At the core of SME competitiveness is the knowledge and skills of the workforce. This cluster examines how these are developed across the lifecycle, starting with how education systems foster entrepreneurial skills and align practical training with SME needs. It then considers how SMEs access relevant skills, leveraging skills intelligence, upskilling and reskilling, and empowering women entrepreneurs. It also explores the role of the social economy and support for social enterprise development.
SME Policy Index for Western Balkans and Türkiye 2026 – Economy Profile for North Macedonia
Abstract
The world of work is in the midst of sweeping change, shaped by deep structural shifts across economies and societies. The twin forces of digitalisation and the green transition coupled with demographic change are altering business models and the skill profiles they demand. In North Macedonia, as in many other economies across the globe, small and medium-sized enterprises (SMEs) stand at the centre of this transition. Building resilience begins in education: schools and training providers must move beyond narrow subject learning to develop transversal abilities – such as adaptability, critical thinking and teamwork – while embedding stronger elements of practical, experience-based learning provision.
Yet, the pace of transformation in labour markets is moving faster than education systems can adjust, and early warning signs are already visible. Basic learning outcomes are under pressure: the latest Programme for International Student Assessment (PISA) results for North Macedonia show declines across all three areas, with 66% of students classified as low performers in mathematics and 74% in reading (compared with OECD averages of 31% and 26%, respectively) (OECD, 2023[1]). At the same time, approximately 28% of businesses in North Macedonia report that the skills taught in the education system do not meet the needs of their company (RCC, 2023[2]). For SMEs in North Macedonia to remain resilient and competitive, education and training systems must not only raise the quality of learning but also become more agile, ensuring that future graduates possess the resilience and versatility demanded by an evolving world of work.
Accordingly, this section considers how the education system equips learners with entrepreneurial capabilities and how education and training pathways can connect more effectively with SMEs to support labour market entry and firm-level skills needs.
5.1.1. Fostering entrepreneurial skills and mindsets through education
Within this broader transformation, nurturing entrepreneurial skills and mindsets among students is essential, especially as global trends indicate a growing demand for these skills, which are projected to increase by 32% in Europe alone by 2030 compared to 2016 (European Commission, 2024[3]). In this context, North Macedonia stands out for the strong entrepreneurial aspirations of its youth: over half of students (50.3%) report wanting to start their own business within five years of graduation, a share that surpasses the global average (Tomovska Misoska et al., 2022[4]).
Several policy frameworks in North Macedonia address entrepreneurial learning (Table 5.1). Entrepreneurial skills are recognised across key strategies in education, innovation and SME development, with an emphasis placed on their importance at all levels of education, reflecting a lifelong learning perspective. Nevertheless, this represents a shift from a previously dedicated, standalone approach to a more cross-sectoral one following the expiration of the Strategy for Entrepreneurial Learning 2014-2020, which has not been followed by a new strategy and for which no replacement is currently planned.
Sources: Government of North Macedonia (2024[5]); North Macedonia Ministry of Education and Science (2023[6]; 2025[7]); Ministry of Economy and Labour of North Macedonia (2025[8]); Ministry of Education and Science of North Macedonia and Bureau of Education Development (2025[9]); adapted from information provided by the government of North Macedonia during the assessment period.
Policy-level emphasis on entrepreneurial learning is reflected in the recognition of entrepreneurship as a cross-curricular competence embedded across the education system. Evidence suggests that introducing entrepreneurial skills at an early stage is particularly effective in building entrepreneurship-related human capital (Gorenc et al., 2023[10]). In line with this, “Technics, Technology and Entrepreneurship” is defined as one of eight key competences for students in Grades 1-9,1 ensuring that entrepreneurship is integrated across compulsory subjects. The gradual roll-out of the Concept for Primary Education, expected to cover all grades by the 2026/2027 academic year, is further embedding entrepreneurial learning into subjects such as civic education, history and society, technical education and computer science, with adaptations already introduced in six subjects. These early foundations are reinforced through elective financial literacy courses in Grades 4-9 and, at the upper secondary level, through the mandatory subjects “Innovation and Entrepreneurship” and “Business and Entrepreneurship”.
In practice, however, coherence across this progression has become more fragile. While the new SME Strategy calls for expanding entrepreneurial learning, recent curriculum changes have altered how entrepreneurship is embedded in compulsory education at the lower secondary level. The subject “Innovation”, previously positioned as a mandatory ninth-grade course and a core component of the entrepreneurial learning progression introduced in 2015, has been reclassified as an elective. Under the revised framework, students may choose the subject in Grades 7 and 8 in the 2025/2026 school year, and in Grades 7-9 from 2026/2027 onwards, subject to school-level offerings and student (Ministry of Education and Science of North Macedonia, 2024[11]). Although this change increases flexibility, it weakens the guaranteed continuity that the original progression model was designed to ensure (i.e. a cumulative pathway). As a result, uptake risks becoming uneven across schools and cohorts, fragmenting the development of entrepreneurial competences and weakening alignment between strategic policy objectives and curriculum implementation.
While the classroom-based instruction2 provides a well-rounded theoretical foundation, opportunities for practical entrepreneurial experiences remain uneven. Recent curriculum reforms, developed in co‑operation with private sector representatives, have increased the share of practical training for students. However, for most primary and secondary students, exposure to entrepreneurship and the world of work still relies largely on extracurricular activities and short company visits. This reliance on extracurricular provision constrains participation to a self-selected group of students, depends heavily on school-level initiative and available resources and limits continuity in skill development over time. The National Development Strategy 2024-2044 recognises this gap by envisaging mandatory practical training in secondary education (Government of North Macedonia, 2024[5]), although implementation is currently confined to vocational education and training (VET). Initiatives such as Junior Achievement are open to general high school and VET students, but their exclusively extracurricular nature and relatively modest scale, compared with programmes in other Western Balkan and Türkiye (WBT) economies, mean that their impact remains uneven and difficult to mainstream within the education system. Smaller innovative initiatives such as the Green Business Challenge (Box 5.1), which combine entrepreneurial learning with green innovation, are growing in reach but still not yet available to high numbers of students.
The Best Business Concept for Green Innovation is a national competition that challenges secondary school students, supported by their teachers, to develop practical and innovative solutions to real-world environmental challenges. Established nearly two decades ago, the initiative originally targeted university students. It was later expanded to high schools and now reaches secondary classrooms across North Macedonia. Each year, more than 35 green business ideas are submitted, engaging around 100 students and 50 teacher-mentors.
Students work in teams with their teachers to co-create business concepts that address environmental and sustainability challenges. Beyond serving as an experiential learning activity, the competition functions as a launchpad for future green entrepreneurs. Participants benefit from entrepreneurship training and engagement with industry partners, while teacher-mentors receive intensive training that strengthens their capacity to support hands-on student projects and builds wider pedagogical expertise within the education system. The programme culminates in live pitches delivered before a national expert jury at an annual event at the end of the competition.
The initiative directly contributes to several strategic priorities: fostering entrepreneurial mindsets among young people, developing green skills aligned with the transition to a sustainable economy, and strengthening collaboration between education providers and industry. In doing so, it enhances the employability and entrepreneurial readiness of vocational education and training students and supports smoother transitions into the labour market.
The competition is led by the National Centre for Development of Innovation and Entrepreneurial Learning in partnership with the Centre of Vocational Excellence in Green Innovation and the Faculty of Mechanical Engineering at Ss. Cyril and Methodius University in Skopje. It was also recognised as one of five finalists for the European Training Foundation’s Green Skills Award 2025.
Source: ETF (2025[12]).
Pedagogical support for entrepreneurship education constitutes another bottleneck. There is currently no evidence of system-level training available to all teachers to support them in implementing entrepreneurship education. The national Programme for the Professional Development of Teachers for 2025 does not include any training dedicated to entrepreneurship education (Ministry of Education and Science of North Macedonia, 2025[13]). Instead, provision is organised by the Bureau for Development of Education primarily on demand from schools, which can be interpreted as a form of responsive, demand-driven delivery. However, in the absence of system-level requirements or a structured training offer available to all teachers, reliance on school-initiated requests risks uneven uptake and fragmented coverage.
Moreover, existing initiatives primarily target teachers of specialised subjects such as “Business and Entrepreneurship” or “Innovation and Entrepreneurship”,3 leaving those expected to integrate entrepreneurial competences across curricula without adequate support. These constraints are compounded by teachers’ limited exposure to industry and real-world business practices, which further reduces their confidence and ability to translate entrepreneurial concepts into practical, applied learning across subjects. While the SME Strategy foresees more structured support, including additional focused training, tools and teaching methodologies for teachers of business-related subjects, it does not extend to all teachers, thus falling short of providing comprehensive, system-wide capacity-building.
