Center for Research and Policy Making

1. Center for Research and Policy Making Local Economic Development of Gostivar municipality- Collapse of the industry, emigrants key for surviving NGO Fair- Skopje

2. 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

3. Historical Overview: Population

4. Inhabitants in Municipality Gostivar

5. Inhabitants in the Town of Gostivar

6. 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.

7. 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

8. 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.”

9. 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.

10. 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.

11. 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

12. The leftovers of “Silika” In 1995, RIOM”SILIKA” started bankruptcy procedure. SILIKA was divided in three business units: • AD “ALUMO SILIKAT” • AD ”REMONT” • 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

13. Aftermaths of Gostivar’s transition • The big industrial capacities have collapsed • Number of active enterprises in 2004: 4352 enterprises (99.1% SMEs)

14. 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

15. Unemployment in Gostivar • 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

16. 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

17. 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

18. 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 houses With positive impact on economy • Home comers bringing in investment and know-how (Gudalat, Fejzi, Fatina)

19. 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

20. 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

21. Recommendations and conclusions Discussion paper on CRPM’s Gostivar research – coming soon -

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