Western Balkans Competitiveness Outlook 2024: Serbia

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 public employment services, the framework of mutual obligations, 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

Serbia has significantly improved its performance in employment policy since the previous assessment (Table 9.1). Progress was made in the areas of inclusive labour market governance, social protection and activation policies, and expanding the skills pool. However, further efforts are needed to bolster the development of skills for the twin green and digital transition, particularly through support for the greening of jobs and skills. Additionally, there is scope to expand the economy’s domestic skills supply through better benefiting from highly skilled migrants.

Table 9.1. Serbia’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			3.7	3.1
	8.3: Skills for adaptable labour markets			2.7	2.6
	8.4: Expanding the skills pool			2.8	2.4
Serbia’s overall score		2.5	2.8	3.3	2.9

The key findings are:

• Limited financial resources allocated to active labour market programmes (ALMPs) hinder the effectiveness and impact of these measures. The average level of spending on ALMPs (0.1% of GDP in 2022) by the WB6 economies is approximately four times less than both EU and OECD levels (0.39% and 0.46%, respectively).

• Serbia’s gender employment gap stood at 13.9% in 2022, which, while being the second lowest in the Western Balkans, is still several percentage points higher than the EU average (10.6%). Efforts to narrow this gap involve the implementation of the Strategy for Gender Equality 2021‑30, which includes the development of ALMPs for women and initiatives to foster female entrepreneurship. However, one persistent barrier to increasing female employment is the insufficient provision of affordable and high-quality childcare.

• Serbia opened the Office for Dual Education and the National Qualifications Framework in 2022. By engaging with employers, this institution has made efforts to better align curricula and education and training opportunities with the needs of the labour market.

• Additional efforts are needed to ensure the adaptability of the labour market to the needs of the digital transition, particularly when it comes to adult learning. According to recent surveys, only 41.3% of individuals reported having a basic or above level of digital skills, compared to 53.92% on average in the EU.

• There is a need to strengthen the capacity of the National Employment Service (NES) by reducing staff caseloads and enhancing co-ordination with local employment councils to improve outcomes for jobseekers. With more than 250 registered unemployed per counsellor as of 2022, the caseload is twice the ratio recommended by the International Labour Organization (ILO).

• With the aim of drawing from diaspora talents, Serbia has implemented various initiatives under its Economic Migration Strategy 2021-27, including the Tačka Povratka, the Serbian Science and Diaspora Collaboration Programme, and Link Up! Serbia II. However, the current policy framework would benefit from enhanced emphasis on the socio-economic integration of migrants and returnees to facilitate their contributions to the labour market.

State of play and key developments

Serbia’s working-age population declined by 1.6% between 2019 and 2021, due to a mixture of emigration and the long-term trend of declining birth rates. This has also contributed to the recent increase in the activity rates, which reached 71.4% in 2022, surpassing the pre-COVID-19 level of 68.1% (yet still below the EU-27 average of 74.5%) (Eurostat, 2023[1]). Activity rates increased mainly among young and older workers. The employment rate increased to 69.3%1 in 2022 but remains well below the EU-27 average of 74.7%.

In 2023, the unemployment rate in Serbia reached 7.8%, the lowest in the Western Balkans, and below the pre-pandemic level of 11.3%, but still slightly above the EU-27 average (6.0%) (World Bank, 2024[2]; Eurostat, 2024[3]). The long-term unemployment rate was at 3.8% in 2022, below the pre-pandemic level (5.5%) but still above the EU-27 average of 2.4% (Eurostat, 2023[4]). The youth unemployment rate (ages 15-24) stood at 24.4% in 2022, and although the falling trend continued (the pre-pandemic level was 28.6% in 2019), tackling youth unemployment continues to be an urgent matter (Eurostat, 2023[5]).

Sub-dimension 8.1: Inclusive labour market governance

Whereas Serbia’s Labour Law has remained unchanged since 2017, several important updates to the legal framework for employment took place during the assessment period through changes to other laws. Namely, the Law on Professional Rehabilitation and Employment of Persons with Disabilities was updated in 2022, aiming to reinforce employment provisions for persons with disabilities and facilitate their integration into the labour market. Serbia also adopted a new law on health and safety at work in April 2023, advancing alignment of regulations in this area with the EU acquis (European Commission, 2023[6]). The Law on the Social Card, which entered into force in 2022, reformed the social protection system through the creation of a centralised register determining the right of individuals to benefit from social support through the use of an algorithm. However, its implementation has been criticised by civil society organisations for reasons relating to the fairness of the algorithm, as well as concerns regarding personal data protection and preservation of privacy rights (A11 Initiative, 2023[7]).

Together, the Employment Strategy of the Republic of Serbia 2021-26 and its newest accompanying Action Plan 2024-26 serve as the primary policy framework for employment in Serbia. The strategy refers to promoting the development of high-quality jobs, improving the position of unemployed persons in the labour market, and improving the institutional capacities of the public employment service (PES) (see Sub-dimension 8.2: Social protection and activation policies). The new strategy continues to focus employment policy on hard-to-employ persons. Namely, special measures are foreseen to improve the position of women, young people, persons with disabilities, beneficiaries of financial social assistance, and Roma. A special priority for inclusion in active labour market policy measures is given to persons who face multiple employment barriers. The government reports progress in implementation and has identified weaknesses in the implementation of the first action plan, aiming to correct them.