Fully harnessing the benefits of entrepreneurial learning requires ensuring that all students, particularly girls, are equally encouraged and empowered to participate. In this regard, North Macedonia is one of the region’s top performers: in 2023, 51.9% of tertiary education graduates in science, technology, engineering and mathematics (STEM) fields were women – nearly 20 percentage points higher than the EU average (33.5%) and 7 percentage points higher than the WBT average (45.0%) (Eurostat, 2025[14]).4 Results from PISA 2022 show that girls significantly outperform boys in STEM-related subjects: specifically, girls outperform boys in mathematics by 6 points (compared to boys outperforming girls by an average of 9 points among OECD member countries) and by 15 points in science (versus the OECD average of 0) (OECD, 2023[15]). Together with the high share of female STEM graduates, these figures reflect both the capacity and the interest of girls to pursue careers in STEM and ICT.
Policies and initiatives have sought to consolidate this advantage and reduce gender stereotypes in career choices. School-based career guidance5 challenges traditional divides between “male” and “female” professions,6 while targeted programmes reinforce participation. For instance, the Global Engineer Girls initiative, supported by the Ministry of Education and Science, provides scholarships to women engineering students (for more details, see Box 5.2) (BalkanEngineer, 2024[16]). Non-governmental actors also play a role: the non-governmental organisation Macedonia2025 runs several programmes, including “STEM it like a Girl” and “STEM≡quality”, to promote STEM education and career aspirations among girl students (Macedonia2025, 2023[17]; 2023[18]).
Launched in 2022 by Limak Group in partnership with the Ministry of Education and Science and the United Nations Development Programme, Global Engineer Girls North Macedonia represents a targeted public-private initiative to address persistent gender imbalances in engineering professions. Adapted from an existing programme in Türkiye, the programme aims to decrease gender inequality in the engineering profession and support girls who have chosen engineering as their career path.
The initiative operates across six public universities and provides merit-based scholarships to female students in priority engineering fields, including civil, electrical, mechanical and computer engineering. While the scale remains modest – 20 scholarships awarded annually from nearly 180 applicants in 2024, compared to more than 3 000 women enrolled in engineering programmes nationwide – the initiative’s design goes beyond financial support. By combining scholarships with structured mentoring, skills development and paid internship placements, the programme addresses multiple barriers to women’s progression simultaneously.
A key strength lies in its integrated support model. Participants are matched with senior professionals and business leaders from the engineering sector, strengthening exposure to role models and professional networks in male-dominated fields. Complementary training in soft skills, digital competencies and career development helps bridge gaps often cited by employers, while internships within Limak Group’s construction, energy and infrastructure operations provide early workplace exposure and smoother school-to-work transitions.
While limited in scale, the initiative offers a replicable model for engaging large employers in addressing gender gaps in science, technology, engineering and mathematics fields and could be scaled or adapted through broader public-private partnerships to increase impact across the higher education system.
Source: GEG North Macedonia (n.d.[19]).
5.1.2. Bridging the divide between education and training systems and SMEs
Equipping students with relevant skills is essential to support smooth school-to-work transitions and to ensure alignment with labour market demands. In North Macedonia, the share of young people not in employment, education or training (NEETs) declined from 24.7% in 2015 to 18.5% in 2024, indicating progress in supporting youth labour market integration (Figure 5.1). However, while this was one of the biggest decreases observed in the WBT region, it is still only slightly below the regional average (19.2% in 2024) and more than double that of the European Union (9.1%), signalling scope for further progress.
Percentage of 15-24 year-olds
Note: Gender-disaggregated data are only available for 2015-2020.
Sources: Eurostat (2025[20]); additional data provided by MAKSTAT.
The observed decrease in the youth NEET rate in recent years, particularly since 2019, coincides with the introduction and subsequent nationwide roll-out of the Youth Guarantee scheme. North Macedonia was the first economy in the Western Balkans to pilot the scheme in 2018, initially in three municipalities, before expanding it nationally in 2019. Since then, more than 110 000 young people have participated in the scheme, underscoring the scale and growing relevance of the programme (ETF, 2024[21]). The 2023-2026 Implementation Plan further signals policy continuity, earmarking MKD 3.81 billion (EUR 55.7 million) to finance activities aimed at raising awareness, improving youth engagement, and enhancing the quality and scope of support. Planned measures include job search assistance and employment mediation, while the institutional framework for career counselling has already been substantially strengthened in recent years.7
Despite these achievements, challenges remain. During the 2018 pilot phase, 41.9% of the 5 200 participants received an employment or traineeship offer within four months; once the programme was rolled out nationwide, this share declined to 36.8% (ILO, 2022[22]). While outcomes have improved gradually since then, reaching a 39.9% success rate in 2024,8 performance continues to be constrained by limited human and financial resources within the Employment Services Agency (ESA), restricting its ability to deliver intensive, individualised support at scale. At the same time, the programme has struggled to reach the hardest to engage NEETs, who remain disproportionately outside its scope. Concerns about the quality and sustainability of offers are further underscored by evidence that around 20% of beneficiaries subsequently returned to the system,9 indicating that initial placements do not always translate into durable labour market integration. Early gains should also be interpreted with caution, as the pilot initially focused on municipalities with the highest NEET concentrations, where improvements were easier to achieve (Pavlovaite, 2023[23]).
Parallel efforts are underway to strengthen outcomes within the formal education system, particularly through expanding work-based learning. Employers consistently highlight dissatisfaction with the skills of vocational education and training (VET) graduates, with only 26% rating their practical skills as adequate to meet labour market needs (IIEP-UNESCO, 2024[24]). The National Development Strategy similarly identifies the lack of hands-on training in secondary education as a key factor behind weak labour market outcomes. Recent reforms seek to address this gap, including increasing the number of practical training hours in VET curricula (from 4 hours to 8 hours per week in year 3, and from 6 hours to 10 hours in year 4) as well as by expanding the minimum number of hours required for ferial (summer) practice (ETF, 2025[25]).10
Despite these measures, the overall share of practical training remains limited compared to total weekly instruction time during the school year, which averages 31 hours in a four-year VET programme.11 Practical training therefore still accounts for less than one-third of total instruction time. Consistent with this, an assessment by the European Training Foundation found that the average ratio of WBL to total instruction time was 26-28% (ETF, 2025[25]). This remains well below international good practice, namely the 50% threshold stipulated by the European Framework for Quality and Effective Apprenticeships.
Further increases in WBL time also raise important feasibility considerations for employers, particularly regarding student compensation. Until 2025, it was not mandatory to remunerate students; extending time spent in enterprises would imply higher wage costs. The willingness and capacity of firms, especially SMEs, to absorb these additional costs will, therefore, be a critical factor in determining whether expanded WBL can be implemented effectively and at scale. In this context, regional VET centres have the potential to play a complementary role by easing implementation constraints faced by SMEs, particularly in sectors where individual firms lack the capacity to deliver the full range of practical training required. At the time of writing, seven of these centres have been made operational at the national level.12
Building on this shift, dual VET has emerged as a more systemic solution to embed practical training within company settings.13 Participation expanding steadily in recent years: in the 2025/2026 school year, approximately 33% of all VET students were enrolled in dual programmes, signalling growing uptake and institutional consolidation of this pathway.14 The new Law on Vocational Education and Training, adopted in December 2024, establishes a comprehensive legal framework defining the roles and responsibilities of employers, schools and students, as well as the contractual, organisational and remuneration arrangements underpinning dual provision. In May 2025, the Ministry of Education and Science complemented this legal framework by publishing the Concept for Vocational Education, which articulates the strategic rationale and implementation priorities for translating the provisions of the law into practice. The Concept for Vocational Education supports operationalisation by clarifying the key elements of implementation, such as employer eligibility for offering dual placements and mentor certification (Table 5.2). However, important procedural aspects remain dispersed across separate laws and guidelines rather than consolidated in a single reference framework. This fragmentation risks creating uncertainty for employers and may act as a barrier to broader uptake and scaling of dual VET.
To encourage uptake, the Ministry of Education and Science announced in June 2025 that a record number of scholarships would be awarded for dual education in the 2025/2026 school year, providing a monthly stipend of MKD 3 500 (EUR 57) for nine months to 1 570 students (Gazeta Express, 2025[26]; 2025[27]). In addition, targeted scholarships have been allocated within vocational education, including 300 awards for students in four-year programmes linked to in-demand qualifications and 150 awards for students in three-year programmes, further strengthening financial support mechanisms in VET (Ministry of Education and Science of North Macedonia, 2025[28]).. However, while support for students has expanded, there are no comparable planned or ongoing measures to introduce financial incentives for employers offering placements. Even so, approximately 700 companies are providing placements in the 2025/2026 school year, marking a notable increase compared with the 2020/2021 school year, when only 16 companies participated (Table 5.3).15
Source: Adapted from information provided by the government of North Macedonia during the assessment period.
