At the turn of the millennium, Serbia was still ravaged by war, bombings and economic sanctions. In 2000, GDP was only half that of 1989. Although the Serbian economy began to boom once the war had ended – recording average growth rates of 6.5 percent between 2000 and 2005 – the global financial and economic crisis acted as a brake on economic recovery.
Within a short time, thousands of jobs were lost: in 2012, Serbia had 600,000 fewer formal employment relationships than in 2008; and even in 2015 the level of employment was still lower than before the crisis. The end of socialism ushered in a period of structural transformation that continued after the crisis.
In 1990, the region was the centre of Yugoslav machine-building, but today this once thriving industry has become obsolete and barely competitive and hence is declining in significance. Instead, the services sector has replaced industry as the main engine of the economy. From 2000 to 2015, the sector’s contribution to the gross value added increased by 14 percentage points to more than 60 percent. The growing significance of the services sector means that different skills are now called for. And because many members of the better-educated younger generation are leaving Serbia, the country is increasingly experiencing a shortage of skilled labour.
Around 15 percent of exportoriented companies in Serbia say that this shortage poses an obstacle to their commercial success. Another reason for the lack of skilled labour is the low quality of education. Formally, Serbia has a relatively good level of education compared with other West Balkan countries – one young person in four has completed tertiary education and one in two has finished secondary school.
However, the skills acquired often leave much to be desired. Both employers and the school leavers themselves are of the opinion that the Serbian education system does not equip pupils with the personal and social competencies they require for the labour market.
At 33 percent, unemployment even among graduates is comparatively high. One reason for this is that many students choose subjects for which there is little demand on the job market, such as social sciences, arts and administration sciences. The poor prospects for those with higher education often mean that graduates work in professions for which they are overqualified. In Serbia, this applies to around 19 percent of graduates.
As in the rest of Europe, jobs for those with higher qualifications are to be found, if at all, mainly in the cities. The country’s urban centres, especially Belgrade, therefore act as magnets. The rural regions in the south and east, on the other hand, are rapidly depopulating. And it is precisely in those places that the population is becoming older, which not only weakens the economy but also leads to problems in providing care and amenities.
The aging of the population poses a bigger problem in Serbia than in the rest of the Western Balkans because it already has more people over the age of 64 who need to be provided for than it has young people under 15. Elsewhere in the Western Balkans, the ratio is still the opposite. The burden of having to provide for older people is likely to increase considerably in the future: whereas today there are four people of working age for every potential pensioner, by 2050 there are likely to be only two./IBNA