THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA - Tracking low-pay workers, unpaid family workers, paid domestic workers, workers ...
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THE EFFECT OF COVID-19
ON PRECARIOUS WORKERS
IN NORTH MACEDONIA
Tracking low-pay workers,
unpaid family workers, paid
domestic workers, workers
with atypical working
contracts and informal
workers
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workers 1
Policy Study No. 36
THE EFFECT OF COVID-19 ON
PRECARIOUS WORKERS IN NORTH
MACEDONIA
Tracking low-pay workers, unpaid family
workers, paid domestic workers, workers
with atypical working contracts and
informal workers
Lead author
Despina Tumanoska
Finance Think – Economic Research & Policy Institute
Contributors
Blagica Petreski
Finance Think – Economic Research & Policy Institute
Marjan Petreski
University American College Skopje
Finance Think – Economic Research & Policy Institute
Reviewer
Dimitar Nikoloski
Faculty of Economics - Prilep
June, 2021
ACKNOWLEDGEMENT Finance Think would like to extend gratitude to the State Statistical Office for the provision of the data from the Labor Force Survey in their safe room, under a Non-Disclosure Agreement. This policy study is prepared within the project “Response to the socio- economic effects of COVID-19 by supporting vulnerable groups of low-paid workers, workers who are part of the informal economy and temporary workers ”, implemented by a consortium of 5 organizations composed of: Economic Research and Policy Institute FINANCE THINK - Skopje; Research and Analysis Association ZMAI - Skopje; Analytica - Skopje; Association Glasen tekstilec - Stip and Association for rural development LAG Agro Leader - Krivogashtani, with financial support of the Foundation Open Society - Macedonia. The contents of this study are the sole responsibility of FINANCE THINK and do not necessarily reflect the policies and views of the Open Society Foundation - Macedonia.
CONTENTS 1. INTRODUCTION6 2. OVERVIEW OF THE RELATED LITERATURE 10 2.1 Precarious employment: Definitions 11 2.2 Determinants of precarious employment 12 2.3 Precarious employment during the COVID-19 crisis 13 3. METHODOLOGY AND DATA 16 3.1 Analysis of microdata from the Labor Force Survey 17 3.2 Construction of a precariousness index 19 3. 3 The model 20 4. PRECARIOUS WORKERS DURING COVID-19 IN NORTH MACEDONIA 21 4.1 Low-pay workers 22 4.2 Unpaid family workers 28 4.3 Paid domestic workers 33 4.4 Informal workers 40 4.5 Workers with atypical working arrangements 45 5. PRECARIOUSNESS OF JOBS IN NORTH MACEDONIA: FURTHER ANALYSIS51 6. CONCLUSION AND POLICY INFERENCE58 REFERENCES62 ANNEX: ORDERED PROBIT MARGINAL EFFECTS ESTIMATIONS 66
LIST OF TABLES Table 1: Cross-tabulation of the five groups of precarious workers 18 Table 2: Changes in the number of low-pay jobs 24 Table 3: Labor-market losses among low-pay workers 26 Table 4: Changes in the number of unpaid family workers 30 Table 5: Labor-market losses among unpaid family workers 32 Table 6: Changes in the number of paid domestic workers 35 Table 7: Labor-market losses among paid domestic workers 37 Table 8: Changes in the number of informal jobs 42 Table 9: Labor-market losses among informal workers 43 Table 10: Change in the number of workers with atypical contract 47 Table 11: Labor-market losses among workers with atypical contract 48 Table 12: Explanatory variables 52 Table 13: Ordered probit results 53 Table 14: Ordered probit results by workers’ gender 55 Table 15: Ordered probit marginal effects – pre-pandemic 66 Table 16: Ordered probit marginal effects – during the pandemic 67 LIST OF FIGURES Figure 1: Low-pay workers by sector and occupation 22 Figure 2: Characteristics of the low-pay workers 23 Figure 3: Rates of low-pay jobs lost, by few characteristics 25 Figure 4: Working hours and income losses, by few personal characteristics of low- pay workers 27 Figure 5: Characteristics of the unpaid family workers 29 Figure 6: Number of unpaid family jobs put out, by few characteristics 31 Figure 7: Working hours loss, by few personal characteristics of unpaid family workers32 Figure 8: Characteristics of the paid domestic workers 34 Figure 9: Number of domestic paid jobs lost, by few characteristics 36 Figure 10: Working hours loss, by few personal characteristics of paid domestic workers 38 Figure 11: Informal workers by sector and occupation 40 Figure 12: Characteristics of the informal workers 41 Figure 13: Number of informal jobs lost, by few characteristics 42 Figure 14: Working hours and income losses, by few personal characteristics of informal workers 43 Figure 15: Workers with atypical contracts by sector and occupation 45 Figure 16: Characteristics of the workers with atypical working arrangements 46 Figure 17: Share of new jobs on atypical working arrangement in total new jobs 48 Figure 18: Working hours loss, by few personal characteristics of workers with atypical contract 49 Figure 19: Ordered probit marginal effect results 56
INTRODUCTION
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
6 Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workersT
The socio-economic crisis caused
by Covid-19, the coronavirus that
outbreak and started spreading
in North Macedonia in early-
March 2020, disrupted the fairly
sectors and the limited operations
in others led to a drastic decline
of country’s economy: 14.9% in
the second quarter of 2020. The
closure of borders and movement
stable economic environment and restrictions contributed to such
favorable labor market conditions. reduced activity, affecting mainly
As elsewhere, government’s rapid the hospitality and transport
response involved a widespread sectors. Many companies whose
lockdown, starting with the closure supply chains were significantly
of the physical education system on interrupted experienced a reduction
March 11, 2020, followed by a series in the production volume or even
of measures aimed to slow the virus temporary cessation of operations.
