The saying “The further south you go, the sadder it gets” perfectly applies to the story of demographic changes in certain parts of Serbia, which are now heavily influencing the labour market. In essence, in some regions, depopulation has reached alarming levels, threatening not only to reshape the local economy but also to alter the structure and even the nationality of the workforce.
While this may sound overly pessimistic, data from both national and international institutions indicate that the country and its leadership face serious demographic challenges. If left unchecked, these challenges could significantly reshape the economy – not only in southern and eastern Serbia, where the problem is most pronounced – but in the entire country. The bleak reality is underscored by World Bank data, which ranks Serbia 13th globally for the fastest population decline. Jakup Berisha, UNDP’s Resident Representative in Serbia, also reminds us of this status.
“The census shows that Serbia has 6.65 million inhabitants, 496,000 fewer than in 2011. Due to a low birth rate, an ageing workforce, and emigration, the number of young people entering the labour market is decreasing, while the number of pensioners is rising faster than we can replace outgoing workers. At the same time, emigration disproportionately draws away highly educated professionals, further worsening labour shortages in key industries,” Berisha told NIN.
It’s difficult to determine how many people leave Serbia each year due to a lack of precise data. Estimates range from 9,000 to as many as 60,000 people annually. According to the Statistical Office’s projections, Serbia will lose 1.5 million inhabitants over the next 30 years, and since 1992, the country has consistently recorded more deaths than births.
Berisha warns that cities and municipalities are especially affected by demographic changes, which is why investing in human potential at the local level is essential.
“In the past three decades, nearly 40% of municipalities in Serbia have lost a third of their population, while simultaneously facing an ageing population, both internal and external migration, and a shortage of workers. Crna Trava, with just 1,066 residents, is the smallest, while the demographic black spots include Gadžin Han, Babušnica, and Rekovac. Only Belgrade, Novi Sad, and Novi Pazar are growing. Depopulation triggers a vicious cycle: the loss of human capital leads to further emigration, declining birth rates, and unfavourable labour market conditions, particularly for young people. This affects economic resources and hampers recovery. The trend threatens not just individual municipalities but the economic and social stability of entire regions,” explains the UNDP representative.
In such conditions, employers are trying to attract workers by offering higher wages, and many factories are turning to labour imports from Asia. In this climate, sheet metal workers earn 176,000 dinars a month, drivers 120,000, and some employers offer up to 3,000 euros for skilled tradespeople. Despite this, labour demand continues to exceed supply.
“The latest UNDP labour market study in Serbia projects that demand for workers will rise from 125,000 in 2024 to nearly 144,000 by 2026, with the highest demand in manufacturing and the IT sector, along with ongoing needs in wholesale, retail, and automotive repair services. The problem isn’t just in the numbers; the real challenge is the mismatch between labour supply and demand. Disparities between educational programmes, student enrolment by discipline, and labour market needs are leading to an oversupply of professionals in some fields and shortages in others. Younger generations are increasingly interested in high-tech and digital professions, while interest in traditional manufacturing jobs is falling, making it even harder to fill key vacancies in the labour market,” Berisha told NIN.
Labour demand beyond tech: Serbia’s workforce crisis deepens across sectors
The labour market isn’t only demanding high-tech jobs. This is confirmed by Miloš Turinski from Infostud, speaking to NIN.
“Data from the Infostud website shows labour market stability, with a total of 73,732 job ads over the year – almost identical to the previous year. However, beneath that surface stability lies a growing deficit in certain sectors, especially manufacturing, retail, logistics, hospitality, and skilled trades. The most sought-after positions – drivers, factory workers, warehouse staff, salespeople, chefs, and sales representatives – are increasingly hard to fill. The trades sector is a particular challenge, with a chronic shortage of workers such as hairdressers, sheet metal workers, butchers, plumbers, welders, panel beaters, metal turners, and bricklayers. For some of these roles, employers have been willing to offer up to €3,000 a month, reflecting both the seriousness of the problem and the real market value of those skills,” Turinski told NIN.
This means there have been dramatic shifts in earnings: sheet metal workers now earn 176,000 dinars, drivers 120,000, chefs 105,000, while cleaners have the lowest wage at 66,000 dinars.
“Even so, it’s becoming increasingly difficult to find workers for these roles – both due to emigration and a declining interest among young people in trades, along with a mismatch between the education system and labour market needs. As a result, more and more employers are turning to foreign labour, particularly in physically demanding sectors. Just a few years ago, this was rare. Now, it’s becoming standard practice, especially in manufacturing and construction,” Turinski added.
