Macedonia During The Communist Regime

Published Date: 02 Nov 2017

Republic of Macedonia for more than 45 years was a constitutive country of federal state of Yugoslavia. In 1991 it has declared its independency and simultaneously started the transition process. The population in Republic of Macedonia counts above 2 million and it is predominately orthodox. The unemployment rate remains among highest in the region with 31,4% as estimated in 2011 and GDP per capita was only $10,500. [1] 

6.1 Macedonia during the communist regime

Macedonia like all other communist countries has used a centrally determined wage grid to set the wages of those who were in the labour force. According to Munich, Svenjar and Teller (1999) the wage grid was introduced by the government leaving little discretion for wage settings at enterprise level by managers or trade unions. Wage levels were a function of the individual’s education, experience, occupational classification and the industrial sector of the job. The productive sector which included industry, construction and agriculture was favored, therefore wages in this sector were boosted compared the unproductive sector.

In addition to regulating wages, the central planners regulated employment and admissions to higher education. Jobs were provided for everyone and employment security was assured. For higher level jobs, assignment was usually based on political loyalty (Munich et al, 1999).

Workers in socialist enterprises enjoyed substantial fringe benefits in the form of basic social services for themselves and their families such as health care, education, child care, generous maternity and sick leave, subsidized housing and vacations, and pensions (Vodopivec 1990).

Furthermore, under the communist regime there was no unemployment in the labour market. Full employment was achieved through overstaffing, which meant that enterprises were employing more workers than was necessary to produce the given output. This meant "unemployment in the job" and low labour productivity, which translated into low wages (Rutkowski, 2006).

The first efforts done to boost the productivity were the ones undertaken to replace the direct method of wage regulations with the indirect one. The direct method of wage regulation involved assigning a wage bill that depended on the fulfillment of output targets. The indirect method still relied on countrywide determination of the basic wage rate (by skill exertion matrices) but use value measures (such as value added or gross output) to calculate an enterprise’s performance index. This index is then used to determine the "socially appropriate" level of the wage bill (Vodopivec, 1990).

Yugoslavia started to use the indirect method of wage regulation since 1950s. According to Vodopivec (1990) Yugoslavia was not only the first but has possibly gone the furthest in the originality and sophistication of its wage regulation. Unlike other countries, it has used skill-exertion matrices to determine relative proportion of personal earnings, not the base level of wage. The entire wage bill is left completely undetermined in advance (except for minimum wage provisions).

The performance index was assessed on the basis of the performance not only of the respective enterprise but of the industry and economy as a whole (Schrenk, 1981). The performance index is corrected to reduce wage differentials among enterprises. On one hand, workers in successful enterprises are allowed to earn above the average wage, but are subject to progressive taxation. On the other hand, although workers in below-average enterprises earn below-average wages, they are effectively subsidized (Vodopivec, 1990a). So even though Yugoslavia differed with the process of wage regulations from other communist countries, it still tented to level differences in personal earnings like other countries of communist regime.

In late 80s and early 90s the constitutive states of federal state of Yugoslavia started declaring its’ independency, which in most cases was achieved through war. Macedonia declared its’ independency in 1991 and simultaneously entered the transition process. Transition process was very difficult for the small country as Macedonia and was followed with many difficulties, which unfortunately are still present. A closer insight to these problems will be discussed in the next part of this paper.

6.2 Problems with the transition process

When discussing the problems that came along with the transition process of Macedonia, we will focus on Macedonia’s labour market.

The labour market in Republic of Macedonia has majority of characteristics which are common for transition economies. Those characteristics are low participation and employment rate, high unemployment rate, long term unemployment, high unemployment rate among youth, people with lower education as well as large regional employment inequalities and large earnings discrepancies between cities and other localities in favor of cities (Krstic, 2004).

In Macedonian labour market the unemployment rate equaled 31,4% in 2011. Although we have a decline in the unemployment rate compared to previous years, this progress is very slow (See Table 4). A high unemployment rate could be a result of bad transition process and a result of an economy which in last two years is creating very little jobs compared to period from 2006 to 2008 (See Table 5). Moreover, a worrying fact according to Blazevski and Kurtishi (2011) is a high unemployment among young people, especially the ones with tertiary education, which is considered to result from an increased number of graduates, whose number has tripled from year 2000.

