Serbia Tackles Labor Law Reform to Revitalize Economy

Speeches Shim

Integrating Public Engagement and Economic Development
Representatives from Serbian trade unions and the private sector convene to discuss labor law reforms.
USAID Business Enabling Project
Comedic Videos Educate Public About Restrictive Policies
“Our goal is to lower the unemployment rate from the current 16.7 percent to below 15 percent during the next two years.”

February 2016—How did Serbia build public understanding and support for a highly technical topic that could significantly increase the country’s economic development?

In 2013, the country’s overall unemployment rate was greater than 20 percent, with youth unemployment exceeding 50 percent. Labor law restricted workplace flexibility, hiring procedures, and employment policies, leading businesses to stay out of the market and creating barriers for job creation. Yet, much of the Serbian population was uninformed about the key problems in the labor market, and some interested parties—such as trade and labor unions—feared that reforms would disrupt business and employment.

The Serbian Government faced a daunting challenge: how to gain support for reforming the country’s antiquated labor law to create a better business-enabling environment and attract investors.

In response, USAID’s Business Enabling Project worked with Serbia’s National Alliance for Local Economic Development and the Serbian Broadcasting Corporation in 2014 to produce a video series entitled Ask WHEN. The series used popular national comedic actors to illustrate the obstacles the law placed on businesses and employees.

Videos featured the challenges of the shadow economy (illegal employment), restrictions in hiring new employees, and prohibitive administration procedures including those for receiving paid maternity leave. The videos were a huge success; thousands viewed the video clips on Serbian prime-time television and YouTube.

The project also encouraged youth involvement and multisector engagement in the issues through public forums and meetings with NGOs, business associations, labor unions and government entities.

Through USAID’s continuous engagement and roundtables, the public and other parties, including the unions, became supportive of labor law changes. USAID and business association partners then recommended a series of amendments to the labor law, which were successfully adopted by the Government of Serbia in July 2014.

Since the law’s passage, the unemployment rate dropped from 18.1 percent in the third quarter of 2014 to 16.7 percent in the third quarter of 2015, while the number of workers in informal employment dropped from 22.5 percent to 20.5 percent.

“Our goal is to lower the unemployment rate from the current 16.7 percent to below 15 percent during the next two years,” said Zoran Martinović, director of the National Employment Service. 

While more research is needed to attribute Serbia’s recent decrease in unemployment, the reform’s benefits to Serbians are evident. New labor laws have made it easier and more affordable for businesses to recruit and retain experienced workers, increased flexible workplace policies such as job-sharing and teleworking, and streamlined procedures for requesting paid maternity leave. These and other new policies are designed to encourage successful businesses and a competitive, growing workforce.

The seven-year Business Enabling Project began in 2011 to help increase the competitiveness of the Serbian economy.

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Last updated: May 31, 2016

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