The gradual recovery of economic activity in Serbia started in May, but the deterioration of the labour market will continue throughout the second half of this year and probably for part of 2021, and will mainly affect the formal labour market.
According to a bulletin published by the Faculty of Economics and the Foundation for the Development of Economic Sciences (FREN), more intensive redundancies in the private sector, which will adjust employment with the scale of economic activity, will start after the end of the state minimum wage payment programme.
The dismissal of workers can be expected mainly in economic branches that produce durable consumer goods, capital products and non-core services such as tourism.
The authors of the analysis predict that the recovery of these branches will be gradual and it will probably take a year before they return to pre-crisis levels.
The dismissal of workers in the formal sector and the loss of some informal jobs will affect the growth of the unemployment rate in this and next year.
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The growth of the unemployment rate will also be influenced by workers who returned to Serbia at the beginning of the pandemic and who had worked abroad in economic branches which recovery will be slow (tourism, catering, production of unessential products).
Since a decline in the GDP by one percentage point leads to an increase in unemployment of 2-4 percentage points and since Serbia expects to see an economic decline of 3%, it can be assumed that the unemployment rate will be on average around 12.5% this year, and at the end of this year and the beginning of next year, it could grow to between 13 and 14%.
The unemployment rate in the first quarter of 2020 was 9.7%.
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