Table 4: Unemployment and participation rate in Macedonia

2006

2007

2008

2009

2010

2011

Participation rate

62,2

62,8

63,5

64,0

64,2

64,2

Unemployment rate

36,3

35,2

34,0

32,3

32,2

31,6

Source: Blazevski, Kurtishi, (2011) - author’s calculations based on data from State statistical office and Eurostat

There are also concerning facts regarding the labour market participation, which in 2011 was 64,2% (See Table 4). Low participation rate can be attributed to few factors such as:

the very low number of employed

the effect of sizeable net inflows of remittances (private transfers) from abroad and

low participation of females (Mojsoska-Blazevski, 2011).

Table 5: Employment growth and jobs creation in Macedonia

Source: Blazevski, Kurtishi, (2011) – author’s calculations based on data from Labour force survey, State statistical office and Eurostat

In Macedonia, just like in other socialist economies, workers were used to have regular full time wage and salary employment. According to Rutkowski (2006) permanent employment contracts were the norm and dismissals were possible only for major misdemeanor. Jobs were secure and employees were providing a range of fringe benefits. However this has changed during the course of transition. The security of jobs was lost and employees were turned to temporary employment contracts. The share of workers with temporary employment in Macedonia was relatively high at 10,8% of the total number of employed persons in 2011 (See table 6). About 3/ 4 of temporary employment in Macedonia is involuntary, which lies in lack of opportunities to find a permanent job.

Table 6: Type of contracts in Macedonian labour market

2006

2007

2008

2009

2010

2011

Type of contract

Permanent

91,5

90,8

89,4

88,8

88,1

89,2

Temporary

8,5

9,2

10,6

11,2

11,9

10,8

Source: Blazevski, Kurtishi, (2011) – author’s calculations based on data from Labour force survey, State statistical office and Eurostat

Furthermore, while the number of secure jobs has gone down, the number of precarious jobs has gone up. This changing nature of job has been associated with the growth of the informal sector, which by definition provides less protected jobs with fewer benefits (Rutkowski, 2006).

Due to economic transition there were also changes in the wage level and structure. According to Rutkowski (2006) a change in the wage level was due to a change in the level of output and productivity, while a change in wage structure resulted from changes in the wage setting mechanism, from bureaucratic and centralized one to a market based and decentralized one. From mid-1990s there has been a significant growth of wages in all transition economies, with no exception. But this wage increase was associated with fall in employment. Therefore we have two extremes: the employed ones with higher wages and the unemployed ones with no incomes.

6.3 Employee compensation today

A study from Nikica Mojsovski Blazevski (2011) gives us a detailed analysis of wage developments in last two decades in Macedonia. A focus is being set on the impact of 2008 crisis on wages. However what we are interested in is only the part on wage setting mechanism today and its effectiveness.

As mentioned previously, in Macedonia wage setting is a decentralized process. In public sector and large private firms wages are set through collective bargaining, while in small and micro-firms are set by the management on enterprise levels.

6.3.1. Wage setting in public sector

In his research paper Blazevski (2011) makes a distinction in terms of wage setting between a civil servant who make up only 10 percent of public administration and non-civil servant who work in education sector, health, internal affairs, defense, etc.

A civil servant’s wage

The wages of civil servants are regulated by the Law on Civil Servants (LCS) which was adopted in 2000. According to the LCS, wages are set based on the number of accumulated points which depend on few factors such as job position, job complexity, education, etc.

For each civil servant number of points is multiplied by value of the point. Government and council of local self-governments determine the value of the point for the central government civil servants and municipal civil servants, respectively (Blazevski et al., 2009).

The wage structure of a civil servant is consisted from the following components:

Basic salary, position supplement and career wage supplements, and

Exceptional components (ex. for overtime work) (Blazevski, 2011)

Basic salary depends on the employee’s educational level, while position supplements reward the employee depending on the nature and complexity of the job, and the career wage supplements depend on the length of service, however are conditioned with positive performance assessments.

A non-civil servant’s wage

For a non-civil servant in Macedonia wage setting and negotiation procedures are regulated through General Collective Agreement (GCA), which is signed between the government and a representative trade union. The agreement lasts for two years and it is automatically extended if not negotiated differently.

The salary of a non-civil servant is consisted from a basic salary and performance-related supplements, which are paid only if government institutions have enough budget resources.

