Addressing Serbia’s labor marketproblems is critical to enhancing growth and job creation.Low labor force participation, relatively high unemployment,particularly among youth and other disadvantaged groups, andrising skills gaps currently impede efficient use of humancapital and the prospects for sustained economic growth andwelfare improvements. Although there has been progress, morejobs are needed if Serbia is to catch up with neighboringcountries in the European Union (EU). Robust growth inemployment will require a comprehensive agenda: boostingprivate sector job creation on the demand side; reducingbarriers and disincentives to work and improving workerskills on the supply side; and ensuring that labor marketintermediation and institutions facilitate employer-employeematches. This note focuses on current labor marketperformance and on skills and labor market policies tosupport inclusive growth. Employment in Serbia’s formalprivate sector is low; the full workforce potential isunderutilized; and labor productivity and real wages havebeen relatively flat. Improving skills and reforming labormarket policies can boost both employment and productivity.This note’s focus on skills and labor taxation, regulation,and intermediation allows it to discuss specific policyactions to support Serbia’s New Growth Agenda. Tacklingthese issues will not only enhance Serbia’s human capitaland productivity for higher growth but will also boostpeople’s incomes, reduce poverty, and grow the middle class.
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