transmission, prevent health-system The functioning of the labor
failure and minimize the number of market was disrupted. The early
lives lost. assessment of the pandemic
The pandemic occurred in a impact onto the Macedonian labor
complex political situation, with market, conducted by ILO/EBDR
dissolved parliament and caretaker (2020), identified nine sectors that
government established in January would suffer a greatest economic
2020 with a limited mandate pain: 1. food and beverage service
to organize fair and democratic activities; 2. retail trade, except for
elections scheduled for April 12, motor vehicles and motorcycles;
2020. Due to such circumstances, 3. land transport and transport
it was only the President of the via pipelines; 4. warehousing and
country who could declare a state support activities for transportation;
of emergency - on March 18, 2020, 5. other personal service activities;
thus restoring the lawmaking power 6. manufacture of food products;
with the government and allowing 7. construction of buildings; 8.
it to issue decrees with the power specialized construction activities;
of law. Subsequently, a number of 9. services to buildings and
restrictive measures were adopted, landscape activities. The jobs in
such as quarantine, curfew, travel these sectors are characterized as
ban, complete closure of the precarious with respect to several
hospitality sector, restriction of the aspects such as: low wages, non-
work of other sectors (most notably standard working arrangements,
trade), paid release of parents of unwritten employment contracts
children up to 10 years from work, and/or unregistered businesses,
etc. The complete closure of some which additionally increased the
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workers 7burden of the pandemic. Majority of The second set of measures was
workers in the most affected sectors directed toward sustaining the living
has been furloughed or faced a standard of the most vulnerable
reduction of working hours and citizens through increasing the
salaries, rather than dismissals, as access to services and relaxation of
measures undertaken by employers the eligibility criteria for guaranteed
in expectation of a support by the minimum assistance (GMA). The
government. relaxation concerned the ownership
As a response to the crisis, the of a real estate where the household
government devised measures resides, a car older than 5 years
to alleviate socio-economic and a construction land parcel
consequences of the pandemic in smaller than 500 m2, all of which
six subsequent economic packages. made applicants ineligible before.
The sets relating to workers and In addition, the income criterion
labor market could be roughly was to be assessed on the previous
classified as those aimed to save month’s receipts, rather than on the
jobs through subsidizing wages and previous three, thus allowing quick
supporting companies’ liquidity; entrance of households in the GMA
and those aimed to prevent and/ system after their income fell due
or compensate income loss among to Covid-19. This was particularly
citizens. important to facilitate fast safety net
The first set included subsidizing for informal workers in particular.
wages and social contributions, As a result of this measure, almost
deferral of profit tax pre-payments, 24 thousand people have been
loans at favorable terms (with rescued from extreme poverty
zero or subsidized interest), loan (Finance Think, 2020b). The relaxed
guarantees and some sector- criteria for entering the GMA system
specific support. Two key job- continued to apply over 2021. Within
retention measures involved a the second set, the government
minimum wage subsidy, for the deployed two one-off financial
companies experiencing more than aids to low-paid, unemployed and
30% decline in revenues during the inactive citizens in the range from
pandemic compared to the average 3,000 to 9,000 MKD in July and
of 2019, as well as a subsidy of 50 December 2020.
per cent of the social contributions While limited existing evidence
up to the level of the average wage substantiates that the key
in the hardest hit sectors (tourism, employment-retention and income-
hospitality and transport), both saving measures prevented loss
covering the period April-June of jobs and compensated the
2020. According to our estimations, income fallouts among the most
60 thousand jobs that were at vulnerable citizens, ensuring
immediate risk to be lost were that recovery is rapid and timely,
retained due to the employment- protecting precarious workers and
retention measures (Finance Think, strengthening the resilience of the
2020a). This measure has been re- labor market for a rapid response to
introduced, with narrower eligibility future shocks remains a significant
criteria, in the wake of the next challenge.
pandemic waves, of the autumn
2020 and of the spring 2021.
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
8 Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workersThe aim of this paper is to
understand the socio-economic
impact of the pandemic on five
groups of precarious workers
in North Macedonia: low-pay
workers, unpaid family workers,
paid domestic workers, informal
workers and workers with atypical
employment arrangement. Also,
the paper portrays precariousness
of jobs in North Macedonia,
comparatively before versus during
the pandemic.
The structure of the paper is as
follows. The second section reviews
the literature on the occurrence
of precarious employment, with
reference to the impact of the
COVID-19 crisis. Section 3 describes
the methodology used. In section
4, the socio-economic impact of
the pandemic on the analyzed
groups of workers is described,
and the policy recommendations
for each group are devised. The
fifth section provides further
description of jobs precariousness
and analyses pandemic’s impact
on the probability of a worker to be
in a precarious employment. The
last section concludes and provides
specific recommendations for
improving the resilience of the labor
market to future economic shocks.
