Council for Determining
the Facts and Initiating a Procedure for Determining the Responsibility of a Judge’. Given that
the number of disciplinary proceedings has actually fallen dramatically in recent years, the
timing and creation of a new body devoted entirely to preparing the procedure for dismissing
judges appears misplaced and is a further blow to a profession which is already under siege.
The defective legislative grounds for dismissal, which jeopardise judicial independence, have
still not been addressed.
Accountability
Revised codes of ethics for judges and prosecutors were adopted in 2014. The Judicial
Council, the Ministry of Justice and the Ombudsman’s Office continued to handle complaints
about the work of the courts in 2014 (the latter received 901, up from 732). However the
Judicial Council’s competence to hear complaints from members of the public, which had
been carried out transparently for several years including through public meetings, was
removed in 2015. This constitutes a step backwards. The Supreme Court continued to receive
compensation claims for unreasonably lengthy court proceedings (637 in 2014, compared
with 434 the previous year) and it awarded EUR 115 963 in compensation and costs. One
dismissal procedure was initiated by the Judicial Council in 2014. The Council for Public
Prosecutors dismissed two prosecutors, one of whom was accused of several crimes. The
State Commission for the Prevention of Corruption launched misdemeanour proceedings in
2014 against 5 judges, 1 former judge and 2 prosecutors for failing to submit asset
declarations and against 15 judges and 1 prosecutor for failing to submit statements of
interest. In October 2014, the sensational arrest of 25 employees (including 14 sitting or
former judges) of Basic Court Skopje I amid accusations of corruption raised concerns about
the line between accountability and political pressure. The case concerned high numbers of
misdemeanour fines whose enforcement had been delayed beyond the limitation period.
Given the need to protect the procedural rights of the judges involved, the case could have
been handled in a different way. The apparent failure at court management level to detect any
systemic problem at an earlier stage raises questions about the timing and nature of the
criminal allegations.
Professionalism and competence
In 2014 the Judicial Council appointed three new judges, all graduates of the Academy for
Judges and Prosecutors, as required by law. It also appointed 14 basic court presidents, of
whom eight had already served as presidents and two were acting presidents. The Council of
Public Prosecutors appointed 14 prosecutors including four graduates of the Academy.
Despite the objective, merit-based criteria set out in the law, the appointment of court
presidents and higher court judges is still vulnerable to political bargaining which not only
affects the outcome but often also delays the appointment procedure, to the detriment of the
courts concerned. Professional evaluation criteria still need to be introduced which focus on
appraising judges’ core competencies, such as legal drafting and reasoning, organisational
skills, participation in training activities and level of specialisation. The current system is
heavily focused on quantitative criteria, targets and deadlines, without reference to quality of
53
performance or professional development. The lack of clear of reasoning in court judgments
is a problem. This skill needs to be taught in a more harmonised way and applied consistently
by the courts.
Quality of justice
A revised Law on the Academy for Judges and Prosecutors introduced stricter criteria for
appointment of the Academy’s Programme Council, as well as for the students. The fifth
generation of students to undertake the two-year initial training programme (13 candidate
judges and prosecutors) have completed the nine-month theoretical training and are currently
on placement in courts and public prosecution offices for the 15-month practical training. In
2014, the Academy provided in-service training via 280 training programmes for 7 560
participants. The Supreme Court continued to take structural measures to ensure the
consistency of judgments of the lower courts.
Efficiency
In 2014 the vast majority of first instance and appeal courts, as well as the Administrative
Court, High Administrative Court and Supreme Court, continued to maintain a clearance rate
of 100 % or more. The overall length of proceedings, particularly for ‘old cases’, remains a
concern. There is still no dedicated human resource management system or strategy aimed at
improving resource allocation across the court system, and disparities persist. The 2015
budgets for the courts and prosecution service are both significantly lower than the per capita
European average. The number of both judges and court staff per 100 000 inhabitants are
significantly above the European average, raising questions about efficiency. Recent changes
to the legislative framework for court staff removed many of the professional criteria
previously required and give rise to concern that the court administration will increasingly
employ more numerous but less qualified staff. In 2014, the Public Prosecutor’s Office (PPO)
recruited 55 new support staff across the country and in 2015 a further 129. At the same time,
several prosecutors' offices, notably in rural areas, suffer from severe shortages of
prosecutors.
Anti-corruption policy
Track record
The track record of investigations, prosecutions and convictions in corruption cases
continued to develop. In 2014, a further 60 criminal investigations and prosecutions were
added. While investigation, prosecution and first instance verdicts are usually swift,
significant delays can occur at the appeal stages due to repeated referrals and re-
examinations at first instance, notably in older cases started before improvements were made
to the criminal procedure legislation. For cases which have reached the court stage the
conviction versus acquittal rate is good and substantial prison sentences are regularly
imposed. However, attention needs to be paid to the number of cases which are dropped by
the prosecution service before reaching the court stage. In particular, it should be clarified
whether this is due to problems in coordinating with the referring law enforcement agencies
or in gathering sufficient evidence at the investigative stage. Most cases are referred to the
prosecution service by the police and the State Commission for the Prevention of Corruption
(SCPC). This shows the need for a more proactive approach also from other law enforcement
and supervisory bodies, such as the Customs Administration, Financial Police, Financial
Intelligence Unit, Public Revenue Office, State Audit Office and relevant public procurement
bodies.
Of the 30 or so high-level corruption cases launched since 2003, half have been closed while
the rest are still ongoing. Repeated appeals and lengthy proceedings are a problem. Moreover,
54
the credibility of the track record in fighting high-level corruption is weakened by the failure
to investigate serious allegations made against senior public officials. This includes
allegations made in the recent interceptions scandal, which implicated several politicians.
Investigations of abuse of public procurement procedures remained limited in 2014.
In 2014, the Minister of Justice started suspending annual political party financing from the
state budget for parties which had breached financial reporting rules in the last 3 years.
Around 75 suspensions were imposed, but subsequently reversed for 18 political parties after
they belatedly submitted the outstanding financial reports. No substantial fines have been
imposed yet. A more credible supervision system and consistent track record of effective and
dissuasive penalties, including fines against major political parties, still needs to be
developed.
In 2014, the SCPC completed systematic checks on the asset declarations of 49 public
officials and 73 incoming and outgoing mayors, as well as on the statements of interest of
152 judges and 91 prosecutors. It initiated 51 misdemeanour proceedings for failing to declare
assets against mayors, judges, members of parliament and directors of state bodies and 22 for
failing to submit statements of interest against judges and members of parliament. It also
asked the Public Revenue Office to conduct asset examination procedures in 58 suspicious
cases (an increase from 35 in 2013) and started 171 procedures to try to resolve conflicts of
interest. The system for investigating and penalising undeclared assets is rather lengthy and
the 75 % tax penalty has been imposed in only handful of cases so far. The SCPC’s ability to
fully implement the system of penalties for reporting failures is being undermined by courts
failing to impose the levels of fines set out by law, releasing officials from liability on
technical grounds or allowing protracted appeals in what should be simple administrative
matters.
Institutional framework
Prevention measures
The SCPC received a 44 % budget increase to EUR 509 000 in 2015 but its capacity still
needs to be strengthened. Above all, the SCPC needs to demonstrate its independence by
fulfilling its mandate to fight corruption in a pro-active and non-selective manner. The
number of complaints to the SCPC continued to drop in 2014, to only 141 (201 in 2013). This
raises concern over the level of public trust and confidence in the SCPC.
The IT infrastructure of the State Audit Office was improved, however it still lacks the
special IT tools needed to properly supervise the financing of political parties and election
campaigns in line with its strengthened role in this area. Moreover, the unit responsible for
carrying out this supervision remains under-staffed.
There is still no institution empowered to ensure effective and timely control and supervision
of public procurement, concessions, public-private partnerships and execution of public
contracts. No administrative penalty regime is yet envisaged for milder violations of the law
and reports of corruption in public procurement are not tackled adequately. The transparency
and accountability of public institutions and state enterprises, and of public expenditure, are
still insufficient. The National Commission for the Protection of the Right to Free Access to
Public Information remains passive, weak in status and focused on training rather than on
systemic shortcomings in the area.
The Academy for Judges and Prosecutors, the SCPC and the Training Centre of the Ministry
of Interior continued to provide various anti-corruption training programmes. More efforts
55
should be made to raise public awareness of anti-corruption measures and the private sector
should be systematically included in corruption-prevention activities.
Law enforcement
The budget of the PPO increased slightly to EUR 7 million in 2015. However, the resources
earmarked for implementing the new Law on Criminal Procedure were reduced by 20 % to
EUR 1.4 million. The roll-out of the PPO’s electronic case management system, which would
improve both its efficiency and integrity, has been delayed. The Ministry of Interior’s Sector
for the fight against corruption remains inadequately equipped and under-staffed, with 7 of
the 19 posts yet to be filled.
The powers and resources of the police, the PPO, the courts and in particular the Agency for
Management of Confiscated Property should be strengthened so that assets can be seized
and confiscated more frequently and in a more coordinated manner in corruption cases, to
ensure a deterrent effect. In particular, asset seizures and other provisional measures should be
undertaken more systematically in the early stages of criminal investigations to ensure assets
are successfully confiscated at the end of the procedure.
In 2014, the Ministry of Interior’s Sector for Internal Control and Professional Standards
(SICPS) started disciplinary procedures against 188 police officers (down from 277 in 2013),
of which 11 cases related to corruption (12 in 2013). The procedures resulted in 9 officers
being fined. The SICPS also started criminal proceedings in 11 corruption-related cases (6 in
2013). To ensure proper oversight of police work the SICPS should become independent from
the Ministry of Interior.
The Customs Administration continued its anti-corruption work by adopting a corruption
risk assessment manual, conducting internal and external surveys and organising anti-
corruption training. It imposed disciplinary measures on 199 customs officials in 2014 (77 in
2013), of whom 4 were dismissed for corruption-related violations (none in 2013).
Corruption-related criminal charges were brought against 5 customs officers in 2014 (none in
2013). The customs administration should continue its anti-corruption efforts and should
acquire technical equipment allowing it to independently carry out special investigative
measures.
Legal framework
Amendments were made to the Law on Prevention of Corruption which introduced the
necessary legal basis for the establishment of a register for elected and appointed persons.
