Western Balkans Competitiveness Outlook 2024: Montenegro

9. Employment policy

Abstract

Effective employment policies are crucial for forging a strong economy and fostering economic development and social inclusion. This chapter aims to assess the regulatory framework and policies governing employment, as well as the institutional capacity for implementation. The first sub-dimension focuses on inclusive labour market governance, specifically looking at the employment regulatory and policy framework, labour inspectorates, social dialogue and inclusive employment policies. The second sub-dimension, social protection and activation policies, analyses the public employment services, mutual obligations framework and active labour market programmes. The third sub-dimension, skills for adaptable labour markets, assesses the skills mismatches in the labour market and initiatives for developing digital and green skills. The fourth sub-dimension, expanding the skills pool, focuses on attracting highly skilled migrants and diaspora.

Key findings

Montenegro’s overall score has increased since the previous Competitiveness Outlook, remaining well above the regional average (Table 9.1). The economy made significant strides in strengthening its inclusive labour market governance, particularly in terms of its regulatory framework, tripartism and social dialogue. Conversely, Montenegro’s efforts to expand its skills pool through maximising the use of foreign talents and attracting diaspora skills are limited, representing its weakest area of performance.

Table 9.1. Montenegro’s scores for employment policy

Dimension	Sub-dimension	2018 score	2021 score	2024 score	2024 WB6 average
Employment	8.1: Inclusive labour market governance			3.6	3.2
	8.2: Social protection and activation policies			3.5	3.1
	8.3: Skills for adaptable labour markets			3.5	2.6
	8.4: Expanding the skills pool			2.5	2.4
Montenegro’s overall score		2.1	3.0	3.4	2.9

The key findings are:

• Informal work remains highly prevalent, constituting 26-31% of national GDP. This challenge underscores the importance of finalising the strategy for combating informal employment for a comprehensive approach, and further strengthening monitoring and advisory mechanisms through labour inspectorates.

• The labour force participation rate of women in Montenegro remains around 19 percentage points lower than the EU average (48.7% versus 67.7%, respectively). Implementation of the National Strategy for Gender Equality 2021-25 and further scaling up impactful initiatives, such “Activating Women”, would be crucial to reduce the gender gap in the labour market.

• The publication of the new General Collective Agreement in December 2022 represents a major stride toward enhancing workers’ rights in Montenegro and further aligning the economy’s employment legislation with the EU acquis.

• Despite Montenegro’s notably high unemployment rate of 14.4% in 2023 – the highest in the region and more than double the EU average of 6.0% – only 23% of jobseekers receive unemployment benefits. Online registration for jobseekers and employers has been introduced, yet the utilisation of these digital services is limited.

• While the economy boasts fairly comprehensive social protection and activation policies, their efficacy remains limited by inadequate funding, impacting both the public employment service's staffing and training capabilities and the financing of active labour market programmes. Ensuring sufficient resources for the Employment Agency of Montenegro will be vital for enhancing jobseekers’ outcomes and fostering labour market efficiency.

• Little progress has been achieved in supporting digital skills development, particularly among adults already in the labour force. Although some strategies touch upon the importance of cultivating digital skills, there are no measures in place to encourage employers to upskill their workers or to address shortages of digital skills.

• Additional efforts are needed to strengthen Montenegro’s expansion of its skill base, particularly by attracting diaspora skills. Despite the existence of a dedicated institution for diaspora engagement, the strategic framework remains limited in scope, with no indication of progress toward developing a new comprehensive National Diaspora Strategy.

State of play and key developments

In recent years, both the activity and employment rate in Montenegro have steadily risen, demonstrating the economy’s steady recovery from the effects of the COVID-19 pandemic. In 2022, the economy reported an activity rate of 67.7% among the population aged 15-64, which represented a five percentage-point increase from 2019 and positioned the rate as the third highest of the Western Balkan economies (MONSTAT, 2023[1]). Similarly, Montenegro’s employment rate was 57.5% in 2022, which represented around a two percentage-point increase from 2019. Despite this progress, the economy’s activity and employment rates remain largely below EU levels, which were 74.5% and 69.8%, respectively.1

Sub-dimension 8.1: Inclusive labour market governance

Since the last assessment cycle, no changes to the legal framework for employment have been observed, although there are ongoing efforts to further align this framework with the EU acquis. Montenegro’s labour legislation encompasses both standard and non-standard forms of employment, including fixed-term or part-time employment contracts as well as temporary agency work. Moreover, the framework ensures that all non-standard workers – ranging from self-employed individuals to temporary employees to platform and gig workers – benefit from social protections, such as health and accident insurance and access to labour market programmes. Such securities are crucial, as temporary employment was quite widespread in Montenegro, accounting for 30.7% of the total employed population in 2021 (Vienna Institute for International Economic Studies, 2024[2]). However, while a monitoring system comprising key employment indicators is in place, systematic data collection on all non-standard employment is underdeveloped.