To address this situation, in addition to national institutions and their strategies, the UNDP has defined its own.
“To respond to depopulation and help local and regional labour markets become more resilient to demographic changes, UNDP is focusing on medium-sized cities, which we see as key to survival, development, and regional integration. These cities act as gravitational hubs for smaller surrounding communities, creating positive spillover effects for nearby areas,” said a UNDP representative.
“This is particularly important in parts of Serbia where entire towns are caught in a cycle of depopulation and economic stagnation. For example, in southern and eastern Serbia, apart from Niš, all municipalities are experiencing a severe population decline and generally weak economic activity. UNDP, in cooperation with the Ministry for Demography and Family Care, is developing demographic policies tailored to specific local contexts. This includes initiatives to support youth, families, and businesses by making these cities more family-friendly and improving the work-life balance,” said Berisha.
Due to this situation, he underlined the need for a long-term strategic shift.
“To manage the rapid labour market changes driven by demographic shifts effectively, we must take a long-term view and assess their impact over the next 10 to 20 years. If we only focus on current demand, we’ll always lag behind. For instance, in recent years, programmers were in high demand, but then the rise of artificial intelligence disrupted that market in just one year. To keep pace with such trends, UNDP is working with the National Employment Service to develop an advanced labour market analytics system. We need a new mindset, adaptive policies, and bold experiments to create an environment where people want to stay, work, and build their futures,” Berisha told NIN.
He also identified three key directions to ease the crisis.
“We must align education and skills development with the changing demands of the labour market; create economic policies that support innovation in small and medium-sized enterprises and attract investment into tech-based industries requiring specialised skills; and deepen our understanding of migration and the role of foreign workers to ensure they contribute to long-term sustainable development. UNDP runs specific projects and supports the organisation ‘Returning Point’, which promotes circular migration by connecting the Serbian diaspora with local opportunities in business, trade, and knowledge exchange, and simplifies job search and administrative processes to attract talent and investment,” Berisha explained.
UNDP has also supported the Serbian Chamber of Commerce in reforming its Diaspora Business Council to facilitate diaspora investment, technology transfer, scientific exchange, and boost exports. Still, until deeper ties with the Serbian diaspora are re-established, the gap is being filled by importing labour from various countries. According to the Ministry of Interior, the number of work permits issued doubled by 113 percent over two years, from 23,662 to 50,397. So far this year, over 16,500 permits have been issued, mostly to nationals from Russia, China, India, Turkey, and Nepal.
Berisha noted that UNDP is helping the Ministry of Interior and the Ministry of Labour to process foreign work permits more efficiently.
“Serbia’s productivity growth will significantly depend on these workers. UNDP facilitates legal and regulated access to the national labour market for foreigners, allowing employment only in vacancies that cannot be filled by Serbian workers. At the same time, we support relevant institutions in protecting migrant workers’ rights, preventing illegal migration, and ensuring access to services. UNDP also organises training, develops digital tools, and promotes data-driven policies to help Serbian institutions manage migration more effectively,” the UNDP representative explained.
For those unaware, 941,319 foreign-born individuals currently live in Serbia, comprising 14.2 percent of the population. That percentage could increase, as Serbian experts estimate that labour imports, especially from Asia and the region, will play an even greater role in Serbia’s labour market in the coming years. UNDP shares this view.
“Digitalisation and automation can help Serbia address labour shortages by boosting productivity, especially in manufacturing, public services, and agriculture. However, Serbia should invest in workforce retraining and ensure that technology complements rather than replaces human capabilities. UNDP’s latest Human Development Report stresses that the future impact of artificial intelligence depends on the choices we make today. For Serbia, this means focusing on a complementary economy, where technology supports people, and investing in skills and education,” said Berisha.
Which strategies this or future Serbian governments will adopt remains uncertain, but what is certain is that, according to Westminster Foundation data, Serbia loses €900 million annually due to emigration. The World Bank predicts that Serbia will have only 5.8 million residents by 2050 – a 25 percent decrease. Wage growth outpacing productivity threatens competitiveness, while pressure on the pension system is becoming unsustainable.
The pressing question is whether Serbia will stop its demographic collapse or adapt to a reality where domestic labour is a scarce commodity, especially in regions south of Belgrade. The government’s response will determine the country’s economic future and its identity in the decades to come.
(NIN, 23.06.2025)