Bylaws on the register were adopted by the SCPC. An amendment to the Criminal Code
refined the criminal offence of abuse in concluding an agreement between interested parties.
However, a number of OSCE/ODIHR and GRECO recommendations on political party and
campaign financing still need to be addressed. Loopholes on donations, campaign bank
accounts and campaign debts still need to be closed. The powers of the SCPC to put an end to
or penalise conflicts of interest in cases where the official concerned refuses to cooperate are
currently inadequate.
Strategic framework
Important measures envisaged in the 2011–2015 state programmes for preventing corruption
and conflicts of interest and their action plans are behind schedule, in particular those related
to the political sector, the judiciary and public procurement. While many measures have been
implemented, the overall impact of the state programmes has been limited in terms of
controlling and reducing corruption. The state programmes for the next period need to have a
higher status and legal force. They should also focus more on key priorities and weaknesses,
56
rather than on excessive numbers of broad, technical measures with limited anti-corruption
impact. The financial costs of individual measures and the bearers of those costs must be
spelled out to ensure sufficient resources are allocated to the fight against corruption.
Fundamental rights
Regarding international human rights instruments, action plans are being developed to
implement the most recent recommendations under the UN Convention on the Elimination of
all Forms of Discrimination against Women and those of the second Universal Periodic
Review of the UN Human Rights Council. The Council of Europe’s Committee for the
Prevention of Torture carried out its 11th country visit in 2014.
Since September 2014, the European Court of Human Rights (ECtHR) has found that the
country violated the European Convention on Human Rights (ECHR) in 11 cases relating to
the right to life, prohibition of torture and degrading treatment, right to a fair trial within a
reasonable time, respect for family life and protection of property. A total of 379 new
applications were allocated to a decision-making body, bringing the number of pending
applications to 324. At present, 117 ECtHR judgments still have to be executed by the
country, of which two are under enhanced supervision. The government submitted its action
plan in relation to the El Masri judgment after considerable delays. The Committee of
Ministers urged the authorities to carry out a fresh investigation of the case in order to bring
those responsible to justice. The country’s Bureau for Representation before the ECtHR
remains seriously under-staffed and the country rarely seconds national judges to the ECtHR
(see the ‘Urgent Reform Priorities’).
On the promotion and enforcement of human rights, the Office of the Ombudsman
remains the key oversight institution underpinning democratic values in the country and
continued to deliver on its constitutional and legal mandate to protect citizens’ rights. In 2014
the Ombudsman received 4 249 complaints, an increase of 11 % from 2013. The level of
follow-up on the Ombudsman’s recommendations rose to 87 %. However, some public
authorities including the Ministry of Interior and some prison institutions continue to be less
responsive. Amendments to the Law on the Ombudsman aiming at full compliance with the
Paris Principles were prepared some time ago but have still not been adopted by Parliament
(this is also one of the ‘Urgent Reform Priorities’). Sufficient resources for the Ombudsman's
office have still not been provided.
Regarding the prevention of torture and ill-treatment, the Office of the Ombudsman
continued to play an active role as national preventive mechanism (NPM) under the Optional
Protocol to the Convention against Torture. However, it remains under-resourced and its
current staffing level is critically low, requiring urgent action to ensure that it can continue to
function. In 2014 the NPM carried out 28 preventive visits to places of detention and warned
against worsening conditions. There was limited follow-up to its recommendations by the
relevant authorities. Inhuman physical conditions persist in a number of prisons and almost all
detention facilities. Seriously substandard conditions in juvenile facilities and in Idrizovo
prison continue to cause concern.
In 2014, the Ombudsman’s Office received 20 complaints of ill-treatment or excessive use of
force by the police. The Sector for Internal Control and Professional Standards received 71. In
four cases it was determined that unjustified physical force had been used. Criminal charges
were brought against two police officers. In January the ECtHR found that potentially lethal
use of force by a member of the special Alfa unit in 2009 violated the right to life. Prisoners’
complaints to the Ombudsman’s Office increased to 274 in 2014 (247 in 2013). Most
concerned inhuman conditions and 14 ill-treatment or excessive use of force. The Directorate
for Execution of Sanctions received 75 complaints against prison staff, including 3 for torture
57
or ill-treatment. One prison officer was convicted for failure to report ill-treatment and
received a conditional sentence. Procedures have yet to be established for conducting detailed
examinations of all alleged cases of torture, inhuman treatment and other unprofessional
conduct towards inmates and detainees. Concerns persist that severe disciplinary measures are
not being imposed on police and prison officers in ill-treatment cases and the number of
criminal charges remains low.
A new strategy and action plan for the prison system for 2015-19 were adopted in May but
adequate financial resources need to be allocated to ensure proper implementation.
Administrative capacity improved with the recruitment of 46 new staff in prisons and 5 in the
Directorate for Execution of Sanctions. There is still no systematic initial and in-service
training programme for prison staff although ad hoc, largely donor-led training took place.
The prison reconstruction programme continued, despite major delays. The prison system
continues to be heavily underfunded, under-staffed and mismanaged, leading to systemic
breaches of international human rights standards. Increasing overcrowding, in some facilities
exceeding 200 %, raises serious concerns over its sustainability. Provisions for conditional
release, alternative sanctions and non-custodial pre-trial measures continue to be under-used.
A probation service has yet to be introduced. Basic education and other re-socialisation
services have yet to be provided to juveniles in detention. Numerous prison management
rules, re-socialisation measures and treatment programmes for vulnerable groups have yet to
be fully implemented in practice. The transparent and merit-based appointment of prison
directors and prison staff should be ensured as an urgent priority and is key to tackling many
of these problems.
The Law on Personal Data Protection is largely aligned with the EU acquis. The Directorate
for Personal Data Protection continued to strengthen its capacity through ongoing training,
employment of 4 new staff and a slight budget increase. It further increased its activities in
2014, carrying out 404 inspections in the public and private sectors (387 in 2013) and finding
300 violations in total. It received 371 complaints in 2014 (404 in 2013), mostly concerning
abuse of personal data on social networks. The number of personal data controllers and
processors trained increased to 66 in 2014 (54 in 2013) and active public awareness-raising
measures continued. The Directorate was consulted on draft legislation, public policies and
operations of data controllers more frequently than in previous years. Further efforts are
needed to ensure full harmonisation of sectoral legislation with the Law on Personal Data
Protection. The Directorate, which is an independent regulatory body, has yet to take action
following the recent disclosure of massive unlawful interception of individuals’ electronic
communications. This has raised questions about its ability to act with full independence.
Freedom of thought, conscience and religion continues to be guaranteed and enforced.
Following the rejection of three new applications which did not meet legal requirements, the
number of registered religious entities remains at 31.
In the area of freedom of expression, increased reports of harassment and intimidation of
journalists were noted, as were some cases of property damage by unknown perpetrators. A
funeral wreath was delivered to the family of a journalist critical of government policies.
There were several physical altercations involving journalists, including a physical attack by a
senior politician, which was not condemned by the government. Numerous journalists were
revealed by the content of the intercepted communications to have been under illegal
surveillance. Some intercepts indicated that media had been under direct and indirect
government pressure to alter their reporting. Attempts to limit reporting on matters of public
interest are worrying. There is still a lack of transparency on government spending on media
advertising and the government has failed to provide details on the amounts, criteria and
58
recipients despite the requirement under the Law on Audio and Audiovisual Media Services
to do so (see also the ‘Urgent Reform Priorities’).
The Agency for Audio and Audiovisual Media Services continued to play an active regulatory
role. It carried out industry-wide programme monitoring in areas including protecting young
audiences and fostering and protecting cultural identity. It also prepared numerous studies and
reports, including on the treatment of gender issues by broadcasters and a guide to monitoring
hate speech. The Agency approved changes in the ownership structures of three regional TV
and radio stations and carried out administrative supervision of the transparency of 138
broadcasters’ operations.
Since becoming operational in November 2014 the new self-regulatory body for the media,
the Media Ethics Council, received 40 complaints against various media outlets and issued
decisions on 39. However, in many cases the media concerned did not publish the Council’s
decision, limiting the impact of self-regulation. Principles of fair reporting in online media
were also adopted by Web portals. There is still a large amount of litigation in the area of
defamation and insult, pointing to the need to further revise the legislation and court practice.
Greater emphasis should be put on non-judicial resolutions such as mediation (in non-media
cases) and right to reply mechanisms (in media cases). Investigative reporting remains weak.
The professional standards and ethics of some journalists, notably in the mainstream media,
remain a serious problem. The tendency of influential programme hosts to use deliberately
offensive or provocative language under the mantel of freedom of expression continues to be
unhelpful in a media culture which is dominated by polarisation, intimidation, a lack of
solidarity and a lack of balanced, objective debate. The widespread misappropriation of the
term hate speech for what is in fact unprofessional or provocative language in the media also
continues. This risks overshadowing true incidents of hate speech, which must be investigated
and penalised when they do occur. The country continued to backslide in this area, although
the publication of the content of the intercepted communications have increased open public
discussion of political issues.
Measures were taken to increase the financing of the public service broadcaster MRT,
including improvements to the licence fee collection system. However, there are serious
concerns about MRT’s editorial independence. It provided limited reporting of the
interception revelations, and some of the published recordings implied that government
officials had threatened public service journalists' job-security if they did not report along the
‘desired’ lines.
Freedom of association is satisfactory but the situation regarding freedom of assembly has
deteriorated. Protests by students, university and high school professors, journalists and other
citizens’ groups increased as a result of the political situation and the most recent education
reforms. In May public protests against police brutality led to a violent clash between police
and protesters. Civil society observers reported that police used excessive force to restore
public order and, after dispersing the protesters, continued to make arrests in the surrounding
areas. There were concerns that some of those detained had nothing to do with the protests.
There appears to be an increasing reliance on the criminal offence of ‘participating in a crowd
which commits a crime’. This broad provision is open to interpretations which infringe the
freedom of assembly, since the state has an obligation to protect the majority of peaceful
demonstrators rather than incriminate them. Amendments to the Law on Police increased its
powers relating to public order, including allowing the use of tasers and rubber bullets. Such
broad powers need to be balanced by accompanying provisions to safeguard human rights.
Clear operational standards are needed, as well as rigorous human rights training for all police
officers involved in such activity.