The economy’s primary labour regulations and laws establish minimum standards for paid holidays and health and safety conditions. Namely, the Laws on Health and Safety at Work apply universally, covering all entities and workers, including seconded workers if the regulations of the receiving economy provide less favourable occupational health and safety measures than those outlined in this law.2 There are several efforts under way to further strengthen the legal framework governing working conditions in Montenegro, particularly given that the existing framework does not address working hours. For example, there is a working group for drafting amendments to the Labour Law, which is the main piece of legislation outlining the rights, obligations, and provisions of employees; this group is currently working to align the law with the EU’s Work-Life Balance Directive.3 Moreover, to evaluate the impact of existing labour regulations, studies have been conducted on social security coverage, health and employment participation, and companies' hiring practices.

Montenegro’s policy framework for employment has been strengthened due to the recent adoption of the Strategy for Improving Health and Safety at Work 2022-27 and ongoing development of the Action Plan for Implementation for 2024 by the government. Under this strategy, employers have the obligation to designate health and safety specialists, either from their existing staff (if necessary training has been provided) or by engaging an external expert.4 While limited information is available regarding the implementation of this requirement, the new strategy highlights efforts to promote a proactive approach to addressing health and safety concerns in the workplace. Although no specific programmes exist to support employers in the field of occupational health and safety, the Ministry of Labour and Social Welfare undertakes prevention and promotion activities in this domain. For instance, under the proposed 2024 Action Plan, the Ministry will carry out awareness-raising activities to help employers prevent work‑related injuries and occupational diseases.

Other key strategies addressing the employment framework include the new National Employment and Human Resources Strategy 2021-25 and annual employment Action Plans. However, a crucial aspect of Montenegro’s employment legislation lies in its efforts to address informality in the labour market, which accounts for an estimated 26-31% of national GDP (European Commission, 2021[3]). The economy is currently in the process of developing a strategy to combat informal employment. Previously, the government relied on multi-annual action plans, with the most recent, titled “Action Plan for the Suppression of the Grey Economy”, covering the period 2020-22.

The operations of labour inspectorates in Montenegro benefit from clear and measurable policy goals as well as activities co-ordinated with other relevant institutions. The primary objectives of the Department of Labour Inspection, which falls under the purview of the Administration for Inspection Affairs of Montenegro, are to detect and combat informal employment, ensure the proper payment of wages, and guarantee the fulfilment of other rights associated with employment. As such, labour inspectorates dedicate most of their efforts toward inspecting workplaces and pursuing infringement procedures, with less attention paid to implementing informational or prevention activities.

Despite the important role that these entities play in ensuring effective and inclusive labour regulation, no measures have been taken to augment the capacities of labour inspectorates in Montenegro since the last assessment cycle. Funding is not determined by labour inspectorates, but by the national government. The labour inspectorates’ inputs and outcomes undergo annual monitoring, with the latest assessment conducted through a public audit at the conclusion of 2022. While these audits have the potential to engender wage increases for staff, the 2022 evaluation concluded that the entity can effectively fulfil its duties with its existing capacity, and therefore no such adjustments were deemed necessary.

Collective bargaining primarily occurs at the sector and national level, with agreements primarily regulating employees’ salaries and working hours. Workers’ coverage by collective agreements remains relatively high in Montenegro.5 Indeed, while specific statistics regarding this coverage are somewhat outdated,6 it is estimated that more than half of Montenegrin workers benefit from collective bargaining coverage (ILO, 2019[4]). Tripartite collective bargaining, which involves the government with various social partners, covers numerous policy fields, including the determination of minimum wages,7 issues related to new forms of work (e.g. the platform economy), legislation on working hours, and pension policies.

Since 2021, collective bargaining and tripartism have undergone several changes aimed at improving the labour market, namely through supporting improved working conditions and augmented wages. Over the past few years, collective agreements and consultations were concluded or amended in numerous sectors, ranging from education and culture to tourism and construction. One of the most notable developments was the signature of a new General Collective Agreement in December 2022. The agreement included revised coefficients used to calculate wages, an increase in base hourly salary for work on Sundays, and the introduction of a maximum allowed number of annual overtime hours (250). Such novelties not only reinforce employees’ rights, but also lay the foundation for additional initiatives aimed at securing further rights for the labour force.

However, despite these recent advances, there is still scope to further improve the legal and institutional frameworks governing this social dialogue. Currently, the government of Montenegro does not conduct any impact assessment for collective bargaining or tripartism. Moreover, there has been no analysis of those sectors or groups of low-wage workers, nor has there been a study on the wage differences between companies covered by a collective agreement and those that are not. Such assessments are crucial for understanding how collective agreements impact the labour market, thereby providing valuable information for informed policy making.

Montenegro has made substantial strides in instituting more inclusive labour market policies. There is an array of strategic documents aiming to ensure equal opportunities and inclusion for vulnerable groups, including Roma and Egyptian minorities and individuals with disabilities. Notably, several demographics are excluded from employment policies: for instance, no specific actions exist to combat child labour or victims of violence. Most of these programmes are funded by the government of Montenegro, although some select few are financed through the EU’s Instrument for Pre-Accession Assistance.

