OECD Reviews of Labour Market and Social Policies: Serbia 2008

A Labour Market in Transition

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To catch up with more advanced economies, Serbia urgently needs to improve the functioning of its labour market. This report reviews labour market trends and the principle challenges to  labour market policy, making a series of recommendations.

Despite many reforms, new business growth until now has been far too slow to compensate for job losses elsewhere. Recent reforms of labour law should be followed up by further efforts to improve the climate for business and productive work. Labour regulations must be flexible, but they should also be enforced more consistently. For all this to happen, it is essential that an effective social dialogue can take place and that it encompasses expanding and declining segments of the labour market.


The Institutional Framework for Employment

The Labour Law, reformed in 2001 and 2005, conforms to international practice on all essential points. It generally offers a degree of flexibility that should permit employers and workers to adjust to changing economic conditions without breaking the law. Until now, however, the application of this and other laws has been uneven across the labour market, with, on the one hand, an informal sector where few rules are enforced, and, on the other, a formal sector that includes a number of severely under-performing enterprises, which have been allowed to stay in business for a long time without fulfilling their obligations. The situation has improved recently, but both informality and unresolved problems of ownership and enterprise management continue to reduce the scope for implementing legislation as it was intended. Moreover, given a persistent labour surplus, policy efforts to enforce labour standards are not always supported by market pressures on employers to make jobs more attractive.


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