59
The Ombudsman’s Office received 239 complaints about property rights in 2014 and found
breaches in 102 cases. Most complaints concerned the slow process of denationalisation and
the work of the Cadastre Office. The Cadastre Office needs to be far more proactive in
rectifying errors and omissions made at administrative level, so as to provide legal certainty
on property rights.
As regards non-discrimination, from its creation in January 2011 until the end of 2014, the
Commission for Prevention of and Protection from Discrimination has only received 288
complaints and confirmed the existence of discrimination in 12 cases. Much greater efforts
are needed to raise public awareness of the Commission's role and work. It remains under-
staffed and under-resourced and concerns persist about its independence. The legislative
framework still needs to be aligned with the acquis as regards discrimination on grounds of
sexual orientation. Collection of data on the reporting, investigation and prosecution of hate
speech and hate crime is still not systematic and several cases of hate speech in social media
and blogs require adequate follow-up by the authorities. (See also Chapter 19 — Social Policy
and Employment.)
As regards equality between women and men, a gender equality strategy (2013-2020) and
action plan (2013-2016) are in place and some ministries have earmarked a budget for
implementation. Of the 123 members of Parliament 42 are women including one minister.
Four of the 84 mayors are women, as are 405 councillors (30 % of the total). Mechanisms to
promote gender equality lack visibility and there are limited opportunities for civil society
organisations and external stakeholders to feed into decision-making processes. Gender
stereotyping persists and further measures are needed to combat double or multiple
discrimination, particularly against Roma women. A new Law on Combating Domestic
Violence was adopted to protect survivors, but it fails to recognise all forms of violence and
only provides for civil proceedings against perpetrators. Further public awareness raising
measures are necessary, particularly in rural areas. (See also Chapter 19 — Social policy and
employment).
Regarding rights of the child, the Law on Child Protection was amended to introduce early
childhood development services and broaden the scope of child protection. New kindergartens
and early childhood development centres were opened, with the latter providing a range of
quality services, especially for the most vulnerable children. However, services to protect
children most at risk remain limited. The most marginalised children who fall outside both the
education and healthcare systems, as well as children with disabilities, continue to face
problems accessing their rights. The National Commission on the Rights of Children still
lacks qualified staff and funding. The Ombudsman’s Office received 124 complaints in 2014
about breaches of children’s rights. The lack of systematic collection of data in this area
remains a major shortcoming.
Implementation of the new Law on Justice for Children started and mediation was
successfully used as an alternative to criminal proceedings involving juveniles. Child-friendly
interrogation rooms were installed in eight police stations, but none has child-friendly
detention facilities required by law. Training was held for juvenile justice professionals and
should be introduced on a permanent basis. Police services and Centres for Social Work
dealing with juveniles remain underfunded and under-staffed. The status and resources of the
State Council for Prevention of Juvenile Delinquency should be strengthened to ensure it
functions properly. Most municipalities have yet to establish local councils for preventing
juvenile delinquency, and most of those that do exist are inactive. Despite improvements in
the law, there is still no systematic access to legal aid for juveniles in practice.
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Little improvement can be reported on integration of persons with disabilities. An interparty
parliamentary lobby group was established to promote the rights of disabled people.
Implementation of the 2010-18 national strategy on equal rights for people with disabilities is
inadequate. The national coordinating body monitoring implementation of the UN convention
on the Rights of Persons with Disabilities is inactive.
Lesbian, gay, bisexual, transgender and intersex (LGBTI) persons continue to suffer
discrimination and homophobic media content, both online and offline. A sixth violent attack
occurred during the celebration of the second anniversary of the LGBTI support centre,
leaving two people injured. Despite calls by civil society organisations and the international
community for the perpetrators to be prosecuted, none of the attacks has yet been fully
investigated. In August parliament rejected a draft amendment to the anti-discrimination
legislation, which would have prohibited any form of direct or indirect discrimination on the
grounds of sexual orientation and gender identity. Considerable efforts are still needed to raise
awareness of and respect for diversity within society and to counter intolerance. This needs to
be done through public campaigns and training of law enforcement bodies, prosecutors,
judges and health workers.
Despite many difficulties, labour and trade union rights are generally respected.
Implementation of the Law on Peaceful Settlement of Labour Disputes, and the start of
mediators’ and arbiters’ work, has been slow. Trust in social dialogue both among employers
and employees should be strengthened as well as the capacity of social partners in policy
shaping. (See also Chapter 19 — Social Policy and Employment.)
The new Law on Criminal Procedure, applied since the end of 2013, guarantees the
procedural rights of suspected and accused persons and victims of crime. It sets out clearly
the right to interpretation and translation of the defendant, victim, private plaintiff and
witness, and establishes the defendant’s right to a lawyer. It also specifies the information
which must be given to anyone who is invited for questioning or detained. This includes the
reasons for their detention, any charges against them, the right to remain silent and the right to
inform a third person and/or diplomatic or consular authorities. Adequate medical assistance
must be provided as needed or upon request and any person deprived of their liberty must be
brought before a court within 24 hours. Legal aid is available under the 2009 Law on Free
Legal Aid but its implementation is not yet widespread. Special safeguards are in place for
juveniles and for vulnerable witnesses or victims. The presumption of innocence is set out in
the Constitution and the Law on Criminal Procedure but there have been some concerns about
its full observance, including in relation to the content of the intercepted communications.
Further efforts are needed, particularly as regards statements made to the public and media,
including by the courts and by members of the executive. The ECtHR has found several
violations of the right to liberty in cases where pre-trial detention was imposed without
concrete and sufficient justification, and judges have made efforts to improve the reasoning
given in pre-trial detention orders and extensions, but there is scope for further improvement.
Trial in absentia is possible in certain circumstances.
Regarding the protection of minorities and cultural rights, the Ohrid Framework Agreement
continues to provide a basis for inter-community relations. The Agency for the Protection of
Minorities representing less than 20 % of the population still struggles with an inadequate
mandate, insufficient budget and a lack of support from relevant institutions. The Directorate
for education in communities’ languages and the Directorate for the promotion of culture of
the communities also continue to be inadequately funded and staffed. Inter-institutional
cooperation remains weak. Systemic measures to ensure that all communities can exercise
their ethnic, cultural and linguistic rights remain largely donor-funded. Curricula for the
Roma, Vlach and Bosnian languages in elementary schools were developed, coming into
61
effect from 2016/17. Limited use was made of the new policy measures to promote inter-
ethnic relations under the integrated education strategy. Measures against separation along
ethnic lines in schools are insufficient. Multiple forms of discrimination against the non-
majority communities persist and action to combat stereotyping, including in the media,
remains ineffective.
The new Roma strategy for 2015-20 was adopted. The Ministry of Labour and Social Policy's
unit for implementing Roma policy was strengthened. The Roma Seminars have been held
regularly but their conclusions have not been followed up comprehensively and coordination
among institutions is still weak. A number of government projects on social housing,
education, employment and social assistance have produced some good results. Roma health
mediators are functioning in six municipalities. Under a project to include people in the
register of births, 120 of the 550 people identified so far have been registered. However, the
most disadvantaged Roma still have problems accessing social benefits due to their lack of
administrative documentation. Hardly any progress can be reported in terms of political
representation, media coverage in the Roma language and the status of the Roma language in
municipalities with a Roma majority. Roma have limited economic opportunities. Poverty
remains the biggest factor behind the low share of Roma children in education. There
continues to be a disproportionate number of Roma children placed in special needs schools.
Segregation, stereotyping and other forms of discrimination remain prevalent. Complaints
have been registered by Roma prevented from leaving the country and of mistreatment of
Roma who have returned after unsuccessfully seeking asylum abroad. Roma refugees and
internally displaced persons continue to live in substandard conditions and their access to
education, housing, health and employment remains a concern. The number of active Roma
non-governmental organisations is declining because less funding is available.
4.24. Chapter 24: Justice, freedom and security
The EU has common rules for border control, visas, external migration and asylum. Schengen
cooperation entails the lifting of border controls inside the EU. There is also cooperation in
the fight against organised crime and terrorism, and judicial, police and customs
cooperation.
The country is moderately prepared for implementing the acquis in this area. It has made
some progress by adopting new laws and strategic documents in several areas (migration,
money laundering and terrorism). The country is on the transit route for mixed migration via
Turkey and Greece towards northern Europe. Urgent measures were taken to deal with the
humanitarian consequences of the regional migration crisis in the short term, but authorities
have been overwhelmed by the escalating numbers. International cooperation and law
enforcement, in particular in the area of organised crime, remained strong. In the coming year,
the country should in particular:
→ strengthen capacity regarding mixed migration flows of refugees and economic migrants,
especially early identification of those needing protection, vulnerable groups and minors;
→ ensure effective border management and step up action against people smuggling and
human trafficking as a high priority;
→ adopt and implement the new anti-terrorism strategy and action plan, with a special focus
on measures preventing radicalisation.
(See also the specific recommendations on the fight against organised crime in section 2.3.)
62
Legal and irregular migration
The government adopted the 2015-2020 migration strategy and action plan in January. As
regards the legal residence and work of foreigners, 4 219 temporary residence permits were
issued in 2014, of which around a quarter were for employment or self-employment purposes.
The number of irregular migrants detected increased significantly from 1 750 in 2014 to 24
637 in the first 7 months of 2015. In 2014, 1 213 people were returned to the country under
the readmission agreement with the EU, which continues to be implemented smoothly on the
whole.
During summer 2015, the former Yugoslav Republic of Macedonia faced an unprecedented
number of third country nationals entering the country, primarily through Greece, on route to
other EU Member States. The numbers of new arrivals regularly reached around 5 000 per
day. Urgent legislative measures were taken on 18 June in order that third country nationals
declaring 'an intention to apply for asylum' could be issued with documentation and allowed
72 hours' legal stay to register their claim. The new legal framework significantly reduced the
scope for organised crime groups involved in people smuggling and also provided easier
access to public transport, reducing the risk of accidents. Over the past year, 24 people had
been killed by trains while transiting the country clandestinely on foot alongside railway
tracks. The changes effectively put an end to transfers of migrants to the Centre for Foreigners
in Gazi Baba, which had been widely criticised by domestic and international monitors due to
serious under-capacity and overcrowding and is no longer in general use.
The government also developed an emergency response plan in the event of continued influx.
