Labor market in Serbia: 1990-2005

Abstract

Key problems in transitions in Serbia can be analyzed through the processes happening at the labor market. Labor market in Serbia is divided on the formal and informal one (gray). The basic problem is mass unemployment. The unemployment in Serbia is not frictional unemployment resulting from decisions of workers to change their jobs. This kind of unemployment is considered normal at all labor markets. Since it is not frictional, unemployment in Serbia is not short-term one. This unemployment is by its nature structural and therefore long-term. Structural unemployment always arises as a result of the illadapted structure of labor supply and demand. There is a particularly high level of long-term unemployment among young people who practically do not have any work experience. The only realistic solution for mass unemployment and low wages in the Serbian economy is increasing of productivity and overall economic efficiency. Stimulating entrepreneurship and opening of new companies to absorb an enormous number of unemployed is the central issue of the economic reform. Instead of short-term passive measures, the state should adopt active measures aimed at stimulating of entrepreneurship and creating of new jobs.