World Bank: without reforms growth falls to 2.4% a year, and by 2050 Macedonia reaches only 55% of average EU income

The World Bank presented its report on growth and jobs in Skopje, and the message is an uncomfortable one: Macedonia made a big leap after independence, and then stopped. In less than two decades the country moved from lower- to upper-middle income, but for the past 17 years it has stayed stuck on that plateau.

If nothing changes, average annual growth will slow to 2.4% through 2050. At that pace, by the middle of the century Macedonia would reach only 55% of average EU income. A comprehensive reform package could lift growth to 3.8%, create 53,000 jobs for people who are currently outside the labour market, and improve wages and conditions for another 196,000 workers.

The neighbours are closing the gap faster

The regional comparison is the most painful number. Over the past decade Albania, Serbia and Montenegro narrowed their income gap with the EU by seven to ten percentage points. Macedonia - by just four, to around 42% of the Union's average GDP per capita.

According to the World Bank, the current growth model is hitting its limits: private consumption, low-value-added foreign investment with high imports, and exports concentrated on a small number of markets and products. The report lists three structural weaknesses: low productivity and low investment; distorted markets with weak competition; and human capital that is underused, shrinking and increasingly expensive.

The people who aren't there

Women's participation in the labour market is 19 percentage points lower than men's. 24% of young people are neither working nor in education or training. About 22% of employees are overqualified for the job they do. There is real success too: unemployment, according to senior economist Sanja Madzarevic-Sujster, is now around 11%, compared with around 35% two decades ago, and poverty has been cut to almost a third.

Prime Minister Hristijan Mickoski called the report a good basis for reforms and pointed out that over the past 27 months average growth has been above 3.5%, higher than in the EU. But he himself warned of a number that sounds worse than any report: today there are 709,000 registered employees, growth of five percent needs at least 800,000, and in 15 to 20 years, he fears, the number could fall below 500,000.

The World Bank and the government are looking at the same hole - the people who aren't there. The difference is the tone: the bank talks about the risk of stagnation, the government about stability. If the neighbours can close the gap with the EU faster, what is holding Macedonia back - and who is going to carry out the reforms everyone is now applauding?