While the economy has introduced several measures to support vulnerable groups, most efforts have been devoted to augmenting labour market inclusiveness through promoting women’s employment. This aim is important given the low employment rate of women in Montenegro compared to EU levels (48.7% versus 67.7% in 2021, respectively) (Eurostat, 2023[5]). Moreover, within the economy, the labour force participation rate among females was more than 14 percentage points lower than males in 2023 (World Bank, 2024[6]). To address this gap, the government approved a National Strategy for Gender Equality 2021-25 accompanied by two-year Action Plans in addition to a separate strategy supporting the development of female entrepreneurship. Additionally, the Employment Agency of Montenegro (EAM), in co-operation with the International Labour Organization (ILO), launched a pilot project titled “Activating Women”. Intended to last from 2021 to 2023, the initiative aims to activate women who are 25-49 years old, have preschool-aged children, and lost their jobs during the COVID-19 pandemic. Furthermore, career guidance is available to young women to encourage them to pursue technical and vocational education and training (TVET) and university education in science, technology, engineering, and mathematics (STEM) fields. These programmes are financed through a system for gender budgeting, although there is no co-ordinating body for gender equality.

Sub-dimension 8.2: Social protection and activation policies

The public employment service (PES) offers a comprehensive array of services, which in turn contributes to its widespread use by jobseekers. Indeed, in 2022, there were over 46 000 jobseekers registered with the PES, although this figure is larger than the number of unemployed individuals reported in the 2022 Labour Force Survey (43 200) (MONSTAT, 2023[1]). EAM activities range from those more administrative, such as registering jobseekers and vacancies, to liaising between unemployed people and employers through the organisation of job fairs or the use of an information technology (IT)-based matching system to pair jobseekers with open posts. However, counselling services remain one of the agency’s central responsibilities. This involves offering professional assistance in job selection, search, and acceptance, as well as introducing methods for active job hunting, supporting career management skills development, and researching knowledge and skills necessary for increased employability and professional advancement. Counselling is conducted through individual sessions and various group activities such as workshops and seminars, encompassing areas like entrepreneurial knowledge, competency development, and self-directed professional growth.

Due to the high share of long-term unemployed individuals, the caseload of PES counsellors is relatively high, with an average of 159 jobseekers assigned to each counsellor. While this is notably higher than the goal threshold of 100 cases or fewer, the average is still lower than those of the other Western Balkan economies. Due to budget restrictions, the PES is unable to hire additional staff or independently finance the necessary training for its existing counsellors. However, there are plans to provide greater support to employees in regional units through the design and implementation of training measures to enhance their competencies.

The digitalisation of PES services and processes has seen only limited progress in recent years. Since the start of the COVID-19 pandemic, online registration was introduced for first-time jobseekers submitting their application as well as for employers who wish to register a vacancy. However, the download of digital PES services remains limited, as some groups of jobseekers do not possess sufficient digital skills or do not have access to the Internet. Moreover, the preference for face-to-face contact is prevalent among most employers, further limiting the uptake of digital services.

Montenegro’s unemployment benefit system is one of the most advanced in the region, although few updates have been made since the previous assessment cycle. The legal framework is harmonised with the ILO standards on social security,8 illustrating a commitment to international standards and promoting fairness and equity in social protections. Moreover, the framework includes workers who are under non‑standard forms of employment, namely part-time work. Unemployment benefits are determined at a fixed rate in relation to the minimum wage. Unemployed individuals can generally receive benefits for a period of 3 to 12 months, depending on the duration of previous job experience.9 To receive these benefits, individuals must provide proof that they are actively searching for employment (and allow this process to be monitored) and must accept any suitable job offer – or face sanctions for failing to fulfil either condition. While a small share of registered jobseekers (23%) receives unemployment benefits, this figure is much higher than in other Western Balkan economies.

Furthermore, most registered unemployed people do not receive social assistance. Like those receiving unemployment benefits, individuals of working age who benefit from social assistance must show proof of their job search and accept any suitable offer. Moreover, there is an agreement between the EAM and centres for social work that aims to improve the position of vulnerable unemployed persons by providing integrated services from both systems. This entails the creation of an individual employment plan by the PES and an individual activation plan by the social work centres. Through the latter, beneficiaries can receive referrals to support programmes aimed at boosting their employability and facilitating their access to the labour market. However, it is vital to note that individuals cannot benefit from social assistance and/or unemployment benefits while earning any income through employment. Such a restriction was designed to ensure that those in need receive adequate financial support while simultaneously limiting the potential abuse of the economy’s social safety net.

Despite these efforts, Montenegro reports the highest unemployment rate in the Western Balkans (14.4% in 2023) (World Bank, 2024[7]). This figure is more than double that of the EU average of 6.0% (Eurostat, 2024[8]). Moreover, a high share of unemployed individuals (69.8%) were experiencing long‑term unemployment, although this proportion has been decreasing in recent years (Vienna Institute for International Economic Studies, 2024[2]). Youth unemployment was also notably high, registering 27.1% in 2023 – or more than 10 percentage points above the EU average of 14.5% (Eurostat, 2024[9]; World Bank, 2024[10]).

Active labour market programmes (ALMPs) in Montenegro are relatively well developed, underpinned by a clear strategic framework and regular impact assessments and evaluation. The target groups of these programmes include youths, specific groups of women, persons with disabilities, and those who are long-term unemployed. While this represents an impressive breadth of intended beneficiaries, other important groups, such as older unemployed workers, ethnic minorities and immigrants, do not benefit from such tailored efforts. ALMPs are outlined in the new National Employment Strategy 2021-25 and its accompanying Action Plan. Moreover, the recently introduced “Entrepreneurship Incentives” programme provides both financial and non-financial assistance to unemployed individuals who launch their own entrepreneurial pursuit. By mitigating obstacles predominantly faced by new businesses, the initiative aims to promote entrepreneurship and self-employment. While these programmes are supported by an allocated budget, they receive a much smaller proportion of funding (0.064% of national GDP) than ALMPs in EU Member States (0.39%) (European Commission, 2024[11]).