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workers 9OVERVIEW OF
THE RELATED
LITERATURE
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
10 Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workersW
of own-account workers and unpaid
family workers, who are usually less
likely to have formal employment
contracts, adequate wages, social
security or membership at trade
unions. According to Saunders
(2003), most of own-account
workers are precarious because they
are often dependent on one or few
clients and have no entitlement to
Worker’s employment is a minimum wage, overtime and
determined by many characteristics holiday pay. Some economists
of the workplace and aspects of (Hudson, 2006; Pollert and
the worker’s job, like the type of Charlwood, 2009) relate vulnerable
the employment contract (written employment to the risk of
or oral), its duration (permanent or becoming poor, defining precarious
temporary), the quality and security workers as those who earn below
of the working conditions, the place a two-thirds of the median wage.
where the worker performs the Eurostat measures precarious work
job (in office, at street, at home, at through the percentage of workers
employer’s home, etc.), the working who have temporary contracts
time and shifts, the remuneration of up to three months. Such
and social security, the formality of multidimensional approach defines
the business, etc. A combination precarious employment with a set
of these aspects makes some of characteristics that make the job
workplaces more secure and indecent, improper and unstable.
decent, compared to others that are Since the first two approaches
vulnerable and precarious. are often criticized because
there can be own-account and
2.1 PRECARIOUS EMPLOYMENT: unpaid family workers who have
DEFINITIONS decent jobs and do not face high
Generally, precarious work is a economic risk at their workplace,
term used to describe a temporary as well as workers that earn above
employment which is insecure, a third of the median wage but
unstable, low-pay and unprotected. work in inadequate conditions,
Precarious workers are also those the multidimensional approach is
who work in dangerous working most widely used in the literature.
conditions, rarely receive social Yet, even in this approach, there
benefits, barely have right to is no consensus on the set of risk
unionization, have limited job factors that are relevant to explain
control and/or regulatory protection patterns of precarious employment.
(Jetha et al. 2020). There is no However, formality and duration of
consensus in the literature on the the employment contract, security
definition and scope of precarious of working conditions, earnings
employment, but there are several and collective bargaining are most
approaches for its description. First, commonly used.
according to the International Labor
Organization (2010), precarious or
vulnerable employment is the sum
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workers 11Saunders (2003) explains that complexity. According to Pollert
the most precarious workers are and Charlwood (2009), precarious
poorly paid and have no right to are the workers who earn below
unionization, employment rights the median hourly wages and
and social insurance. Chaykowski are non-unionized. O’Regan
(2005) describes that workers et al. (2005) equate precarious
with non-standard employment employment with poor job quality,
contracts (temporary, seasonal, adverse working conditions and
part-time) are more precarious low protection. Lewchuk (2017)
compared to those with permanent and Tompa et al. (2007) explain
working arrangements. Cranford that workers with non-standard
et al. (2002) corroborates that part- employment contract who are
time workers are less paid and have involuntary part-time engaged are
no access to collective bargaining, in a precarious work. Benach et
hence they are more precarious al. (2014) highlight that precarious
compared to full-time employees. employment does not offer access
According to TUC Commission on to health insurance, social support,
vulnerable employment (2008, pension, paid sick leave, and
p.16) vulnerable employment is exposes the worker to dangerous
a “precarious work that places working conditions. Vosko et al.
people at risk of continuing (2009) describe precarious work
poverty and injustice resulting as short-term paid work that is
from an imbalance of power in poorly paid and does not provide
the employer-worker relationship”. sufficient legal protection. Some
Therefore, precarious are the studies note that a worker is in
workers who are low-paid, insecure, precarious employment if he/she
have temporary contract, work at performs the job at the employer’s
home and face high risk of abusing house, because it is less likely that
their rights at the workplace. he/she has written contract, access
The majority of workers in the to social protection, health care and
informal economy are likewise collective bargaining (WIEGO, 2020).
precarious, because they barely They are also poorly paid and have
have any employment and social worst working conditions within the
protection, are low-paid, do labor- informal economy ILO (undated).
intensive work and are seasonally or
irregularly engaged. 2.2 DETERMINANTS OF
Fudge and Owens (2006) PRECARIOUS EMPLOYMENT
define precarious work as Whether a workplace is precarious
employment under atypical and a worker is exposed to an
working arrangements with risk adverse treatment depends on
of redundancy. Greenan and many interrelated factors. According
Segir (2017) describe precarious to Bewley and Forth (2010), there
work through five components: are four important factors that
adverse physical environment, may impact job’s precariousness:
violence at the workplace, non- labor market characteristics, the
standard working schedule, high external product market, employer
work intensity and low work and employee. If the labor market
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
12 Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workersprovides opportunities for quick disabilities, are more likely to be in
re-employment, employees will precarious job (Fevre et al. 2016).
not tolerate any adverse treatment According to Bocquier et al. (2010),
and the appearance of precarious the head of the household when
employment will be less likely. faced with the need to feed the
If the employer has high power family, may have higher incentive to
at their product market, such accept a precarious job. The same is
as discretionary pricing power, applicable for workers from larger
employees also have power to ask households with dependents.
for improving or maintaining the
working conditions. The employer/ 2.3 PRECARIOUS EMPLOYMENT
firm characteristics refer to the DURING THE COVID-19 CRISIS
size, the level of unionization and The current literature emphasizes
the knowledge of the statutory that during past economic crises,
employment rights. Therefore, it like the Global economic recession
is less likely that workers in small of 2008, the labor market was
firms, firms with high level of strongly affected. Along the increase
collective bargaining and firms in unemployment, they all brought
with a personnel specialist and/ increases in jobs of short-term
or HR sector will report adverse nature, which were low-pay and
treatments at their workplace. which did not provide sufficient
Personal characteristics of legal and social protection. Such
employees may also affect the level employments represented a
of precariousness of their workplace, threat to some groups of workers
because some of them like age, who were already disadvantaged,
educational attainment and like informal workers, those with
experience, are closely related with temporary contracts, and low paid
the productivity level (Kalleberg, workers (Carls, 2012).