The basic wage is based on complexity factors set for each job position which are multiplied by the lowest wage in the branch. Complexity factors and the lowest wage are set in the branch or through employer-level collective agreement (Blazevski, 2011).

6.3.2. Wage setting in private sector

According to Blazevski (2011) besides the Labour Code, the general framework for wage negotiation in private sector is determined by the General Collective Agreement (GCA) and by the signed branch collective agreements.

The wages of private sector are consisted from the basic wage, a performance related wage and wage supplements. The basic pay is calculated similarly to the one in public sector, by multiplying wage coefficients to the lowest wage (Blazevski, 2011). Additions to basic wage are paid to workers for the overtime work, night shifts, work during public holidays, etc. According to Blazevski et al. (2009) workers are also entitled to compensations for sick leave, business trips, annual leave compensation, wage compensation while obtaining higher education, etc. Until 2009, employers were paying travel and food allowances for their employees, but with the introduction of gross wage system they were abolished.

6.3.3. Taxes and social security contributions

In 2009 in area of labour taxation was introduced a reform, which aimed at reduction of labour costs. Previously the wage in Macedonia was taxed by the personal income tax (PIT) and social security contributions, both paid by the employer on behalf of employees. Although with an introduction of a flat PIT of only 10 percent Macedonia belongs to countries with the lowest personal income tax, the overall tax burden remains relatively high. According to Blazevski et al (2009) this tax burden was mostly affecting the low-wage workers, because of the minimum base for payment of social insurance contributions which was prescribed at 65 percent of the national average wage. Example, in Macedonia a worker who earned the average wage and received free fringe benefits like food and travel allowances, faced a labour tax wedge of around 33 percent.

In order to reduce this tax wedge the government designed and implemented a reform starting from January 2009, which consisted from the following:

Full harmonization of assessment bases for social contributions

Reduction of social contribution rates form 32% in 2008, to 27.9% in 2009 and to 22% in 2011

Reduction of the minimum floor for the payment of contributions from 65% to 50%of the average gross wage in the economy

Introduction of a gross wage concept of wage negotiation and contracting

Integrated collection of PIT and social insurance contributions by the Public Revenue Office (Blazevski, 2011)

This reform has many positive outcomes like:

Transparent and simple system of payroll taxes and labour costs

Reduced administrative burden on firms

Improved control over payment and hence reduction of the grey economy

Greater job creation as a result of the reduction of the tax wedge for low-wage earners and

Greater social insurance for workers (Blazevski et al. 2009).

Also an introduction and implementation of gross wage system itself has many positive effects and fringe benefits for both the employers and the employees. From employers perspective these benefits would include the following:

Reducing labour costs

Reduce the administrative burden and

Reduce the total cost of employment (Uznov, 2009).

While the advantages of gross wage system from employee perspective would include:

Having full insights into the amount of the gross income and all categories that are incorporated into the gross salary

Gaining security for the payment of mandatory social contributions and

Creating opportunity for wage increases, especially in the lower or higher pay categories (Uznov, 2009).

The purpose of this reform will be to reduce the administrative burden and complex calculations of gross and net salary, which will significantly increase the transparency of the overall recognition of the labor costs. This is an important fact from the aspect of domestic companies in preparing their business plans, but also to potential foreign investors. At the same time Macedonian system of pay will equal the ones of member states of EU and OECD countries, as well as most countries in the region (Manovski, 2009).

6.4 Summary

Since its’ independency Macedonia is struggling with many problems in the labour market which seem to be present even now days. With an underperforming economy it faces a very high unemployment rate, low participation in labour market and a very small progress in the aspect of job creation.

Human resource management in majority of companies in the country has only administrative function and its core activities such as selection, recruitment, compensation, training and development are rather neglected and underdeveloped. The laws on employment, unemployment, compensation, labor relations, social protections and others introduced post-1991 contain insignificant inconsistencies and measures not entirely relevant for the development of the labor market.

Regarding performance appraisals and rewards Republic of Macedonia is significantly behind developed European countries. The national culture is characterized with high collectivism and therefore is individual performance less important. This fact limits the implementation of an objective performance appraisal system.

Performance based pay is used to a lesser extend compared to developed European companies and reasons behind this lay firstly in the inability of the management to implement a sound performance based pay system and secondly in the national culture of Macedonians.