In 2021, the Regional Cooperation Council (RCC) carried out an evaluation of Montenegro’s ALMPs (RCC, 2021[12]). The assessment found that these programmes did not sufficiently meet the needs of unemployed individuals. One issue cited was the complicated and time-consuming public tender process, which is launched by the EAM once a year. Additionally, the low remuneration of some programmes is not competitive enough to induce unemployed people to participate. Given these challenges, the RCC concluded that the PES in Montenegro did not suitably engage the individuals that are furthest from the labour market, underscoring the need to improve the design of the ALMPs.

Sub-dimension 8.3: Skills for adaptable labour markets

Montenegro’s employment landscape is characterised by a stark contrast among workers with different skill levels. The employment rate for low-skilled workers was notably low at 17% – a figure far below the rates reported for medium-skilled (49.4%) or highly skilled workers (74.6%).10 Moreover, unemployment rates varied, with low-skilled workers facing the highest rate at 28%, compared to 17.4% of medium‑skilled workers and 12.3% of high-skilled workers. It is important to note that the majority of low‑skilled individuals in the working-age population did not participate in the labour market at all (Vienna Institute for International Economic Studies, 2024[2]).

Montenegro boasts a robust institutional and policy framework to address skills mismatch within the economy. Strategies and action plans for promoting adult learning are well established, and both an apprenticeship system and a dual vocational training system – two key features for promoting work‑based learning – are in place. There is also consultation between the government and employers, trade unions, sector associations and social partners for the amendment of existing curricula and the introduction of new ones. Career guidance is available to both students and adults. To analyse skills gaps and mismatches, the government utilises several tools, including sectoral analysis and skills‑forecasting studies as well as an employer needs survey. While the results of these assessments are not publicly available, they will be crucial for better anticipating the current and future needs of the economy’s labour market, and subsequently incorporating these findings into the design of employment policies.

However, progress can still be made in reducing the skills imbalance, particularly for adult learning. The Adult Education Strategy of Montenegro 2021-25 encompasses adult learning, but it does not explicitly focus on addressing the needs of low-skilled individuals, who are more prone to experiencing a vertical mismatch (possessing a lower level of education than required for roles) (RCC, 2021[12]). Initiatives such as the Adult Learning and Training Programme are perceived to be beneficial, although most participants did not secure employment upon completion, suggesting a need to further align such programmes with the workforce’s needs.

In terms of skills for the digital transition, Montenegro has taken some preliminary steps toward promoting the development of digital skills at all levels of expertise. There are several policy frameworks that touch upon the importance of digital skills in the labour market (Box 9.1). However, the economy lacks specific policies, programmes, and action plans that encourage employers to upgrade their workers’ digital skills as well as programmes for developing digital skills in adults. Furthermore, there are no surveys on employees’ participation in continuous training and education to improve their digital skills, nor are there impact assessments for promoting digital skills at all levels of knowledge.

The nascent policy framework has led to a comparatively higher prevalence of basic digital skills among Montenegrin citizens. In fact, Montenegro leads the WB6 economies with this measure, surpassing the regional average by over 12 percentage points, though it remains below the EU average (Table 9.2). In 2021, approximately 47% of Montenegrin individuals possessed at least basic digital skills, surpassing the 36.3% observed in the Western Balkans.11 Nevertheless, this still fell short of EU levels, which stood at 53.9%.

Box 9.1. Montenegro’s policy framework for digital skills

While Montenegro does not have a dedicated strategy outlining the priorities and objectives for promoting skills for the digital transition, there are several policy documents that indicate the economy’s commitment to ensuring that its workforce acquires the digital skills demanded by both the current and future labour market. These policies include:

• The National Employment Strategy of Montenegro 2021-25 – This strategy includes the goal of creating knowledge and competencies for the labour market in the digital era. This aim is supported by two measures on providing IT education and training to all individuals and improving the quality of vocational and higher education.

• The Digital Transformation Strategy 2022-27 – This strategy has an objective centred on the development and improvement of digital knowledge and skills among the population of Montenegro. It particularly highlights the importance of increasing female IT experts and strengthening the skills of civil servants who provide digital services.

• The Programme for Improving the Competitiveness of the Montenegrin Economy – This document promotes the development of soft digital and creative skills in its entrepreneurship and employment programmes.

Source: UNDP (2023[13]).

Table 9.2. Individuals with basic or above-basic overall digital skills (2021)

Percentage of all individuals

	MNE	WB6	EU
Individuals with basic or above basic overall digital skills	47.2	34.8	53.9

Note: Kosovo data (used to calculate the WB6 average) were from the latest available year (2019).

Sources: Eurostat (2023[14]; 2020[15]).