When it comes to combating informality, a Programme for Combating the Shadow Economy 2023-25 has been adopted. Official estimates on informal employment, calculated from the LFS and including self-employed persons in unregistered businesses, wage workers without a written contract, and unpaid family workers show that informal employment has continued to fall (Vienna Institute for International Economic Studies, 2021[8]).

In 2021, changes to the Law on Simplified Work Engagement for Seasonal Jobs in Certain Industries (2018) were planned with the aim of further addressing informality. These changes would have extended the provisions of the law to other sectors, such as construction, allowing simplified declaration procedures and access to social rights such as guaranteed minimum wage, health and safety standards and insurance. However, the established social provisions under this law were criticised by labour unions and civil society groups for being too low and for not including collective labour rights, leading to the abandonment of the changes. The situation of gig workers remains unresolved, as they currently have the option to register as entrepreneurs, to self-tax, or to establish a limited liability company (LLC) – just like any other activity. These options are often either unprofitable or administratively demanding, leading to challenges in the formalisation of gig workers.

The Labour Inspectorate is relatively well developed and boasts sufficient capacity to carry out its mandate. Its work is supported by the Occupational Safety and Health Directorate, which prepares regulations, provides professional assistance and informs the public about various matters concerning safety and health at work. Of note, in 2023, as part of the EU-financed Platform for Employment and Social 2 (ESAP2) project, the Labour Inspectorate developed a brochure to inform employees about informal work, including how to recognise it and how to report instances. More generally, this entity organises and attends meetings and workshops with representative employee and employer associations to protect workers’ rights more effectively. Additional information on labour regulations and their proper implementation was provided during advisory visits and inspections. A rotating system for the territorial assignment of labour inspections has been implemented and is considered to be effective.

The number of staff at the Labour Inspectorate steadily fell from 265 in 2017 to 210 in 20212 but has recently begun increasing, rising to 230 in 2023 (European Commission, 2023[6]). Plans to further increase the number of inspectors to 360, initially foreseen for 2020, were further delayed until the end of 2025. However, even with this reduced number of personnel, the Labour Inspectorates’ operations have continued to expand, with the number of annual inspections rising from 63 670 in 2021 to 66 896 in 2023. This was complemented by simultaneous increases to the planned budget, which grew from RSD 396 766 000 (EUR 3.39 million) in 2021 to RSD 556 202 000 (EUR 4.75 million) in 2024, marking a 40% increase. According to the Labour Inspectorate, these augmented financial and staff capacities have contributed to a notable reduction in fatal workplace injuries, decreasing by 20% between 2021 and 2022. Such recent efforts reveal the Labour Inspectorates’ commitment to improving regulatory compliance and preventing infractions throughout the economy. However, there is still room to ensure that the results of monitoring and auditing inform the design and implementation of the Labour Inspectorate’s activities.

A collective bargaining framework exists, including for workplace representation. There is evidence of the implementation of collective bargaining, mainly in the public sector, but information on that implementation at the sector, company, and workplace levels in the private sector is not available.3 Collective agreements mainly regulate wage levels, working time, and issues concerning trade unions' rights; other issues, such as working conditions, training and job security, are more rarely covered. The Labour Law stipulates that employees of an employer with more than 50 employees may form an employees' council as a platform for defending their economic and social rights. However, there have been frequent cases where this right has been denied, especially for companies established through foreign direct investment.

The government's involvement through tripartite social dialogue is more developed, with minimum wages being regularly fixed in tripartite negotiations. As of early 2024, the Social and Economic Council, as the main platform for tripartite dialogue, was running four permanent working bodies on legal issues, economic affairs, occupational safety and health, and collective bargaining and peaceful settlement of labour disputes. However, research and analysis of wages among companies with collective agreements and those without collective agreements, as well as an analysis of the low-wage sector, have not been carried out. Such analysis would help understand the benefits and impacts of collective agreements on the labour market.

Efforts have been made to develop inclusive labour market policies for vulnerable or disadvantaged groups in Serbia. The Employment Strategy 2021-26 identifies several target populations facing significant employment barriers, including women, Roma individuals, people with disabilities, recipients of social assistance, and youth not in education, employment or training (NEET). For instance, under this strategy, one area of planned progress is vocational rehabilitation measures for people with disabilities.4 Additionally, the Law on Social Entrepreneurship, adopted in January 2022, aims to improve these groups’ labour market integration. To complement these policy frameworks, there are several concrete initiatives, although most existing programmes are ALMPs (which are further explored in Sub-dimension 8.2: Social protection and activation policies).

However, of the aforementioned target groups, the strongest policy and programmatic emphasis has been placed on increasing the participation rates of women. Serbia has adopted the Strategy for Gender Equality 2021-30. A co-ordination body for gender equality is in place, and a system for gender-responsive budgeting was introduced to support labour market policies. Regulations on flexible working time allowing reconciliation of work and family life are in place, allowing for switching from full-time to part-time, flexible working hours, remote work and telework to care for children. Nevertheless, securing quality and affordable childcare facilities may still be challenging for women wanting to work, although an ongoing project with the World Bank seeks to improve these services’ accessibility (for more on this project, see Chapter 8). Additionally, in 2023, the government of Serbia established a new programme that seeks to provide financial assistance to female entrepreneurs, augmenting women’s empowerment and inclusion in the economy.