Regarding the wage structure in Macedonia are done few steps to move forward toward the developed countries. Until recent it was used the system of net wages which involves a salary minus all contributions for compulsory social insurance. Afterwards Macedonia’s government planned and proposed the introduction of a system of a gross pay, which will significantly increase the transparency of the overall recognition of the labor costs and will bring Macedonian system of pay closer to the ones of member states of EU and OECD countries.

7. Market Research - Employee Compensation in Republic of Macedonia during 90s and Today

This market research is done in order to ascertain the change in the employee compensation in the Republic of Macedonia between two periods of time, the one during the communist regime and the present time. What I wanted to bring to light is to see which was the most favorable period for the workers in Republic of Macedonia in terms of their compensation.

The data was collected through a questionnaire which was divided into two parts of questions, where the same questions were asked in two different times: the one before 90s and the present time. This separation was done in order to provide a clear comparison of employee compensation during two periods of time.

There were a total of 101 persons interviewed, that were engaged in various public and private organizations like hospitals, schools, banks, government institutions, etc. Into the research sample I have mainly summarized workers with over 20 years of working experience, so that the same person had gone through two time periods that are important for this research.

7.1 Demographic data

On this market research are questioned workers of different public and private companies in Republic of Macedonia like hospitals, schools, government organizations etc. The total number of respondents is N=101.

Table 7 presents the total number of respondents of this survey classified into different categories, which were considered as important for this research. According to gender classification we have questioned (N=66) female and (N=34) male workers.

Another classification is done based on the type of habitat, according to which we can classify our workers into two different categories like the one living in cities represented with (N=59 or 64,84%) of respondents and the ones living in rural settlements represented with (N=32 or 35,16%) of respondents.

A further classification of respondents is done according to the type of organizations they were engaged in. Respondents employed in public organizations include (N=81) employers from the total number of respondents, while the ones engaged in private sector include (N=20) employers.

Table 7. The number of respondents according to gender, habitat and type of organization

N

N %

Gender

Female

66

65,35%

Male

34

33,66%

Habitat

Rural

59

58,42%

Urban

32

31,68%

Organization

Public

81

80,20%

Private

20

19,80%

TOTAL

101

100,00%

Graph 1. Respondents’ gender Graph 2. Type of habitat

Data presented in Table 7 are represented above in form of graphs 1 and 2, where we can see that there are few respondents who did not respond to questions related to gender and type of habitat. On the question related to gender there is (N=1) respondent who did not answer and there are (N=10) respondents who did not answer the question related to type of habitat.

Another classification of respondents is done based on their nationality, since Republic of Macedonia is a multiethnic country. Table 8 shows there are (N=45) respondents of Macedonian ethnicity, (N=40) are Albanians and other ethnicities like (N=8) Roma, (N=3) Turkish, (N=3) Croatians and (N=2) respondents didn’t declare their nationality.

Table 8. Respondents according to their nationality

N

N %

Nationality

Missing

2

1,98%

Croatian

3

2,97%

Macedonian

45

44,55%

Roma

8

7,92%

Albanian

40

39,60%

Turkish

3

2,97%

Table 9 shows the average age of the respondents of this survey. The average age is (M=52,22) years, where the minimal age is (Min=36) years and the maximal (Max=64) years.

Table 9. Age Statistics

N

Valid

100

Missing

1

Mean

52,22

Minimum

36

Maximum

64

Graph 3. Age statistics

Table 10 classifies the respondents of the survey according to their educational level. Data show that (N=9) respondents have finished only the primary school, (N=24) respondents have started but not finished the high school and (N=24) respondents have their high school diplomas.

The rest of respondents are included in the ones with 2 years of college (N=20), with university degree there are (N=30) respondents, (N=2) with a master degree and (N=2) respondents with doctoral degree.

Table 10. Educational level of respondents

N

N %

Level of education

Finished primary school

9

9,18%

Unfinished high school

10

10,20%

Finished high school

24

24,49%

2 years of college

20

20,41%

University degree

30

30,61%

Master degree

2

2,04%

Doctoral degree

2

2,04%

Other

1

1,02%

Another important variable of this survey is the years of work experience of respondents. The maximum work experience applied for measuring is above 36 years of work experience where we have (N=8) respondents. There are (N=24) respondents with a work experience from 31 to 35 years, (N=44) respondents with a work experience from 26 to 30 years and (N=24) respondents with 20 to 25 years of work experience.