Policies and programmes supporting the development of the workforce’s skills for the green transition are limited in both depth and scope. Notably, there is no dedicated strategy for mitigating the negative effects on employment of downsizing polluting industries, such as coal mining. Phasing out fossil fuels will likely result in job losses and other social challenges that necessitate proactive management (OECD, 2022[16]). A working group was recently formed to help mitigate these adverse employment and social consequences, although its nascent establishment means that it has not yet engendered substantial advances. Indeed, the most relevant strategy is the economy’s circular transition strategy, which tangentially addresses the issue of skills for the green transition but does not exclusively focus on them.

The Chamber of Commerce has initiated certain preliminary activities, including forecasting the impact of the green transition on employment and identifying and categorising jobs related to the green transition. While the government has introduced incentives to promote employment and entrepreneurship in the green economy, details about potential beneficiaries and the types of incentives provided are limited. Also despite these initiatives, the government's efforts to foster employment have yet to be accompanied by concrete measures for training and adapting skills among both employed and unemployed individuals to meet the demands of the green transition. As such, there is substantial scope for the government of Montenegro to strengthen its efforts to bolster its population’s acquisition and advancement of skills for the green transition through more targeted policies and expanded training and career guidance for both new and longer-term jobseekers.

Sub-dimension 8.4: Expanding the skills pool

Montenegro is actively seeking to make the most of foreign talent through its migration policies, such as the 2021-25 Strategy on Migration and Reintegration of Returnees, which builds on earlier strategies (Government of Montenegro, 2021[17]). As elaborated in this policy document, Montenegro aims to ensure a sustainable and functional mixed migration management system that provides full access to rights, complies with the relevant international agreements and protocols, and improves readmission and return mechanisms for Montenegrin and foreign citizens. The latest Action Plan 2023-24, aligned with the 2021-25 Strategy, addresses persistent challenges as well as unimplemented actions from the previous 2021-22 plan. Additionally, it incorporates findings and recommendations from international reports. From May to October 2025, external experts will evaluate the 2021-25 Strategy to assess its success in meeting its objectives and to inform the development of a new strategy.

Despite the presence of an Interdepartmental Working Group consisting of representatives from government bodies, NGOs, and international organisations to supervise the Strategy’s implementation, a permanent co-ordination body has not yet been established in order to ensure a co-ordinated and coherent migration policy approach (OECD, 2022[18]). Nevertheless, implementation progress has been largely positive. Between 2021 and 2022, of the 100 planned activities, 65 were fully implemented, 36 were partially implemented and only 8 were not implemented at all.

In recent years, legal labour migration to Montenegro has continued to increase. Seasonal labour migrants, mainly from neighbouring Western Balkan economies, work primarily in the tourism and construction sectors. In 2022, 29 319 temporary residence and work permits for foreigners were issued, a 40% increase compared with 2021.

In terms of labour market access, no major legislative changes occurred since the last assessment cycle. However, it is notable that the Law on Foreigners, effective since March 2018, was amended in July 2022 to define the concept of digital nomads and introduced temporary residence permits for that category of persons. Ongoing efforts aim to further align the law with EU directives and ensure equal work conditions and tax exemptions for EU migrant workers. Due to administrative and technical capacity issues, the government postponed the application of procedures for handling foreigners' requests for temporary residence and seasonal employment permits until EU accession.

The economy is actively co-ordinating social security systems through bilateral agreements and ongoing negotiations. The introduction of the European Health Insurance Card post-EU accession has seen no significant progress beyond agreements with five EU Member States. Furthermore, Montenegro maintains satisfactory alignment with the EU acquis on the mutual recognition of professional qualifications. In April 2023, the parliament passed a law confirming the Agreement on the Recognition of Professional Qualifications for doctors of medicine, dentists, and architects under the Central European Free Trade Agreement (CEFTA) (European Commission, 2023[19]). However, further efforts are required to align with the minimum training requirements of all sectoral professions for professional qualifications recognition. Montenegro's progress in joining the European Employment Services (EURES) network has been limited due to delays in launching technical assistance projects.

On the other hand, one-third of Montenegro’s population is recognised as living outside the economy, although accurate data are not available. The lack of recent official statistics on the diaspora from the Statistical Office of Montenegro (MONSTAT) may be attributed to persistently insufficient financial and human resources, coupled with a lack of relevant expertise.12 While MONSTAT collects data on demographic indicators and internal migration, it does not publish information on international migration.

Thus, to engage with its diaspora, Montenegro has a Department for Co-operation with Diaspora and Emigrants within the Ministry of Foreign Affairs, a dedicated structure responsible for relations with the diaspora. The department comprises representatives from the diaspora, national government bodies, municipalities and other associations. A strategy for diaspora engagement, specifically the Strategy for Cooperation with Diaspora (2020-23), was in place but it was relatively limited in scope.13 While the Strategy addressed co-operation with the diaspora in business, culture, sports and in diaspora networks, it lacked a comprehensive policy framework to effectively facilitate diaspora engagement. Moreover, the Strategy expired in 2023, although the creation of a new strategy is planned for 2024. However, until it is adopted, the sole legislative framework guiding the Montenegrin Government is the Law on Co-operation of Montenegro with the Diaspora – Expatriates.

