The new increase in the minimum wage in Macedonia as a legal obligation can affect the increase in youth unemployment, warns the International Monetary Fund (IMF) in a separate analysis of the minimum wage in the country. It states that Macedonia can pay a high price from further ad hoc increase in the legally stipulated minimum wage, and this is supported by a separate study on the impact of such measures on the workforce.

The IMF suggests caution in a large percentage of the gray economy in the business environment and argues that in this way informality can be encouraged additionally.

“Authorities need to be cautious with an additional ad hoc increase in the minimum wage. Despite the recent favorable impact on minimum earnings, the minimum wage in Macedonia is on a critical threshold, over which further increases may be associated with adverse effects on the employment of young and unskilled workers,” the analysis says.

According to the IMF study, in several countries in Central and Eastern Europe, an additional 10 per cent increase in minimum wage is reflected by a decline in employment among young people of two per cent.