This classification of respondents is done because of the nature of the problem treated in this survey where was necessary to realize a comparison between employee compensation during the communist regime and the one that governs today in Republic of Macedonia.

Table 11. Respondent’s years of work experience

Count

Column N %

P3

20-25 years

24

24,00%

26-30 years

44

44,00%

31-35 years

24

24,00%

36 years and above

8

8,00%

7.2 Hypothesis

H1. There are important differences in the relationship of employees and managers in organizations before 90s and today

Based on the above stated hypothesis, where we analyze the same variable but in two different time periods, Table 12 shows the mean achieved from the valuation of respondents done to the relationship they had with their managers in organizations they were engaged in during 90s and today. When comparing the means of two time periods we achieve the mean (M=3,51) for the relationship with managers for the time period before 90s and the mean (M=3,14) for the relationship with managers today.

Table 12. The mean for the relationship with managers before 90s and today

Mean

N

Std. Deviation

Std. Error Mean

Pair 1

The relationship before 90s

3,51

101

,626

,062

The relationship today

3,14

101

1,040

,103

Table 13. The average comparison

Paired Differences

t

df

Sig. (2-tailed)

Mean

Std. Deviation

Std. Error Mean

95% Confidence Interval of the Difference

Lower

Upper

Pair 1

90s - today

,376

1,103

,110

,158

,594

3,427

100

,001

According to achieved averages from the valuation done by the respondents we can see that the value of the difference for the two time periods (t=3,427; p<0.01) is statistically significant, which on other hand shows that there was a difference in relationships between employees and their managers before 90s and today. The above stated hypothesis is accepted. Therefore, the null hypothesis is refused.

The result shows that the employees consider their relationship with managers before 90s far better than the relationship they have now.

H2. There are important differences in employee motivation before 90s and today

Based on the valuation done by the respondents regarding the employee motivation on the work place during 90s and today we have achieved the following mean (M=3,30) for the period of time before 90s and (M=2,92) for the employee motivation today as shown in Table 14.

Table 14. The mean of employee motivation before 90s and today

Mean

N

Std. Deviation

Std. Error Mean

Pair 1

Before ‘90

3,30

99

,692

,070

Today

2,92

99

1,085

,109

Table 15. The difference of averages related to employee motivation

Paired Differences

t

df

Sig. (2-tailed)

Mean

Std. Deviation

Std. Error Mean

95% Confidence Interval of the Difference

Lower

Upper

Pair 1

Before 90s – Today

,384

1,291

,130

,126

,641

2,958

98

,004

According to the difference value (t=2,958; p<0.01), the above stated hypothesis is verified, because there is a difference between the averages of employee motivation before 90s and today. According the results, the employee motivation was much higher during the communist regime than it is today.

H3. Before 90s and today there are differences in the way of compensating the employees for their work done

The analysis of the difference in employee compensation for their work done in organizations is represented in Table 16 and 17. By comparing the data for the same employees before 90s and today, from (N=66) employees that were receiving total compensation before 90s now only (N=42) of them are receiving this form of compensation, while (N=5) of these workers now receive a performance based compensation. (N=13) employees receive total compensation and only (N=18) of them receive indirect compensation.

With a performance based compensation before 90s were compensated only (N=8) employees, while today with this form of compensation are compensated (N=10) employees.

Table 16. Employee compensation before 90s and today

Today

Total

Total Compensation

Performance based Compensation

Direct Compensation

Indirect Compensation

Before 90s

Total Compensation

30

5

13

18

66

Performance based Compensation

3

2

2

1

8

Direct Compensation

4

2

8

1

15

Indirect Compensation

5

1

1

4

11

Total

42

10

24

24

100

Direct compensation, which includes only the wage without any type of additional benefits was received from (N=15) employees before 90s, while today the same compensation is received from (N=24) employees. Before 90s with indirect compensation were compensated (N=11) employees, while today only (N=24) employees are compensated with indirect compensation.

According to the values of chi square in Table 17 we can see that (p>0.05), which indicates that these data do not have any significance within the limits of reliability. This shows that our hypothesis is rejected and proves the null hypothesis, which indicates that there is no significant difference between forms of compensation before 90s and at the present time.

