Labor market in the Western Balkans: Unemployment at a historic low, high demand for skilled workers and IT experts

According to the latest European Commission report, the countries of the Western Balkans have recorded “historically low” unemployment rates. However, as Kosovo Online reports, experts from Tirana to Belgrade warn that labor migration trends toward the EU remain prominent, and there is still high demand in the region for IT professionals and skilled tradespeople.

Written by: Djordje Barovic

“Unemployment rates fell in most economies of the region in the first quarter of 2025. Due to slowing economic activity, the average annual employment growth slowed to 0.2% across the Western Balkans, while labor force participation continued to rise in most countries. Unemployment rates remained at historically low levels but are still higher than in the EU, ranging from 8.2% in Serbia to 13.4% in Bosnia and Herzegovina,” states the European Commission's report on the Western Balkans and Turkey.

However, the Musine Kokalari Institute presents different data, at least for Kosovo.

Based on an analysis of Kosovo Agency of Statistics data, they found that Kosovo lost 97,059 workers last year alone and saw a net loss of 11,006 jobs.

“A decline of nearly 100,000 workers in a single year cannot be ignored, downplayed, or hidden behind differently calculated percentages,” the Institute emphasized.
Skilled Labor Shortage

Zoran Ristic, Senior Economic Advisor at the UGS “Nezavisnost” trade union, highlights similar concerns.
“In Serbia, the unemployment rate is 9.1%, similar to Albania, followed by Montenegro. Naturally, the highest unemployment rate remains in Kosovo and Metohija. Even with claims of significant reductions in unemployment, the persistently high rate in Kosovo indicates that the problem there is the most acute,” Ristic told Kosovo Online.

Commenting on the European Commission's report, Ristic said the data on falling unemployment is accurate but stressed that the region’s unemployment levels are still well above the EU average.

“For the Western Balkans, unemployment remains at a high 12%, which is about 50% more than in EU countries,” he noted.

He warned of a critical shortage of tradespeople and healthcare workers across the region.

“Craftsmen are lacking throughout the region. Construction workers are in limited supply, and healthcare professionals are also in short supply. Essentially, we’re missing exactly the types of workers who were needed in Western countries and who many young workers from this region have gone to replace,” Ristic explained.

To fill the labor gap, countries in the region are turning to labor imports. Ristic illustrated this with the fact that 46,000 work permits were issued in 2018, while last year that number exceeded 100,000. In Serbia alone, there are now over 50,000 valid work permits.

Although workers from the region often express a willingness to retrain, the actual numbers remain low.

“If you ask any worker, they’ll say they’re ready to retrain and understand the need to adapt to a changing job market. World Bank research shows that over 60% of workers in the Western Balkans say they’re willing to retrain. But in reality, only about 15% actually follow through,” Ristic said.

He added that most intra-regional labor migration is related to tourism.

“This trend of labor movement from one country to another mostly concerns seasonal tourism work. As with last summer, this year too we see seasonal job migration toward the Montenegrin and Albanian coasts. In Serbia, hospitality businesses struggle to secure workers during the summer season,” he noted.

“Labor Migration”

Agim Shahini, President of the Kosovo Business Alliance, also warned of continued labor migration toward the EU this year, with construction workers, hospitality staff, and healthcare workers in particularly high demand.

“We’re again seeing increased labor migration from the region to EU countries this summer, especially to Germany, Austria, Slovenia, and Croatia. Workers are leaving for better wages, more secure contracts, and seasonal jobs in construction, tourism, agriculture, and healthcare,” Shahini told Kosovo Online.

Commenting on the European Commission’s report highlighting declining unemployment, Shahini noted that employment growth has slowed to just 0.2%.

“This indicates that the labor market is still feeling the effects of the economic slowdown,” he explained.

Kosovo is no exception when it comes to high-demand professions. Shahini listed the top sectors as construction, IT, retail, logistics, and tourism.

“The most sought-after workers are drivers, tradespeople, programmers, as well as production workers and seasonal tourism staff,” he said.

He added that young people just finishing their education and workers lacking digital skills struggle most to find employment.

