ANALYSIS
Macedonia’s Recent Social
Contributions Fiasco
Last July, the Macedonian government began amending
laws to introduce mandatory social and pension contributions on virtually all non-employment related income
(e.g., freelancing) starting January 1st of this year. Officials billed it as a necessary step toward reducing the
grey labor economy and unemployment. However, the
move was made without meaningful involvement of the
general public or the business sector and sparked a series of protests, particularly from freelance interpreters,
consultants and the like. Protesters argued that it was
unfair for pension and healthcare benefits to remain
fixed, while their contributions could rise indefinitely.
Others argued that temporary employees – who until
now received the same benefits as other employees –
could now be forced to sign contracting agreements,
thereby losing their right to paid vacations, maternity
leaves and more. It should be noted that while official
data is lacking, the biggest
single user of temporary
employment contracts is
widely accepted to be the
state administration itself.
24% increase in contractor-related costs or make their
contractors unhappy by reducing net payments to them
by the same margin.
While contractors, foreigners and companies weren’t
consulted, it was perhaps most worrying to see that
the state institutions responsible for implementing this
radical change were caught unprepared. Even with the
6 months notice given to adapt their internal procedures and systems, mass confusion ensued as the first
freelancers attempted to pay contributions on their
non-employment related income. None of the key institutions had published definitive instructions for public
use by the time the law came into force on January 1st.
The pension fund published one set of instructions on
their web site in November 2014, then removed them
without explanation prior to year end.
Perhaps the icing on the
cake was that the amendments rather cynically exempted earnings made by
public officials and judges.
In contrast, even foreign
citizens who earn honoraria in Macedonia (e.g.,
for speaking engagements)
are now required to set
up a state pension account here and pay social
contributions in line with
their earnings.
Companies were also
surprised by the change,
since it appeared they
would be responsible for
a host of new reporting
requirements. Also, they
would either swallow a
Photo by: Vanco Dzambaski
Continued on page 18
Spring 2015
Issue 45 17