Skills development is a key driver of long-term growth and convergence, strengthening human capital and boosting productivity. This chapter benchmarks the progress of Western Balkan economies against the EU, exploring how effectively the six economies develop and utilise skills to improve education, employment and innovation outcomes. It highlights the role of quality education throughout individuals' lives – starting with early childhood education through to lifelong learning once in the labour force – in shaping the skills and competencies needed to meet labour market demands. The chapter further explores how these skills contribute to enhanced employment outcomes and productivity gains, while emphasising the importance of innovation in adapting and enhancing capabilities to ensure regional competitiveness and resilience.
Economic Convergence Scoreboard for the Western Balkans 2025
Abstract
While the Western Balkan economies have made some strides in improving skills outcomes, the region still lags far behind the EU. Figure 3.1 presents each economy’s performance alongside the seven key indicators on skills development that were used to monitor progress and calculate scores. The average regional performance for each indicator is also shown.
Notes: The scores – both overall and for individual indicators – were calculated to reflect each economy’s performance relative to the EU average, which is set at 100. The exact values for each indicator are presented in the graphs within the subsequent analysis section. For more information about the calculation of the scores, as well as the overall methodological approach, please consult the Methodology Annex. NEET = not in employment, education or training.
The overall regional trend is positive, with the region narrowing the gap with the EU by four points between 2014-16 and 2020-23. Yet, at just 38% of EU levels, skills remains the lowest scoring cluster of the five assessed. Among the Western Balkan economies, Montenegro is positioned as the regional leader, whereas Kosovo ranks lowest.
Structural challenges within the region’s education systems impede further improvements. Although advanced education attainment is high and nearly aligned with the EU, substantial quality issues remain, particularly at the primary and secondary levels. The region’s score for mathematics on the OECD’s Programme for International Student Assessment (PISA) is 80% of the EU’s average, reflecting sluggish progress in closing the performance gap. These quality-related issues adversely impact the school-to-work transition, contributing to a youth not in employment, education or training (NEET) rate that, despite recent declines, remains significantly higher than the EU average.
In turn, these obstacles within the education system have negatively impacted employment outcomes in the region. While the Western Balkans has experienced consistent increases in employment rates, with many economies reaching historic highs in 2023, labour productivity remains low. Output per hour worked remains below 40% of EU levels and has shown little improvement in recent years. However, this is not necessarily a negative outcome, as the apparent stagnation may conceal underlying gains, with productivity levels remaining stable despite a significant increase in labour force participation and the continued emigration of skilled workers. Low productivity can be attributed to, amongst other things, inefficiencies in educational and training systems, which often fail to equip individuals with the skills required by the labour market, ranging from foundational skills to digital competencies, with the latter limiting the adoption of emerging technologies within the workforce. While lifelong learning initiatives have the potential to address these skills imbalances, participation rates have only risen to slightly above one-third of the EU average.
Innovation represents the region's weakest area of performance, as research and development (R&D) investments account for only 17% of the EU average. This low level of expenditure limits the capacity to create and sustain research opportunities that foster advanced skills. While greater public spending on R&D could help build this capacity and stimulate private investment through crowding-in effects, persistently low private R&D spending highlights more systemic issues that need to be prioritised. These include gaps in human capital, an underdeveloped innovation ecosystem and weaknesses in both the broader business environment and firm-level capabilities.
Skills are essential for driving economic growth and thus accelerating economic convergence. A highly skilled population enhances labour productivity and can foster innovation, resilience and adaptability to the constantly evolving demands of the labour market.
Labour productivity, measured as output per hour worked, represents one of the Western Balkans’ most pressing challenges to skills, with a regional average of USD 26.7 between 2020 and 2023, just 39% of EU levels (Figure 3.2). The performance of individual economies shows relatively limited variation, ranging from USD 17.6 in Albania to USD 33.1 in Montenegro. In addition to this low level of convergence, the trend from 2014 to 2023 shows a widening gap between the region and the EU: while the Western Balkans increased output per hour worked by only USD 2.6, the EU average rose by more than USD 7.0 during the same period.
2021 USD in purchasing power parity
Note: Data are unavailable for Kosovo (2022, 2023).