Serbia has also advanced in conducting labour market studies on women’s employment and impact assessments. The Law on Gender Equality, which came into force in 2021, ensures the gender disaggregation of statistical data (RCC, 2023[9]). The Gender Equality Index is calculated following the methodology of the European Institute of Gender Equality (EIGE). During 2023, with the support of UN Women, an analysis of the prerequisites for harmonising work and family life of young women not engaged in education, employment or training was prepared. Studies have been conducted on female entrepreneurship in two municipalities. Monitoring and evaluation of the dual vocational system are being improved by including gender-based statistics.

As a result, the economy has made some progress in reducing gender inequalities in the labour market in recent years. The gender employment gap shrank by 0.7 percentage points from 2021 to 2022, reaching 13.9%, the second-lowest gender employment gap in the Western Balkans. However, this gap remains above the EU average of 10.6% (RCC, 2023[9]). Between 2019 and 2021, the activity rate (ages 15-64) of women increased by 1.7 percentage points, while it increased by 2.6 percentage points for men (Vienna Institute for International Economic Studies, 2021[8]), showing an uneven dynamic in the improvement of the employment situation.

Sub-dimension 8.2: Social protection and activation policies

Although it has been declining in recent years, primarily due to declining unemployment, the caseload of counsellors at Serbia’s public employment service (PES), the National Employment Service (NES), is still high. There are more than 250 registered unemployed per counsellor as of 2022, which notably exceeds the International Labour Organization’s (ILO) recommended ratio of 100:1 (Kuddo, 2012[10]). Due to this high caseload, offering in-depth counselling and follow-up services to all jobseekers is challenging, meaning that only a fraction may be effectively assisted. The NES profiles registered jobseekers to categorise them into three groups, differentiated by the level of employment barriers the individual faces. For those jobseekers considered to be “hard-to-place”, they are provided with more intensive and targeted support services. The PES is aware that it needs to improve the individual approach to jobseekers, including improving instruments for and techniques of counselling work and implementing preventive action for those at risk of becoming long-term unemployed.

On the positive side, there is advanced co-operation with social services and local actors to bring hard-to-place jobseekers into jobs, formalised through numerous agreements, and signed Protocols on Co-operation, and frequent meetings (581 in 2023). Discussions centre around how to strengthen general cooperation in areas, including the referral to ALMPs of low-skilled individuals, job matching, and supporting the transition from the informal economy to formal employment. Moreover, to address the complexity of employment barriers, an initiative was launched to provide support within the framework of intersectoral co-operation (school administrations, regional chambers of commerce, and civil society organisations) at the local level.

As part of the preparation of the new Employment Strategy 2021-26, the ILO carried out a functional analysis of the NES and certain organisational units of the Department for Labour and Employment.5 The emphasis of this assessment was on the need to reorganise the service and provide additional focus on core functions. Progress has also been made in organising services for employers, as the NES established a Department for the Development of Relations with Employers in October 2021. In 2022, the number of registered vacancies more than doubled compared to both the previous year and the pre-COVID-19 years. However, there are still 4.5 times more registered unemployed individuals than registered vacancies. Despite this significant disparity between labour supply and demand, Serbia has not conducted a detailed analysis of the structure of vacancies and the unemployed, which might include examining occupations, skills, and geographical areas.

Digitalisation of PES services and processes has advanced in some areas. The “Path to a Successful Entrepreneur” programme (job search training) and one labour market training course have been digitalised. During the COVID-19 pandemic, the NES enabled unemployed individuals to register with the agency electronically (i.e., by sending a request for registration to the e-mail address of the competent branch). In addition, the unemployed could fulfil their obligation to report to the NES regularly via e-mail or telephone. In practice, the use of digital services is restricted, as some groups of jobseekers do not have access to the Internet or have insufficient digital skills. Employment mediation is not yet digitalised, but there are ongoing efforts to implement digital solutions on a project-by-project basis. While there is still scope to strengthen these digitalisation efforts, such advances expand the accessibility of efficient, user-friendly digital services, which in turn could potentially reduce the workload of the PES counsellors.

The unemployment benefit system provides low to moderate levels of unemployment benefits (“cash benefits”). It is estimated that the net replacement rate is 60% for an average wage earner and, less than 50% related to gross wages, and lower for people with higher earnings.6 Receiving unemployment benefits depends on previous work history and varies between 3 and 12 months. As of 31 December 2022, the majority of registered jobseekers do not receive an unemployment benefit (4.6%) or social assistance (11.1%). All unemployment benefits and social assistance recipients7 are obliged to actively look for work. This search is monitored and must be reported to the competent branch of the NES. Each individual’s employment plan serves as the basic instrument for monitoring, and all planned measures and activities are recorded in the Integrated Information System of the NES. Jobseekers’ activity diary is an auxiliary instrument used in exceptional cases when the employment counsellor assesses that a person needs additional motivation to actively seek a job. Beneficiaries of cash social assistance who can work are one of the priority categories for activation in the new Employment Strategy 2021-26.