In view of the substantial rise in third country nationals transiting the country, further efforts
are needed in the area of cooperation and information sharing, especially on the borders with
Greece and Serbia. Attention should be paid to proper contingency and emergency planning
to enable the country to manage the migratory flows more efficiently. The crisis has
highlighted the need for a cross-cutting strategic approach encompassing migration, asylum
and law enforcement, in particular the fight against people smuggling and human trafficking.
Asylum
The number of new applications for asylum continued to increase, from 1 364 in 2014 to 1730
so far in 2015. Refugee status was granted to 11 people in 2014 and three in 2015, the
majority coming from Syria. The Ministry of Interior appointed a full-time representative of
the asylum unit to the reception centre in Vizbegovo, improving access to the asylum
procedures. On the whole, the asylum recognition rate remains low, and the Administrative
Court continues to process asylum appeals largely on procedural rather than substantive
grounds, leading to long delays and repeat appeals. In 2014, one asylum seeker was granted
legal aid under the Law on Free Legal Aid, but for the remaining 40 applications the
procedure had to be stopped as the asylum seekers had left the country. It is important that
the existing asylum legislation be fully implemented by ensuring that access to and
information about asylum procedures are readily available.
Visa policy
Legislation is largely aligned with the acquis and the link between diplomatic and consular
missions, the national visa system N-Vis and the Visa Centre at the Ministry of Foreign
Affairs has been operational since 2009. An agreement on joint use of consular premises with
Serbia was signed in September 2014.
Implementation of the visa-free travel regime with the EU has continued smoothly overall.
The national authorities continued cooperation to tackle unfounded asylum applications made
in Schengen members and associated countries, and the overall numbers fell by around 10%
63
in 2014. In addition to running public information campaigns, the authorities continued to
carry out additional border controls, surveillance patrols and risk analysis. Criminal charges
for facilitating abuse of the visa-free regime were brought against 32 people in 2014 and
against 7 people during May-July 2015. Some efforts were made to improve the socio-
economic conditions of vulnerable groups, notably Roma, through specific support
programmes in the areas of employment, education and health. However, the root causes of
this phenomenon still require greater structural efforts and the investment of proper resources.
Schengen and external borders
The national integrated border management development strategy for 2015-2019 is being
prepared. Good cooperation with Albania, Bulgaria, Kosovo and Serbia continued, including
through the operation of the respective joint contact centres and regular mixed border patrols.
A joint cooperation centre was opened with Kosovo in January 2015 at Hani i Elizit/Blace.
Good cooperation and exchange of best practices continued with Frontex, as did participation
in other bilateral and multilateral cooperation initiatives in the field of border operations. The
capacities of the National Coordination Centre for Border Management were strengthened
slightly but internal coordination and cooperation with related ministries remains weak.
Judicial cooperation in civil and criminal matters
The country received 2 252 new requests for mutual legal assistance in 2014 and made 2 856
such requests to other countries. Around a third of such exchanges related to criminal
matters and two thirds to civil matters. As regards judicial cooperation in criminal matters,
the country issued 100 extradition requests and received 20 from abroad. A total of 45
requests for transfers of sentenced persons were also processed.
The former Yugoslav Republic of Macedonia is the only enlargement country to have a
cooperation agreement with Eurojust, in force since 2010.
Fight against organised crime
Track record
During 2014, the Ministry of Interior filed 93 criminal charges (85 in 2013) against 584
people accused of involvement in different types of organised crime, including drug
trafficking, people smuggling and financial and economic crimes. In the same period there
were 109 convictions at first instance, 101 at second instance and 27 decisions given by the
Supreme Court within the extraordinary review procedure.
The Financial Intelligence Unit submitted 154 reports of suspicious transactions in 2014. It
submitted 31 notifications related to money laundering and financing of terrorism to law
enforcement for further investigation (up from 25 in 2013). In the same period, 14 people
were prosecuted and 7 convicted of money laundering.
As regards trafficking in human beings, 37 criminal proceedings involving 52 accused
persons ended in convictions in 2014. The Ministry of Interior also submitted criminal
charges against 8 police officers involved in trafficking. In total 8 victims were identified, of
whom 6 were minors. Four cases of forced marriage including both sexual and labour
exploitation, 3 cases of sexual exploitation and 1 case of forced begging were detected.
There was a general increase in drug seizures, with those involving heroin rising the most
(by 73.5 %). In 2014 the Ministry of Interior seized 632 kg of marijuana, 20 kg of heroin,
318 g of cocaine, 1 187 stems and 3 816 seeds of cannabis, 5 kg of hashish, 1 189 ecstasy
tablets and 1.2 kg of amphetamine. In addition, the Customs Administration seized around
4 kg of heroin, 91 kg of marijuana, 20 g of hashish and 96 ecstasy tablets. As a result of two
64
joint operations (with Switzerland and Bulgaria, and with Serbia) three heroin trafficking
channels to the EU from Turkey were cut off. Cigarette seizures in 2014 and first quarter of
2015 totalled 757 270 as well as a further 103.5 kg of tobacco. The destruction of seized drugs
continued in 2014 under the responsibility of the Ministry of Health (involving 187 kg of
marijuana, 46 kg of heroin, 447 cannabis stems and over 1 000 tablets and capsules).
Special investigative measures, which are still used mainly by the police, were applied in
307 cases in 2014 (271 in 2013). All three law enforcement agencies with powers in this field,
including the Financial Police and Customs Administration, need to have the technical
capacity to carry out interception of communications independently of the intelligence
services, whose facilities they currently rely on. Trust in the system has been undermined by
the content of the intercepted communications which implied serious abuse of special
investigative measures within the intelligence services. However, this should not detract from
the continued and effective use of special measures for genuine criminal investigation
purposes.
Institutional and operational capacity
In 2014, 400 police cadets completed basic training and 399 of them were recruited. Training
of a further 400 is currently underway. In addition, 50 vacancies for candidates with higher
education were filled in the Ministry of Interior. Although the Law on Internal Affairs and the
human resources strategy introduced a merit-based recruitment policy and career system,
allegations of politicised recruitment by the Ministry still persist and need to be addressed.
Implementation of the ‘national intelligence model’ continued, with the preparation of 11
standard operating procedures, seven guidelines and a manual. Steps were undertaken to set
up national and regional threat assessments of serious and organised crime activities, inspired
by the EU SOCTA methodology. The establishment of the National Intelligence Database has
been delayed until 2018.
Staffing in the Department for the Fight against Serious and Organised Crime at the Ministry
of Interior continued to increase, with 10 new employees hired. The Basic Public Prosecutor's
Office for Organised Crime and Corruption employed 9 support staff in 2014 and a further 13
in 2015. Within the same Office, the first Investigative Centre was established, equipped with
IT and audio-visual recording facilities, and started to function.
The specialised units in both the Ministry of Interior and the Public Prosecutor’s Office
fighting serious and organised crime are well established. However, general understaffing still
hampers their ability to handle cases with maximum effectiveness and concerns remain about
political interference in some cases. The National Coordination Centre for the Fight against
Organised Crime is established by law but is still not operational pending the development of
procedures for data exchange between the relevant institutions, training and supply of IT
equipment.
Direct cross-border cooperation with national police services continued, through exchanges of
operational information and intelligence, joint operations, joint investigative teams and the
involvement of public prosecutors from the countries concerned.
Legal framework
In March 2015 the Law on Police and the Law on Internal Affairs were both amended to
standardise the use of video recordings of police actions. Amendments to the Law on Police
additionally allow for rubber bullets and tasers to be used in situations which threaten public
order. The introduction of such broad powers need to be accompanied by adequate human
rights protection, which should be set out clearly in the legislation and operating procedures
65
and be accompanied by training. The Ombudsman has called for clear rules on the use of such
measures to be laid down in the relevant secondary legislation.
Strategic framework
Work is currently underway to prepare the new cyber-security strategy, along the lines of the
EU strategy in this area, including cybercrime as one of its four pillars. Fighting organised
crime and corruption remains fundamental to countering criminal infiltration of the political,
legal and economic systems.
Fight against terrorism
The Criminal Code was amended in September 2014 to introduce a new criminal offence of
participation in foreign army, police, para-military or para-police formations. In August 2015
charges were brought against 36 people under the new provisions. The new Law on
Prevention of Money Laundering and Financing of Terrorism was adopted in September 2014
and a new Law on Property Rights Restrictions for Prevention of Terrorist Financing is in
preparation. A new anti-terrorism strategy and action plan, addressing among other things
radicalisation and foreign terrorist fighters, are under preparation. Radicalisation remains a
serious challenge for the country. Efforts need to be enhanced to identify, prevent and disrupt
the flow of foreign terrorist fighters traveling to countries such as Iraq and Syria.
Cooperation in the field of drugs
The National Drug Strategy 2014-2020 is coordinated with the drug strategy and action plan
of the EU and the UN political declaration to combat drugs, as well as reflecting national and
regional priorities. Amendments to the Law on Control of Narcotic Drugs and Psychotropic
Substances are being prepared, including on the early warning approach and timely, partial or
full banning of new psychoactive substances emerging on the market. Plans are underway to
set up supervisory bodies for the implementation of prevention activities under the Strategy
and for activities relating to drug addiction treatment. Good cooperation continued between
the national focal point and the European Monitoring Centre for Drugs and Drug Addiction.
Customs cooperation
The Customs Administration took part in four international operations and four projects to
detect illicit trade in counterfeit goods, drugs, cultural goods and high-risk chemicals.
Cooperation continued with the regional intelligence liaison offices of the World Customs
Organisation, the South-East European Law Enforcement Centre and the United Nations
Office on Drugs and Crime. Information about seized goods was regularly entered in the
respective databases. Cooperation and exchange of intelligence with the customs authorities
of the neighbouring countries and the wider region continued. Regular information on illicit
trade in drugs was exchanged with the German Customs Investigation Bureau. A cooperation
agreement was signed with the customs administrations of Hungary, Serbia and China. (See
also Chapter 29 — Customs union).
For measures against counterfeiting of the euro, see Chapter 32 — Financial control.
66
4.25. Chapter 25: Science and research
The EU provides significant support to research and innovation. All Member States can
benefit from the EU’s research programmes, the more so where there is scientific excellence
and solid investment in research.
