AmCham Macedonia 1/2019 - Page 7

that domestic companies are not competitive enough. The EU integration process will enable higher competitiveness of the economy, mainly utilizing the benefits of knowledge transfer, technology transfer, fostering innovation, as well as research and development activities. The integration process itself enables access to funds that support these activities. Access to the open market also increases opportunities for domestic companies. From this process, the most compelling, innovative, and fast-growing companies will reap the greatest benefits, making them competitive with their peers from EU countries. Hungary’s experience has shown a rapid increase in trade in services and agricultural products after EU membership, while neighboring countries are mentioned as key partners. Benefits to the Public Sector In addition to the benefits for the private sector, the benefits of joining the EU are perceived in improving public services. Standardization of public services, higher quality, and efficiency are the expected results from the process of structural reforms of public services. Additionally, by joining the EU, the country is eligible for the use of infrastructure funds, which is an important aspect for fostering economic development. The focus and significance of EU transport infrastructure can be seen from the long-term investment plans. As part of the next long-term EU budget 2021-2027, the European Commission proposes a budget of 42.3 billion euros to support investments in European infrastructure projects through the reconstruction of the Connecting Europe Facility. This represents an increase of 47% compared to 2014-2020. Challenges on the Road to EU However, besides the benefits, EU membership has its own challenges. The two key deficiencies that the country faces at the moment are: low productivity, and lack of skills and labor shortages. These disadvantages are a key threat on the path to EU membership. In the latest World Bank report, it was noted that the country has a low level of productivity and no progress in this field. The top 10% of the most productive companies are more than seven times more productive than the lowest 10% of companies. For comparison, in America, the difference is two times. On the road to EU, companies will face greater competitiveness and need for productivity, and some of the companies will not “survive” this process. Joining the EU is a threat to the least-productive companies. Whether this threat can be overcome depends on domestic companies and on how much they can adapt, restructure, and take advantage of technological development opportunities. In addition to the productivity of companies, the availability of skilled labor, human capital, and employee productivity is a second threat to the country. The average employee in the production and service sector in Europe is four times more productive than the average employee in Macedonia (World Bank, 2019). The business sector has been warning about the lack of skilled workforce for a long time. One of the obstacles to further attracting foreign investment and expanding the country’s existing foreign investment is precisely the lack of workforce, low skills, and a long process of training at the workplace (Trajkovska and Petreski, 2018). Currently, the lack of skilled labor is evident in both quantity and quality. With EU membership, labor market mobility is much greater and an outflow of skilled labor should be expected. Hence, urgent reforms in this field are needed in order to minimize the negative consequences.  EMERGING MACEDONIA 7