Depressed labour market conditions in Macedonia manifested by high and persistent unemployment rate, strong segmentation and prevailing long-term unemployment is considered as a heritage of more than two decades long period of transition. Unemployment has a number of negative consequences such a decreased income which is assumed to influence the subjective experience of unemployment. The negative macroeconomic shocks in Macedonia have been mitigated due to the strengthened role of alternative labour market adjustment mechanisms such as: employment in the informal sector, emigration and inactivity. However, their impact on the unemployed workers’ perceptions of stress and future labour market prospects is less clear-cut. In this paper we use results from a survey carried out on a sample of unemployed workers in Macedonia in order to identify the psychological implications of unemployment by assessing the perceived stress and employment prospects with particular reference to the role of alternative labour market adjustment mechanisms.

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Research and development (R&D) represents a crucial input to the innovation process, while R&D expenditure significantly determines the innovation capacity of a given country. The issue of the sub-optimal allocation of resources to R&D has been widely elaborated. The low innovation potential of post-transition countries, including western Balkan countries, may inter alia stem from insufficient capacity to provide the conditions for efficient R&D. Namely, the long transition has had tremendous economic, political and social impacts. In consequence, the western Balkans have experienced an erosion of their R&D potential while their national innovation systems remain underdeveloped. This article seeks to explore the scope and nature of R&D in the western Balkans as determinants of their innovation capacity and to assess the impact of R&D on economic development. In the process, it seeks to come up with policy recommendations that will contribute to better R&D performance and which will assist the transformation of western Balkans countries into 'innovation learners'.

During the past two decades the unemployment rate in Macedonia has constantly remained above 30 per cent. In addition, long-term unemployment has significantly contributed to an erosion of the skills and motivation of unemployed workers. Significant sectoral shifts have occurred on the demand side of the Macedonian labour market during the past two decades, but these need to be accompanied by changes on the supply side, consisting of appropriate reforms in the education system and active labour market policies that would lead to an improved match between supply and demand. We are interested in this article in assessing the implications of the skill mismatch for the unemployment rate and the degree to which structural imbalances contribute to high and sustained unemployment. Our aim is to assess the potential supply side deficiencies and to propose appropriate policy recommendations to improve the match between supply and demand of skills as a strategy for fighting persistent unemployment in Macedonia.