The way forward
Develop a coherent Entrepreneurship Learning Progression Framework across the education system by formalising it as an implementation tool within existing strategies. The framework should update and operationalise the 2015 Entrepreneurship Learning Progression Matrix and be adopted as a cross-cutting reference document under the SME Strategy 2025-2030 and the Education Strategy 2026-2032, guiding curriculum revisions, learning outcomes and assessment standards related to entrepreneurship. It should clearly map how entrepreneurial competences are delivered through dedicated innovation and entrepreneurship subjects and reinforced as a transversal competence across core curricula at each education level. Integration into existing strategies should be ensured by embedding the framework in curriculum reform guidelines, teacher competency standards, and pre-service and in-service teacher training programmes, rather than creating a parallel policy instrument. Oversight by the planned Co‑ordination Body for Entrepreneurial Education, as foreseen in the SME Strategy, would support alignment across institutions and ensure coherent implementation.
Increase access to structured practical entrepreneurial experiences beyond extracurricular provision. To ensure broader and more equitable participation, practical entrepreneurial learning should be more systematically embedded within compulsory education, particularly in general secondary pathways where exposure remains limited. This could involve integrating mandatory project-based assignments linked to real-world challenge (e.g. local SME case studies, student-led mini-enterprises or problem-solving projects aligned with green and digital priorities) into existing subjects. Leveraging partnerships with local businesses, chambers of commerce and municipalities could support delivery, while offering SMEs opportunities to engage with young people in ways that can stimulate innovation and creativity within firms. Clear national guidance and examples of good practice would help move such activities from optional extracurricular initiatives to a regular component of classroom-based learning.
Strengthen and expand the existing online presence of the Youth Guarantee into a comprehensive, user-centred portal. While information on the Youth Guarantee is currently available through the ESA’s website, this is limited to a single page providing a high-level overview of the initiative, with minimal practical guidance for users. Building on this foundation, the authorities could develop the page into a full-fledged portal that consolidates detailed information on available measures, eligibility criteria, registration procedures, timelines and points of contact. Drawing on good practice from other countries like Portugal (Box 5.3), an expanded platform could also host guidance for employers and training providers, promote available opportunities, and improve co-ordination between youth employment services and SME workforce needs, thereby enhancing outreach, transparency and uptake, particularly among NEETs.
Portugal developed a dedicated Youth Guarantee portal (Garantia Jovem) which was launched in 2014. The portal serves as a centralised digital entry point for young people up to the age of 29 who are not in employment, education or training (NEET). The portal allows young people to register directly for the Youth Guarantee, access clear information on available measures and services, and initiate contact with public employment services even if they are not already registered with the national employment agency (IEFP). Young people who submit a request through the portal are contacted by email or phone to begin a personalised guidance and activation process, reducing administrative barriers and improving early outreach.
Beyond registration, the portal functions as a regularly updated information hub, consolidating youth employment, training and skills programmes offered across public institutions. Content is reviewed on a monthly basis and includes traineeships, apprenticeships, digital skills programmes and employment incentives, helping users navigate a complex policy landscape through a single interface. Importantly, the platform is not limited to young people: employers, training providers, social partners and municipalities can also register and access a secure back-end workspace that supports co-ordination, information-sharing and service delivery across institutions.
Available data indicate strong reach and impact. By 2021, the Youth Guarantee in Portugal had reached more than 1.3 million young people aged 15-24, with around 70% of participants hired following internships or traineeships under the Employment Stimulus initiative. This suggests that the portal has played a meaningful role in linking young people to concrete labour market opportunities and in improving transitions into employment.
In sum, Portugal’s experience illustrates how a well-designed Youth Guarantee portal can move beyond basic information provision to act as an active co-ordination and delivery tool. For North Macedonia, developing a more comprehensive, interactive portal could improve outreach to NEETs, reduce entry barriers for young people not registered with employment services, and strengthen co-ordination with employers and training providers, particularly SMEs.
Sources: Public Employment Service of Portugal (2026[29]); Government of Portugal (2021[30]).
Gradually increase the duration and intensity of WBL within VET programmes, with a clear medium-term objective of raising the share of WBL beyond the current one-third threshold. This could include extending the number of days per week spent in enterprises in upper-secondary VET, lengthening the duration of company placements across school years and ensuring more consistent exposure to WBL throughout the programme rather than concentrating it in later stages. Any expansion should be phased and aligned with sector-specific capacity, with close monitoring of learning outcomes and employer engagement to ensure quality and feasibility for SMEs.
Expand collaborative and pooled WBL models by systematically leveraging regional VET centres. To address capacity constraints faced by SMEs that cannot deliver the full range of required skills in-house, policy guidance should explicitly promote collaborative training arrangements. Regional VET centres could be positioned as hubs for shared practical training, enabling groups of SMEs to pool resources, rotate students across firms and combine enterprise-based learning with centre-based training. This would help increase effective WBL intensity without placing disproportionate demands on individual firms and could facilitate broader participation in dual VET.
Building a skilled workforce for SMEs in North Macedonia starts with education but must extend far beyond it. Rapid and complex changes in the labour market, particularly in the skills and occupations in demand, require workers to continuously adapt, often taking on new roles or significantly transforming their existing ones. Global projections indicate that by 2027, around 60% of workers will need to engage in some form of training to keep up with accelerating technological change (World Economic Forum, 2023[31]). This underscores the critical importance of lifelong upskilling and reskilling to sustain employability, productivity and resilience among SMEs, while strengthening the economy’s capacity for innovation and competitiveness to fully leverage opportunities in the EU Single Market and beyond.
Persistent skills imbalances are becoming increasingly entrenched in North Macedonia’s labour market, with employees and SMEs reporting significant gaps in the availability and quality of relevant skills. Over 40% of workers report substantial unmet learning needs (Badescu, 2023[32]). Employers, meanwhile, point to labour shortages rather than labour quality as the main constraint to growth, identifying workforce availability as one of the most pressing challenges in 2023 (RCC, 2023[2]). Reflecting this, around 70% of companies report difficulties in finding qualified employees (Net4VET, 2025[33]). Thus, to support SME competitiveness and growth, North Macedonia’s skill systems must become more responsive and agile.
This section focuses on improving the responsiveness and inclusiveness of the SME skills ecosystem through four interrelated dimensions: 1) more effective skills intelligence; 2) stronger adult learning provision; 3) targeted upskilling to manage the impacts of AI; and 4) dedicated measures to support women entrepreneurs.
5.2.1. Understanding and anticipating skills needs
Responding to labour market change is not enough to keep pace with its rapid evolution; what is needed is the capacity to anticipate current skills shortages and predict how demand will develop in the years ahead. At the heart of this effort lies skills intelligence, which helps align education and training provision with the realities of the economy. By informing recruitment choices, shaping training initiatives and supporting workers and SMEs in adapting to technological and structural shifts, it ensures a closer match between supply and demand. Experience across the European Union shows that when applied systematically, skills intelligence is highly effective: it allows for more precise identification of labour market gaps, guides the distribution of adult education funding and underpins reforms in career guidance systems (Cedefop, 2024[34]).16
Skills intelligence remains underdeveloped in North Macedonia despite growing formal policy recognition. Existing efforts focus primarily on employer and SME needs assessments (Table 5.4), which help identify immediate skills gaps but lack forward-looking components. As a result, reforms tend to be reactive and risk becoming quickly outdated amid rapidly evolving labour market and technological demands.
This gap has been recognised at the strategic level: both the SMART/MK 2030 Strategy and the draft Education Strategy 2026-2032 include commitments to introduce skills forecasting, including the identification of emerging skills and those at risk of becoming obsolete. To date, however, these commitments have not been translated into concrete institutional arrangements, methodologies or operational tools. If implemented, they would provide an opportunity for North Macedonia to move towards a more balanced skills intelligence system that combines short-term skills assessment with systematic skills anticipation.
Note: S3: Smart Specialisation Strategy.
Sources: Ministry of Labour and Social Policy of North Macedonia (2021[35]); Ministry of Education and Science of North Macedonia (2023[6]); Ministry of Digital Transformation of of North Macedonia (2025[36]); information provided by the government of North Macedonia during the assessment period.
At present, skills assessment in North Macedonia remains heavily dependent on employer surveys conducted by the ESA. These surveys provide valuable insights into immediate labour market needs, highlighting sectors and skills in high demand. For example, the 2023 survey found that manufacturing alone is expected to account for over half of planned new hires (7 642 jobs, or 51.2%), followed by wholesale and retail trade (1 667 jobs, or 11.2%) (ESA, 2024[37]). Employers seeking candidates with a higher education particularly emphasised foreign language proficiency, advanced digital competences with certification where possible and specialised IT skills.
However, this employer survey-centric approach is not complemented by systematic training needs assessments. No such assessments are conducted on a regular or institutionalised basis by national authorities. Where such assessments do exist, they are typically carried out on an ad hoc basis within donor-funded projects led by international partners17 and remain weakly connected to the national skills intelligence architecture.