2009). According to Bewley and The crisis caused by the COVID-19
Forth (2010), younger workers virus that started as health crisis
with higher levels of education but rapidly progressed into an
and working experience, are more economic and social crisis, has
productive and less susceptible to made significant shifts in the world
precarious employment. Young of work. Although a global crisis, the
(2010) notes that women are usually impact on the labor markets and
employed in low-pay sectors, precariousness of jobs differs among
on a workplaces that have low regions and countries. According to
responsibilities and have short-term the World Bank (2020), the burden
employment contracts due to their inflicted by the crisis is larger in less
caring obligations in the household. developed countries where jobs
Also, women are more likely to have been already more precarious.
have precarious jobs because they The crisis brought to the surface
usually work in the low productivity the fragilities of the labor markets,
sectors and are usually domestic as several groups of workers like
workers. In addition, the workers informal, low-pay, young, women,
traditionally disadvantaged on the self-employed and those with non-
labor market, like persons with standard employment contracts
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workers 13have been hit the hardest. income (ILO/OECD, 2020). Informal
According to ILO/OECD (2020), the workers from the Arab countries
crisis has led to deterioration of were disproportionally affected by
labor market position of the least the pandemic, facing high risk of
protected workers who have limited income and job loss, mainly because
means, such as those engaged in they lacked means and capacities
the informal economy and those to cope with the pandemic (Kebede
with atypical employment contracts. et al. 2020a,b,c). In Asia, the initial
Workers, who work in essential shock of the pandemic was most
sectors (health care, food, retail, felt by the informal workers as
electricity and water supply) and nearly 40% lost their jobs in April
those who can perform their work 2020 while the others experience
from home, suffered less compared a massive decline in their earnings
to workers from the non-essential (Bussolo et al. 2020). According
sectors and workers who have a to UN Women (2020), informal
job that cannot be performed from workers from Asia and the Pacific
home. The latter, are usually low- experienced a 22% decline of their
pay workers who experienced the income.
sharpest decline in their income. Domestic workers are another
Low earners were particularly hit group disproportionally affected by
hard because majority of the front- the COVID-19. ILO (2020a) estimates
liners to COVID-19 (medical staff, that 55 million domestic workers
cashiers, pharmacists, delivery were significantly impacted by the
workers, etc.) are low-pay, and pandemic, facing income and job
because many of the non-essential loss due to the fear and restrictive
sectors affected by the restrictive measures limiting their mobility and
measures pay low wages. access to the workplace. 74.6% of
Workers with non-standard working them are informal workers, meaning
arrangements, such as those with they lack social protection and right
temporary, seasonal and/or part- to unemployment benefits that
time employment contract have further deteriorate their livelihoods.
been the first to be discharged According to UN Women/ILO/ECLAC
from their workplaces following (2020), between 8 and 13 million
the COVID-19 outbreak (ILO/OECD, domestic workers in Latin America
2020). The crisis caused by COVID-19 and Caribbean experienced contract
posed severe consequences termination, working hours and pay
for informal workers as most of reduction due to the pandemic.
them have been engaged in the In Mexico, most of the 2.2 million
most affected sectors like retail, domestic workers were fired and
hospitality, manufacturing, and remained without compensation
because many of them worked (WIEGO, 2020).
for their own-account or in micro The crisis has also severely affected
companies, which are usually more the low-pay workers. Those in
sensitive to economic shocks. elementary occupations lost more
Around 850 million informal working hours compared to workers
workers in the G20 countries are on managerial or professional
likely to be highly affected by positions. According to ILO (2020b),
the pandemic, losing 61% of their the lowest-paid 50 percent of
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
14 Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workersworkers in 28 countries would have
lost 17.3% of their wages without the
temporary subsidies provided by
governments. Due to the restrictive
measures, low-pay workers in the
US faced massive job and income
losses (Kinder and Ross, 2020). In
the UK, every third low-pay worker
is in the sectors that were closed
during the pandemic, experiencing
also heightened worries about
their finances (Learning and Work
Institute, 2020). According to Lund
et al. (2020), low-pay workers should
also worry about their workplaces
because 100 million of them may
face job-vanishing by 2030. The
pandemic showed that many low-
pay jobs, especially in developed
countries, may be automatized,
which will lead to many job losses.
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workers 15METHODOLOGY
AND DATA
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
16 Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workersT
1. The low pay indicator is the
only monetary and takes value
1 if the worker receives a wage
below 2/3 of the median wage;
and 0 otherwise.
2. The unpaid workers are
considered precarious
because they may be hidden
unemployed with no access
The objective of the study is two-
to social protection and
fold: first, to portray the socio-
salaries. Therefore, if a worker’s
economic impact of the pandemic
economic status is unpaid
on five groups of precarious workers
family worker, the indicator
in North Macedonia; and second, to
equals to 1; and 0 if he/she is an
investigate how and to what extent
employer, employee or own-
workers’ characteristics explain the
account worker.
probability of being in a precarious
employment, with a comparative 3. The adverse working conditions
overview of before versus during are expressed through the
the crisis. To fulfil the first objective, place and premises where
we are using descriptive statistical the worker performs his/her
analysis of microdata provided job or through the fact that a
by the State Statistical Office work is performed for one or
of North Macedonia. For the more households from another
second objective, we construct a location. If the job is performed
precariousness index and employ an at workers’ home, at employers’
econometric model to estimate the home, or belongs to one of
relationship between the probability the following occupations:
to be in a precarious employment domestic housekeepers, child-
and the personal and households’ care workers, home-based
characteristics of the worker. personal care-workers, or
domestic cleaners and helpers,
3.1 ANALYSIS OF MICRODATA the indicator takes a value of 1,
FROM THE LABOR FORCE SURVEY and 0 otherwise.