Montenegro has introduced several initiatives to attract diaspora skills. Under the Strategy for Cooperation with Diaspora (2020-23), programmes included: the formation of new diaspora associations and cultural centres; research and publications on Montenegrin culture, traditions and history; roundtable discussions; the establishment of the Luxembourg-Tivat-Luxembourg air route through the diaspora association; and business forums to inform diaspora members about investment opportunities in Montenegro. The government has also created several online platforms – including the "Upiši se" web application for registering diaspora members, and the "Scientific Network" portal for Montenegrin academics globally – although it faces challenges with data precision and timely updates. Furthermore, the International Organization for Migration (IOM) Diaspora Engagement Programme, undertaken in partnership with the Ministry of Foreign Affairs and Department for Co-operation with Diaspora and Emigrants, aims at enhancing co-operation between Montenegrin institutions and expatriates, adjusting policy approaches through diaspora mapping and developing new strategies for engagement (IOM, 2023[20]). The programme encompasses awareness-raising activities, support for local businesses, and a tailored fellowship plan to encourage diaspora knowledge transfer, ultimately benefiting local and national institutions.

Overview of implementation of Competitiveness Outlook 2021 recommendations

Montenegro has made moderate progress in the areas of social dialogue, adult learning, combating informal employment, reducing gender inequalities, and the implementation of employment policies for vulnerable groups. Conversely, Montenegro has made little or no progress in increasing capacities of labour inspectorates, analysing the wage structure, or training instructors delivering adult education (Table 9.3).

Table 9.3. Montenegro’s progress on past recommendations for employment policy

Competitiveness Outlook 2021 recommendations	Progress status	Level of progress
Continue to improve working conditions, aligning with EU acquis and ILO standards	In December 2022, the Ministry of Labour and Social Welfare signed several branch collective agreements as well as the General Collective Agreement through social dialogue with trade unions and employers’ associations.	Moderate
Continue to increase the capacities of labour inspectorates in terms of number of staff, training and equipment	There has been no evidence of progress.	None
Implement the activities to upskill adult learning and introduce incentives for employers and workers to participate in continuous training	Some progress has been made in the co-operation with employers and education institutions. A system for certification of skills is evolving. Adult learning is promoted through Active Labour Market Programmes, although budget allocations for this have been fluctuating.	Moderate
Use the skills anticipation system for guiding young people, adult workers and the unemployed into retraining and upskilling activities	There has been no evidence of progress.	None
Conduct a thorough analysis of wage development and the wage structure as well as of non-wage labour costs	There has been no evidence of progress.	None
Update the assessment of the scope, structure and reasons for informality	An Action Plan to combat the informal economy has been in place. However, a formalised strategy is absent, although the government is currently working to develop such a strategy. Additionally, some evidence indicates satisfaction with the programme “Stop the Grey Economy”.	Moderate
Reduce labour market barriers for women	The National Strategy for Gender Equality 2021-25 has been adopted along with two-year Action Plans. A strategy for the development of female entrepreneurship 2021-24 has been put in place. There is a measure aimed at empowering young women to enroll in undergraduate, master’s and doctoral studies in STEM, but the activities within this initiative have not been implemented. Hence, this measure has been transferred to the new Action Plan 2023-24.	Moderate
Increase efforts to bring vulnerable groups, e.g. Roma and Egyptian communities, into education, training and work	Improvements have been made in co-ordinating social and employment services.	Moderate
Assess the volume of seasonal, temporary and permanent emigration to the EU and other regions, and develop strategies to mitigate the negative effects of migration and to consolidate the benefits	There has been no evidence of progress.	None

The way forward for employment policy

To continue progress made in the employment dimension and address key challenges for employment policies, Montenegro should consider the following recommendations:

• Continue to increase the capacity of labour inspectorates to detect informal employment and to address bad working conditions. Labour inspectorates should expand implementation of preventive measures. It is recommended to develop a comprehensive and publicly available monitoring system on working conditions. Monitoring results of implementing the planned strategy for combating informal employment would pave the way to improvements.

• Conduct regular analyses of earning structures disaggregated by gender, sectors, and educational level and occupation. Additionally, attention should be given to non-wage labour costs (like social security contributions), the share of recipients of minimum wages, and the development of the low-wage sector by gender. Monitoring of labour market data should be improved, with a specific focus on incorporating information regarding in-work poverty. It is also recommended to assess the impact of the minimum wage on both poverty reduction and informal employment.

• Sustain efforts to combat gender inequalities by challenging and reducing gender stereotypes, starting from early childhood education and continuing throughout the educational journey and into professional life. This should contribute to enhancing female participation in the workforce, particularly in sectors where they might be traditionally underrepresented (Box 9.2). Labour market barriers for women should be reduced by promoting access to childcare and out‑of-school care for school-age children, and by promoting part-time and flexible working time with the objective of easing reconciliation of family and working life. Moreover, vocational guidance needs to improve at primary and secondary schools to foster gender sensitivity and broaden occupational choices for both men and women.

Box 9.2. Austria’s Women in Craft and Technics programme

In Austria, the Women in Craft and Technics programme was established by the PES in 2006. It has since served as a good practice for combating gender stereotypes and occupational segregation while also addressing labour shortages of qualified workers in crafts and mechanical professions. The programme offers female participants vocational guidance and financial support for enrolling in technical vocational training, which is typically male-dominated.