This imbalance limits the effectiveness of skills intelligence. Employer surveys are mainly used to inform the design of active labour market programmes for the unemployed which, while important, provide only a partial view of skills needs. The focus on labour market entry overlooks the upskilling and reskilling requirements of the existing workforce, particularly SMEs, whose ability to adapt to technological and organisational change is critical for productivity and competitiveness. Moreover, there is little evidence that employer survey findings systematically feed into adult education or lifelong learning provision.
Additionally, employer surveys are inherently reactive: they capture current demand but do not incorporate forward-looking methodologies, such as participatory forecasting or econometric modelling, to anticipate structural shifts in skills needs. In response, attempts to develop medium- and long-term skills projections have emerged, including donor-funded efforts to forecast sectoral needs. Another example comes with the Just Transition Implementation Plan 2025, which includes several measures for skills forecasting, projecting future skills demand based on market trends, technological developments and regional economic plans to identify the competencies likely to be in demand over the medium to long term (five to ten years) (Ministry of Energy, Mining and Mineral Resources of North Macedonia, 2024[38]). However, none of these initiatives have been institutionalised, and at the time of writing, there is no evidence that the results have been systematically integrated into employment or education strategies, limiting their impact on policy.
Within this context, the establishment of sectoral qualification committees represents an important step towards strengthening the skills intelligence system. As of November 2025, 14 such committees had been established, signalling progress in creating institutional bodies intended to support sector-specific qualification development and maintenance (European Commission, 2025[39]). In principle, such committees are expected to advise on occupational and qualification standards and to support alignment between qualifications and labour market needs. If effectively operationalised, they could also serve as a core skills intelligence mechanism by providing structured, sector-level input from employers and other stakeholders on evolving skills requirements, technological change and emerging occupations. This would complement employer surveys and inform curriculum updates, qualifications design and training priorities.
More broadly, North Macedonia’s demographic outlook underscores the urgency of strengthening skills intelligence. The population has been gradually shrinking, falling from 1.9 million in 2014 to 1.8 million in 2024, while simultaneously ageing: the share of individuals aged 65 and over has increased over the last two decades from 10.6% to 17.2% (Pavlovski et al., 2024[40]; World Bank, 2025[41]). Looking ahead, projections by the United Nations and the State Statistical Office suggest the population could shrink by 4‑9% by 2030, posing significant and sustained challenges to labour market stability (United Nations Population Division, 2024[42]). This shift is driven by in part by persistently low fertility: indeed, in 2023, the economy reported 1.5 births per woman, well below the replacement rate (World Bank, 2025[43]).
Another key pressure stems from sustained high levels of emigration. In 2024, an estimated 535 000 citizens of North Macedonia lived abroad, up from 437 000 in 2015, representing an emigration rate of 24.2% (United Nations Population Division, 2024[44]). While many migrants have lower education levels than the general population, the economy still experiences a significant “brain drain”, with the loss of highly educated personnel estimated to cost 0.8% of GDP annually and overall GDP losses due to emigration ranging between 5.15% and 8.34% (Cvetkoska et al., 2025[45]). The impact on the private sector is already apparent: 58% of businesses report that brain drain constitutes a moderate or major obstacle to their operations (RCC, 2024[46]). In response to growing labour shortages, the government has doubled the annual quota for work permits for foreign workers, from 5 000 in 2023 to 10 000 in 2025, signalling a greater reliance on foreign labour to mitigate immediate skills gaps (European Commission, 2025[39]).
Taken together, these demographic pressures are narrowing the domestic talent pool and shifting the profile of available skills. In this context, robust and forward-looking skills intelligence is essential—not only to anticipate future labour market needs but also to ensure the economy’s long-term competitiveness and capacity to adapt to structural changes.
5.2.2. Addressing skills needs of SMEs through adult education
While skills intelligence is essential for anticipating labour market needs, its real value lies in how effectively it is used to shape adult education programmes. Providing employed and unemployed individuals with access to relevant learning opportunities is critical for fostering continuous reskilling and upskilling. This is particularly important for SMEs, where employees often perform multiple functions and can gain substantially from well-targeted training. However, despite this importance, adult education rates in North Macedonia remain notably low with respect to regional and EU averages: in 2023, the average rate was only 2.8% (compared to 3.7% in the WBT region and 12.8% in the European Union) (Figure 5.2).
Raising this rate is a recognised policy priority. The Smart Specialisation Strategy 2024-2027 sets a target of 5.5% by 2027, effectively requiring participation to double within a few years. Progress to date has been limited: since 2015, the participation rate has increased by just 0.2 percentage points, highlighting persistent challenges in boosting adult engagement and raising questions about the feasibility of achieving the target without a co-ordinated and sustained effort.
Percentage of population aged 25-64 years
Note: Gender-disaggregated data are not available for North Macedonia.
Sources: OECD (2025[47]); additional data from MAKSTAT.
Low participation in adult education occurs against a backdrop of persistent structural challenges in the labour market, highlighting the urgency of upskilling initiatives. In 2024, labour force participation among the working-age population was 66.0%, nearly 10 percentage points below the EU average of 75.3%, while the employment rate stood at 57.8%, compared with 70.8% in the European Union (Eurostat, 2025[48]; 2025[49]; MAKSTAT, 2025[50]).18 Long-term unemployment remains a particular concern: 8.7% of the labour force had been unemployed for more than 12 months, far exceeding the EU average of 1.9%, with roughly 70% of all unemployed individuals in this category (Eurostat, 2024[51]).19
These issues are compounded by persistent skills mismatches. Job creation has not kept pace with labour demand: in 2024, only 9 867 vacancies were recorded, up from 8 357 in 2021, but still far below the 97 603 unemployed (MAKSTAT, 2025[52]). At the same time, many vacancies remain unfilled, particularly among SMEs in sectors such as construction, administrative and support services, and mining/quarrying, reflecting gaps in the skills of available workers (MAKSTAT, 2025[53]). Adult education could help address these mismatches, as unemployment is concentrated among individuals with lower educational attainment: 60% of unemployed workers have only a primary education or less, while just 8% hold tertiary qualifications (ESA, 2024[37]).
In this context, increasing participation in adult learning requires a sequenced approach that reflects the structure of skills gaps faced by SMEs. For a large share of unemployed individuals and SME workers, deficits in basic literacy, numeracy and digital skills remain the primary barrier to labour market participation and firm-level productivity gains. Remedial and second-chance education thus constitute a necessary entry point to adult learning, enabling individuals to meet minimum skill thresholds required for employment and allowing SMEs to build a workforce capable of adopting new technologies and work practices.
Alongside remedial provision, systems for validating non-formal and informal learning can help reduce skills mismatches in SMEs by recognising competences acquired through work experience and on-the-job learning. In this regard, North Macedonia has made efforts to develop a national system for recognition and validation aligned with the European Qualifications Framework; however, the system remains under development and is not yet fully operational.20 Pilot validation initiatives have been launched in selected sectors such as construction, ICT and hospitality but remain at an early stage. As a result, procedures are not yet sufficiently simplified, and awareness among workers and SMEs of the benefits of validation remains limited, constraining take-up and impact.
Building on these foundations, micro-credentials function as a recognition mechanism for short, modular learning aligned with labour market needs. By formally validating skills acquired through brief, often non‑formal training, they offer a flexible way to support rapid upskilling and reskilling in response to changing demand. However, their development remains limited in North Macedonia, as no national approach is in place. Although briefly mentioned in the Adult Education Strategy 2025-2030, the framework does not provide clear guidance on their implementation or governance, meaning micro-credentials are not yet widely available in practice.
More broadly, increased participation in adult learning is essential to ensure SMEs have workers with the skills to navigate the twin transitions. Yet the current state of play reveals significant gaps between the skills needed and those available: for example, looking first at digital skills, only 34.6% of the population possessed at least basic digital competences in 2023, down from 37.1% in 2015 (see Cluster 3) (Eurostat, 2024[54]; 2020[55]). Consistent with this, 36% of individuals report a need to further develop their digital skills, underscoring unmet demand for upskilling and the risk of skills obsolescence (ETF, 2025[56]). This stagnation casts doubt on the feasibility of the National Employment Strategy’s target of raising this share to 45% by 2027. While initiatives such as the ESA’s 2023 digital training for 735 unemployed individuals have been introduced, participation was limited to those under 40 years old and focused on advanced IT skills, potentially deepening disparities between highly skilled workers and the broader population, as well as between younger and older cohorts (ESA, 2024[37]). Planned digital skills vouchers under the Smart Specialisation Strategy offer greater promise, targeting non-formal ICT education for non-ICT professionals with an emphasis on foundational skills, though implementation remains limited.
Sector-specific approaches simultaneously reveal progress and persistent gaps. Targeted upskilling initiatives are emerging in tourism and hospitality, but agriculture, although identified as a key focus area in the Smart Specialisation Strategy, lags behind. In 2024, the sector accounted for 6% of GDP but 9% of employment, reflecting lower average productivity (World Bank, n.d.[57]; n.d.[58]). Low digital literacy among farmers constrains the adoption of innovations such as precision farming, while employers report a mismatch between required skills and available workforce competencies (Kostadinov, 2025[59]; AgriSkills, 2022[60]). Without targeted interventions, significant portions of the workforce risk being excluded from the benefits of digitalisation, slowing sectoral competitiveness.
