The Western Balkans – Serbia, Albania, North Macedonia, Kosovo, Montenegro and Bosnia and Herzegovina – stand at a crossroads, facing an acute shortage of qualified labour that threatens the region’s economic competitiveness and long-term survival. A high share of firms surveyed by the World Bank in 2021 stated that the education system does not provide the skills needed in the current labour market.
The twin challenges of an ageing population – Serbia, for example, is expected to lose over 40% of its working-age population by 2050, while other countries in the region will lose between 20% and 25% – and ongoing emigration are shrinking the working-age population, leaving many jobs unfilled and industries struggling to maintain productivity. In this context, widespread discrimination against vulnerable groups such as Roma workers exacerbates the problem, as does digitalisation, which excludes many low earners who are trapped in jobs that offer few opportunities to develop their skills, all while traditional approaches like cheap labour and tax cuts are no longer sufficient to address it.
Yet, amid this workforce crisis, a solution is hiding in plain sight: the Roma. As the youngest and most dynamic ethnic population in the region, Roma communities are multilingual, adaptable, and entrepreneurial. Investing in their economic empowerment can not only help resolve the workforce shortages but also generate significant public revenues, challenge entrenched stereotypes, and foster greater social inclusion.
How many Roma young people are there in the Western Balkans? According to the latest data available, 355,000 Roma are living in the Western Balkans. The estimated number is three times higher, as official surveys rarely consider ethnic backgrounds. Between 14% and 29% of all new labour market entrants in Serbia will be Roma by 2035.
A Workforce Paradox
The Western Balkans face a paradox: despite high unemployment rates, there is a significant shortage of qualified workers. This situation stems from an underperforming labour market, where too many people are discouraged from seeking work because of low wages and a mismatch between skills and openings, and the informal economy leaves both workers and economies vulnerable.
The shrinking working-age population further compounds the issue. Emigration to countries such as Germany, Austria, or Italy that promise better opportunities has surged by 10% over the past decade, particularly among young people, with one-fifth of the Western Balkans population now living abroad, mostly in the EU. Serbia alone is expected to lose over 40% of its workforce by 2050, with other countries in the region facing similar declines.
At the same time, education systems in the region are failing to equip young people with the skills needed for the labour market. Many young people – between 16% and 33% of those aged 15–24 – in the Western Balkans are classified as NEETs (Not in Education, Employment, or Training), a situation that is even more dire for the Roma, two-thirds of whom belong to this group. Prejudice and discrimination in hiring processes further exclude Roma from job opportunities, despite their potential to contribute meaningfully to the economy.
Roma as a Solution
One solution to these challenges lies in investing in the Roma community. Roma are the fastest-growing demographic group in the Western Balkans, with their share of the labour market set to increase significantly in the coming years. For instance, by 2035, between 14% and 29% of all new labour market entrants in Serbia will be Roma.
World Bank estimates suggest that integrating Roma into the labour market could generate substantial economic gains. In Serbia alone, increased productivity could yield between €314 million and €1.28 billion per year, while fiscal benefits from increased taxes and reduced social assistance could range from €78.1 million to €317 million annually.
Excluding Roma from the labor market, on the other hand, risks the fiscal sustainability of the region. The experience of Slovakia, where the International Monetary Fund warned of economic stagnation without increased employment among Roma, women, and the elderly, serves as a cautionary tale.
Investments in Roma communities, therefore, are not only a moral imperative but also an economically sound strategy. Training programs for Roma youth in deficit occupations can quickly yield returns, often recouping costs in less than three years, as our model shows. Success stories from initiatives like the European Commission-funded program in Tivat, Montenegro, which achieved a 100% employment rate for Roma chambermaids, also demonstrate the potential of such investments. Other sectors experiencing shortages that this model could be applied to are the service industry, construction, or sales, to name a few.
Opportunities for Investment
Now is the time to seize the opportunity to invest in Roma communities. The Western Balkans’ current account deficit has decreased significantly, providing new fiscal flexibility to invest in innovative training programs. Additionally, the European Union’s Reform and Growth Facility for the Western Balkans offers €2 billion in grants and €4 billion in concessional loans, providing unprecedented financial support to the region.
Public support for investments in Roma is stronger than ever. A recent poll found that three out of four citizens in the region support government funding for Roma, and two-thirds agree that Roma should receive special priority in public sector employment. Moreover, securing employment is the top priority for Roma themselves, challenging a common stereotype that they do not want to work.
Roma-led Partners Ready to Lead
To make these investments successful, it is essential to partner with Roma-led organisations that have the expertise, trust, and flexibility needed for large-scale interventions. Organisations like the Roma Education Fund and the Roma Entrepreneurship Development Initiative – both members of the Roma Foundation for Europe Network – have already demonstrated their ability to deliver effective programs, from skills training to business mentoring.
By working with these organisations, governments and businesses can move beyond traditional education and recruitment models to create a more inclusive and dynamic labour market. Such partnerships can help address the region’s workforce crisis, boost economic growth, and lift Roma communities out of poverty.
Investing in Roma communities is not just a matter of social justice—it is an economic necessity. The potential of the Roma population to contribute to the workforce and drive economic growth in the Western Balkans is enormous. The time to act is now. By recognising and harnessing this potential, the region can overcome its workforce challenges and build a more prosperous and inclusive future for all its citizens.
