Labor markets in a number of South Eastern European countries are
characterized by high levels of unemployment and low rates of job creation. The Balkan
countries also have some of the highest youth and long-term unemployment rates in
Many of these economies face a unique set of challenges: labor market problems are especially severe among the emerging market economies which are not members of the European Union, namely, Albania, Bosnia and Herzegovina, Kosovo, the former Yugoslav Republic (FYR) of Macedonia, Montenegro, and Serbia.
In particular, this paper aims to bring to light the relatively weak performance of the Balkan labor markets in a cross-country context; analyze the factors that may have contributed to this longstanding problem?the unfinished transition process, the institutional setup of labor markets, including possible market rigidities, and labor cost factors; and presents a range of policy recommendations for tackling these problems while keeping in mind that the labor market challenges differ across countries, and reforms to address these challenges must be carefully tailored to specific country circumstances.