The need to develop skills for the green transition is increasingly urgent, as structural changes in the labour market are set to reshape job demand and skills requirements. In North Macedonia, approximately 20% of jobs are considered “at risk,” with 12% expected to undergo substantial changes in task content and 8% concentrated in highly polluting sectors sectors (World Bank, 2025[61]; 2025[62]). Workers with lower levels of education are particularly vulnerable, holding a disproportionate share of these at-risk positions. At the same time, the green transition presents notable employment opportunities: projections suggest the creation of 5 000-7 000 new green jobs by 2030, increasing to 10 000 by 2035, largely linked to energy efficiency and renewable energy deployment (see Cluster 2) (UNFCCC, 2023[63]; Kostadinov, 2024[64]). Additional momentum stems from the EU’s Carbon Border Adjustment Mechanism (CBAM), which is expected to accelerate decarbonisation in carbon-intensive industries and increase demand for green, technical and regulatory skills among exporting firms. Survey data reinforce this outlook, identifying energy efficiency, environmental protection and renewable energy as the key sectors driving demand (UNDP and OECD, forthcoming[65]). The planned coal phase-out by 2030 is expected to further intensify the need for skilled technical experts, particularly electrical and mechanical engineers, to support the construction and maintenance of renewable energy infrastructure (Todorović, 2024[66]).
Recognising these challenges and opportunities, the government has outlined measures under the Just Transition Implementation Plan, including a skills gap assessment in coal-dependent regions by mid-2025 and subsequent reskilling programmes21 (Ministry of Energy, Mining and Mineral Resources of North Macedonia, 2024[38]). However, there is currently no evidence of implementation, making it impossible to evaluate the plan’s effectiveness. Moreover, the target of training 150 workers by late 2025 is insufficient given that roughly 20% of the 694 000-strong workforce is at risk, suggesting that current efforts are unlikely to meaningfully support labour mobility or facilitate the broader transition for communities affected by the coal phase-out.
5.2.3. Upskilling to support AI adoption and use
Artificial intelligence (AI) is rapidly transforming skill requirements across industries, with 32% of global professions expected to undergo significant change, making workforce upskilling essential for SMEs to remain competitive (European Commission, 2024[67]). This challenge is even more pronounced in North Macedonia: an estimated 131 000 workers have skills or tasks that exhibit “low complementarity” with AI (i.e. less compatible), making them more susceptible to displacement (World Bank, 2025[68]). This represents roughly one-fifth of the employed population, underscoring the importance of equipping workers with the competencies needed to adapt to AI-driven transformations and seize emerging employment opportunities.
Despite the scale of this challenge, North Macedonia’s policy response remains limited and fragmented. The economy lacks a comprehensive and operational framework to address the workforce implications of AI adoption. While the SMART/MK 2030 strategy acknowledges the importance of retraining, requalification, and digital and AI-related skills development, these commitments have not yet been realised. Similarly, neither the National Employment Strategy 2021-2027 nor the SME Strategy 2025-2030 provides substantive guidance on workforce planning for robotics, automation or AI; in the case of the SME Strategy, AI is mentioned only marginally, primarily as a tool for enhancing productivity rather than as a driver of skills transformation. Authorities are currently working towards the development of a dedicated AI strategy, which could represent an important opportunity to address workforce readiness in a more systematic and forward-looking manner. However, until this strategy is finalised and operationalised, efforts to prepare workers and SMEs for AI-driven change remain largely reactive, increasing the risk that skills mismatches will widen as technological adoption accelerates.
These strategic gaps are reflected most clearly in the limited availability of training opportunities for workers and SMEs. Effective workforce development requires two complementary types of AI-related training: programmes developing specialised AI skills and those equipping the average worker with general competencies to interact with AI, such as digital literacy, analytical thinking and creativity (OECD, 2023[69]).
Currently, few such opportunities exist in North Macedonia, and none are provided by the government. The Action Plan 2025-2027 under the SME Strategy foresees organising at least six AI trainings for SMEs in key sectors,22 reaching at least 100 enterprises by 2027. While this is a positive step, the initiative only reaches a small fraction of the SMEs operating in the economy (numbering more than 5 650, excluding microenterprises), highlighting the nascent stage of AI upskilling efforts (Eurostat, 2025[70]). To fill this gap, several private providers have begun offering relevant training, though evidence on participation rates and the effectiveness of these programmes remains limited (Table 5.5).
Source: Adapted from information provided by the government of North Macedonia during the assessment period.
Looking ahead, as key institutions such as thew new Agency for Innovation, Scientific and Technological Development and Entrepreneurship (INOVA) and the Ministry of Digital Transformation begin developing AI training initiatives, it is vital that programmes be tailored to the specific needs of strategic sectors. Evidence indicates that the skills most vulnerable to AI-driven displacement are largely manual—a particularly pressing concern in North Macedonia, where labour demand remains heavily concentrated in low-skilled, routine roles (OECD, 2023[69]; World Bank, 2025[68]). This combination of high automation exposure and an economy reliant on manual work heightens potential disruption, especially in manufacturing, which accounted for 13% of national GDP in 2024 and depends heavily on routine tasks (World Bank, n.d.[71]).
At the same time, manufacturing presents a clear opportunity for productivity-enhancing adoption of AI and automation. The SMART/MK 2030 Strategy explicitly identifies the application of AI for “smart manufacturing” as a strategic priority, yet this ambition has not yet been translated into operational programmes or concrete implementation measures (Ministry of Digital Transformation of of North Macedonia, 2025[36]). Automation could help alleviate persistent labour shortages: manufacturing reports one of the highest gaps in North Macedonia, with 23% of total job vacancies, particularly for plant and machine operators and assemblers positions (Cvetkoska et al., 2025[45]; MAKSTAT, 2025[52]). These shortages stem not only from a lack of skills but also from difficulties in attracting qualified workers, with lower wages intensifying recruitment challenges (MKD 40 318 [EUR 655] in June 2025 versus a national average of MKD 45 468 [EUR 738]). Thus, by automating repetitive tasks, firms could partially offset workforce constraints and redeploy labour to higher skilled roles (e.g. supervision, programming, quality control), but the full benefits depend on complementary measures to improve the sector’s overall appeal and retention prospects.
Data gaps complicate assessment of the potential impact of automation and the associated need for reskilling. North Macedonia, unlike most WBT economies, does not collect digital skills information disaggregated by age or education level, limiting understanding of where targeted interventions are most needed. This poses a risk that vulnerable groups, such as low-skilled or older workers, may be left behind as technological adoption accelerates.
These challenges are compounded by a near absence of public incentives to support the participation of SMEs’ employees in AI-related training. Apart from free advanced IT courses offered by the ESA, which are valuable but not specifically focused on AI, no mechanisms exist to offset the direct or opportunity costs of participation, despite cost being a major barrier for most adult learners (OECD, 2025[72]). Without financial support, those most at risk, who also tend to have lower rates of engagement in adult learning, are unlikely to participate, limiting their ability to adapt to AI-driven changes and undermining long-term employability and workforce resilience.
5.2.4. Improving talent availability by empowering women entrepreneurs
The underutilisation of women’s entrepreneurial potential continues to hinder North Macedonia’s efforts to foster a highly skilled and inclusive workforce. Women remain under-represented in the labour market: in 2024, their employment rate stood at 49.6%, more than 16 percentage points below that of men (66.0%) and well below the EU average for women (66.2%) (Eurostat, 2025[49]). Moreover, although women constitute 50.4% of the population, they represented only 23.3% of entrepreneurs in 2024, a level that has almost not changed since 2019 when it stood at 23.8% (MAKSTAT, 2025[73]; 2022[74]).
These low and stagnant levels of women entrepreneurship may in part reflect the relatively weak policy framework in place to support women entrepreneurs (Table 5.6). While the expiration of the Strategy for Women Entrepreneurship 2019-2023 could coincide with a transition toward more integrated and comprehensive strategic planning, the SME Strategy 2025-2030 and Reform Agenda 2024-2027 only include a limited number of targeted measures for women entrepreneurs. In the absence of clearly articulated priorities, dedicated implementation mechanisms and measurable targets within this integrated framework, there is a risk that support for women’s entrepreneurship becomes diluted, allowing persistent structural barriers to remain insufficiently addressed.
Sources: Ministry of Economy and Labour of North Macedonia (2025[8]); Government of North Macedonia (2024[75]); adapted from information provided by government of North Macedonia to the OECD during the assessment period.
