In today’s global competitive arena the term “knowledge economy” is no mere slogan. It points to the very real fact that economic activities are increasingly knowledge intensive and that in this globalized world, success will come to those that are able to generate and harness knowledge in order to stay ahead of the pack. Research shows that in economies that do not have sufficient infrastructure, natural resources or may be designed as high cost base locations, comparative advantage has shifted to knowledge-based activities that cannot be transferred around the world without a significant cost. High knowledge and skills based economies will most likely be able to attract and retain investments in industries with a strong future. It is no secret that good education lies at the heart of economic growth and development. At the same time, improving the quality and relevance of education is enormously difficult not least because there is no one single policy measure that will do so effectively.Macedonia is not exclusion to this fact. The Macedonia’s employers and employees face a huge talent management dilemma. Analyses by all relevant institutions (World Bank, NGOs) and interviews with multiple representatives from the private sector companies indicate that while the labor pool is growing (supply side), it does not provide the skills needed by employers (demand side) so, that they could be competitive and further grow in today’s market. Employers are nearly unified in their criticism of an education system that produces graduates with limited practical experience and no soft skills transferable to the workplace. This is largely due to a lack of experiential education, competency based curricula, pragmatic guidance, which fails to meet the needs of the business community. The burden falls most often on employers to provide practical training, usually on the job. While in-company training is good practice, the scale of the skill gap requires a cost and internal training capability that many enterprises cannot afford, creating a disincentive for businesses to hire new employees.The dilemma has impacted job seekers (official unemployment in Macedonia is around 28% as of December 2017) and contributes to lower overall economic growth. It is especially problematic for micro and small enterprises (MSEs), which make up a large proportion of employment in Macedonia. MSE size and limited capacity makes their employees skills, experience and multitasking capabilities that much more critical for growth. Additionally, MSEs often lack the resources necessary to effectively train and maximize the productivity of their staff. As a result, sustained employment growth within Macedonia must include the development of a pipeline of skilled employees for microenterprises, including bolstering the capacity of small businesses to organize and train their workers. On the other side, the formal education institution dislike they way the private sector manages their employees. According to many of them, this is due to the fact that companies believe that their performance in the market is not directly linked with the human capital performance. In addition, education holds to the belief that private sector companies are not engaged enough in creating the next pool of talents in Macedonia. When they are invited to participate in the classrooms as expert of guest speaker, hire or engage students they show little interest. To conclude, the education institution believes that private sector companies in Macedonia consider the investment in human capital as a cost and not an investment.