Table 17. Chi-Square Tests

Value

df

Asymp. Sig. (2-sided)

Pearson Chi-Square

13,684a

9

,134

Likelihood Ratio

12,988

9

,163

Linear-by-Linear Association

,076

1

,783

N of Valid Cases

100

a. 11 cells (68.8%) have expected count less than 5. The minimum expected count is 80.

Graph 4. Types of compensation before 90s and today

H4. There are important differences in the wage structure before 90s and the present time

In the wage structure was usually included the basic salary and payment for food and transport, different bonuses and overtime payments. Table 18 shows that at the present time (N=60) respondents receive only a basic salary for their work done, while (N=26) of respondents receive in addition to basic salary also payment for food and transport. If we compare these data with the ones before 90s we see a drastic change, as during that time only (N=17) of employees received only basic salary while (N=61) of them received in addition to basic salary also payment for food and transport. We have noted also lower figures for the bonuses and overtime payments at present time (N=3 and N=9), while in the years before 90s we have larger number of employees receiving bonuses and overtime payment (N=9 and N=11).

Table 18. Wage structure before 90s and today

Today

Total

Only basic salary

Basic salary and payments for food and transport

Basic salary and different bonuses

Basic salary and overtime payments

Before 90s

Only basic salary

14

2

0

1

17

Basic salary and payments for food and transport

37

17

3

4

61

Basic salary and different bonuses

3

5

0

1

9

Basic salary and overtime payments

6

2

0

3

11

Total

60

26

3

9

98

Table 19 shows that during the 90s the average is (M=2,14) which is much higher compared to the average of the present time (M=1,60). This difference between two averages (t=4,847; p<0.01) is significant and proves the hypothesis laid down (Table 20). The difference is in favor and supports the payment structure situation in organizations before the 90s.

Table 19. The average of wage structures before 90s and today

Mean

N

Std. Deviation

Std. Error Mean

Pair 1

Before 90s

2,14

98

,837

,085

Today

1,60

98

,928

,094

Table 20. The difference between averages

Paired Differences

T

df

Sig. (2-tailed)

Mean

Std. Deviation

Std. Error Mean

95% Confidence Interval of the Difference

Lower

Upper

Pair 1

Before 90s –Today

,541

1,105

,112

,319

,762

4,847

97

,000

H5. Compensation packages in organizations before 90s are different from the ones in the present times

Regarding the compensation packages, there is a comparison done between the ones applied before years 90s and the ones that are applied at the preset time. (N=17) respondents have received packages with different bonuses before 90s, while at the present time only (N=7) of them receive bonuses. Also the data show that today very less of employees receive overtime payments (N=5) compared to (N=11) employees that received overtime payments before 90s.

We have a close proximity in the number of employees receiving the health and pension insurance package. In the past (N=57) of them received this package and today (N=50) employees receive it. However we have a large difference in the number of employees that do not receive any compensation package today (N=29) with the ones in the past (N=6).

Table 21. Compensation packages before 90s and today

Today

Total

Different bonuses

Overtime payments

Health and pension insurance

None of these packages

Before 90s

Different bonuses

4

0

1

12

17

Overtime payments

1

3

1

6

11

Health and pension insurance

2

1

46

8

57

None of these packages

0

1

2

3

6

Total

7

5

50

29

91

Table 22. Chi-Square Tests

Value

Df

Asymp. Sig. (2-sided)

Pearson Chi-Square

55,702a

9

,000

Likelihood Ratio

56,106

9

,000

Linear-by-Linear Association

,159

1

,690

N of Valid Cases

91

a. 11 cells (68,8%) have expected count less than 5. The minimum expected count is ,33.

According to chi square value in the Table 22, the data affirm and confirm the hypothesis put forward (p<0.01).

H6. There is a difference in the delay of salary (pay) before 90s and nowadays

According to the data in the Table 23 and 24 we can see that salary delays during years before 90s occurred very rarely or almost never with (N=43 and N=24) respondents. Nowadays the delays of salary occurs very often with (N=41) respondents, compared to years before 90s with only (N=4) respondents. These differences are significant (p<0.01) and indicate that before 90s the delays of salary have occurred very rarely and today it happens very often. The hypothesis is accepted.