Gaps in sector-specific strategies further exacerbate these challenges. The Smart Specialisation Strategy mentions women only in relation to employment in high-skill domains (“employed women with advanced degrees”), while the National ICT Strategy 2021-2025 highlights general barriers to women entering the ICT sector but does not propose concrete measures to retain them in growth sectors. This contributes to the “leaky pipeline” phenomenon: although women make up a high proportion of tertiary STEM graduates, many do not transition into corresponding occupations. Consequently, women’s labour market engagement, including entrepreneurship, is concentrated in lower productivity, lower pay activities (Finance Think, 2025[76]). With the exception of manufacturing, women are disproportionately represented in lower value-added sectors such as wholesale and retail trade (17%), health and social work (13%), and education (10%) (Figure 5.3).
Percentage
Notes: “Other services” include 1) arts, entertainment and recreation, 2) accommodation and food service activities and 3) other service activities.
Those sectors that made up less than 2% of total distribution were excluded from this figure.
Source: MAKSTAT (2025[77]).
At the same time, evidence gaps constrain more granular analysis. While the State Statistical Office (MAKSTAT) collects gender-disaggregated data on employed women by sector, comparable data on the sectoral distribution of women entrepreneurs or women-led businesses are not yet systematically collected. This disconnect between labour market and entrepreneurship statistics limits the ability to assess whether women’s educational attainment and employment patterns translate into entrepreneurial activity in higher-value sectors.
Despite limited overall policy support, the government has implemented targeted initiatives to pragmatically support women entrepreneurs, particularly by improving access to finance. Indeed, in one survey, more than half of women entrepreneurs in North Macedonia reported lacking “sufficient or appropriate access to finance” (Dimoski, 2024[78]). Initiatives to address this include partnerships between the National Bank and the European Bank for Reconstruction and Development, grant schemes administered by the Ministry of Economy,23 and a targeted credit line for women’s entrepreneurship offered by the Development Bank of North Macedonia (Bogdanovska, 2024[79]; National Bank of North Macedonia, 2025[80]; Development Bank of North Macedonia, n.d.[81]). However, grants alone cannot compensate for unequal access to bank financing. Although banks maintain gender-neutral lending policies, women’s ability to obtain credit is often constrained by limited ownership of assets required for collateral, an issue reflected in the fact that women owned only 26% of property in 2023 (Hadzi-Vasileva, 2025[82]). Developing more effective policies is further hindered by a lack of gender-disaggregated data from financial institutions, which could reveal how approval rates for women compare to men when controlling for firm size, sector and creditworthiness.
Capacity-building initiatives complement financial support, including training and mentoring delivered by the former Agency for Promotion of Entrepreneurship (now INOVA). Two annual trainings target up to 40 women entrepreneurs or potential entrepreneurs, providing guidance on available financial instruments. Regional mentoring projects, such as “Strengthening and Expanding Mentoring Services for SMEs in the Western Balkans”, offer up to 50 hours of mentoring for established companies and 25 hours for start-ups. These projects prioritise women and dedicate a minimum budget to them (for more, see Cluster 1). Yet in 2023, only 24% of mentees were women, a proportion roughly aligned with the share of women entrepreneurs but still far from achieving an ideal gender balance (APPRM, 2024[83]).
Structural constraints extend beyond finance and capacity building. Family obligations continue to limit women’s entrepreneurial engagement, despite relatively strong maternity benefits that provide 100% of wages24 for nine months to all women, including those who are self-employed. The most persistent barrier remains unpaid care work: over one-quarter of unemployed women report childcare responsibilities as the reason for not seeking employment, and when broader household duties are included, half of women aged 15-64 are economically inactive for these reasons, compared to a negligible share of men (World Bank, 2025[62]; Papachek et al., 2024[84]). Limited access to early childhood education and care exacerbates these constraints. Enrolment remains low (i.e. around 20% for children aged 0-3 and 33% for those aged 4-6), with stark urban-rural disparities (urban enrolment six times higher than rural enrolment) and nearly 15 municipalities lacking facilities entirely (Papachek et al., 2024[84]; Eurydice, 2023[85]). Even where provision exists, capacity is insufficient: in 2025, roughly 4 800 children were unable to secure places in public kindergartens, forcing families to rely on costly private alternatives (Gagovksa, 2025[86]). Weak childcare infrastructure thus reinforces traditional care roles and limits women’s ability to participate fully in entrepreneurship and other economic activities.
The way forward
Prioritise the design and implementation of a comprehensive SME skills intelligence framework with INOVA as the co-ordinating organisation. The framework could build on the commitments within the SME Strategy to create a coherent approach across the Ministry of Education and Science, the Ministry of Economy, the Ministry of Labour and Social Policy, the ESA, and the State Statistical Office. It should clearly define existing data collection and assessment, commit to gender-disaggregated data, create explicit links to inform learning design and career guidance in the education system, and incorporate comprehensive skills forecasting to anticipate how labour market demand will evolve in the years ahead. Sectoral qualification committees should be embedded within this framework as a structured channel for sector-level input from employers, supporting the identification of emerging skills needs, validation of occupational standards, and alignment of qualifications and training provision with SME demand. This would enable proactive curriculum development, targeted training provision and strategic workforce planning aligned with North Macedonia’s economic development priorities.
Introduce financial incentives to encourage employee and employer participation in adult education to combat the low rates of adult learning engagement in North Macedonia compared to regional and EU averages. For SMEs, this should include simple and easily accessible instruments, such as streamlined e-training vouchers, tax benefits, co-funded training schemes or wage subsidies to offset productivity losses during training leave, with minimal administrative requirements. For employees, tools could include training vouchers or subsidised course fees, as cost is a primary obstacle to participation. Particular attention should be paid to reducing red tape and simplifying application procedures, especially for SMEs, and to providing enhanced incentives for training in critical skills areas, such as AI, skills for the green transition or Smart Specialisation Strategy-related competences.
Scale up training provision in skills for the twin transitions. Specifically, policy efforts should move beyond pilot initiatives and expand access to foundational digital upskilling for adults – particularly for non-ICT professionals, older cohorts and low-skilled workers in SMEs – through a national training offer that leverages short, modular courses with flexible delivery options. Delivery should prioritise sectors with high employment and low productivity where digitalisation can increase competitiveness, such as agriculture and tourism. This should be complemented by targeted training for the green transition, aligned with projected job creation in energy efficiency and renewable energy, as well as the technical skills required to support the coal phase-out. Implementation of the Just Transition skills measures should be accelerated and scaled to match the size of the workforce at risk, with training volumes, targeting criteria and outcomes monitoring strengthened to ensure that provision supports labour mobility and reaches the most exposed workers to transition-related disruption.
Urgently establish the National Platform for Women's Entrepreneurship as a formally recognised co-ordination body with a clear mandate and active government engagement. The SME Strategy has defined actions and associated budget, but implementation is slow, and the mandate remains unclear. The platform should bring together relevant ministries, business associations, financial institutions, and civil society organisations to ensure coherent policy development and implementation. Formal recognition should be a requirement, to provide ongoing cross-government coordination, structured stakeholder engagement and robust monitoring of progress against women's entrepreneurship objectives.
Establish sector-specific support packages for women entrepreneurs entering higher productivity sectors, such as technology and manufacturing. Women’s entrepreneurship is currently concentrated in lower value-added activities such as wholesale and retail trade, health and social work, and education. In contrast, women comprise a high proportion of tertiary STEM graduates, but this does not transition into corresponding occupations or entrepreneurship. To address this, the government could encourage sectoral diversification for women entrepreneurs through targeted support including tailored mentoring, financial advisory services, collateral-free access to finance and skills development programmes aligned with the priorities of the Smart Specialisation Strategy. Spain’s “Digital Entrepreneurs” programme can serve as a model for developing such a support package (Box 5.4).
Spain’s “Digital Entrepreneurs” programme, implemented by the national innovation agency ENISA under the Ministry of Industry, Commerce and Tourism, illustrates how targeted public finance can address persistent gender gaps in high-growth, technology-driven entrepreneurship. The programme responds to the structural under-representation of women in digital start-ups and scale-ups by combining gender targeting with a clear sectoral focus on digital and technology-intensive activities.
The scheme provides participative (quasi-equity) loans ranging from EUR 25 000 to EUR 1.5 million to women-led small and medium-sized enterprises (SMEs), defined broadly to include firms where women hold significant ownership, governance or management roles. Loan conditions are deliberately adapted to the risk profile of innovative firms, including long maturities, extended grace periods and the absence of collateral requirements beyond the business project itself. By linking part of the interest rate to firm performance, the instrument shares risk between the public lender and entrepreneurs, improving access to finance for early-stage and growth-oriented ventures that may otherwise be excluded from bank lending.
Crucially, the programme is embedded within Spain’s wider digital and recovery agenda and financed through the EU Recovery, Transformation and Resilience Plan, ensuring both scale and policy coherence. By 2022, it had supported 55 women-led projects with EUR 9.55 million in financing, concentrated in higher productivity sectors such as ICT, professional and scientific services, and biotechnology. This demonstrates how gender-responsive financial instruments can be aligned with innovation and industrial policy objectives, rather than operating as stand-alone inclusion measures.