The Serbian PES has made a significant effort to improve the design and implementation of active labour market programmes. However, the impact is likely to be limited due to the low level of the budget allocated to measures. The budget8 for ALMPs at 0.1% of GDP (in 2022) has increased in recent years and in 2022 surpassed the pre-COVID-19 level (of 0.08% of GDP), yet still remains low to effectively serve disadvantaged groups. To compare, in 2019, on the EU average, about 0.39% of GDP was spent on ALMPs (including training, employment incentives and start-up incentives) and another 0.19% of GDP on labour market services (including also administration). Similarly, in 2021, OECD countries spent an average of 0.46% of their GDP on ALMPs (OECD, 2023[11]). Roughly half of the budget allocated to ALMPs in Serbia is spent on training measures. The second largest ALMP category is employment incentives (representing 0.03% of GDP), and 0.01% of GDP is spent on direct job creation measures (public works). In addition, some financial support for start-up incentives and vocational rehabilitation is available (RCC, 2023[12]). A very small budget (only around EUR 8 800) was spent on active jobseeking services.

Several ALMPs are specifically designed to benefit vulnerable groups. For example, in 2022, two training opportunities – the “Training for Active Job Search” and the “Path to a Successful Entrepreneur” programmes – were offered in the Romani language to engage this population better. However, the most notable efforts have targeted the economy’s youth NEET. Indeed, although Serbia boasts the lowest levels of youth NEET in the Western Balkans (15.1% in 2022), this figure remains slightly above the EU average of 11.7% (RCC, 2023[9]). One prominent initiative to address youth unemployment was the “My First Salary” programme, designed to benefit young jobseekers without work experience. These individuals work in selected public and private sector entities for nine months to gain knowledge, skills and competencies to enhance their employability. Additionally, Serbia has made recent progress on establishing its Youth Guarantee, adopting its implementation plan in December 2023. The piloting of the plan, at the level of three NES branches, is scheduled to take place from 2024 to 2026, with professional and financial support from the IPA 2020 programming cycle. However, a significant gap is the lack of programmes targeting older workers (55-64). Although their activity rate is relatively high compared to other regional economies, it is well below the EU-27 average (58.5% versus 65.4%, respectively, in 2021).

Considering the widespread implementation of ALMPs for vulnerable groups, Serbia's recent efforts to evaluate the impact of employment incentives for hard-to-employ individuals are essential to determining these measures’ effectiveness (Janackovic and Aksentijevic, 2023[13]). This assessment was part of the “Knowledge to Work – Education to Employment (E2E)” programme and stands as one of the few efforts to assess NES programmes’ outcomes. The incentives took the form of a one-time subsidy provided to employers who hired workers falling into specific categories: those below 30 or above 50 years old, Roma individuals, people with disabilities, recipients of social assistance, and long-term unemployed individuals. The subsidy amounts ranged from RSD 240 000 (EUR 2 050) to RSD 300 000 (EUR 2 560). The study revealed that implementing this subsidy increased the likelihood of employment by nearly 34 percentage points. However, the impact intensity varied: it was high for the age group between 30-49 years; medium for youth, Roma individuals, and the long-term unemployed; and lower for older individuals. An assessment was crucial for understanding the efficacy of these ALMPs, particularly considering their relatively limited funding levels. Consequently, the findings will inform improvements in the measures outlined in the Action Plan 2024-26 for the National Employment Strategy 2021-26.

Sub-dimension 8.3: Skills for adaptable labour markets

People with a low level of education (lower secondary or below) experienced the biggest fall in employment rates during the pandemic (Vienna Institute for International Economic Studies, 2023[14]). Moreover, individuals with lower levels of education showed a weaker recovery of employment rates between 2019 and 2021 when compared to people with higher levels of education and training. Participation in training activities to learn new job-related skills is 30 percentage points below the EU average and lower than in other Western Balkan economies for which information is available. The share of those participating in an education or training activity was only half of the EU average (ETF, 2023[15]).

A major development in efforts to reduce the skills mismatch in Serbia was the opening of the Office for Dual Education and the National Qualifications Framework in 2022. The Office is the primary platform for developing laws and bylaws governing the dual education system. It actively engages with employers to better align curricula and education and training opportunities with the needs of the labour market.

Strategies and action plans for addressing the adult learning framework are in place, and progress is under way to improve the system. When introducing new curricula or modifying existing ones, sector associations, including sector skills councils, are consulted, while social partners such as employer organisations and trade unions are not involved. A system for the recognition and validation of prior learning is being developed. The policy framework and implemented measures are promoting workplace-based learning in VET and in ALMPs. Progress has also been made to monitor participation in continuing education and training and to assess the skills needs of employers. However, there is limited evidence that other tools, such as tracer studies and web analysis, are regularly used to identify skills mismatches.

Yet, despite ongoing initiatives, both under- and over-education reflect the persistence of the challenge posed by skills imbalances. Indeed, in 2023, more than one-quarter of businesses in Serbia indicated that education did not adequately prepare workers for the needs of the labour market, indicating a significant gap in the skills acquired during education and those demanded by the market (ACIT Centre, 2023[16]). Conversely, 24% of workers reported that they have an education level that is higher than what the job requires (compared to 17% among OECD countries (OECD, 2023[17])), which highlights the prevalence of vertical skills mismatches.

Career guidance and counselling are carried out by career planning counsellors and, career information counsellors and psychologists at the NES and are primarily available to unemployed individuals. Activities include information and counselling on career development opportunities, self-efficacy training, and a workshop for overcoming stress due to job loss. As of 2023, a new workshop called "Psychological challenges of entrepreneurship" will be held. Additionally, career guidance and counselling services in the NES – including employment mediation services, employment counselling, active job search training, and job search clubs – are provided for persons with disabilities.

