10 December 2005 NGO Fair- Skopje

Center for Research and Policy Making

Local Economic Development Local Economic Development of Gostivar municipality-of Gostivar municipality-Collapse of the industry, Collapse of the industry,

emigrants key for surviving emigrants key for surviving

History of Gostivar

• Gostivar is mentioned for the first time in Middle Ages• In XVII century Gostivar became center of Gorni Polog• In 1904 Gostivar had 3 400 inhabitants. • Today the municipality of Gostivar has 35 inhabited

places with the population of: - the municipality of Gostivar 81035 inhabitants- the town of Gostivar 35 847 inhabitants

Historical Overview: Population

Year # of inhabitants

1874 2000

1900 4000

1921 4885

1931 5952

Inhabitants in Municipality Gostivar

Year TotalMacedonian

sAlbanian

sTurks

Roma

Serbs

Others

1953 14928 4134 8213 1932 353 137 148

1961 18870 6641 7282 4473 … 255 219

1971 27214 9262 12539 4504 219 268 422

1981 39306 11429 20773 4426 1384 232 1053

1991 20608 13594 … 4038 1977 225 740

1994 45740 13514 25186 4477 1884 261 400

2002 49545 13149 29326 4564 1904 149 528

2005 81035 15870 54038 7991 2237 160 685

Inhabitants in the Town of Gostivar

Year TotalMacedonia

nsAlbanian

sTurks

Roma

Serbs Others

1953 9505 2637 4313 1924 353 133 138

1961 12787 5092 2904 4349 … 249 193

1971 19467 8109 6044 4449 219 254 392

1981 27726 10127 10791 4378125

4223 947

1991 18734 11946 … 4023184

2208 681

1994 32926 12084 14128 4475160

9231 381

2002 35847 11885 16890 4559189

9146 419

Developments in Socialist Times Internal migration

• The rural population from the mountains descended to the Polog valley; many people from the villages moved to the town of Gostivar.

• In 1954 the Turkish “left”. Macedonians and Albanians moved in from the surrounded villages.

• Gorni Polog is highly fertile land – key economic activities crafts and agriculture.

• But! Incoming peasants are being employed in Industry.

Developments in Socialist Times Rapid Industrialization

• Dekon (clothing manufacturing) founded in 1948

• Silika (fire proof materials) in 1954• Mermeri c.1955 (industry for decorative

stone -industrija za ukrasen kamen)• Goteks founded in 1958• Gorni Polog Slaughterhouse 1960

Developments in Socialist Times Decline of Agriculture, Old Crafts

• In 1971 agriculture sector provides only 20% of total revenues of the municipality whereas the industry makes 41% of the revenues.

• But! Many still work in agriculture- in 1973, 4720 households employed in agriculture and cattle-breeding, 98% of cultivation area (obrabotliva povrsina) private .

• Old craft is dying the younger craftsmen do not show any interest. Turks “left.”

The Story of “Silika” Before Transformation

• Giant in ex-Yu consists of Alumosilikatna, Dolomitna and Chajle mine

• Selling all over Europe, 70% of production.• In 1980 exported 8882 tons.• In 1989, total turnover USD 100 mil, out of

which USD 63 mil. profit.

The Story of “Silika” Before Transformation

• Major employer - total of 1900 employees Alumosilikatna worked in 5 shifts; Dolomitna in 4 shifts the mines in 2 shifts.

• The average salary was DEM 750. • Equipped with top technology, imported

from Europe, staff trained abroad.

Factors For Fall of “Silika” After 89

• Break Down of Traditional Markets• Transport Costs Increase (x-Yu Wars)• Over- employment (450 employees as

technological surplus). • Increasing debts• Problems with enforcement of payments• Government policy stimulating SME based

economy

The leftovers of “Silika”

In 1995, RIOM”SILIKA” started bankruptcy procedure. SILIKA was divided in three business units:

1. AD “ALUMO SILIKAT”2. AD ”REMONT” 3. AD “DOLOMIT”• The mines “Chajle” Chajle and “Minerals Silika”

Makedonski Brod, as well as the brick-plant “Ciglana” had been separated.

• Nowadays only AD”DOLOMIT” works- bought in 2003 by “HAZNEDAR” - exports 45.000 tones fireproof materials annually to Bulgaria

Aftermaths of Gostivar’s transition

Type of ownership

Private

no defin

ed

socially

mixedco-operati

vestate

89.8% 4.5% 3.3% 1.1% 1.0% 0.3%

Wholesale and retail trade 51.6%Manufacturing 12.0%Transport and storage 9.0%Social and personal services 7.1%Hotels and restaurants 4.7%Real estate and renting 4.5%Construction 4.4%Agri. hunting and forestry 2.8%

• The big industrial capacities have collapsed • Number of active enterprises in 2004: 4352

enterprises (99.1% SMEs)

Main employers in today's Gostivar economy

• Only 37 of registered companies have more than 10 employees

• Only 5 of them have more than 100 employees (DEKON, OHIM Ges, Komunalec, Zito Sar, Getro)

• ESM branch Gostivar is a major employer, but recorded in Skopje

• The rest are dominated by companies dealing with trade and production of furniture and construction materials

Unemployment in Gostivar

Year No. of unemployed1992 69751993 72731994 82121995 93751996 105521997 97071998 106711999 118322000 123212001 134172002 153972003 163732004 167642005 16773

• Number of unemployed (1992-2005) - 31.03.05 :

• Number of unemployed in 2005 in urban areas – 8985; and in rural areas 7788• Employed are 7195

Emigrants – key for survival

• CRPM estimation on basis of its research is that the number of emigrants from Gostivar is between 15.000-20.000

• The vast majority of migrants- for economic reasons, guest workers

• 54.60% of remittances for family needs, home investments - 15.30%, renovations of the family houses - 13%, buying house/apartment - 9.20%, savings - 3.10%, and other reasons - 4.80%.

• From 1993 until 2004 the Macedonian economic emigrants brought to the country 3 billion dollars

Effect of Remittances on town’s dynamics

• The town becomes lively when the guest workers arrive / summer and New Years /

• This summer 1000 weddings some worth of 20.000 euros

• Construction of houses main activity in the summer period

• Belvicica street – the housing and furniture paradise• Trade and services booming in summer

New trends in emigration

With negative impact on economy• In recent years emigrants come in

smaller numbers• Spend less time and money• They take the entire family• Buy apartments rather than housesWith positive impact on economy• Home comers bringing in

investment and know-how (Gudalat, Fejzi, Fatina)

Decentralization and municipal good governance

• Dynamic new mayor• 800.000 euro invested in municipal

infrastructure in the last 6 months (parking, improvement of the water supply, park, street, organization of traffic, waste depot)

• One stop shop• Removal of illegally built houses• Gradual payment of the municipal debts

CRPM basic findings

• 80 companies and individuals were interviewed in the period April-December 2005

• Highlight – decent / fair inter ethnic relations • Most of them identified the same issues of concern:

- unfaithful competition- problems with enforcing payments- limited access to finance (bad loan criteria)- no state aid- high dependence on emigrant’s financial assistance- lack of industrial capacities in the town and employment- predominance of petty trade- high level of corruption and nepotism - lack of FDI- too many seasonal jobs / no stable employment

Recommendations and conclusions

Discussion paper on CRPM’s Gostivar research – coming soon -

Thanks to our Partners and Donors

European Stability Initiative   The German Marshall Fund of the United States of America

Libertas Institute

Olof Palme International Center

Foundation Open Society Institute Macedonia Journal of Southeast European Politics

CRPM

Your comments and suggestions are welcomed at crpm@europe.com