The report presents the findings from the six Western Balkan economies. This includes Albania, Bosnia and Herzegovina, Kosovo, Montenegro, Serbia and the Former Yugoslav Republic of Macedonia. It is structured into seven sections. Firstly, it presents a brief review of the main indicators, trends and characteristics of the labor markets. Secondly, it analyses in more detail the sector specific conditions for labor demand and the key sectors for employment generation. In Section 3 it discusses the role of the institutional framework and the regulatory environment in supporting labor markets.

Sections 4 and 5 cover the supply and demand for labor. Section 4 focuses on demographic trends and migration, the educational system, qualifications of the labor force and the extent of skill mismatches that affect employment. Section 5 presents the key factors determining employment generation, focusing on the business cycle, labor costs, tax and benefit systems, wage setting process, and the role of structural change in shifting the demand for labor over time.

The analysis is mainly based on a review of government reports and previously published studies. Section 6 reviews labor market policies, particularly related to active labor market policies (ALMPs). Section 7 provides conclusions and some policy recommendations.

The report says that the Western Balkans economies have made progress in increasing the flexibility of labor markets and reducing the restrictiveness of employment protection legislation, although differences between the economies remain. Most economies have implemented reforms to improve the business environment and ease the entry of new firms, and most have progressed in the ease of doing business.

Employment policy has traditionally been passive rather than active throughout the region, although recent policy reforms have promoted the idea of active labor market policies. However, the expenditure on these policies remains relatively low in comparison with EU averages and this is an area that should be developed much more in the future to support both the supply and demand sides of the labor market, supporting the creation of a job-friendly growth model, the continuing reduction of unemployment, and improvements in the quality of jobs in the region.

The report was prepared under the overall guidance of the Regional Cooperation Council in the framework of the Employment and Social Affairs Platform regional project, funded by the EU. The report has benefited from comments from DG Employment, Social Affairs and Inclusion. It can be found here.