A specific challenge is to develop skills for the digital transition. A lower share of the Serbian population has basic or above-basic overall digital skills compared to the EU average, although this proportion exceeds the WB average by 6.5 percentage points (Table 9.2). Learning new digital skills at the workplace and participation in related continuous training are happening, but Serbia is lagging behind the EU average in this regard. One explanation is that both the use of computer devices and computerised machinery at the workplace is markedly less developed, behind the EU-27 average (ETF, 2023[15]). Serbia is implementing its Strategy for the Development of Digital Skills 2020-24, for which an Action Plan for the period 2023-24 was adopted in February 2023. The strategy focuses on the development of society's digital skills in a broad sense, including vulnerable groups such as older citizens, the unemployed, NEETs, women, and youth. Significant initiatives are being implemented to support the digital upskilling of business owners and the development of Serbia’s ICT sector. Upskilling initiatives have also been implemented, primarily focusing on the unemployed (see Chapter 11). Conversely, the limited availability of programmes targeting workers means that a significant portion of the population – who also need to cultivate digital competencies – remains excluded.

Table 9.2. Individuals with basic or above-basic overall digital skills in Serbia, the WB6 economies and the EU in 2021

Percentage of all individuals

	SRB	WB6	EU
Individuals with basic or above-basic overall digital skills	41.3	34.8	53.9

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

Sources: Eurostat (2020[18]; 2023[19]).

Regarding developing skills for the green transition, no progress can be noted, which is concerning considering that Serbia is one of the two Western Balkan economies with the highest numbers of employed in coal mining. Phasing out coal and fossil fuel subsidies will likely result in direct and indirect job losses and social challenges that must be managed. Employment has already been declining in certain coal-rich regions (such as the Kostolac, Kolubara and Pomoravlje regions) (OECD, 2022[20]). At the same time, the green transition has the potential to generate new employment opportunities in other energy sectors, inducing job transitions across sectors and necessitating skill adaptation in existing roles (European Commission, 2021[21]). While preliminary studies seeking to measure the impacts of the green transition and reduce the negative impact on vulnerable groups are taking place, there is no information on the elaboration of a strategy, action plans or any specific measure to prepare the workforce for the green transition in Serbia, and political commitment towards this goal cannot be confirmed. Additionally, there is no evidence of co-ordination or consultation with key stakeholders on skills needs for the green transition. Studies that seek to identify green jobs and skills and/or evaluate the magnitude of their impact (on both the economy and society) have not been conducted.

Sub-dimension 8.4: Expanding the skills pool

Serbia is implementing a comprehensive and multi-year migration strategy, the Economic Migration Strategy (2021-27), aiming to promote circular and return migration, reduce emigration factors, and harness the potential of the diaspora for economic development. Migration management responsibilities in Serbia are distributed among various ministries9 and are co-ordinated by a government working group on mixed migration, with the Commissariat for Refugees and Migration acting as the secretariat. The Coordination Body for Monitoring Flows in the Area of Economic Migration plays a pivotal role in assessing the economic migration landscape and guiding public administration decisions in this realm, reflecting Serbia's commitment to effective migration management. International migration data are published by the Ministry of Security and the Commissariat for Refugees and Migration, not the National Statistical Office of Serbia. Annually published Migration Profiles draw on available data from various institutions, offering extensive information on immigrants but limited details on emigrants.

In terms of labour market access, there is a recognised need for further simplification of procedures governing work permit issuance for EU citizens, who currently navigate regulations designed for third-country nationals (European Commission, 2023[6]). In 2022, 35 173 work permits were issued, with 2 101 allocated to EU citizens. Amendments of July 2023 to the Law on foreigners and the Law on the employment of foreigners, aiming at greater alignment with the EU acquis, unify procedures for obtaining a temporary residence permit and a work permit by introducing a single permit (European Commission, 2023[6]).

As part of its preparations to join the European Network of Employment Services (EURES), Serbia has taken significant steps, including the initiation of preparations to align the work processes of the National Employment Service (NES) with EURES requirements. Additionally, Serbia opened two new migration service centres in Subotica and Vranje, supplementing the existing seven centres. The NES conducted training sessions related to EURES for its migration services centre staff and completed the re‑engineering of its information system. Notably, there have been no developments regarding the European Health Insurance Card. Serbia has not yet initiated preparations for joining the European Labour Authority.

Under the Berlin Process, Serbia is actively engaged in co-ordinating recognition of qualifications and education with other Western Balkan economies, as well as social security systems, through bilateral agreements and ongoing negotiations. Serbia has so far signed regional agreements recognising qualifications for certain highly qualified professions, such as doctors of medicine, dentists, and architects (Berlin Process, 2023[22]). However, further alignment is still needed on the relevant sectoral legislation. A preliminary list of 50 regulated professions, drafted with EU support, is still pending adoption. In March 2024, Albania, North Macedonia and Serbia fully opened their labour markets to each other as part of the Open Balkan initiative (Government of Serbia, 2024[23]).

Recently, in Serbia, there has been a notable shift from prioritising refugees to concentrating on diaspora and returning migrants at the local level. This shift is attributed to both a new policy framework and a recognised need for more active engagement in diaspora and return migration.

