Quality of Life in the Republic of North Macedonia Seen Through the Human Development Indicators

Quality of Life in the Republic of North Macedonia Seen Through the Human Development Indicators

Elizabeta Djambaska (Institute of Economics, University Ss. Cyril und Methodius in Skopje, Macedonia), Aleksandra Lozanoska (Institute of Economics, University Ss. Cyril und Methodius in Skopje, Macedonia) and Vladimir Petkovski (Institute of Economics, University Ss. Cyril und Methodius in Skopje, Macedonia)
DOI: 10.4018/978-1-7998-1196-1.ch025

Abstract

This chapter considers the trend of human development in the RNM, presented through the HDI. The special focus would be the links with the problem of poverty and inequality in the economy, regarding the data for the GINI, IHDI, GDI, poverty line, MPI, vulnerable employment, and youth unemployment. The research subject is the period from 2010 to 2017, using the secondary statistical data. Comparative analysis, with the countries from the CESEE countries, further improve the quality of the chapter. The RNM is a country with a high level of human development, and it is relatively equally distributed among the population. There is a difference in the distribution of the achievements of HD and an intermediate level of equality in the distribution between the genders. Income inequality expressed with the GINI index shows increase. The results confirm that there is no automatic link between the economic growth and human development. Income and gender inequality regress the quality of life in Macedonia. Growth in RNM in the past period has failed to produce the expected positive effects.
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Introduction

Stable and increasing income, poverty, inequality and vulnerability are all monetary dimensions of development. Human development concept emphasized that people are the development objective and “people are the real wealth of a nation”, not accumulated capital. The human development concept stressed the role of non-monetary aspects of wellbeing and significantly broadening the dimension of development. This paper analyzes the quality of life seen through the human development indicators.

There are several indices and indicators that relate different aspects of the quality of life, such as demographics, health, education, the environment, income and expenditures of states, democratic rights and freedom of speech and many others. Grouping and analysis of the socio-economic indicators for the Republic of North Macedonia was made according to the general division of the United Nations. Selection of the analyzed indicators was made considering their importance and methodology and their interpretation in terms of the current socio-economic situation in the Republic of North Macedonia. Also, the same indicators were used for the comparative analysis with the countries of the Central East-Southeast Europe.

First, the analysis refers to the Human Development Index (HDI). The data for the HDI for the Republic of North Macedonia has been presented, the trend has been determined and an overview of the position of the Republic of North Macedonia in relation to human development on a global level was made and compared with the human development in the CESEE countries.

The special focus of the analysis is the links with the problem of inequality in the economy, regarding the data for the GINI index, inequality adjusted human development index (IHDI) and gender development index (GDI). The poverty situation in the Republic of North Macedonia is seen through the Poverty Line and Multidimensional Poverty Index (MPI). Also, special contribution of the analysis is the aspect of the vulnerable employment and youth unemployment.

The research subject is the period from 2010 to 2017, using the secondary statistical data.

Comparative analysis, for the mentioned indicators, with the countries from the Central, Eastern and South-eastern Europe, further improve the quality of the paper.

According to the data for the Human Development Index, the Republic of North Macedonia is a country with a high level of human development and in the 2017, in the United Nation Human Development Report, ranks at the position of 80 (out of 189 countries). The data on the Inequality Adjusted Human Development Index (IHDI), present that the achieved level of human development is relatively equally distributed among the population. The result generally indicates that there is a difference in the distribution of the achievements of human development, but the difference is not significant. The distribution of human development by gender (GDI) in the period 2011-2017 determine the country in the category with an intermediate level of equality in the distribution between the genders (in 2011- 5.7, in 2015- 5.2 and in 2017, 5.4). Income inequality expressed with the GINI index shows increase. The highest average increase in the GINI index, in the Republic of North Macedonia is evident in the period from 1998 to 2000, when the index increased by 18%, i.e. from 28.1 to 34.4. The GINI index indicates further increase in income inequality. Hence, in 2015 it is 35.6.

The poverty in the Republic of North Macedonia seen through the poverty line and MPI shows discouraging situation. Republic of North Macedonia and Albania are the countries which have the largest percentage of their population living in poverty. In 2012 it is 29.2% and 39.1% respectively.

Due to the inaccessibility of data for all components for calculating the MPI index, it is calculated for only about 100 countries. Therefore, the comparison is among data of the Balkan Countries. The highest index for multidimensional poverty belongs to Republic of North Macedonia, therefore meaning that people in this country are living on the verge of poverty conditions described with the MPI index, more specifically 2.53% of the population.