This approach is highly relevant for North Macedonia, where women entrepreneurs remain under‑represented in technology-intensive and export-oriented sectors. While existing support measures in North Macedonia focus largely on small grants, the Spanish example highlights the potential of repayable, growth-oriented instruments tailored to women-led firms in strategic sectors. Adapting a similar model (potentially through the Development Bank or in partnership with EU funding instruments) could help North Macedonia simultaneously advance gender equality, digital transformation and SME competitiveness while making more efficient use of public resources than grant-based schemes alone.
Source: ENISA (n.d.[87]).
Against a backdrop where rapidly evolving global markets outpace the capacity of North Macedonia’s education and training systems to deliver a fully skilled workforce, it is evident that human capital development on its own is insufficient: for SMEs, which often struggle with limited financial and human resources, developing and leveraging social capital – the networks, trust and shared norms that underpin co-operation and resilience – is essential.
The social economy25 offers an important vehicle for SMEs in North Macedonia to both build and benefit from social capital. By participating in these networks, businesses can access alternative knowledge flows, share resources and co-develop innovative solutions to economic and social challenges. While the social economy is gaining significant traction globally, with over 4.3 million organisations and 6.3% of the workforce in Europe alone (European Commission, 2025[88]), it remains in its nascent stages in North Macedonia, presenting both challenges and opportunities for broader uptake and integration.
Against this backdrop, this section examines the key building blocks for strengthening North Macedonia’s social enterprise ecosystem, focusing on improved mapping alongside the development of a more supportive legal and institutional environment.
5.3.1. Mapping the social enterprise landscape
Understanding the structure and scope of the social enterprise landscape is essential to advancing the broader social economy. In North Macedonia, however, the absence of a government-managed register significantly constrains the design of tailored policy measures. The lack of a formal procedure for granting social enterprise status further compounds this challenge, leaving organisations to operate only as de facto social enterprises. To fill this gap, the Organisation for Social Innovation (ARNO) created an informal database where enterprises can self-register through an online form (ARNO, n.d.[89]). However, the database has notable limitations: it does not require evidence that profits are reinvested in a social mission, it records only basic contact details without information on sectors or objectives, and it has not been updated since 2022. As a result, available data are partial and outdated.
Although the registry provides little clarity on sectors of activity, the National Strategy for the Development of Social Enterprises 2021-27 indicates that most social enterprises operate in labour market integration, education and rehabilitation and resocialisation (Ministry of Labour and Social Policy of North Macedonia, 2021[90]). These reflect traditional areas of social engagement but also highlight untapped potential in under‑represented domains such as sustainability or circular economy. In practice, data availability remains limited to ad hoc exercises: a 2022 baseline study identified 57 social enterprises in North Macedonia, compared with around 242 officially registered in Latvia,26 an EU economy of similar population size (ARNO, 2022[91]). Such stark contrast underscores the relative underdevelopment of North Macedonia’s social enterprise ecosystem. Nevertheless, the existing landscape features diverse examples addressing a variety of social and environmental challenges (Box 5.5).
Social enterprises in North Macedonia engage with a broad spectrum of social and environmental challenges. The Road Map of Social Enterprises, which covers only a subset of organisations, shows that diversity and inclusion are the most prevalent focus areas, with roughly one-third of enterprises working with marginalised groups or advancing inclusive practices – an emphasis that aligns with priorities outlined in the National Strategy for the Development of Social Enterprises 2021-2027:
Lice v lice has developed the economy’s only street magazine sold by individuals from marginalised communities. Vendors are trained and receive income by selling the magazine; half of the cover price (MKD 100 or EUR 1.6) goes to the seller, the other half towards production and activities supporting vulnerable groups. The magazine also works to raise public awareness of social justice, inclusion, environmental issues, volunteering and activism.
Atelier Irina Tosheva creates clothing from upcycled and environmentally friendly materials while seeking to preserve traditional crafts. It engages women makers and artisans, including those facing barriers to employment, ensuring fair wages and promoting inclusive, environmentally conscious production.
Moreover, while there remains room to expand social enterprises’ presence in agriculture and rural development, emerging examples already showcase the sector’s potential in these areas, such as:
The Centre for Development and Promotion of Agricultural Practices works to introduce environmentally friendly agricultural methods, promote renewable energy and strengthen rural development. It targets farmers, rural communities and civil society stakeholders by raising awareness of sustainability and improving living standards in rural and urban areas.
Sources: Poraka Nova (n.d.[92]); CeProSARD (n.d.[93]); adapted from information available at https://socialenterprisesmap.org/listing-category/mkd.
5.3.2. Creating an enabling environment for social enterprises
The underdevelopment of North Macedonia’s social enterprise ecosystem can be partly attributed to gaps in legal and regulatory frameworks, despite initial steps to support sector development. The National Strategy for the Development of Social Enterprises provides overarching guidance and includes useful components, such as a definition of social enterprises aligned with the EU Social Business Initiative. While this definition is important for raising awareness, it remains non-binding, functioning as a voluntary set of principles. In practice, organisations can self-identify as social enterprises without any formal legal recognition, limiting the enforcement of standards and the ability to create incentives, such as access to public procurement or tax benefits. Moreover, the non-binding nature of this definition allows different government ministries and agencies to continue using varying definitions, perpetuating inconsistency across the public administration.
The strategy recognises this limitation and identifies establishing a legal definition and a formal recognition procedure as a priority. However, as of August 2025, this initiative had not been implemented despite an original completion target by the end of 2022 (Ministry of Labour and Social Policy of North Macedonia, 2021[90]). Without clear legal requirements, enterprises cannot formally secure recognition, and the government cannot systematically incentivise engagement. Progress is further constrained by the absence of an updated Action Plan following the expiration of the 2021-2023 plan; in addition, the pending Law on Social Enterprises, which could provide the legislative foundation for recognition, has not yet entered force (although this is anticipated in the first half of 2026). Similarly, the SME Strategy contains only a single, vaguely defined measure on “supporting social entrepreneurship,” without concrete activities or budget allocation, reflecting recognition of the issue rather than providing a practical plan for implementation.
Existing legal instruments provide some potential incentives for formalising social enterprises, but their practical impact has been limited. For example, the 2019 Law on Public Procurement allows for reserved contracts for operators whose primary objective is the social and professional integration of persons with disabilities or socially vulnerable groups, with profits reinvested in this mission. Yet these opportunities largely remain untapped due to two key barriers: limited capacity within public institutions to implement reserved contracts and insufficient experience among social enterprises to participate in public procurement (Ministry of Labour and Social Policy of North Macedonia, 2021[90]). The narrow scope of eligible beneficiaries is a further constraint: exclusively targeting work integration social enterprises excludes organisations pursuing other social missions, creating inconsistency with broader definitions outlined in key policy documents. This misalignment can disincentivise formalisation, as enterprises unable to access benefits may see little value in formal registration while simultaneously reinforcing the perception that only work integration social enterprises qualify as social enterprises.
Institutionally, some progress has been made in outlining support structures for social entrepreneurship. In particular, the draft Law on Social Enterprises proposes the creation of a National Council for Social Entrepreneurship, a multi-sectoral advisory body composed of representatives from ministries, social enterprises, civil society and financial institutions. The council would be responsible for policy development, assessing sectoral needs and co-ordinating with local authorities (Loparska-Iloska and Ilijevski, 2023[94]). However, these initiatives remain largely at the level of establishment or planning, and there is little evidence to date of concrete actions or measurable impact that have fostered growth or improvements in the social enterprise ecosystem.
The limited impact of existing legal, regulatory and institutional frameworks has contributed to the low levels of awareness of social entrepreneurship in North Macedonia. In one survey, more than 60% of respondents had little or no understanding of the concept, and nearly three-quarters were unaware of available support programmes or grants (Gjelevska, 2022[95]). Government initiatives largely target SMEs broadly, such as coaching and training through the APPRM, rather than addressing the specific needs of social enterprises, including measuring social impact or communicating a dual mission. Non-governmental actors, including the Organization for Social Innovation and CEED Hub Skopje, have stepped in to provide incubation, training, mentorship, small grants and investment readiness programmes. But these efforts remain fragmented, donor-dependent and not systematically embedded in national frameworks, limiting their reach and long-term effect.
Whereas aforementioned barriers have limited the growth of North Macedonia’s social enterprise ecosystem until now, going forward difficulties in measuring and reporting social impact are likely to become one of the sector’s most significant challenges. Demonstrating impact is increasingly important, as international trends emphasise the need for social enterprises to provide evidence of their contributions to social and environmental goals (OECD, 2023[96]). Existing methodologies, however, are generally designed for well-established social enterprises and may not be suitable for North Macedonia’s specific context. Indeed, many enterprises in the economy lack formal tracking systems and instead rely on ad hoc internal monitoring, with indicators that are collected irregularly, inconsistently and in ways that are not comparable across organisations (Ministry of Labour and Social Policy of North Macedonia, 2021[90]).