Although official data on the total number of the Serbian diaspora and Serbs in the region are unavailable, earlier estimates suggest a figure exceeding 5 million (United Nations Networks on Migration, 2021[24]). To enhance co-operation with its diaspora and effectively manage economic migration, Serbia has established key institutions such as the Assembly of the Diaspora and Serbs as the representative body for diaspora affairs, which facilitates the collaboration with state institutions, and the Office for Cooperation with Diaspora and Serbs in the Region, a dedicated institution within the Ministry of Foreign Affairs for diaspora engagement. The legal framework, including the Law on the Diaspora and Serbs in the Region, forms the basis for engaging with the diaspora (International Centre for Migration Policy Development, 2023[25]).

Serbia has implemented significant legal initiatives to attract diaspora skills, such as the Regulation on Customs Benefits, enabling customs-free import of personal property for returnees residing abroad for over ten years. Additionally, amendments to the Law on Personal Income Tax and the Law on Contributions for Compulsory Social Insurance provide tax breaks for highly skilled returnees. Alongside these legal measures, Serbia has launched successful initiatives, including Link Up! Serbia II, co-funded by the Austrian Development Agency, supports transnational entrepreneurial activities with the Serbian diaspora in Austria, Germany and Switzerland. Furthermore, the Serbian Science and Diaspora Collaboration Programme, facilitated by the Science Fund, provides financial incentives for local research and development institutes to collaborate with the diaspora, resulting in the implementation of 92 joint scientific projects between Serbian institutions and their diaspora counterparts in 22 countries, focusing on science, technology, and engineering. Another noteworthy programme is Tačka povratka (Returning Point), which assists diaspora members interested in returning to Serbia through a dedicated digital platform, offering support in various aspects of the return and reintegration processes.

Overview of implementation of Competitiveness Outlook 2021 recommendations

Serbia has made moderate progress in most Recommendations made in Competitiveness Outlook 2021. There was strong progress toward strengthening the link between universities and employers to improve the school-to-work transition (Table 9.3). Serbia made only limited progress in promoting continuous training at the company level, particularly among workers with intermediate qualifications, to help adapt to technological change and to ensure the continuous improvement of employees’ knowledge and skills following changes in the labour market.

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

Competitiveness Outlook 2021 recommendations	Progress status	Level of progress
Increase the capacity of the labour inspectorate to detect informal employment	There was a decrease in fatal work injuries, and labour inspectorates continued to detect informal employment successfully. The Programme for Combating Grey Economy 2023-25 was established. An intra-agency working group for combating informal employment is in place. Labour inspectorates have made no progress in providing information and warnings, nor do they provide education and information on the legislation's requirements. The labour inspectorates have not made progress in collecting data on infringements and informal employment.	Moderate
Strengthen collective bargaining capacity at sector and company levels, and strengthen worker representation in companies	Sessions and meetings of the Social and Economic Council are taking place (although the number of sessions has recently declined). The government has no information on employee councils being set up at the company level or on social bargaining coverage. The government and the social partners run initiatives (sometimes supported by international organisations) to strengthen social dialogue, including at the local and company levels.	Moderate
Foster links between universities and employers to ease the transition from university to work	Progress has been made through implementing the programme, “My First Salary”. The Youth Guarantee Implementation Plan 2023-26 was adopted in December 2023, and will primarily focus on young people from the NEET category. Moreover, the pilot programme is expected to last from 2024 to 2026. The Office for Dual Education and National Qualifications Framework was created in 2022 and actively involves employers in reforms to reduce skills mismatches.	Strong
Promote adult education, especially for low-skilled adults	No progress has been made toward promoting remedial education. A system for the recognition and validation of prior learning is being developed. Several training measures, which promoted the acquisition of practical knowledge and training, were implemented through the PES. A representative of the Ministry of Labour, Employment, Veteran and Social Affairs is a member of the Working Group to prepare the Annual Plan of Adult Education. Progress has been made in monitoring participation in continuing education and training and in assessing employers' skills needs. However, other tools to identify skills mismatch, such as tracer studies, web analysis, etc., are not used.	Moderate
Encourage employers to promote continuing training at the company level, particularly among middle-skilled employees, to adapt to technological change	There is no evidence of progress in support of employers.	None
Assess and expand the availability of affordable and quality childcare to enhance female employment	A project launched in 2022 between the Serbian Ministry of Education and the World Bank seeks to improve the accessibility and inclusivity of childcare. However, apart from this initiative, there is limited information on other efforts to provide affordable, high-quality childcare, particularly in rural areas.	Moderate
Continue to strengthen the capacities of the NES	There is no progress in reducing caseload and no increase in staffing capacity. There has been some progress in co-ordinating with local actors and strengthening employer relations. The PES has started to implement elements of a statistical profiling system for jobseekers, with services offered varying by employability level, and preparations are underway for further integrating statistical profiling into the work process.	Moderate

The way forward for employment policy

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

• Intensify efforts to develop and implement ALMPs, particularly programmes targeting those most distanced from the labour market. Measures should also include life skills training and basic skills training. Efforts to deliver employment services in a comprehensive way by integrating employment and social services should be continued. The role of the PES in addressing skills mismatch at all skill levels should be expanded. This implies implementing training measures to adapt skills, upskill, and retrain based on employers’ skills needs, which should be assessed. While the share of training in ALMPs is considerable, the low financial resources allocated to ALMPs as a share of GDP limits these measures' overall effectiveness and impact. Consideration could be given to increasing the overall financial resources allocated to ALMPs, especially those focused on more vulnerable categories of unemployed and those seeking to address skills mismatch.

