Wages are rising, employment is falling: What do these figures tell us?

Wages are rising, employment is falling: What do these figures tell us? Serbia’s labor market is transitioning from expansion to a period of moderate, structurally conditioned adjustment, characterized by stagnating employment and rising real wages. This shift is influenced by global trends such as geopolitical uncertainty and industrial slowdowns in neighboring economies, as well as domestic demographic changes leading to a shrinking labor pool. The decline in employment is most pronounced in labor-intensive sectors like manufacturing and services, while growth is observed among entrepreneurs and in Belgrade, contrasting with declines in southern and eastern Serbia. Concurrently, real net wages have seen substantial growth, which can be interpreted as a selective retention of productive jobs or pressure from labor shortages. Future job creation is projected to slow, with an increasing emphasis on productivity and technological transformation over sheer expansion, as employers report difficulties in finding workers. This signals a need for Serbia to adapt its economic model towards higher value-added sectors capable of sustaining higher salaries.

• Serbia’s economic growth model is shifting away from subsidizing foreign investments and cheap labor towards high-tech sectors.
• The number of employed individuals decreased in the last quarter of the previous year compared to the same period in 2024.
• Real net wages increased significantly in both 2024 and 2025.
• The labor market is entering a phase of moderate adjustment, with stagnating employment and rising inactivity.
• Global factors like geopolitical uncertainty and the slowdown in the German economy are impacting Central and Southeast Europe.
• The largest employment reduction was in manufacturing, particularly in labor-intensive branches like clothing and electrical equipment production.
• Service sectors, administration, information, communication, accommodation, and food services also saw employment decreases.
• Employment is growing among entrepreneurs while decreasing in companies, and concentrating in Belgrade while declining in Southern and Eastern Serbia.
• Demographic changes, including an aging population and a declining birth rate, are contributing to a shrinking labor supply and shifting demand towards health and social services.
• Job creation is expected to slow down in the coming years, with a greater focus on replacing existing workers rather than expanding roles.
• Employers are facing difficulties in finding suitable workers, indicating a tightening labor market in certain segments.
• The future of the labor market depends more on productivity and technological transformation than on numerical expansion of jobs.