We use data from the Labor Force 4. The fourth indicator is related
Survey for the second and third to the type of the employment
quarter of 2019 and 2020 – a total of contract and reflects the
four quarters, so the comparative contractual insecurity. It
figures are at annual level: takes a value 1 if the worker
pandemic period (second and third has informal employment
quarter of 2020) in relation to the contract or if he/she works in
pre-pandemic period (second and an unregistered entity; and 0
third quarter of 2019). We observe otherwise.
a wide span of indicators for the
two defined sub-periods, in order 5. Working part-time job
to describe the circumstances and is a signal of precarious
precariousness of the five groups employment, except in case
of workers, defined through the of voluntary agreement due
following indicators: to illness, education and/
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workers 17or family obligations. Hence, fourth of paid domestic workers
the fifth indicator refers to have at least another precarious
the contract and work-time characteristic: most of them (35%)
duration and is equal to 1 if are informal. 90.6% of informal
the worker has a temporary, workers have at least a second
fixed-term contract or he/she precarious characteristic distributed
works part-time due to lack of along low pay (27.7%), unpaid family
full-time job; and 0 if he/she work (29.9%) and atypical contract
is in permanent employment (29.8%). While, a third of workers
and or is in voluntary part-time with atypical contract are informal,
employment or has a full-time yet another 21.1% are low-pay.
job. This implies that precariousness
It should be noted that the five compounds in workers, an issue
groups of workers defined through we revert to in Section 5, while
these indicators are not mutually in the descriptive section, we
exclusive. According to Table 1 a total observe each group separately,
of 307,190 workers (pre-pandemic) ignoring the accumulation of the
are subject to our analysis, which vulnerabilities. Namely, each sub-
implies that 38.5% of all employed in group of workers is disaggregated
North Macedonia belong to at least by sector and occupation, by status
one of the above defined groups of in employment, type and formality
workers and could be considered as of the employment relationship,
precarious. and number of employees of the
Table 1 suggests that 45.5% of enterprise they work with. Then,
low-pay workers possess at least a we disentangle the pandemic
Table 1: Cross-tabulation of the five groups of precarious workers
Low-pay Unpaid Domestic Informal Workers
workers family paid workers with
workers workers atypical
contracts
Low-pay workers 0.0% 18.8% 27.7% 21.1%
Unpaid family workers 0.0% 0.0% 29.9% 0.4%
Domestic paid workers 1.6% 0.0% 3.2% 2.3%
Informal workers 26.2% 92.5% 35.0% 33.6%
Workers with atypical contracts 17.7% 1.1% 21.7% 29.8%
TOTAL
(% with at least a second 45.5% 93.6% 75.5% 90.6% 57.4%
precarious characteristic)
Source: LFS
second precarious characteristic: effect for each workers’ group by
of them 26.2% are informal, 17.7% observing the changes in four key
are with an atypical contract and indicators: hours worked, number of
1.6% are domestic workers. A sheer workers with lower working hours
majority of unpaid domestic workers than usual, wage income lost and
are also informal (92.5%), while three average wage changes; and we
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
18 Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workerscompare such changes with those 6.
1. The sixth indicator is related
of the overall employed population. to the day and time of the job
Finally, we pay particular attention execution. Working at night
to the loss of working hours and or during weekend is not
wage income by age, sex and precarious by itself, but if a
educational attainment to identify worker performs an evening
those further precarious within the work during Saturday or
five sub-groups. Sunday, then jobs’ stability
may be at stake. This indicator
3.2 CONSTRUCTION OF A equals to 1 if at least two of
PRECARIOUSNESS INDEX the following prevail: work in
Measuring precarious work is a shifts, at night, in the evening,
complex task since it is not a pure on Saturday, on Sunday; and 0
statistical category but consists otherwise.
of many characteristics of the 7.
2. The seventh indicator taken
workplace and the employment into account for measuring
relation. As mentioned in section precarious employment is
2, precarious work usually refers related to underemployment.
to informal, atypical working A worker is underemployed
arrangements that are poor if he/she works less than 35
paid, non-protected and/or low- hours per week and would like
unionized. These aspects, upgraded to work more. In such case,
by a few more characteristics the indicator equals to 1, and 0
of the workplace that make otherwise.
the employment less stable,
secure and decent, are the basis 8.
3. Having second additional job
for our measurement of the may signal that the main job is
precariousness of jobs. Certainly, instable and precarious or that
this is not the only way to measure the worker is underemployed.
the precariousness of the work, Therefore, the additional job
but it is in line with the research variable is equal to 1 if the
conducted by other economists worker conducts an additional
(Kalleberg, 2012; Bocquier et al. 2010; job, and 0 otherwise.
Tompa et al. 2007). Our approach 9.
4. The ninth variable reflects
uses 11 indicators that describe the dynamic facet of the
the multifaceted precariousness precariousness and refers to
of the jobs, of which the first five the employment duration at
are the basic ones to this analysis, the current work. It equals to
already explained in Section 3.1. For 1 if the worker is in the same
the index, we consider the atypical job for less than 5 years, and 0
working arrangements as separate: otherwise.
one relating to contract duration (1
= temporary, fixed-term duration) 10.