• Continue to promote adult learning and ensure the workforce can adapt to changing labour markets. It is necessary to better prepare Serbia’s workforce for the twin green and digital transitions. It is advisable to start by identifying green jobs and related skills needed to manage the employment effects and skills requirements of the green transition. Appropriate measures should be developed in co-ordination with key stakeholders (like social partners, employers, chambers, training institutions, local economic development actors) to anticipate and manage the labour market effects of the green transition. When developing skills for the digital transition, policies to encourage upskilling employees in digital skills should be developed (Box 9.1).

Box 9.1. Supporting continuous training of the employed and jobseekers in Germany

In Germany, the Qualification Opportunities Act, which came into force on 1 January 2019, and the Work of Tomorrow Act of 2020 have expanded PES funding for continuous training for all employees whose professional activities are at risk of being replaced by digital technologies and who are otherwise threatened by structural change or who seek further training in a bottleneck occupation.

Financial support can be granted for certified training lasting more than 120 hours. Support under this programme is larger for SMEs, who generally have fewer resources to invest in upskilling their workforce. These changes are important steps towards addressing barriers to lifelong learning in the workforce as a whole and promoting skill adaptability in a preventive way. The main challenge of this approach is raising awareness among companies about these possibilities.

Sources: OECD (2021[26]); Duell (2023[27]).

• Continue efforts to reduce gender inequalities. Significant progress has been made, but gender inequalities in the labour market are still prevalent. Thus, efforts to promote female entrepreneurship, formal employment in rural areas, and access to full-time childcare should continue, and the new Strategy for Gender Equality should continue to be implemented.

• Draw policy conclusions from the assessment of the unemployment insurance law. Specifically, the government of Serbia should monitor progress and assess the outcomes of the newly planned vocational rehabilitation measures and social enterprises.

• Strengthen the capacities of social partners to conduct collective bargaining at sector and company levels and strengthen worker representation at the company level. The Social and Economic Council should be equipped with the necessary resources to conduct labour market and sector analysis, as in several other European countries. The Council should be encouraged to evaluate the impact of the minimum wage on poverty reduction and formal employment. This would reinforce its role as the primary consultative platform for tripartite dialogue.

• Refine the existing migration strategic framework by placing more emphasis on labour migration, through concrete strategic goals and action plans. While the existing Economic Migration Strategy primarily focuses on diaspora and returning migrants, it needs to broaden its scope by prioritising implementing policies that facilitate the optimal utilisation of foreign talent and improve the integration of migrants into the labour market and society.

References

[7] A11 Initiative (2023), Communication: The A11 Initiative Presents the Current Effects of the Law on the Social Card on the Social Protection System, https://www.a11initiative.org/inicijativa-a-11-predstavila-dosadasnje-efekte-zakona-o-socijalnoj-karti-na-sistem-socijalne-zastite/.

[16] ACIT Centre (2023), Balkan Barometer 2023 Business Opinion, Regional Cooperation Council, https://www.rcc.int/balkanbarometer/key_findings/1/.

[22] Berlin Process (2023), Agreement on the Recognition of Professional Qualifications of Nurses, Veterinary Surgeons, Pharmacists, and Midwives in the Central European Free Trade Agreement Context, https://www.berlinprocess.de/uploads/documents/joint-agreement-recognition-of-professional-qualifications-nurses-veterinary-surgeons-midwives-and-pharmacists-bp-summit-2023_1697628897.pdf.

[27] Duell, N. (2023), “New forms of active labour market programmes”, European Network of Public Employment Services, European Commission, https://ec.europa.eu/social/BlobServlet?docId=26973&langId=en.

[15] ETF (2023), European Jobs and Skills Survey - Statistical Profile, Serbia, https://www.etf.europa.eu/sites/default/files/2023-11/Statistical%20profile_RS_EN_edited.pdf.

[6] European Commission (2023), Serbia Report 2023, https://neighbourhood-enlargement.ec.europa.eu/serbia-report-2023_en (accessed on 23 January 2024).

[21] European Commission (2021), European Network of Public Employment Services, Greening of the labour market – Impacts for the Public Employment Services – Small scale study, Directorate-General for Employment, Social Affairs and Inclusion, https://data.europa.eu/doi/10.2767/558712.

[3] 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).

[1] Eurostat (2023), Employment and Activity by Sex and Age, Annual Data, https://ec.europa.eu/eurostat/databrowser/view/lfsi_emp_a__custom_10254650/default/table?lang=en (accessed on 6 March 2024).

[19] Eurostat (2023), Individuals’ Level of Digital Skills (from 2021 onwards), https://ec.europa.eu/eurostat/databrowser/view/isoc_sk_dskl_i21/default/table?lang=en&category=isoc.isoc_sk.isoc_sku (accessed on 4 March 2024).

[4] Eurostat (2023), Long-term Unemployment by Sex, Annual Data, https://ec.europa.eu/eurostat/databrowser/view/une_ltu_a/default/table?lang=en&category=labour.employ.lfsi.une (accessed on 4 March 2024).

[5] Eurostat (2023), Unemployment by Sex and Age - Annual Data, https://ec.europa.eu/eurostat/databrowser/view/une_rt_a/default/table?lang=en&category=labour.employ.lfsi.une (accessed on 6 March 2024).