Table 24. Delays of salary nowadays

Observed N

Expected N

Residual

Very often

41

24,0

17,0

Rarely

28

24,0

4,0

Very rarely

18

24,0

-6,0

Never

9

24,0

-15,0

Total

96

Table 23. Delays of salary before 90s

Observed N

Expected N

Residual

Very often

4

24,5

-20,5

Rarely

27

24,5

2,5

Very rarely

24

24,5

-,5

Never

43

24,5

18,5

Total

98

Table 19. Test Statistics

Before 90s

Today

Chi-Square

31,388a

23,583b

Df

3

3

Asymp. Sig.

,000

,000

a. 0 cells (,0%) have expected frequencies less than 5. The minimum expected cell frequency is 24,5.

b. 0 cells (,0%) have expected frequencies less than 5. The minimum expected cell frequency is 24,0.

H7. There is a difference in employee satisfaction from the pay they receive from organizations where they actually work in

H8. Employees of private organizations are more satisfied with the compensation they receive compared to employees of public organizations

In Table 25 we can see that (N=27) of respondents are not satisfied at all with their incomes, (N=16) of respondents are unsatisfied, (N=36) of respondents are moderately satisfied, (N=14) of them are satisfied and only (N=8) respondents are completely satisfied. According to the chi square vale (p<0.01) the hypothesis is verified (Table 26).

Table 25. Employee satisfaction from their incomes

Observed N

Expected N

Residual

Not satisfied at all

27

20,2

6,8

Unsatisfied

16

20,2

-4,2

Moderately satisfied

36

20,2

15,8

Satisfied

14

20,2

-6,2

Completely satisfied

8

20,2

-12,2

Total

101

Table 26. Test Statistics

P14

Chi-Square

24,792a

Df

4

Asymp. Sig.

,000

a. 0 cells (,0%) have expected frequencies less than 5. The minimum expected cell frequency is 20,2.

Table 27 shows the average of employee satisfaction of public organizations, which is (M=2,38) and the one of engaged in private organizations is (M=3,50). These data help us conclude that the employees of private organizations are more satisfied with their compensation than the employees of public organizations. According to the value of F coefficient in Table 28 (F=14,778; p<0.01) our hypothesis is verified.

Table 27. The averages of employee satisfaction form compensations in public and private organizations

N

Mean

Std. Deviation

Std. Error

95% Confidence Interval for Mean

Minimum

Maximum

Lower Bound

Upper Bound

Public

81

2,38

1,135

,126

2,13

2,63

1

5

Private

20

3,50

1,277

,286

2,90

4,10

1

5

Total

101

2,60

1,242

,124

2,36

2,85

1

5

Table 28. ANOVA

Sum of Squares

Df

Mean Square

F

Sig.

Between Groups

20,023

1

20,023

14,778

,000

Within Groups

134,136

99

1,355

Total

154,158

100

Graph 5. Employee satisfaction according to the type of organization

H9. There are differences in level of savings from incomes before 90s and nowadays

According to data presented in Table 29 we can see that before 90s a larger number of respondents have declared they could save money from the incomes they’ve received (N=43 and N=48), while at the present time only (N=9 and N=1) have declared they can save money from their incomes, which is quite small number compared to years before 90s.

At the present time (N=41) respondents declared they could not save at all from their incomes, while (N=27) of respondents declared they should borrow money to cover the monthly expenses. This number is very small for the years before 90s (N=1 and N=3).

Table 29. Level of savings before 90s and nowadays

Today

Total

Borrow money for covering the monthly expenses

Can’t save at all

Spend also the saving

Can save very less

Save money for the future

Before 90s

Borrow money for covering the monthly expenses

1

0

0

0

0

1

Can’t save at all

1

0

0

2

0

3

Spend also the saving

0

2

0

1

0

3

Can save very less

15

18

8

2

0

43

Save money for the future

10

21

12

4

1

48

Total

27

41

20

9

1

98

In Table 30 we can see that the average of savings is much higher before 90s (M=4,37) compared to the average of savings at the present time which is only (M=2,14). This difference is significant (t=18,133; p<0.01) and therefore we verify our hypothesis and refuse the null hypothesis (see Table 31).