5. The last indicator refers to
and the other to work-time duration the skills mismatch and it
(1 = involuntary part-time work). To is defined in the following
these, we add: manner. For each 2-digit ISCO
occupational group in each
of the two sub-periods, the
mean of educational categories
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workers 19of workers as well as their The probability that observation i
standard deviation is measured. will select the alternative j is
Then the over- (under-)
Pij = p(yi=j) = p(αj-1 < y*i < αj) = F(αj-xiβ) –
educated are respondents who
F(αj-1-xiβ)
have education years above
(below) the mean level by one Hence, the ordered probit model
standard deviation. They are with j alternatives will have one set
assigned a value of 1; and 0 of coefficients with (j-1) intercepts
otherwise. and j sets of marginal effect. The
Eventually, for each worker we marginal effect of an increase
define a precarious index as a in the independent variable on
sum of all eleven indicators where the probability of selecting the j
the precariousness of job ranges alternative is:
between 0 (lowest precariousness) δpij/δxri = {F’(αj-1-xiβ) – F’(αj-xiβ)}βr
and 11 (highest precariousness). The
The estimation of the predicted
real values obtained in our analysis
probabilities and marginal effects is
is from 0 to 7, implying that there is
widely used today, and details can
no worker whose job is precarious
be found, for example, in Greene
in more than 7 of the 11 aspects of
(2012). Hence, we estimate ordered
precariousness.
probit model together with the
marginal effects and the predicted
3. 3 THE MODEL probability for a worker to have a
In the next step, we establish job not precarious at all (a value of
a relationship between the 0) to highly precarious (a value of
precariousness index and the 11). Hence, the model is presented
personal characteristics of the through the following equation:
worker. Since our dependent
variable, the precariousness of the P(precarious employment)=
job, is an ordered variable with α1 + β1sexi + β2agei + β3educationi +
eleven outcomes, we apply an β4maritali + β5 hh_position + β6hh_sizei +
ordered probit model which takes β7childi + β8elderlyi + εi
the following main form: where the probability of
y*i = xiβ + ui precariousness of the job
theoretically ranges from 0 to
where y is the exact but unobserved 11 and depends on the personal
dependent variable, xi is a vector of characteristics of the worker (sex,
the independent variables and β is age, level of education, marital
the central coefficient that reflects status and his/her position at the
the strength of the relationship household) and the characteristics
between the dependent and of his/her household (the size of
independent variables. The ordered the household and the shares of
variable yi takes values from 0 to N children and elderly).
according the following template:
yi = j if αj-1 < y*i ≤ αj
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
20 Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workersPRECARIOUS
WORKERS
DURING
COVID-19
IN NORTH
MACEDONIA
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workers 214.1 LOW-PAY WORKERS
Low-pay workers are defined as
those who earned below two-thirds
of the national median wage.
Precariousness of the low-pay
work
Before the pandemic, more than
140 thousand workers were paid
low. Figure 1 (left) shows that
most of them were engaged in
the agriculture sector (27.3%),
manufacturing (21%), wholesale
and retail (19.1%), accommodation
and food (7%) and construction
(6.1%), the sectors that were strongly
affected by the pandemic according
to ILO/EBRD (2020). They are usually
engaged in low-skill occupations
which, according to ILO (2020c), lost
more working hours than managers,
professionals and the other high-
skill occupations (Figure 1, right).
Figure 1: Low-pay workers by sector and occupation
Managers Professionals Technicians and
Arts and 1.7% 1.4% associate
recreation professionals
2.2% 3.0%
Administrative Other
Clerical support
2.6% service workers
activities 3.5%
Accomodation Elementary
8.2%
and food occupations
7.0% 14.6%
Agriculture
27.3%
Plant and
Transport machine Service and
4.8% operators sales workers
15.4% 24.7%
Wholesale and
retail Craft and
19.1% Manufacturing related trade Skilled
21.0% workers agricultural
13.4% workers
22.3%
Construction Water supply
6.1% 1.7%
Source: LFS
Note: The share of workers in the sectors that are not shown on the figure is less
than 1% and are presented in the Other service activities.
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
22 Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workersOther key characteristics analyzed in Every fourth low-pay worker does
Figure 2 reveal that low-pay workers not have an employment contract
are in precarious employment or works in an unregistered
which makes them more sensitive business, thus is not covered by the
to the pandemic shock. A third of job-retention measures provided
them are own-account workers by the government and can be
(Figure 2, upper left), while half easily fired in case of work rationing
work in a micro company (up to 10 (Figure 2, upper right).
workers) (Figure 2, lower left).
Figure 2: Characteristics of the low-pay workers
Employment type Employment contract
Own
Informal,
account
27.2%
worker,
33.1%
Employee,
63.2%
Formal,
72.8%
Employer,
3.7%
Number of employees Work time
Does not know, but
>10 Parttime,
8.0% 5.2%
Does not
know, butLosses during pandemic Table 2: Changes in the number of
Nearly 54 thousand low-pay jobs low-pay jobs
have been put out during the Rest
pandemic, which is nearly 40% of all Low- (non-low-
low-pay jobs (Table 2). However, not pay pay and TOTAL
workers no-pay
so many low-paid workers lost their workers)
job. Large share of the reduction
of the low-pay jobs could be Before the
0.0% 18.8%
pandemic
attributed to two key developments:
1) the minimum wage increased in During
0.0% 0.0%
pandemic
October 2019 - from 12.507 MKD in
the period before the pandemic, -53,929 +46,502 -7,427
to 14.500 MKD in the period during Change
the pandemic (and further to -38.3% +7.1% -0.9%
14.932 MKD in June 2020); and Source: LFS
2) the government introduced a
subsidy of social contributions for Figure 3 suggests that the share
a wage increase between 600 and of low-pay jobs that were put
6,000 MKD in November 2019 for a out during pandemic is higher
maximum duration of 3 years. Both among employers and employees,
wage increases supported by these formal workers and workers from
government policies resulted in medium-sized companies. This
wage hikes predominantly in the share is the highest in the sectors
left part of the wage distribution, that have not been hit the hardest,
which reflected in the notion that like manufacturing, water supply
the median wage did not change and administrative sector. Both
over 2020 because of these shifts. observations are aligned with the
notion that large share of low-paid
Hence, in Table 2 we observe that
workers actually transferred onto a
the loss of 54 thousand low-pay jobs
job above the low-pay threshold.
was largely compensated with an
increase of jobs which are either
above the low-pay threshold or
belong to the categories of unpaid
workers (e.g. unpaid family workers).