The data for the vulnerable employment of the Republic of North Macedonia rates around and higher than 20%. Although the values of the vulnerable employment indicator of the RNM are not the highest among the considered CESEE countries, in comparison to developed countries are high. Hence, vulnerable employment continues to be an issue for the Republic of North Macedonia.

Another aspect that country must hang out is the youth unemployment. The evidence shows that the highest youth unemployment rates are characteristic for Bosnia and Herzegovina and Republic of North Macedonia. In 2017 it was 45.8% in the first, and 46.7% in the later country.

Key Terms in this Chapter

Mean Years of Schooling (MYS): Is a calculation of the average number of years of education received by people ages 25 and older in their lifetime based on education attainment levels of the population converted into years of schooling based on theoretical duration of each level of education attended. Fifteen is the projected maximum of this indicator for 2025.

Central, East, South East European Country (CESEE Country): That that are considered in this paper are (Albania, Austria, Belarus, Bulgaria, Bosna and Hercegovina, Croatia, Czech Republic, Estonia, Germany, Hungary, Latvia, Lithuania, Moldova, Montenegro, Poland, Republic of North Macedonia, Romania, Russian Federation, Serbia, Slovakia, Slovenia, Turkey and Ukraine).

Multidimensional Poverty Index: The global Multidimensional Poverty Index (MPI) is an international measure of acute multidimensional poverty covering over 100 developing countries. It complements traditional monetary-based poverty measures by capturing the acute deprivations that each person faces at the same time with respect to education, health and living standards. The MPI assesses poverty at the individual level. If someone is deprived in a third or more of ten (weighted) indicators, the global index identifies them as ‘MPI poor’, and the extent – or intensity – of their poverty is measured by the percentage of deprivations they are experiencing. The global MPI was developed by OPHI with the UN Development Programme (UNDP) for inclusion in UNDP’s flagship Human Development Report in 2010. It has been published in the HDR and by OPHI ever since.

Youth Unemployment: Youth unemployment is the unemployment of young people, defined by the United Nations as 15–24 years old. An unemployed person is defined as someone who does not have a job but is actively seeking work. In order to qualify as unemployed for official and statistical measurement, the individual must be without employment, willing and able to work, of the officially designated 'working age' and actively searching for a position. Youth unemployment rates tend to be higher than the adult rates in every country in the world.

Gini Coefficient: The Gini coefficient measures the distribution of income in a society. The value of the coefficient can range from 0 to 100, where 0 means total equality, and 100 means total inequality. The higher the coefficient of 0, the more unequal the distribution of income is present in society.

Expected Years of Schooling: Expected years of schooling is a calculation of the number of years a child is expected to attend school, or university, including the years spent on repetition. It is the sum of the age-specific enrollment ratios for primary, secondary, post-secondary non-tertiary and tertiary education and is calculated assuming the prevailing patterns of age-specific enrollment rates were to stay the same throughout the child's life. Expected years of schooling is capped at 18 years. Eighteen is equivalent to achieving a master's degree in most countries.

Poverty Line: The poverty threshold, poverty limit or poverty line is the minimum level of income deemed adequate in a particular country. Determining the poverty line is usually done by finding the total cost of all the essential resources that an average human adult consumes in one year. The largest of these expenses is typically the rent required to live in an apartment, so historically, economists have paid particular attention to the real estate market and housing prices as a strong poverty line affecter. Individual factors are often used to account for various circumstances, such as whether one is a parent, elderly, a child, married, etc. The poverty threshold may be adjusted annually.

Vulnerable Employment: Vulnerable employment is defined as the sum of the employment status groups of own account workers and contributing family workers. They are less likely to have formal work arrangements, and are therefore more likely to lack decent working conditions, adequate social security and ‘voice’ through effective representation by trade unions and similar organizations.

Education Index: Education Index has been measured by combining average adult years of schooling with expected years of schooling for children, each receiving 50% weighting. It is calculated by dividing the sum of the mean years of schooling and the expected years of schooling by 15.

Gender Development Index: Is an index designed to measure gender inequality. The GDI is often considered a “gender-sensitive extension of the HDI”. It addresses gender-gaps in life expectancy, education, and incomes. It uses an “inequality aversion” penalty, which creates a development score penalty for gender gaps in any of the categories of the Human Development Index which include life expectancy, adult literacy, school enrollment, and logarithmic transformations of per-capita income.

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