There is a good level of preparation in the area of science and research. Good progress was
made with respect to actions on innovation, and with initial and active participation in the EU
Research and Innovation Programme "Horizon 2020". In the coming years, the country
should focus on:
→ actions to strengthen the research capacity in line with the European Research Area;
→ increasing the level investment in research in particular by the private sector.
A network of national contact points was established and representatives in the Horizon 2020
Programme Committees, have been nominated. Several workshops and information days on
Horizon 2020 have been organised which resulted in a large number of applicants submitting
proposals for funding. Based on first Horizon 2020 statistics, about 20 projects were
successfully evaluated. An Action Plan on promotion and support for participation in Horizon
2020 was adopted focussing on SMEs and mobility of scientists. The country cooperates
actively at regional level on the implementation of the Regional Strategy on Research for
Innovation and with the Central European Initiative (CEI) and UNESCO.
As regards policy actions on research and innovation, the country concentrated on
innovation. Implementation of the National Innovation Strategy is high on the political
agenda, as demonstrated by the allocation of EUR 20 million (in part with a World Bank loan)
through the Fund for Innovation and Technological development to facilitate access to risk
capital to co-finance innovations, new technologies start-ups and spinoff companies. As
regards strengthening research capacity, a new 2015-2019 programme for higher education
and scientific and research activities is being prepared, aiming at funding national research in
line with the EU priority areas. The level of investment in research stagnated at less than
0.30%. The country nominated representatives to the European Research Area Committee and
related advisory bodies but due to lack of administrative capacity participation was limited.
4.26. Chapter 26: Education and culture
The EU supports cooperation in education and culture through funding programmes and
through the open method of coordination. Member States must also prevent discrimination
and facilitate education of children of EU migrant workers.
The former Yugoslav Republic of Macedonia is moderately prepared in this area, and some
progress was made in the past year. Improvements were seen in pre-school education and on
early school-leavers. Children from non-majority communities and children with special
needs continue to face barriers in access to quality education. Participation in the EU’s
Creative Europe programme has made an important contribution to the country’s cultural
activities locally and regionally. Far-reaching reforms of the education system were put on
hold following large public protests. In the coming year, the country should in particular:
→ reform teacher training aimed at improving the basic and transversal skills at basic levels
of education;
→ evaluate the implementation of reforms in the education sector from 2005 to 2015;
→ develop a new strategic framework for education, linking all reform processes and
involving a wide range of stakeholders.
67
Regarding education, training and youth, the government introduced a wide-ranging reform
by amending the laws on primary, secondary and higher education as well as a law
establishing a teacher academy. Following mass protests by students and academics over lack
of consultation and objections to content, the reform was put on hold for a year.
The number of places in pre-school education facilities increased. The number of places in
pre-school education facilities increased. The proportion of three to six-year olds in early
childhood education has steadily increased (34% in 2014), but remains well under the EU
average and targets (95% by 2020). Children from rural areas, from non-majority
communities and with disabilities remain disadvantaged. Measures were introduced to support
education of children with special needs.
Some progress was made in modernising vocational education and training programmes and
occupational standards. However, most of these do not match the demands of the labour
market. The country participates fully in the Erasmus+ programme. The administrative and
financial capacity of the National Agency for European Educational Programmes and
Mobility was strengthened.
Concerning culture, the Law on Protection of Cultural Heritage was amended and bilateral
agreements on cultural cooperation signed. Participation in the Creative Europe programme
continued successfully. The relevant institutions need to be strengthened to ensure policies are
implemented and monitored effectively. Strategic expenditure planning needs to be improved.
4.27. Chapter 27: Environment and climate change
The EU promotes strong climate action, sustainable development and protection of the
environment. EU law contains provisions addressing climate change, water and air quality,
waste management, nature protection, industrial pollution, chemicals, noise and civil
protection.
In the field of environment and climate change, the country is moderately prepared. Some
progress was made in transposing the acquis, in particular general horizontal legislation and
air quality and chemicals laws. In the coming years, the country should focus on:
→ finalise the setting up of systematic strategic planning, and start implementing the
country's contribution to the expected 2015 Paris Climate Agreement;
→ implementing national legislation and increasing investment, especially in the waste and
water sectors.
On the environment, some progress was made in the area of horizontal legislation. The
environment and climate change strategy was developed. Public communication and access to
environmental information improved, although public consultations still need to do so.
Some progress was made in aligning with the acquis on air quality but air pollution levels
remain high. They pose serious risks to health and they need to be addressed urgently.
Implementation of measures laid down in the national plan for air quality protection remains
limited and insufficient, although some general measures were implemented. Data reporting
and dissemination of information on air quality improved. Work continued on transposing the
acquis on control of volatile organic compound emissions from petrol use, on planning air
quality protection and improvement at local level. Adequate financial resources are needed to
support the automatic air quality monitoring network.
Regional waste management plans and strategic environmental assessments were developed
for two regions, and are at a preparatory stage in the other four. The implementation of the
legislation on special waste streams continued, but is still lagging behind.
68
On water quality, planning and preparation of river basin management plans and future
infrastructure investment to improve the systems for waste water collection and treatment are
ongoing. The government began preparations for establishing integrated water management
systems, but the river basin management boards are not yet operational. A system for
monitoring water quantity and quality is needed.
Regarding nature protection, the transposition of the acquis on natural habitats and wild
fauna and flora is delayed. Implementation of the nature protection acquis and designation of
a Natura 2000 network has still not begun. The Fifth National Report to the Convention on
Biological Diversity was adopted. Cross-border cooperation was improved with the
designation of the Ohrid-Prespa region as a transboundary biosphere reserve. The national
nature protection strategy still needs to be completed. Concerns remain about the potentially
detrimental environmental impact of the planned construction of two large hydropower
facilities, Lukovo Pole and Boškov Most. Investments in hydropower need to be in
conformity with relevant EU environment legislation, respecting EIA, water legislation and
nature protection obligations, especially for national protected areas and areas of high natural
value, potential protected Natura 2000 sites. Public consultations with stakeholders continue
to not always be properly applied, and results not always fully reflected in decisions.
On industrial pollution control and risk management, the integrated pollution prevention
and control permitting procedures are under way but far behind schedule. The issuing of
permits needs to speed up.
In the area of chemicals, initial steps were taken to establish an inter-sectoral body for major
accident prevention and control. The national plan to reduce and eliminate persistent organic
pollutants was adopted.
No progress was made on noise. The preparation of maps and action plans still lags behind.
The country continues to actively participate in the EU Civil Protection Mechanism and in
several regional projects aimed at strengthening cooperation. However, it has still not
connected with the Civil Protection Mechanism’s common emergency communication
system. Disaster risk reduction and management need to be treated as a matter of priority,
particularly in the light of the 2015 floods.
The country still needs to develop a comprehensive policy and strategy on climate action,
consistent with the EU 2030 framework. More efforts are needed to integrate climate action
into all relevant sectoral policies and strategies. The country submitted its First Biennial
Update Report to the United Nations Framework Convention on Climate Change. The country
submitted its intended nationally determined contribution (INDC) and adopted it as an input
to the expected 2015 Paris Climate Agreement. The country is at the early stages of
transposing and implementing EU climate acquis. A Roadmap for achieving long term
climate action objectives was developed. Some progress was made on ozone depleting
substances. The country needs to continue to pay attention to adaptation to climate change.
Overall, there has been some progress towards strengthening the country’s administrative
capacity to implement and enforce legislation on the environment and climate change, but it
remains largely insufficient at all levels. The environmental monitoring and information
system is inadequate. Environmental protection and climate action requirements are still not
well integrated into other areas of policy-making and implementation.
69
4.28. Chapter 28: Consumer and health protection
EU rules protect consumers in relation to product safety, dangerous imitations and liability
for defective products. The EU also ensures high common standards for tobacco control,
blood, tissues, cells and organs, patients’ rights and communicable diseases.
The country is moderately prepared in the area of consumer and health protection. Some
progress was made in the last year. In the coming year the country should in particular:
→ strengthen the operational structures serving consumer protection;
→ ensure efficient and high-quality healthcare.
The Council for consumer protection was established, but its impact on individual cases
remains modest. The Law on Consumer Protection was amended to align with the acquis. The
lack of administrative and financial resources, however, hampers effective policy
implementation. On product safety-related issues, a new Law on Market Surveillance was
enacted and market supervision was intensified, although further efforts are needed by market
supervisors and other regulatory bodies to ensure effective consumer protection. Awareness-
raising activities were carried out on non-safety-related issues.
Investment in public health continued. Mobile and rural pharmacies were introduced and
measures adopted to reduce the price of pharmaceuticals, resulting in savings of EUR 33
million. A free telephone line for medical counselling was established. However, the e-health
card system is only partially functional. The lack of human and financial resources, including
accrued arrears, continues to undermine the sustainability of public health programmes and
equal access to healthcare. The health sector has not yet been decentralised effectively.
The enforcement of tobacco control legislation is uneven and primarily focused on major
urban areas. Public health centres provide counselling on giving up smoking.
New polyvalent vaccines were introduced as part of the mandatory immunisation against
communicable diseases and the rapid alert system on communicable diseases was
successfully deployed. The inter-agency commission continued to work towards full
implementation of international health regulations, but more administrative capacity is
needed. Supervision of antibiotics was strengthened, requiring medical prescriptions. Free
HIV/AIDS tests showed an increase in HIV infection amongst males.
On blood, tissues, cells and organs, a central information system was set up for tissue
matching, storage, replacement and transplantation. A protocol for cadaver transplantation
was prepared in line with Eurotransplant standards and a list of potential recipients was
established. Standard operative procedures for transfusion medicine and quality control of
blood and blood safety were adopted. The haemophilia centre was certified at European level.
Further efforts are needed to achieve full alignment with the acquis.
A rulebook on veterinary pharmaceuticals was adopted to transpose relevant EU regulations,
increasing the level of overall health protection. Administration of human pharmaceuticals
improved. The Ministry of Health ensures the monitoring, tracing and quality assurance of
pharmaceuticals subject to parallel trade.
Mental health facilities continue to be under-staffed and under-resourced. Centres for
treatment of depression were opened in 36 healthcare centres. The 2014-2020 mental health
strategy and action plan is not yet adopted.