Still, it is very likely that the net loss
of 7,427 jobs is mostly among the
low-paid workers, also supported by
the following: 1) large share of jobs
losses is domestic workers who are
predominantly low-paid (see section
4.3); 2) unpaid workers (a total
of 28.433, of which 8.277 unpaid
family workers) prevalently have
been formalizing their jobs within
the small agricultural holdings as
a vehicle to get qualified for the
government support (see section
4.2).
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
24 Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workersFigure 3: Rates of low-pay jobs lost, by few characteristics
0%
-10%
-20%
-30%
-40%
-50%
-60%
-70%
-80%
-90%
Employee
Employer
Formal
above 50
No employees
1 to 10
11 to 49
Own account
Informal
Type of employment Employment Size of the company
contract
0%
-10%
-20%
-30%
-40%
-50%
-60%
-70%
-80%
Accomodation and
Administrative
Other service activities
Water supply
Transport
Agriculture
Wholesale and retail
Manufacturing
Construction
Arts and recreation
food
Sector
Source: LFS
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workers 25Low-paid workers experienced Pandemic’s impact on low-pay
severer declines in two labor workers according to age, sex and
market outcomes compared to all educational attainment is shown
workers (Table 3)1. The number of in Figure 4. Older workers (50-64)
workers with lower working hours and workers with tertiary education
than usual nearly doubled (95%), have been most shielded in terms
though is lower than among all of both working hours and income
workers (155%). The lower increase losses. The other two age groups
of workers with lower hours than have been almost equally affected,
usual when compared to all experiencing a loss of around 50%
employed is probably due to the of the working hours and 40% of
fact that nearly 30% of the low-pay income. However, the relatively
workers are agricultural workers equal distribution of the losses
who were not strongly affected by across the categories justifies that
the restrictive movement measures, the transferring of low-pay workers
thus continued to perform their job towards higher-pay jobs has been
as usual to a considerable extent. fairly uniformly distributed.
Table 3: Labor-market losses among
low-pay workers
Low-
pay All workers
workers
Workers with lower
working hours than 95% 155.8%
usual
Mean wage -2.4% 6.3%
Source: LFS
1
The other two outcomes: working hours and wage mass losses are not shown because
they are strongly determined by a large part of such workers transferring to a non-low-pay
category.
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
26 Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workersFigure 4: Working hours and income losses, by few personal
characteristics of low-pay workers
Working hours
0%
-10%
-20%
-30%
-40%
-50%
-60%
secondary
50-64
men
primary or less
tertiary or more
15-29
30-49
women
Age Sex Education
Income
0%
-10%
-20%
-30%
-40%
-50%
secondary
50-64
men
primary or less
tertiary or more
15-29
30-49
women
Age Sex Education
Source: LFS
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workers 27Policy space 4.2 UNPAID FAMILY WORKERS
The finding that all jobs lost Unpaid family work is a kind of
during the pandemic are likely to labor that supports production for
have been low-paid is worrying. sales, is not remunerated but the
To protect jobs losses during compensation may be felt through
the pandemic, the government the family income, fringe benefits
instituted a wage subsidy at the and/or payment in kind. Unpaid
minimum wage level during the family workers are usually members
pandemic. Providing a wage of producers’ cooperatives or
support with a reemployment contributing family members.
subsidy to safeguard jobs that Precariousness of the unpaid
were lost during the pandemic, family work
may increase the incentive for
More than 43 thousand workers in
low-paid workers to faster return
North Macedonia have been unpaid
in the labor market. Expanding the
family workers in 2019. They are
unemployment benefit through
usually agricultural workers who
larger scope and longer duration is
perform their job at a farm or on an
another way to provide financial and
agricultural land (Figure 5, upper
social relief among those who lost
left). Regarding the employment
their jobs during the pandemic.
type of unpaid family workers, 92.5%
For those who permanently are informal, suggesting that they
lost their low-pay job, actions have had no employment contract
for increasing their skills and or that work in an unregistered
knowledge for gaining access to business (Figure 5, upper right).
a higher-pay job are necessary. Hence, they have had no access
Promotion of the palette of existing to the available measures for job
active labor market measures may retention during the pandemic and
alleviate scarring among workers could have been easily fired. Almost
who lost their jobs and keep them in 80% of these workers are employed
an active search for a job. in micro firms (1-5 employees)
As many low-paid workers are (Figure 5, lower left).
engaged in the labor-intensive
sectors, like textile, and continued
to work during the pandemic,
supplying with necessary
information and/or prioritization
in vaccination is indispensable to
maintain their health and jobs.
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
28 Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workersFigure 5: Characteristics of the unpaid family workers
Place of work Employment contract
Other, 0.8% ce,
Open market or street, 0.6% 5.7%
Own home, 0.6%
Formal,
7.5%
Farm or Informal,
agricultural 92.5%
land, 91.1%
Number of employees Contracted hours
Does not know, but 10
1.8%
3.2% 0.3%
6-10
0.8% No
11-19 employees
5.9% 9.8%
Parttime,
25.4%
Fulltime,
1-5 74.6%
78.1%
Source: LFS
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workers 29Losses during pandemic 8 thousand. The net loss of 7,427
jobs is unlikely to have been driven
More than 8 thousand unpaid
by losses of unpaid family jobs. The
family workers or 19.2% of all unpaid
conclusion that mostly low-pay
family jobs were put out during
jobs were lost is corroborated by
the pandemic (Table 4). Since the
the fact that a large share of own-
increase of number of jobs among
account jobs was lost (19.5%). The
the rest is negligible (0.1%), one may
latter is aligned with the evidence
conclude that such unpaid family
that micro subsistence businesses
jobs were lost. However, this would
suffered most during the crisis2,
contradict with the conclusion
including with early attempts by the
that the net loss of 7,427 jobs was
government to exclude from the
primarily low-pay (see Section 4.3.1).
