Addressing Serbia's labor market problems is critical to enhancing growth and job creation. Low labor force participation, relatively high unemployment, particularly among youth and other disadvantaged groups, and rising skills gaps currently impede efficient use of human capital and the prospects for sustained economic growth and welfare improvements. Although there has been progress, more jobs are needed if Serbia is to catch up with neighboring countries in the European Union (EU). Robust growth in employment will require a comprehensive agenda: boosting private sector job creation on the demand side
reducing barriers and disincentives to work and improving worker skills on the supply side
and ensuring that labor market intermediation and institutions facilitate employer-employee matches. This note focuses on current labor market performance and on skills and labor market policies to support inclusive growth. Employment in Serbia's formal private sector is low
the full workforce potential is underutilized
and labor productivity and real wages have been relatively flat. Improving skills and reforming labor market policies can boost both employment and productivity. This note's focus on skills and labor taxation, regulation, and intermediation allows it to discuss specific policy actions to support Serbia's New Growth Agenda. Tackling these issues will not only enhance Serbia's human capital and productivity for higher growth but will also boost people's incomes, reduce poverty, and grow the middle class.