“Women also have a harder time finding jobs, especially in rural areas where there are fewer opportunities and flexible positions,” said Shahini.

According to the Kosovo Business Alliance, young people are more willing to retrain for in-demand jobs, but stronger institutional support is needed.

“We need stronger institutional support through practical training to accelerate the retraining process and align it with the real needs of the economy,” Shahini stressed.

While the most sought-after jobs are in IT, manufacturing, logistics, and services, traditional administrative roles and professions not adapted to new technologies are least in demand in Kosovo.

“At KBA, we believe that the key to long-term unemployment reduction and stemming migration lies in greater investment in education, digital skills, and aligning the education system with the actual needs of the labor market. Only then can we retain our workforce and narrow the gap with the EU,” Shahini concluded.
Labor Market Trends

Nevertheless, for economist Besnik Avdijaj from Pristina, the European Commission's data on declining unemployment rates in the Western Balkans should be viewed conditionally, as the picture is much less optimistic due to migration trends and structural deficiencies in the region.

"The overall employment situation in Western Balkan countries is improving, but the region still lags behind the EU average in many indicators. When economic growth slows down, a drop in unemployment does not necessarily reflect real economic development. When this data is compared with migration trends and structural weaknesses, the picture becomes even less optimistic," Avdijaj told Kosovo Online.

He explains that most reports show the highest unemployment rates among youth and women.

"Workers in their prime working years see better outcomes in sectors like domestic services, construction, and certain branches of manufacturing. Rural areas still lag behind urban centers in access to employment, and people with lower qualifications are more exposed to mismatches between labor supply and demand," the economist notes.

He adds that labor market trends are closely linked to global shifts in economic flows, which is why demand for IT professions has grown in recent decades.

"Due to population aging and low birth rates, demand for healthcare workers is expected to rise. The construction and real estate sectors are currently experiencing rapid growth, but it's uncertain how sustainable that growth will be, given rising costs and decreasing availability of interested labor. That’s why many companies are turning to more distant countries in search of cheaper labor," Avdijaj explains.

He believes that tourism and hospitality are becoming increasingly profitable sectors, especially in coastal countries like Albania and Montenegro, making them attractive to entrepreneurs and workers.

At the same time, “due to the mismatch between skills and labor market needs,” many sectors are undergoing transformation, resulting in more frequent requalification for new jobs.

He notes this phenomenon is increasingly visible even within companies, as they aim to “adapt their workforce to new demands.”

Avdijaj says there is still no precise data on labor migration during this year's summer season, but that “economic trends indicate heightened activity across all sectors, especially in tourism and hospitality.”

“General migration trends show a strong desire among the workforce to move to more developed European economies for a better standard of living. The most attractive destinations include Germany, Switzerland, Austria, France, Italy, the Scandinavian countries, and closer ones like Croatia and Slovenia,” Avdijaj emphasizes.

Albanian "Record"

Another specific feature of the Western Balkans is the difficulty young people and workers over 50 face in finding employment.

Ergis Sefa, an expert on EU financing and venture capital from Tirana, stresses that Albania still holds the record—not just in the region but in Europe—for youth unemployment under the age of 30.

"Unfortunately, there's a gap in employment levels between age groups. Albania has the highest youth unemployment rate for those aged 18 to 30, both compared to the region and certainly the EU," Sefa told Kosovo Online.
 

He explains that a range of factors contributes to this, with migration being only one part of the problem.

Sefa highlights young people's lack of interest in enrolling in schools that offer training for high-demand professions.

"The fact remains that youth unemployment is nearly twice the general unemployment rate. If the overall rate is 8.8%, youth unemployment reaches 19%—more than double. That’s the highest rate in the region," Sefa warns.

On the other hand, Albania is also among the regional leaders in reducing unemployment, which dropped from 9.5% to 8.8%.

"But that’s not just because more jobs are being created, but also due to the outflow of labor, primarily young people leaving for the EU," he emphasizes.
 

He explains that job growth is strongest in services, especially during the summer months in tourism.