The way forward
Adopt and implement the Law on Social Enterprises to provide a legal framework and establish a clear definition that includes those social enterprises already operating in North Macedonia, without restricting it to specific legal forms. This definition should supersede and harmonise all different definitions currently used across government ministries. Once a legal framework is adopted, the government should adopt bylaws that provide operational guidance in key areas, such as reporting criteria and methodologies for measuring and disclosing social impact.
Introduce a certification or labelling system to formally register and recognise social enterprises as part of a transparent social enterprise ecosystem. This system should strengthen the visibility and credibility of registered social enterprises by raising awareness of the label and its value. There should be an emphasis on creating a channel for accurate data collection, including social impact data, with clear guidance documents for using the data, to support the development of evidence-based support measures for the sector. Austria’s Verified Social Enterprise label offers a useful example of how recognition mechanisms can support formalisation and growth of the sector (Box 5.6).
Prioritise the full establishment of the National Council for Social Entrepreneurship, committed to in the draft Law on Social Enterprises to bring together relevant ministries, social enterprises, civil society and financial institutions into an advisory body for the sector. To move beyond the planning stage, the government should define clear terms of reference, allocate dedicated resources, establish a timeline for the council to become operational and provide a clear mandate with responsibility for specific actions from the outset.
In 2022, Austria introduced the Verified Social Enterprise (VSE) label as the country’s first official recognition system for social enterprises. Developed under the Federal Ministry of Labour and Economics with support from the Austrian Federal Economic Chamber, the label aims to increase the visibility and credibility of the social enterprise ecosystem by allowing organisations to be publicly identified as social enterprises. The label is open to enterprises of any sector or legal form.
To obtain the VSE label, social enterprises must demonstrate social or environmental impact through publicly accessible impact reports, prioritise mission over profit and provide documentation of their social commitment. Applications are processed through the Austria Wirtschaftsservice promotional bank, with final approval granted by an independent jury. Certified enterprises are publicly recognised and listed in an online registry maintained by the Austrian Federal Economic Chamber.
From its introduction until September 2025, more than 60 organisations across a range of social missions were certified. The Austrian Social Enterprise Monitor 2023‑2024 reports that 12.1% of respondents currently use the VSE status, with an additional 17.9% planning to adopt it.
Such a label offers a useful reference for North Macedonia, demonstrating the types of requirements that could be applied, such as impact reporting and prioritisation of social mission, and how formal recognition can be linked to a centralised, publicly accessible registry to enhance the profile and legitimacy of social enterprises.
Sources: Austria Wirtschaftsservice (n.d.[97]); European Commission (2025[98]); Vandor et al. (2024[99]).
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← 1. This competence is defined in the National Standards on the Students’ Achievements at the end of Primary Education. See: https://bro.gov.mk/wp-content/uploads/2023/02/Nacionalni-%D0%A1%D0%A2%D0%90%D0%9D%D0%94%D0%90%D0%A0%D0%94%D0%98-%D1%83%D1%81%D0%B2%D0%BE%D0%B5%D0%BD%D0%B8.pdf.
← 2. This refers to general education, as opportunities for practical experiences are much more widespread in vocational education and training, as discussed in Section 5.1.2.
← 3. For example, the Programme for Supporting Entrepreneurship, Competitiveness and Innovation of SMEs in 2025 outlines trainings for teachers and professors who teach “Entrepreneurship and Business.” The aim in 2025 was to organise three one-day trainings for at least 60 teachers from secondary schools and faculties. See: https://apprm.gov.mk/content/Documents/APPRM_Programa_2025.pdf.
← 4. This average excludes Kosovo.
← 5. Career guidance more broadly faces persistent challenges that can undermine efforts to reduce gender stereotypes in schools. Availability remains a key constraint, particularly at the primary level, while further capacity building is needed across all education levels to ensure that staff are adequately trained to provide effective and gender-sensitive guidance.
← 6. Information provided by government of North Macedonia during the assessment period.
← 7. Career counselling in secondary education has been formally institutionalised through amendments to the Law on Secondary Education. These reforms established the requirement for each public secondary school to appoint a career counsellor and form a dedicated career counselling team to support students in identifying their interests and making informed choices regarding higher education or labour market transition. The framework is guided by an adopted Rulebook and accompanying Guidelines, and implementation is supported by a national register of career counsellors maintained and published by the Ministry of Education and Science. In addition, the development of the digital platform “Guide through Qualifications in Vocational Education” is expected to further strengthen the information and guidance dimension of the system by consolidating data on sectoral qualifications, education pathways and employment opportunities.
← 8. It is important to note that this rate may be somewhat underestimated, as the calculation includes 1 419 participants (out of a total of 21 641) who had not yet completed the four-month period since entering the Youth Guarantee at the time of the assessment. For example, in the preceding year (2023), the success rate had reached 43.4%.
← 9. Inputs provided by European Training Foundation colleagues.
← 10. Minimum ferial practice requirements of approximately 10 days after Year 1, 15 days after Year 2 and 20 days after Year 3 have been introduced.
← 11. In a four-year VET programme, the total weekly hours of instruction are as follows: 29 hours in the 1st year, 33 hours in the 2nd year and 31 hours in both the 3rd and 4th years. For more information, see: https://eurydice.eacea.ec.europa.eu/eurypedia/republic-north-macedonia/teaching-and-learning.
← 12. Information provided by the government of North Macedonia during the assessment period.
← 13. Dual VET is a system of instruction under which “theoretical training is carried out in school, and practical training in the company (based on a partnership contract between the two actors).” See: https://www.cedefop.europa.eu/en/tools/apprenticeship-schemes/scheme-fiches/vet-dual-system#:~:text=In%20dual%20VET%2C%20theoretical%20training,%2F%20municipality%20%E2%80%93%20see%20Q27).
← 14. Information provided by the government of North Macedonia during the assessment period.
← 15. Ibid.
← 16. These examples refer to specific examples of Greece, Germany and Cyprus, respectively.
← 17. One such example was the training needs assessment done by the Institute for Research in Environment, Civil Engineering and Engineering with the support of the United Nations Development Programme in the construction sector. See: https://skills4future.mk/wp-content/uploads/2022/09/NEEDS-ANALYSIS-ENG_compressed.pdf.
← 18. Please note that all rates are based on a population aged 15-64.
← 19. To calculate these figures: the total number of unemployed individuals in 2024 was 97 603 (MAKSTAT, 2025[100]). Age-disaggregated data were used to calculate the total number of long-term unemployed individuals for 2024, which were aggregated across the age brackets 15-19, 20-24, 25-29, 30-34, 35-39, 40-44, 45-49, 50-54, 55-59 and 60-64 to get a total number of 67 649 (MAKSTAT, 2025[101]). The total number of long-term unemployed was divided by the total number of unemployed individuals to calculate the proportion of unemployed individuals who were long-term unemployed (69.3%). To calculate the total long-term unemployment rate, the total number of long-term unemployed (67 649) was divided by the labour force aged 15-64 (781 583 in 2024) (MAKSTAT, 2025[50]).
← 20. A methodology for the validation of vocational qualifications has been adopted along with adult education programmes for training validation counsellors and assessors. A public call invited regional centres for vocational education and training to nominate candidates for these roles, covering five vocational qualifications (website administrator, milk and dairy products processor, tractor operator, barista/pizza maker, and beekeeper). Thirty-nine individuals applied and five-day training sessions are currently under way.
← 21. Key areas for reskilling include renewable energy, energy efficiency, energy audits, manufacturing, warehouse management and agriculture.
← 22. These sectors include: finance, retail, manufacturing, transport, education, agriculture, energy and entertainment.
← 23. These schemes cover up to 60% of investment in operational assets for women-owned or women‑managed enterprises (capped at MKD 150 000, or around EUR 2 500).
← 24. This “100%” refers to the average monthly salary received over the preceding twelve months, as stipulated in Article 17 of the Health Insurance Law. The compensation is capped, however, at the equivalent of four average monthly salaries in North Macedonia from the previous year (approximately EUR 3 000 per month).
← 25. The OECD defines the social economy as “made up of a set of organisations such as associations, cooperatives, mutual organisations, foundations, and, more recently, social enterprises. The activity of these entities is typically driven by societal objectives, values of solidarity, the primacy of people over capital and, in most cases, by democratic and participative governance.” For more, see: https://legalinstruments.oecd.org/en/instruments/OECD-LEGAL-0472.
← 26. This data point refers to data as of February 2025. For more on Latvia’s social enterprises, see: https://knowledgecentre.euclidnetwork.eu/2025/02/13/latvian-social-enterprise-monitor-2023-2024/#:~:text=Abstract,of%20the%20Ministry%20of%20Welfare.