[18] 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).

[23] Government of Serbia (2024), “Establishing free labour market in countries of Open Balkans”, https://www.srbija.gov.rs/vest/en/217794/establishing-free-labour-market-in-countries-of-open-balkans.php.

[25] International Centre for Migration Policy Development (2023), Study of the Diasporas’ Contributions to the Socio-Economic Development in the Western Balkans, https://www.icmpd.org/file/download/59589/file/ECONDIAS_Comparative-report_FINAL.pdf.

[13] Janackovic, M. and S. Aksentijevic (2023), Evaluation of Active Employment Policy Measure – Subsidies for Employing Hard-to-Employ Individuals for the Years 2021 and 2022, https://www.ilo.org/media/307771/download.

[10] Kuddo, A. (2012), Public Employment Services, and Activation Policies, World Bank, Washington, D.C., https://documents1.worldbank.org/curated/en/261871468184139230/pdf/689380NWP00PUB0ction0and0labor01215.pdf (accessed on 18 March 2024).

[11] OECD (2023), OECD Data Explorer: Labour Market Programmes, https://data-explorer.oecd.org/vis?df[ds]=DisseminateFinalDMZ&df[id]=DSD_LMP%40DF_LMP&df[ag]=OECD.ELS.JAI&dq=AUS.EXP..PT_B1GQ&lom=LASTNPERIODS&lo=5&to[TIME_PERIOD]=false (accessed on 10 July 2024).

[17] OECD (2023), OECD Data Explorer: Skill Needs by Country, https://stats.oecd.org/Index.aspx?DataSetCode=S4J2022 (accessed on 10 July 2024).

[20] OECD (2022), Multi-dimensional Review of the Western Balkans: From Analysis to Action, https://doi.org/10.1787/8824c5db-en.

[26] OECD (2021), Continuing Education and Training in Germany: Getting Skills Right, OECD Publishing, Paris, https://doi.org/10.1787/1f552468-en.

[12] RCC (2023), Aligning Western Balkan Labour Market Policy Databases with the EU Guidelines, https://www.rcc.int/pubs/167/aligning-western-balkan-labour-market-policy-databases-with-the-eu-guidelines#:~:text=The%20report%20Aligning%20Western%20Balkan,to%20advocate%20for%20labour%20market.

[9] RCC (2023), Regional Overview of Western Balkan Economies Regarding the European Pillar of Social Rights, https://www.rcc.int/pubs/156/regional-overview-of-western-balkan-economies-regarding-the-european-pillar-of-social-rights.

[24] United Nations Networks on Migration (2021), Voluntary Contribution of the republic of Serbia to the First Regional review on the Implementation of the Global Compact for Safen Orderly and Regular Migration, https://migrationnetwork.un.org/sites/g/files/tmzbdl416/files/docs/serbia.pdf. (accessed on 10 July 2024).

[14] Vienna Institute for International Economic Studies (2023), SEE Jobs Gateway, https://data.wiiw.ac.at/seejobsgateway-q.html.

[8] Vienna Institute for International Economic Studies (2021), Labour Market Brief 2021. Special Topic – Employment in greenfield FDI, https://data.wiiw.ac.at/seejobsgateway.html.

[2] World Bank (2024), World Development Indicators, DataBank, https://databank.worldbank.org/source/world-development-indicators (accessed on 6 February 2023).

Notes

← 1.  Note that Serbia has started publishing labour force survey (LFS) data according to a new methodology in 2021. The changes were implemented in accordance with the new Regulation (EU) 2019/1700 of the European Parliament and the Council and followed new guidelines from the International Labour Organization (ILO). The biggest change refers to the treatment of persons who produce agricultural goods and services for their own consumption, without bringing them to market. Serbia has revised the data gathered prior to 2021 according to the new methodology, but only for the main aggregate indicators (RCC, 2023).

← 2.  These data come from the CO 2024 quantitative questionnaire.

← 3.  22 collective agreements have been concluded in the public sector. In addition, 6 special collective agreements have been concluded at the local level for the activities of utility companies. In the private sector collective agreements exist for specific professions and sectors: artists and performers in the hospitality industry, and in the road building and maintenance industry.

← 4.  The share of people with disability among registered jobseekers is 2.7% (as of 31 December 2022) (administrative data provided by NES).

← 5.  The Department of Labour and Employment is a department within the Ministry of Labour, Employment, Veteran and Social Affairs. One of its divisions, the Division for active labour market policy, plays a central role in the design and implementation of public employment services and ALMPs.

← 6.  Data provided by Serbia, and https://www.stat.gov.rs/en-US/oblasti/trziste-rada/zarade for comparing with net and gross average wages.

← 7.  Recipients of social assistance must register with the NES.

← 8.  The funds shown for active labour market policy measures are the funds provided by the National Employment Service, which were secured from different sources (unemployment insurance contribution and the RS budget, including the Budget Fund for professional rehabilitation and incentives for employment of persons with disabilities, as well as the budgets of provincial and local self-governments which have local employment action plans).

← 9.  The Ministry of the Interior, the Commissariat for Refugees and Migration, and others such as Labour, Employment, Veteran and Social Affairs; Foreign Affairs; Justice; Defence; Health; and Education, Science, and Technological Development.