The 2014-2020 strategy and action plan on preventing drug abuse were adopted, aiming to
reduce demand for and supply of drugs. Regarding health inequalities, programmes to
include Roma and Roma health mediators continued. A project to increase physical activity
70
by children with Down syndrome was launched. Civil society organisations raised concerns
over the strict application of the abortion law. Awareness campaigns were launched on
nutrition and physical activity.
A new programme for prostate cancer screening began. The cancer registry is not yet fully
operational and cooperation with the State Statistical Office on mortality data not yet ensured.
Sustainable funding is needed to screen all age groups for cervical, breast and colon cancer.
The amended excise law provides that 1 MKD per cigarette box is allocated for
pharmaceuticals for rare diseases, but funding and specialised knowledge for their treatment
remains limited.
4.29. Chapter 29: Customs union
All Member States are part of the EU customs union and follow the same customs rules and
procedures. This requires legislative alignment as well as adequate implementing and
enforcement capacity and access to the common computerised customs systems.
The country has a good level of preparation in the area of customs union. Good progress
was made on legislation and administrative and operational capacity, although introducing
fees for customs declarations is a step backwards. Certain customs provisions of the Law on
Special Zones for Technological and Industrial Development are still not in line with the
acquis. In the coming year, the country should in particular:
→ remove fees for customs declarations;
→ finalise and consolidate ongoing IT projects, ensuring the maintenance and business
continuity of the IT systems.
On 1 January 2015, fees were introduced for lodging and processing customs declarations,
which is not in line with the acquis or the Stabilisation and Association Agreement.
The country’s July 2015 accession to the conventions on a common transit procedure and on
the simplification of formalities in trade in goods will significantly facilitate trade. The 2015
customs tariff was adopted in line with the latest changes in the EU Combined Nomenclature.
A new Law on Representation in Customs Procedure defines the status of authorised and
licensed representatives and lays down criteria for issuing authorisations and licences for
customs representations. In May, a new Law on Customs Measures for Intellectual Property
Rights (IPR) Protection was adopted which regulates actions to be taken by customs related to
goods that are suspected of infringing IPR.
Good progress was made on administrative and operational capacity. Professional integrity
standards and internal control measures were implemented systematically. Risk management
was further developed and a new risk analysis module in transit operations was introduced.
The use of simplified procedures is well developed. Capacities for carrying out customs
controls and combating cross-border crime were strengthened. Improved inter-agency
cooperation and exchange of information continued to result in seizures of drugs and
counterfeit goods. Cooperation with neighbouring customs administrations continued,
including through joint operations, and cooperation agreements with the Serbian, Hungarian
and Chinese customs administrations were signed. The agreement on the country’s
participation in the EU’s Customs 2020 programme was ratified. In relation to IT, the ‘new
computerised transit system’ is fully operational since March 2014 and its maintenance was
secured. The common communication network/common system interface was installed and
successfully tested. The integrated tariff environment system was completed. Some of its
functions are in use and consideration should be given to adding others that would benefit
traders. A new system for processing customs declarations is expected to be completed soon.
71
4.30. Chapter 30: External relations
The EU has a common trade and commercial policy towards third countries, based on
multilateral and bilateral agreements and autonomous measures. There are also EU rules in
the field of humanitarian aid and development policy.
The country is moderately prepared in the area of external relations, with some progress
over the past year. The country continued its good cooperation with the EU within the World
Trade Organisation (WTO), but its institutional capacity to fully participate in EU
commercial, development and humanitarian policies is still insufficient.
On the common commercial policy, the country continued to coordinate its positions and
align its policies closely with those of the EU, including within the WTO. It notified Category
Commitments under the WTO Trade Facilitation Agreement, detailing the provisions it will
implement when the agreement enters into force. The country also ratified the Additional
Protocol 4 to the Agreement on Amendment of and Accession to the Central European Free
Trade Agreement, abolishing all import duties on agricultural products from the Republic of
Moldova. The competencies of the Commission on Export of Dual Use Goods and
Technologies were strengthened.
36 bilateral agreements with other countries are in force, of which 18 EU Member States. In
the areas of development policy and humanitarian aid, the country is lagging behind.
4.31. Chapter 31: Foreign, security and defence policy
Member States must be able to conduct political dialogue in the framework of the foreign,
security and defence policy, to align with EU statements, to take part in EU actions and to
apply agreed sanctions and restrictive measures.
The country is moderately prepared in this area. Some progress was made as the country
continues to participate in civil and military crisis management missions. In the coming year,
the country should in particular improve its alignment with EU declarations and Council
Decisions on foreign and security policy.
The regular political dialogue between the EU and the former Yugoslav Republic of
Macedonia on foreign and security policy issues continued. (For information on bilateral
relations, see Political criteria — Regional issues and international obligations). On the
common foreign and security policy, the country aligned itself, when invited, with 27 out of
40 EU declarations and Council Decisions (68 % alignment). On the illegal annexation of
Crimea by Russia and events in eastern Ukraine, the country aligned its foreign policy in
broad terms with the EU’s stance but not with the Council Decisions introducing restrictive
measures over those issues. (On the International Criminal Court, see Political criteria —
Regional issues and international obligations.)
As part of measures on non-proliferation of arms, the country continued its efforts to
become a participating state to the Wassenaar Arrangement.
The country continued to engage actively in cooperation with international organisations. It
is a member of the UN Human Rights Council until 2016 and was elected to the Board of
Directors of the International Atomic Energy Agency.
The country continued to participate in civil and military crisis management missions under
the common security and defence policy (CSDP), in particular EUFOR ALTHEA Bosnia
Herzegovina. The country extended its participation in the NATO-led Resolute Support
mission in Afghanistan with 38 personnel as of 2015. The country has also officially
contributed to the ‘2014-20 European Union Battle Group’ since March 2014.
72
4.32. Chapter 32: Financial control
Based on international standards, EU financial control rules promote sound financial
management of national income and expenditure. They also protect the EU's financial
interests against fraud in the management of EU funds and the euro against counterfeiting.
The country is moderately prepared in this area. Some progress was made in the past year,
especially in strengthening public internal financial control (PIFC) and external audit.
However, significant efforts are needed with ensuring coherent implementation of the PIFC
legislation across public administration and delegation of responsibilities. The independence
of the State Audit Office in the Constitution has yet to be achieved. In the coming year, the
country should in particular:
→ ensure that there is a more systematic follow up to government's recommendations
following the annual PIFC review;
→ ensure efficient implementation of risk assessment and other tools and techniques in public
sector organisations' management processes;
→ strengthen the coordination role of the Anti-fraud Coordination Service and improve
management of irregularities through the Irregularity Management System.
Public Internal Financial Control
As concerns a PIFC strategy framework, implementation of the 2015-17 PIFC policy paper
and its action plan adopted in December 2014 are under way. The Committee for Financial
Management and Control and the Audit Committee have resumed their regular quarterly
meetings.
The Central Harmonisation Unit (CHU) prepares an annual report on the implementation of
PIFC, but it is adopted only in June the following year. The government issues
recommendations on the basis of the report, but they need to be monitored more
systematically. The CHU has ensured training for its staff and improved coordination with the
State Audit Office (SAO). The CHU should further step up its monitoring and supervision
over implementation of FMC in the public sector organisations and state-owned companies.
The legal framework for financial management and control (FMC) is established in line
with the Committee of Sponsoring Organisations (COSO) model and the guidelines of the
International Organisation of Supreme Audit Institutions (INTOSAI), but the legislation is not
coherently implemented by all institutions. Rulebooks and manuals will need to be further
updated and adapted to the needs of smaller budget users. Management of risks should be
fully embedded in the organisations' management processes. The Law on Financial Inspection
regulates a centralised budget inspection function that is compatible with PIFC. The
Financial Inspection Department in the Ministry of Finance, with four staff, launches
investigations on the basis of suspicion of irregularities and fraud. The department still needs
to reach its full operational capacity.
The legal framework on internal audit is in line with the international standards. Progress
was made on better implementing internal audit standards, rulebooks and manuals. 151
internal audit units exist at central and local level, with 77 internal auditors internationally
certified. However, most units do not have sufficient number of auditors. Most internal audit
units conduct their audits based on strategic and annual plans, although not yet based on
operational and systematic risk. Quality assurance needs to be better implemented.
73
External audit
The constitutional and legal framework is not complete, as the State Audit Office's (SAO)
independence is not anchored in the Constitution. Amendments are yet to be adopted by
parliament. The SAO law is largely in line with the INTOSAI standards.
The SAO has sufficient institutional capacity to perform its tasks, with 70 of its 82 auditors
being certified public auditors. The SAO is not required to perform a full financial audit on
the final government accounts, which allows it to decide on the audits it wants to perform.
The audit coverage, however, has been limited, leaving a majority of public funds unaudited.
The SAO is committed to improving institutional capacity and continued to implement its
2013-2017 strategic development plan efficiently.
Concerning the quality of audit work, a revised regularity audit manual, covering both
financial and compliance audit, and a performance audit manual were adopted. Special
attention should be paid to improving capacity to carry out performance audits.
Regarding the impact of audit work, in 2014 the SAO audited 80 budget users on efficiency
and effectiveness of their internal control systems, therefore proactively contributing to
improvement of the public sector internal control standards. Implementation of
recommendations needs to be closely monitored. The SAO’s annual audit report is discussed
in parliament but its recommendations are still not followed up systematically to ensure that
public funds are used more transparently and with greater accountability.
Protection of the EU’s financial interests
The main elements of the Convention on the Protection of the EU’s financial interests are
regulated, ensuring a partial acquis alignment. A memorandum of cooperation between the
Financial Police, the Public Prosecutor’s Office, the Ministry of Interior and the customs
administration was signed to facilitate joint inspections. The Financial Police department in
the Ministry of Finance with four staff is the dedicated Anti-fraud Coordination Service
(AFCOS). It should focus its efforts on developing and disseminating methodological tools,
establishing an AFCOS network and organising training for irregularity officers. A national
anti-fraud strategy still needs to be adopted and implemented efficiently. On cooperation
with the European Commission, one joint investigation was carried out in 2014,
irregularities in seven cases (of which three concern potential fraud) were reported to the
European Anti-Fraud Office (OLAF), albeit on paper and not electronically in the Irregularity
Management System. Development of a solid track record on investigations and reporting
needs to continue.