The programme comprises three stages. The first is a 10-week orientation phase, during which participants learn about artisan and mechanical occupations. By the conclusion of this stage, they have participated in some practical training and have developed a career plan. The next step is a 12‑week vocational preparation phase, during which the women attend a course and receive some technical training for their selected occupation. Finally, participants have the chance to complete a maximum of three years of vocational training, benefiting from financial assistance from the PES.

An evaluation of the programme found that nearly two-thirds of the women who successfully completed the training found a job in the related fields, and they reported significantly higher workplace satisfaction than their counterparts in more traditional professions. As such, the Women in Craft and Technics programme is an illustrative example of how governments can address gender inequalities in the labour market, particularly in sectors in which they are underrepresented.

Source: Bergmann et al. (2022[21]).

• Utilise the budget for ALMPs to activate more unemployed individuals. The government of Montenegro should continue to assess and evaluate the design and implementation of ALMPs and adapt activities and processes accordingly. It also should prioritise ongoing improvement of the monitoring of outcomes of programme participation in ALMPs.

• Facilitate co-ordination of various actors to adapt and modernise education and training systems, focusing on high levels of both hard and soft skills, while also assessing the quality of training and education. Furthermore, opportunities for upskilling and reskilling the workforce should be provided, including through internships. Moreover, the government should ensure that both employed and unemployed individuals benefit from programmes for digital skills development. There should also be concerted efforts to support women in entering and remaining in the IT sector, with a view to bolstering the labour supply of individuals proficient in digital skills. A potential measure for mitigating skills mismatches could be the implementation of vocational guidance in a life cycle perspective, starting at secondary school.

• Develop a strategy for skills development and skills adaptation of adults to align with the needs of the green transition. In this regard, generating labour market intelligence pertaining to skills required for the green transition should be a first step. As such, the Montenegrin government should develop strategies to mitigate negative employment effects of downsizing coal mining. It also should explore the potential for promoting renewable energies, which are labour-intensive sectors, in mining regions with the goal of facilitating economic diversification and sustainable employment opportunities (European Commission, 2023[22]; Commission, 2021[23]).

• Strengthen connections with the diaspora by formulating and adopting a new, comprehensive National Diaspora Strategy to encourage and facilitate diaspora engagement in Montenegro. This entails enhancing understanding of the diaspora, increasing institutional capacities, and launching new initiatives while strengthening existing efforts to foster diaspora engagement.

References

[21] Bergmann, N. et al. (2022), Evaluierung der Erwerbskarrieren von FiT-Absolventinnen in Österreich, Arbeitsmarktservice, Wien, https://www.lrsocialresearch.at/files/EB_EvaluierungFIT_AMS_LR_Okt_2022.pdf (accessed on 13 March 2024).

[23] Commission, E. (2021), European Network of Public Employment Services, Greening of the labour market – Impacts for the Public Employment Services – Small Scale Study, https://op.europa.eu/en/publication-detail/-/publication/a5ce471b-f0dd-11eb-a71c-01aa75ed71a1/language-en (accessed on 13 March 2024).

[11] European Commission (2024), Labour Market Policy, https://webgate.ec.europa.eu/empl/redisstat/databrowser/explore/all/all_themes (accessed on 13 March 2024).

[19] European Commission (2023), Montenegro 2023 Report, https://neighbourhood-enlargement.ec.europa.eu/montenegro-report-2023_en (accessed on 5 February 2024).

[22] European Commission (2023), PES Support to Greening of the Labour Market, https://ec.europa.eu/social/BlobServlet?docId=26998&langId=en.

[3] European Commission (2021), 2021 SME Country Fact Sheet: Montenegro, https://neighbourhood-enlargement.ec.europa.eu/system/files/2021-09/montenegro_-_sme_fact_sheet_2021.pdf (accessed on 13 March 2024).

[8] Eurostat (2024), Total Unemployment Rate, https://ec.europa.eu/eurostat/databrowser/view/tps00203/default/table?lang=en&category=t_labour.t_employ.t_lfsi.t_une (accessed on 18 March 2024).

[9] Eurostat (2024), Unemployment by Sex and Age – Annual Data, https://ec.europa.eu/eurostat/databrowser/view/une_rt_a__custom_10934656/default/table?lang=en (accessed on 17 April 2024).

[5] Eurostat (2023), Enlargement Countries - Labour Market Statistics, https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Enlargement_countries_-_labour_market_statistics&oldid=627514#Employment_rates (accessed on 13 March 2024).

[14] Eurostat (2023), Individuals’ Level of Digital Skills (from 2021 onwards), https://ec.europa.eu/eurostat/databrowser/view/ISOC_SK_DSKL_I21__custom_2397093/bookmark/table?lang=en&bookmarkId=dc481686-c938-4e07-b03c-8e039f532857 (accessed on 13 March 2024).

[15] Eurostat (2020), Individuals’ Level of Digital Skills (until 2019), https://ec.europa.eu/eurostat/databrowser/product/view/isoc_sk_dskl_i?category=degurb.degurb_isoc.du_isoc_sk.du_isoc_sku (accessed on 23 April 2024).

[17] Government of Montenegro (2021), Strategy on Migration and Reintegration of Returnees in Montenegro for the Period 2021-2025, with an Action Plan for 2021 and 2022, https://www.gov.me/en/documents/15ef985b-eddb-4a41-a58a-63fee7e8455c (accessed on 13 March 2024).