Table 30. The average of savings before 90s and today

Mean

N

Std. Deviation

Std. Error Mean

Pair 1

Before 90s

4,37

98

,778

,079

Today

2,14

98

,963

,097

Table 31. Paired Samples Test

Paired Differences

Mean

Std. Deviation

Std. Error Mean

95% Confidence Interval of the Difference

T

df

Sig. (2-tailed)

Lower

Upper

Pair 1

Before 90s and today

2,224

1,214

,123

1,981

2,468

18,133

97

,000

H10. There is a difference between rural and urban settlement workers in their satisfaction from their incomes from organizations they’re engaged in

In the Table 32 we can notice that the average of employee satisfaction that live in rural settlements is (M=2,75), while the average of satisfaction for employees of urban settlements is (M=2,12), which is bitt lower.

Table 32. The average of employee satisfaction between urban and rural settlements

Settlement

N

Mean

Std. Deviation

Std. Error Mean

Satisfaction

Rural

59

2,75

1,281

,167

Urban

32

2,12

1,008

,178

Table 33. The difference between averages

Leven's Test for Equality of Variances

t-test for Equality of Means

F

Sig.

t

Df

Sig. (2-tailed)

Mean Difference

Std. Error Difference

95% Confidence Interval of the Difference

Lower

Upper

Satisfaction

Equal variances assumed

1,423

,236

2,370

89

,020

,621

,262

,100

1,141

Equal variances not assumed

2,543

77,368

,013

,621

,244

,135

1,107

According to the value of the difference presented in the Table 33, (t=2,370; p<0.05), we can conclude there is a significant difference between the satisfaction averages of employees living in rural and urban settlements. Therefore or hypothesis is verified – the employees of rural settlements are more satisfied with their compensations than the ones of urban settlements.

7.3 Summary

After collecting all the necessary information from the questionnaires, I derived 10 hypothesis and tested them to prove whether they are valid or not. The results were quite surprising since they favored the period of time during the communist regime in the Republic of Macedonia.

The first hypothesis questioned the relationship between employees and managers during 90s and today and the result showed that the employees consider their relationship with managers before 90s far better than the relationship they have nowadays. Also, the employee motivation was much higher during the communist regime than it is today, which could result from our next conclusions achieved from the research. An important fact derived from the survey is that employees during 90s have received beside their basic salary more bonuses and overtime payments than they receive today. The results of research showed that bonuses and overtime payments at present time were received from only (N=3 and N=9) employees, while in the years before 90s we have (N=9 and N=11) employees receiving bonuses and overtime payment. We have a close proximity in the number of employees receiving the health and pension insurance package. In the past (N=57) of them received this package and today (N=50) employees receive it. However we have a large difference in the number of employees that do not receive any compensation package today (N=29) with the ones in the past (N=6).

Another factor that could have influenced on the motivation of employees is a delay in salary. In this point we have numbers that favor the period before 90s again. The research showed that nowadays the delays of salary occurs very often with (N=41) respondents, compared to years before 90s with only (N=4) respondents.

Another important fact derived from the research was the level of savings from incomes received during two different time periods. The results of the survey showed that at the present time (N=41) respondents declared they could not save at all from their incomes, while (N=27) of respondents declared they should borrow money to cover the monthly expenses. This number is very small for the years before 90s (N=1 and N=3) and according to the persons interviewed back than a saving was much possible than it is at the present time.

8. Conclusion

The main purpose of this paper was to give insights on the importance and development of reward systems overall and with special focus on the economies in transition. What we tried to understand was how the transition process influenced on the development of employee reward systems.

As it was discussed earlier, economic transition can happen together with political and social transformation. In this economy transformation human resource management itself and reward systems played a significant role. In order to successfully overcome the transition to market driven economy many socialist countries introduced management theories and applied tools that were recognized and used in many developed countries and successful companies world-wide (Milikic and Janicijevic, 2009). However their success highly depended on their sources and capabilities within their borders.

Some of ex-socialist countries proved to be more successful when it comes to changes and developments in employee reward systems, like two of former Yugoslavian countries, Slovenia and Serbia, which similarly to Europe use the performance appraisal or also used as performance-related pay, and other are less successful, like the case of Macedonia. Macedonia proved to be significantly behind developed European countries when referring to performance appraisals and rewards. The individual performance less important, therefore the implementation of an objective performance appraisal system is very limited. This can be result of many problems that came with the bad-managed transition process in Macedonia. Therefore the unique solution remains in overcoming the problems of the labour market and afterwards creating space and conditions to implement a human resource management system, including compensation system, compared to those of developed European countries.