employment-retention measures
Hence, we need to delve deeper
owners employed in their own
to understand what happens by
micro-ventures. The latter is also
observing the development of the
aligned with production in the
other three working statuses during
agricultural sector which in 2020
the pandemic.
declined by 1.8%, while the overall
The number of wage employees
economy by 4.5%. Therefore, the
increased by almost 20 thousand,
loss of unpaid family jobs is to a
the number of employers stayed
large extent a transformation into
the same, the number of own
employees to get qualified for the
account workers declined by almost
government employment-retention
20 thousand, while the number of
measures.
unpaid family workers declined by
Table 4: Changes in the number of unpaid family workers
Rest (paid and
Unpaid family
other unpaid TOTAL
workers
workers)
Before the pandemic 43,016 753,899 796,915
During pandemic 34,739 754,749 754,749
-8,277 +850 -7,427
Change
-19.2% +0.1% -0.9%
Source: LFS
https://www.financethink.mk/wp-content/uploads/2020/11/QLife_No.3-EN-1.pdf
2
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
30 Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workersFigure 6 reveals that most of The number of unpaid workers with
the put out unpaid family jobs lower volume of working hours
were informal, in agriculture than usual increased by 18.3%,
and in micro-enterprises, which which is less than the number of all
is a reflection of their structure. workers (Table 5)3. Given that most
However, it also indirectly suggests of the unpaid family workers are
that these workers likely formalized agricultural workers who were not
through concluding an atypical covered by the restrictive movement
contract within their small measures during the lockdown, this
agricultural holding to qualify result is not surprising.
for the employment retention
measures (see Section 4.5).
Figure 6: Number of unpaid family jobs put out, by few characteristics
2000
0
-2000
-4000
-6000
-8000
-10000
Other service activities
Informal
Wholesale and retail
Formal
11 to 50
Construction
No employees
Transport
Agriculture
Manufacturing
Accomodation and food
Over 50
Arts and recreation
1 to 5
6 to 10
Type of
employment Sector Number of employees
Source: LFS
3
The other outcome available for unpaid family workers: working hours, is not shown because
it is strongly determined by a large part of such workers formalizing in a paid job to get
qualified for the government measures.
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workers 31Table 5: Labor-market losses among Working hours of both men and
unpaid family workers women, young and older unpaid
Unpaid
family workers, were almost
family All workers equally affected. A significant
workers difference appears among the
Workers with lower tertiary-educated unpaid workers,
working hours than 18.3% 155.8% who experienced smaller loss.
usual However, the relative equality of the
Source: LFS impact corroborates that the likely
transformation of the unpaid family
Figure 7 reveals that there are
workers into paid workers to benefit
no significant differences in the
from the government measures
impact of the pandemic between
followed fairly equal distribution
different age and gender groups
among the observed categories.
among the unpaid family workers.
Figure 7: Working hours loss, by few personal characteristics of unpaid
family workers
0.0%
-5.0%
-10.0%
-15.0%
-20.0%
-25.0%
-30.0%
-35.0%
-40.0%
secondary
50-64
15-29
men
primary or less
30-49
women
tertiary or more
Age SexE xEducation
Source: LFS
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
32 Tracking low-pay workers, unpaid family workers, paid domestic workers, workers with atypical working contracts and informal workersPolicy space 4.3 PAID DOMESTIC WORKERS
The finding that unpaid family jobs According to ILO’s Domestic
were not lost but rather transformed workers convention,4 domestic work
into formal agreements to make refers to a job that is performed
them eligible for the employment- in or for one or more households,
retention measures of the within an employment relationship.
government is a momentum to To identify the domestic workers
be sustained. As unpaid family in the Labor Force Survey, we use
workers are predominantly nested the task-based approach and the
in agriculture, the government may International Standard Classification
introduce incentives to prevent of Occupations (ISCO-08) where the
these workers to retract back into unit groups with typical domestic
informality. tasks are the following:
Along these lines, in September 5152: Domestic housekeepers
2020, Finance Think prepared
a Brochure with measures for 5311: Child-care workers
financial support of female farmers, 5322: Home-based personal care-
which presents the measures workers
available to agricultural workers and
their agricultural holdings, most of 9111: Domestic cleaners and
which were available in the pre- helpers.
crisis period. It is necessary for the In addition, we include all workers
line ministry to consider increasing who reported that they perform
the scope of these measures by their job at the employer’s home,
possibly relaxing / revising some irrespective of whether they belong
of the criteria, as well as designing to these or other occupations. As a
accompanying measures that would second step, we estimate the socio-
further support the income of the economic impact of the pandemic
recipients during and post Covid-19 only for the workers from these
crisis. unit groups who performed their
Likewise, increasing the awareness job exclusively at the employer’s
of farmers about the available home, which are usually domestic
programs and measures to support housekeepers and child-care
agriculture, through personal visits, workers.
distribution of printed materials,
opening information corners,
especially in rural areas where
awareness is extremely low, will
facilitate greater utilization of
available measures that support
formalization, which in the
post-Covid-19 situation may be
indispensable for preventing a set-
back in the small formalization gain
achieved during the pandemic.
4
C189 Domestic Workers Convention, 2011 (No. 189)
THE EFFECT OF COVID-19 ON PRECARIOUS WORKERS IN NORTH MACEDONIA
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