Protection of the euro against counterfeiting
There remains relatively little counterfeiting of currencies in the country. On acquis
alignment, national legislation already lays down the national anti-counterfeiting procedures
and the roles and responsibilities of relevant institutions. The Banknote Department of the
National Bank carries out technical analysis of counterfeit money, including euro banknotes
and coins. Its cooperation with the Ministry of Interior should be improved further through
timely exchange of information through the database system of counterfeit banknotes. No
formal cooperation agreements are in place with the European Commission on coins or with
the European Central Bank on banknotes on counterfeiting. Further efforts are needed to
improve cooperation between national institutions involved in fighting counterfeiting. This
should be done through systematic training, expanding practical experience and skills and
improving cooperation with the European Commission and the European Central Bank.
74
4.33. Chapter 33: Financial and budgetary provisions
Rules for funding the EU budget provide for contributions based mainly on the gross national
income of each Member State as well as from value-added tax and customs duties.
Preparations are at an early stage but some progress was achieved in this chapter. The
administrative framework for applying the own resources rules needs to be set up.
No progress was made on traditional own resources, the value added tax-based resource
or the gross national income-based resource. Some progress was made in the underlying
policy areas affecting the correct application of the financing system. (For developments in
the underlying policy areas see Chapters 16 — Taxation; 18 — Statistics; 29 — Customs
union; and 32 — Financial control).
On administrative infrastructure, some progress was made towards fighting tax evasion and
fraud and reducing the size of the informal economy, which remains a key challenge. The
administrative capacities of the institutions involved in the own resources system (customs,
taxation, statistics, financial control) need to be further strengthened and legislation further
aligned with the acquis.
75
Annex I – Relations between the EU and the former Yugoslav Republic of Macedonia
The former Yugoslav Republic of Macedonia is participating in the Stabilisation and
Association process.
The Stabilisation and Association Agreement (SAA) with the EU is the framework for
relations with the EU including political and economic dialogue. Experts met in six sub-
committees and in a special group on public administration reform. Meetings of the
Stabilisation and Association Committee and the Stabilisation and Association Council took
place in June and July 2015, respectively. The discussion at this year’s Committee and
Council was dominated by the serious political crisis in the country, on which the European
Commission and Members of the European Parliament facilitated dialogue from March to
July,, as well as the systemic rule of law issues revealed in intercepted conversations
involving senior government officials on which the European Commission presented “Urgent
Reform Priorities” which the country needs to address.
As regards the SAA, the country has continued to implement commitments, including all
those relating to the first stage of implementation of Title V (‘Movement of workers,
establishment, supply of services, capital’). The Council has still not decided on the
Commission’s 2009 proposal on passage to the second stage of the Association, under Article
5 of the SAA. The protocol on the adaptation of the SAA, to take account of Croatia’s
accession to the EU, was signed in July 2014; pending its ratification, the protocol is applied
on a provisional basis with effect from 1 July 2013.
The country is also engaging in the reinforced multilateral economic dialogue with the
Commission and with EU Member States, to prepare for participation in multilateral
surveillance and economic policy coordination under the EU’s Economic and Monetary
Union. Under the High Level Accession Dialogue, work continued on a new table of targets,
complemented by the “Urgent Reform Priorities”. A plenary meeting was held in September
involving, for the first time, several political parties and civil society.
Visa liberalisation for citizens of the country travelling to the Schengen area has been in
force since December 2009. As part of the monitoring mechanism is in place since visa
liberalisation, the Commission has been regularly assessing the progress made by the country
in implementing reforms introduced under the visa roadmap. The monitoring mechanism also
includes an alert mechanism to prevent abuses, coordinated by Frontex. The Commission has
regularly submitted its post-visa liberalisation monitoring reports to the European Parliament
and the Council. On the basis of a visa-waiver suspension mechanism, EU Member States can
request the Commission, in an emergency situation and as a measure of last resort, to examine
the possibility of temporarily suspending the visa waiver for third country nationals. A
readmission agreement between the European Union and the country has been in force since
2008.
Over the period 2007-13, the EU provided financial assistance to the country under the
Instrument for Pre-accession Assistance (IPA). It has allocated a total of EUR 610 million
to the country, complemented by IPA multi-beneficiary programmes. Of this overall amount,
the national authorities are directly responsible for managing about EUR 470 million under
the decentralised implementation system (DIS). The delays in procurement under the DIS led
to a situation in which the country was unable to implement EUR 70 million of IPA funds by
the end of 2014, which were returned to the EU budget. Due to the limited national capacity
to programme and to absorb IPA funds, there is a risk that further funds will be unused by the
76
country in the future. Administrative capacity to plan, design and implement projects needs to
be strengthened, in line with the rules of sound financial management.
In December 2014, the Commission adopted its first IPA II National Programme for 2014. It
addresses the sectors of democracy and governance, rule of law and fundamental rights,
competitiveness and innovation, agriculture, transport and environment. The government
adopted sector operational programmes on transport 2014-2020, as well as on environment
and climate action, 2014-2020. The Framework Agreement between the country and the
Commission on IPA II was ratified by the government on 10 June 2015, enabling the
implementation of IPA II funds.
In October 2015, the Commission adopted a special measure of EUR 10 million, to strengthen
the response capacity of the most affected countries in the Western Balkans to cope
effectively with increased mixed migration flows, focusing primarily on Serbia and the former
Yugoslav Republic of Macedonia.
77
Annex II – Statistical Annex
STATISTICAL DATA (as of 11.09.2015)
The former Yugoslav Republic of Macedonia
Basic data Note 2002 2010 2011 2012 2013 2014
Population (thousand) 2 039 2 053 2 057 2 060 2 062 2066
Total area of the country (km²) 25 713 25 713 25 713 25 713 25 713 25 713
National accounts Note 2002 2010 2011 2012 2013 2014
Gross domestic product (GDP) (million national
currency)
1) 258 58
1
437 296 464 187 466 703 499 559p 525 843e
Gross domestic product (GDP) (million euro) 1) 4 241 7 109 7 544 7 586 8 112p 8 533e
GDP (euro per capita) 1) 2 099 3 459 3 665 3 680 3 930p 4 127s
GDP (in Purchasing Power Standards (PPS) per
capita)
1) 2) 5 500 8 900b 8 800 9 100 9 500 10 000p
GDP (in Purchasing Power Standards (PPS) per
capita), relative to the EU average (EU-28 =
100)
1) 2) 26 35b 34 34 36 36p
Real GDP growth rate: change on previous year
of GDP volume (%)
1) 1.5 3.4 2.3 -0.5 2.7p 3.8e
Gross value added by main sectors
Agriculture, forestry and fisheries (%) 1) 12.3 11.7 10.9 10.5 11.0p 10.2e
Industry (%) 1) 17.1 17.9 19.0 17.8 17.9p 18.0e
Construction (%) 1) 6.4 6.5 6.1 6.6 6.6p 6.8e
Services (%) 1) 64.2 63.9 64.0 65.1 64.4p 65.0e
Final consumption expenditure, as a share of
GDP (%)
1) 98.1 93.8 92.0 92.5 89.6p 86.7e
Gross fixed capital formation, as a share of GDP
(%)
1) 21.3 23.1 23.5 23.4 23.5p :
Changes in inventories, as a share of GDP (%) 1) -0.5 1.4 3.4 5.6 5.0p :
Exports of goods and services, relative to GDP
(%)
1) 26.3 39.8 47.1 45.4 43.8p 47.9e
Imports of goods and services, relative to GDP
(%)
1) 45.2 58.1 66.1 66.8 61.9p 65.1e
Business Note 2002 2010 2011 2012 2013 2014
Industrial production volume index (2010 = 100) 90.8 100.0 107.0 104.1 107.4 112.5
Number of active enterprises (number) 3) : 71 638 71 022 70 010 68 158 :
Birth rate: number of enterprise births in the
reference period (t) divided by the number of
enterprises active in t (%)
: 16.8 12.9 11.9 10.0 :
Death rate: number of enterprise deaths in the
reference period (t) divided by the number of
enterprises active in t (%)
: 13.6 9.3 : : :
People employed in SMEs as a share of all
persons employed (within the non-financial
business economy) (%)
: : : : : :
Value added by SMEs (in the non-financial
business economy) (EUR million)
: : : : : :
Total value added (in the non-financial business
economy) (EUR million)
: : : : : :
Inflation rate Note 2002 2010 2011 2012 2013 2014
Consumer price index (CPI), change relative to
the previous year (%)
1.8 1.6 3.9 3.3 2.8 -0.3
78
Balance of payments Note 2002 2010 2011 2012 2013 2014
Balance of payments: current account total
(million euro)
4) -402 -144b -189 -224 -147 -114
Balance of payments current account: trade
balance (million euro)
4) -1 000 -1 532b -1 905 -2 008 -1 858 -1 856
Balance of payments current account: net
services (million euro)
4) 121 132b 359 309 361 358
Balance of payments current account: net
income (million euro)
4) -48 -100b -131 -148 -212 -225
Balance of payments current account: net
current transfers (million euro)
4) 525 1 356b 1 487 1 622 1 563 1 609
