Stanic: Common labor market important for foreign investors; danger of political constraints

The Protocol on Free Access to the Labor Market, signed by Serbia, Albania, and North Macedonia within the Open Balkan Initiative, expected to come into effect on March 1, cannot be expected to solve the problem of labor shortages, Bojan Stanic from the Serbian Chamber of Commerce says, however, he adds that Serbia has a certain advantage because it has a larger market and greater economic potential, thus offering more job opportunities.

Stanic reminds that one of the main long-term problems for the Serbian economy is the shortage of labor, particularly felt in the construction, transportation, and hospitality sectors, and increasingly in some sectors of the manufacturing industry and seasonal agricultural jobs.

"However, the fact is that the capacity of the Western Balkans, generally, and especially these three countries within the Initiative, is not large enough to meet all of Serbia's needs. Also, it is very important to consider the sustainability of these economies within the Initiative. Here, Serbia has a certain advantage because it has a larger market, greater economic potential, and a greater chance of obtaining employment," Stanic emphasizes for Kosovo Online.

As he notes, the goal is not for all available labor from Albania and North Macedonia to move to Serbia, as their economies also experience a labor shortage.

"But the fact is that the market would be more functional; someone who tried to find a job there can now try to find one in Serbia. Or vice versa, meaning our highly educated professionals who have trouble finding work here, may have profiles needed in Skopje or Tirana," our interlocutor says.

Stanic emphasizes the importance of how foreign investors perceive the situation.

"They now see one market that has 6-7 million inhabitants in Serbia alone, according to the census, but if you add the population of these two countries, you get around 11-12 million. So they now look at that area as a broader environment where they can simply draw the workforce they need for their investments. And what's thirdly important is that when we talk about the pronounced demographic problem, it is most pronounced in those peripheral areas, for example, in southern Serbia. And when you see the possibility not only to find workers in southern Serbia but, for example, those who would come from the northern part of North Macedonia, you certainly have a greater choice of workers and the opportunity to start production even in those areas characterized by a pronounced demographic crisis," Stanic explains.

The benefits that each country will have depend on whether they are viewed in absolute or relative terms, Stanic adds, emphasizing that Serbia is the leader in terms of its capacity within the Open Balkan Initiative and could therefore benefit the most in absolute terms.

"For example, if we take CEFTA, which encompasses the entire Western Balkans, Serbia has the highest inflows from intra-regional trade, i.e., trade that takes place within the region. However, over time, as the agreement is implemented, which has been in effect since 2006, the coverage of imports from Serbia by exports to the region relatively decreases. This means that, in relative terms, they still increase their income from trade with Serbia, or the value of exports to Serbia. So, by that logic, something similar could happen with this Open Balkan Initiative, but it is very important that we must think not only about the sustainability of our own economy but also about the sustainability of others if we are talking about a joint initiative," our interlocutor says.

He warns that a potential crisis in one country in the region, because it is becoming increasingly integrated, would later reflect on the situation in a country not directly affected by the crisis. It all depends on whether the Protocol will start to be implemented on March 1, Stanic emphasizes, recalling previous negative experiences where something was agreed upon but later not implemented.

"So certain political constraints that exist can certainly limit the functioning of that agreement. When we remember that the Open Balkan Initiative started under the name Mini Schengen in 2019 – almost five years have passed, and there are not many tangible results, which businessmen feel. Then the authority of the Initiative itself is lost. There are certain benefits that have occurred regarding the transport of goods, and people can travel with personal IDs within the region, but the fact is that businessmen do not see the benefits that were announced yet, considering that there is indeed pronounced political interference in these economic matters and putting the whole issue into the background for the benefit of some daily politics," Stanic notes.

He also recalls statements by certain officials who said that the Open Balkan Initiative "has fulfilled its mission."

"Well, how can it fulfill its mission if it has not achieved even a tenth of what was planned, especially if we are talking about trade, services, and movement of capital? We believe that precisely that political aspect can limit the functioning of this agreement, but we have firm announcements from Skopje, where representatives of Serbia, Albania, and North Macedonia were, saying that the implementation of such a protocol, which means a unified labor market, is underway," Stanic reminds.