"Tourism is the dominant sector, but we also see growth in specific sectors like information technology. IT is also the highest-paying field, although salaries have also significantly increased in the tourism sector," the analyst notes.

He identifies two main challenges in Albania’s labor market.

"The first is the decline of underperforming sectors like agriculture, which are facing workforce extinction. This could spark a new wave of migration from agriculture and related fields. The second challenge is the shift in technical skills demanded by the labor market. We now have more specialized roles requiring new technical and professional education. Young men and women should pursue those paths rather than general education in economics, law, or similar disciplines," Sefa argues.

He says Albania provides access to vocational training, with both public and private centers offering various courses to help young people adapt to market needs.

However, Albania is also losing labor in agriculture and in clothing and footwear manufacturing.

"The reasons are the weakening euro, strengthening Albanian lek, and a shift in demand structure. Today, there’s less demand for basic industrial goods and more for high-quality products. Workers in these fields face two choices: requalify and increase their professional level to meet growing product sophistication, or change careers, as these sectors must transform to remain competitive—or they’ll fade away," Sefa concludes.

Supply and Demand

According to North Macedonia’s Employment Agency, the country has been steadily reducing unemployment, but still faces a shortage of skilled labor.

“Unemployment continued to decline in 2025. In Q1, it stood at 11.7%, down 1.2 percentage points from the same period in 2024. Employment rose to 46.3%, up 0.9% year-over-year,” Biljana Zivkovska from the Agency told Kosovo Online.

As of June, 97,157 unemployed people were registered in North Macedonia.
Zivkovska says the country’s labor market is primarily characterized by a mismatch between supply and demand.

"There are still many sectors where qualified workers can’t be found to fill vacancies, as potential candidates lack the necessary qualifications and skills," she explains.

The most in-demand workforce is in the IT sector.

"This is especially appealing to young people. The working conditions are better, the career advancement potential is high, salaries are attractive, and these companies invest in additional training and certification, increasing workers’ competitiveness," Zivkovska says.

Other highly sought-after professions include:

Electrical and mechanical engineering (engineers and technicians)
Construction and architecture
Hospitality and tourism (waiters, chefs, managers)

According to the Agency, most job seekers without secondary education can’t find work.

"About 60% of the unemployed population has only primary education or less. These individuals lack qualifications and professional identity, making them difficult to place. Employment is extremely hard to secure for them," Zivkovska says.

This group also includes workers over 55, despite their practical experience.

At the same time, young people with university degrees also struggle, as employers increasingly demand practical knowledge and skills that new graduates often lack.

"University graduates have trouble finding work in certain fields because employers look for hands-on skills in addition to a diploma," she notes.

More workers in North Macedonia are becoming aware that requalification is the best path to employment, especially among youth.

"One of the positive trends is growing awareness of the need to upgrade skills—particularly IT and digital skills. Many young people, but not only them, are showing interest in requalification for IT, digital marketing, graphic design, and similar areas. There are many private and public initiatives supporting this," says Zivkovska.

She adds that many workers are aware that automation and new technologies are replacing traditional jobs, and are trying to adapt.

However, motivation remains a barrier, as some courses—especially in IT—are expensive, and retraining often requires changing one’s environment.

The biggest problem, she says, is the lack of guaranteed employment after retraining.

North Macedonia’s most in-demand occupations in recent years have been in IT technologies, such as programmers, software engineers, data engineers, cybersecurity experts, and AI specialists.

There’s also strong demand for:

Doctors, pharmacists, nurses, lab technicians
Civil engineers, architects
Electrical and mechanical technicians
Teachers (especially for physics, math, languages, and computer science)
Green energy and environmental professionals

On the other hand, lawyers and economists are less in demand.

"There is still demand for them, but due to fierce competition, employers require additional skills beyond a law or economics degree," Zivkovska explains.

North Macedonia is not immune to seasonal migration, with many workers spending summers in Croatia.

"What concerns us more is the permanent migration of highly educated professionals, primarily to Italy, Germany, and Austria. We're now undertaking initiatives to help our students studying abroad return and apply their knowledge in practice here," Zivkovska concludes.