of which government transfers (million euro) 4) 103 31b 77 60 74 83
**3 year backward moving average of the current
account balance relative to GDP (%)
4) -6.2 -7.2 -3.8 -2.5 -2.4 -2.0
Net inward foreign direct investment (FDI)
(million euro)
4) 112.0 156.9 344.6 117.3 263.8 278.0
Foreign direct investment (FDI) abroad (million
euro)
4) 0.1 3.6 -0.2 -6.1 -11.6 -15.7
of which FDI of the reporting economy in the EU-
28 countries (million euro)
: : : : : :
Foreign direct investment (FDI) in the reporting
economy (million euro)
4) 112.1 160.5b 344.4 111.2 252.2 262.3
of which FDI of the EU-28 countries in the
reporting economy (million euro)
4) 5) : 135.6 224.4 117.1 226.7 88.9
**Net international investment position, relative
to GDP (%)
4) : -51.1 -52.6 -55.1 -56.2 -56.0
Year on year rate of change in gross inflow of
remittances (in national currency) from migrant
workers (%)
4) 6) 29.1 5.4 -0.7 1.6 -3.4 6.4
Public finance Note 2002 2010 2011 2012 2013 2014
***General government deficit / surplus, relative
to GDP (%)
: -2.4 -2.5 -3.8 -3.9 -4.2
***General government gross debt relative to
GDP (%)
40.5 24.1 27.7 33.7 34.2 38.2
Total government revenues, as a percentage of
GDP (%)
: 30.2 29.5 29.6 28 27.8
Total government expenditure, as a percentage
of GDP (%)
: 32.6 32.0 33.4 31.9 32.0
Financial indicators Note 2002 2010 2011 2012 2013 2014
Gross foreign debt of the whole economy,
relative to GDP (%)
4) 7) 39.3 57.8b 64.2 68.2 64.3 69.8p
Gross foreign debt of the whole economy,
relative to total exports (%)
4) 7) 150.5 150.5b 140.8 153.3 148.7 146.8
Money supply: M1 (banknotes, coins, overnight
deposits, million euro)
8) 432 933b 997 1 072 1 138 1 391
Money supply: M2 (M1 plus deposits with
maturity up to two years, million euro)
8) 1 052 3 277b 3 523 3 540 3 545 3 801
Money supply: M3 (M2 plus marketable
instruments, million euro)
8) 1 141 3 781b 4 147 4 330 4 558 5 040
Total credit by monetary financial institutions to
residents (consolidated) (million euro)
657 3 102b 3 367 3 551 3 779 4 157
Interest rates: day-to-day money rate, per
annum (%)
9) 11.94 3.78b 2.17 2.10 1.86 1.79
Lending interest rate (one year), per annum (%) 10) 23.00 5.50 5.50 4.23 3.75 3.75
Deposit interest rate (one year), per annum (%) 10)
11)
: : : 1.00 0.75 0.50
Euro exchange rates: average of period (1 euro
= … national currency)
60.978 61.515 61.529 61.524 61.566 61.623
Trade-weighted effective exchange rate index
(2005 = 100)
12) 93.3 106.8 107.8 107.9 109.4 112.5
Value of reserve assets (including gold) (million
euro)
10) 770 1 715 2 069 2 193 1 993 2 436
79
External trade in goods Note 2002 2010 2011 2012 2013 2014
Value of imports: all goods, all partners (million
euro)
2 105 4 137 5 053 5 071 4 983 5 485
Value of exports: all goods, all partners (million
euro)
1 178 2 535 3 215 3 124 3 235 3 723
Trade balance: all goods, all partners (million
euro)
-927 -1 602 -1 838 -1 947 -1 748 -1 762
Terms of trade (export price index / import price
index * 100) (number)
13) 106 90 94 101 : :
Share of exports to EU-28 countries in value of
total exports (%)
61.2 65.5 63.5 65.3 72.6 76.6
Share of imports from EU-28 countries in value
of total imports (%)
64.4 55.2 56.3 60.3 62.7 63.5
Demography Note 2002 2010 2011 2012 2013 2014
Crude rate of natural change of population
(natural growth rate): number of births minus
deaths (per thousand inhabitants)
4.8 2.5 1.6 1.7 1.9 :
Infant mortality rate deaths of children under one
year of age (per thousand live births)
10.2 7.6 7.6 9.8 10.2 :
Life expectancy at birth: male (years) 70.6 72.9 73.1 73.0 73.2 :
Life expectancy at birth: female (years) 75.6 77.2 77.2 76.9 77.2 :
Labour market Note 2002 2010 2011 2012 2013 2014
Economic activity rate for persons aged 20–64:
proportion of the population aged 20–64 that is
economically active (%)
: 70.4 70.1 69.6 70.4 70.8
*Employment rate for persons aged 20–64:
proportion of the population aged 20–64 that are
in employment (%)
: 48.1 48.4 48.2 50.3 51.3
Male employment rate for persons aged 20–64
(%)
: 58.4 57.8 57.5 59.7 61.6
Female employment rate for persons aged 20–
64 (%)
: 37.5 38.8 38.7 40.7 40.8
Employment rate for persons aged 55–64:
proportion of the population aged 55–64 that are
in employment (%)
25.8 34.2 35.4 35.4 37.9 38.6
Employment by main sectors
Agriculture, forestry and fisheries (%) : : 18.1u 17.3 18.7 18.0
Industry (%) : : 24.1u 23.6 23.5 23.5
Construction (%) : : 6.2u 6.3 6.9 7.0
Services (%) : : 51.6u 52.7 50.6 51.4
People employed in the public sector as a share
of total employment, persons aged 20–64 (%)
: : : : : :
People employed in the private sector as a
share of total employment, persons aged 20–64
(%)
: : : : : :
Unemployment rate: proportion of the labour
force that is unemployed (%)
31.9 32.0 31.4 31.0 29.0 28.0
Male unemployment rate (%) 31.7 31.9 31.8 31.5 29.0 27.7
Female unemployment rate (%) 32.3 32.2 30.8 30.3 29.0 28.6
Youth unemployment rate: proportion of the
labour force aged 15–24 that is unemployed (%)
58.4 53.7 55.3 53.9 51.9 53.1
Long-term unemployment rate: proportion of the
labour force that has been unemployed for 12
months or more (%)
27.0 26.7 25.9 25.5 23.9 :
Unemployment rate for persons (aged 25–64)
having completed at most lower secondary
education (ISCED 0–2) (%)
: : : : : :
Unemployment rate for persons (aged 25–64)
having completed tertiary education (ISCED 5 &
6) (%)
: : : : : :
80
Social cohesion Note 2002 2010 2011 2012 2013 2014
Average nominal monthly wages and salaries
(national currency)
11 279 20 553 20 847 20 902 21 145 :
Index of real wages and salaries (index of
nominal wages and salaries divided by the
inflation index) (2000 = 100)
14) 103.0 160.8b 157.0 152.3 : :
GINI coefficient — see definitions : 40.9 38.5 38.8 37.0 :
Poverty gap : : : 43.1 39.0 :
*Early leavers from education and training:
proportion of the population aged 18–24 with at
most lower secondary education who are not in
further education or training (%)
: 15.5 13.5 11.7 11.4 12.5
Standard of living Note 2002 2010 2011 2012 2013 2014
Number of passenger cars relative to population
size (number per thousand population)
150.9 151.1 152.2 163.5 168.2 179.8
Number of mobile phone subscriptions relative
to population size (number per thousand
population)
179.7 1 098.2 1 104.9e 1 084.6 1 083.9 :
Infrastructure Note 2002 2010 2011 2012 2013 2014
Density of railway network (lines in operation per
thousand km²)
27 27 27 27 27 27
Length of motorways (kilometres) 208 251 259 259 259 259
Innovation and research Note 2002 2010 2011 2012 2013 2014
Public expenditure on education relative to GDP
(%)
3.4 3.7 3.5 4.0p : :
*Gross domestic expenditure on R&D relative to
GDP (%)
0.24 0.22 0.22 0.33 0.44p :
Percentage of households who have internet
access at home (%)
: 46.0 55.0 58.3 65.1 68.3
Environment Note 2002 2010 2011 2012 2013 2014
Energy intensity of the economy (kg of oil
equivalent per 1 000 euro GDP at 2005 constant
prices)
3) 589.5 493.5 521.6s 502.7p 453.9s :
Electricity generated from renewable sources
relative to gross electricity consumption (%)
11.0 28.0 15.2 11.7 18.7p :
Road share of inland freight transport (based on
tonne-km) (%)
15) 91.7 89.0b 91.8 93.2 92.4 92.4
Energy Note 2002 2010 2011 2012 2013 2014
Primary production of all energy products
(thousand TOE)
1 577 1 616 1 736 1 525 1 373p :
Primary production of crude oil (thousand TOE) 0 0 0 0 : :
Primary production of hard coal and lignite
(thousand TOE)
1 356 1 194 1 410 1 246 1 069p :
Primary production of natural gas (thousand
TOE)
0 0 0 0 0 :
Net imports of all energy products (thousand
TOE)
1 486 1 271 1 435 1 453 1 172p :
Gross inland energy consumption (thousand
TOE)
2 892 2 879 3 131 2 976 2 722p :
Electricity generation (thousand GWh) 6.1 7.3 6.8 6.3 6.1 :
81
Agriculture Note 2002 2010 2011 2012 2013 2014
Agricultural production volume index of goods
and services (at producer prices) (previous year
= 100)
97.5 107.7 96.8 94.7 103.0p :
Utilised agricultural area (thousand hectares) 1 316 1 121 1 120 1 267 1 260 1 263
Livestock numbers: live bovine animals
(thousand heads, end of period)
259 260 265 251 238 242
Livestock numbers: live swine (thousand heads,
end of period)
196 191 197 177 167 165
Livestock numbers: live sheep and live goats
(thousand heads, end of period)
1 234 854 839 796 807 822
Production and utilisation of milk on the farm
(total whole milk) (thousand tonnes)
198 347 376 350 381 387
Harvested crop production: cereals (including
rice) (thousand tonnes)
645 541 555 460 562 :
Harvested crop production: sugar beet
(thousand tonnes)
44 0 0 0 0 0
Harvested crop production: vegetables
(thousand tonnes)
678 887 845 704 702 778
: = not available
b = break in series
e = estimated value
p = provisional
s = Eurostat estimate
u = low reliability
* = Europe 2020 indicator
** = Macroeconomic Imbalance Procedure (MIP) indicator
*** = The government deficit and debt data of enlargement countries are published on an "as is" basis and without any
assurance as regards their quality and adherence to ESA rules.
Footnotes:
1) Based on ESA 2010.
2) Source: Eurostat.
3) Excluding NACE Rev. 2 Sections A, O, T, U and Class 64.20.
4) Based on the balance of payments manual 6th edition.
5) Data on FDI flows by countries are produced only for the categories Equity capital and the Loans component of Other
capital.
6) Calculation based on data in euro.
7) 2002: partial data coverage.
8) 2002: excluding data for savings houses.
9) The interest rates are calculated as weighted averages. Data cover bilateral over-night transactions.
10) End of year (31 December).
11) In 2012, the National Bank of the Republic of Macedonia introduced two deposit instruments for the banks — overnight and 7
day deposit. At the end of year the rate for overnight deposits was 1% and for 7 day deposits was 2%.
12) NEER (nominal effective exchange rate).
13) Index (previous year = 100) of the ratio of Paasche unit value indices.
14) Break in series caused by the introduction of a new concept of gross income.
15) Break in series caused by inclusion of pipeline transport and transport for own account.