[4] ILO (2019), Decent Work Country Programme 2019-2021: Montenegro, https://montenegro.un.org/sites/default/files/2020-04/20190226_MontenegroDWCP_ENG_ONLINE.pdf (accessed on 13 March 2024).

[20] IOM (2023), Diaspora Engagement for Sustainable Development of Montenegro (Phase II), https://www.iom.int/project/diaspora-engagement-sustainable-development-montenegro-phase-ii#:~:text=The%20current%20Montenegrin%20Strategy%20on,diaspora%20engagement%20is%20therefore%20required (accessed on 13 March 2024).

[1] MONSTAT (2023), Labour Force Survey 2022, https://monstat.org/uploads/files/ARS/2022/2022/LFS%20release_2022.pdf (accessed on 14 March 2024).

[18] OECD (2022), Labour Migration in the Western Balkans:, OECD Publishing, https://www.oecd.org/south-east-europe/programme/Labour-Migration-report.pdf (accessed on 8 March 2023).

[16] OECD (2022), Multi-dimensional Review of the Western Balkans: From Analysis to Action, OECD Publishing, Paris, https://www.oecd-ilibrary.org/development/multi-dimensional-review-of-the-western-balkans_8824c5db-en (accessed on 13 March 2024).

[12] RCC (2021), The Evaluation of Active Labour Market Policy in Montenegro, https://www.esap.online/download/docs/Evaluacija-aktivne-politike-trzista-rada-u-Crnoj-Gori-eng.pdf/2ea4a8687cca0c9f53bc7794cdd92bb1.pdf.

[13] UNDP (2023), Digital Skills: Needs and Opportunities, https://www.undp.org/montenegro/publications/digital-skills-needs-and-opportunities.

[2] Vienna Institute for International Economic Studies (2024), The Jobs Gateway in South Eastern Europe, https://data.wiiw.ac.at/seejobsgateway.html (accessed on 13 March 2024).

[6] World Bank (2024), Gender Data Portal: Montenegro, https://genderdata.worldbank.org/countries/montenegro/#:~:text=In%20Montenegro%2C%20the%20labor%20force,older%20that%20is%20economically%20active. (accessed on 14 March 2024).

[7] World Bank (2024), Unemployment, Total (% of Total Labor Force) (Modeled ILO Estimate) - Montenegro, https://data.worldbank.org/indicator/SL.UEM.TOTL.ZS?locations=ME (accessed on 26 April 2024).

[10] World Bank (2024), Unemployment, Youth Total (% of Total Labor Force ages 15-24) (Modeled ILO Estimate) - Montenegro, https://data.worldbank.org/indicator/SL.UEM.1524.ZS?locations=ME (accessed on 26 April 2024).

Notes

← 1.  The Eurostat database can be accessed here: https://ec.europa.eu/eurostat/databrowser/view/tipslm60/default/table?lang=en.

← 2.  Official Gazette of Montenegro, Nos. 34/14 and 44/18.

← 3.  The EU Directive on Work-Life Balance can be found here: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32019L1158.

← 4.  A specialist in occupational health and safety is a person who has a university degree in technical and/or technical-technological and other appropriate fields, has one year of work experience in the profession and has passed a professional exam in occupational health and safety in the relevant industry.

← 5.  In 2019, there were 21 collective agreements, with eight targeting the public sector. For more, see: https://www.ilo.org/wcmsp5/groups/public/---ed_mas/---program/documents/genericdocument/wcms_679155.pdf.

← 6.  The most recent available statistic is from the International Labour Organization, which stated that 75% of workers were covered by collective bargaining agreements in 2008. See: https://montenegro.un.org/sites/default/files/2020-04/20190226_MontenegroDWCP_ENG_ONLINE.pdf.

← 7.  The minimum wage is set by the Labour Law, in the amount of EUR 450 in 2023.

← 8.  ILO Convention No. 102 on social security.

← 9.  There are several specific circumstances for enjoying unemployment benefits longer than 12 months. For example, an unemployed individual who has more than 35 years of job experience is entitled to receive monetary compensation until they are re-employed or certain stipulated conditions for termination are met. Moreover, unemployed workers who have more than 25 years’ experience and have a child with a disability are eligible for benefits until they are re-employed or certain stipulated conditions for termination are met.

← 10.  To determine skill level, the International Standard Classification of Education (ISCED) is used. Low‑skilled workers fall between ISCED 0 and 2, obtaining a maximum of lower secondary education. Medium-skilled workers constitute those with a level of either ISCED 3 (upper secondary education) or ISCED 4 (post-secondary non-tertiary education). Finally, high-skilled workers must have completed either a short-cycle tertiary education (ISCED 5) or a bachelor’s degree or above. See: https://ec.europa.eu/eurostat/statistics-explained/index.php?title=International_Standard_Classification_of_Education_(ISCED)#Implementation_of_ISCED_2011_.28levels_of_education.29.

← 11.  This average excludes Kosovo.

← 12.  MONSTAT’s data on migration can be found here: https://monstat.org/eng/page.php?id=1130&pageid=53.

← 13.  The Strategy for Cooperation with Diaspora (2020-23) can be accessed here: https://www.gov.me/en/documents/10cd8fe6-cd47-4c22-9047-ef4a04aa419f.