Sources: (ILO, 2024[1]). OECD calculations for Kosovo from (Government of Kosovo, 2019[2]; 2020[3]; 2022[4]; 2023[5]).
Although factors such as physical capital (e.g. equipment and infrastructure) and technological advancements significantly affect labour productivity, skills remain essential. Education, training and skills levels directly influence the workforce’s efficiency and effectiveness. While foundational skills such as literacy and numeracy are essential for workers’ productivity, the development of digital skills has become increasingly critical as they are among the most sought after by employers in the region (see the Digital Transformation chapter for more details). Among adults, only 33.8% of individuals in the region possess basic or above-basic digital skills,1 compared to 55.6% in the EU.2
This shortfall limits the labour force’s capacity to capitalise on the digital transition to boost productivity, such as through the adoption of emerging technologies like artificial intelligence (AI). Recent studies offer preliminary evidence linking AI use to productivity gains at both the firm and worker levels (Filippucci et al., 2024[6]). However, only around 5% of firms in the Western Balkans use AI technologies, which is significantly below the rate of usage among enterprises in the EU (see the Digital Transformation chapter for more details). AI has particular potential to boost productivity in knowledge-intensive areas like information and communication technology (ICT) – one of the Western Balkans’ fastest-growing sectors. However, the region’s low level of digital skills constrains its ability to fully leverage these technologies.
Skills gaps in the region extend beyond digital skills, collectively undermining overall labour productivity. Underqualification due to weak educational outcomes and low participation in continuous learning can leave many individuals without the skills needed to perform their jobs effectively. High rates of emigration can further exacerbate these challenges, although the impact may vary across economies. For example, Bosnia and Herzegovina and Montenegro both see a higher share of highly educated individuals leaving, which depletes the talent pool, lowering the average skill level of the remaining workforce. In contrast, emigrants from the other economies tend to have lower levels of education than the average population in their place of origin, making this effect less pronounced (De Silva, 2024[7]; OECD, 2022[8]).
The Western Balkan economies have made some strides in enhancing employment levels, both in absolute terms and relative to the EU (Figure 3.3). Between 2020 and 2023, the average employment rate reached 57.6%, which was 77% of the EU average. This marked a 7.8 percentage point increase relative to 2014-16, narrowing the gap with the EU by two percentage points and indicating that employment growth in the region slightly outpaced that of the EU.3 Notably, regional leaders Albania and Serbia, with employment rates of 68.9% and 67.6%, respectively, have made significant progress, although they still remain several percentage points below the EU average. In contrast, Kosovo lags behind its regional counterparts, with an employment rate of only 35.1%,4 representing less than half of the average EU level.
Percentage of population aged 20-64
Sources: (Eurostat, 2025[9]). Data for Albania from (INSTAT, 2024[10]) and (European Commission, 2020[11]; 2024[12]). Data for Bosnia and Herzegovina from (European Commission, 2020[13]; 2024[14]). Data for Kosovo from (European Commission, 2020[15]; 2024[16]). Additional data for Montenegro from (MONSTAT, 2024[17]). Additional data for North Macedonia from (MAKSTAT, 2023[18]; 2024[19]).
This increase in employment levels has several drivers, including job creation by the private sector and increased public and private investment. However, policies targeting traditionally women, have also contributed. All six Western Balkan economies have either implemented or are finalising strategies and action plans aimed at increasing women’s employment, with specific initiatives focused on improving work-life balance (e.g. Albania’s “Family Hub” services and increased vacation time for single parents in Serbia) or promoting women’s entrepreneurship (OECD, 2024[20]). Additionally, each economy has introduced active labour market programmes that target women, providing resources such as information, counselling and training to enhance employability and facilitate job matching. These measures have helped drive gains in women’s employment rates, with an average regional increase of 10 percentage points since 2014.5 Nevertheless, progress has been uneven across the Western Balkans. While some economies have significantly narrowed the gap with the EU – such as Albania, where the female employment rate reached 61.7% in 2023, just four percentage points below the EU average of 65.7% – others continue to lag significantly behind. In stark contrast, Kosovo’s rate stood at just 19.8%, less than one-third of the EU level.6
Despite the progress made toward increasing employment levels, activation programmes remain insufficient, especially for disadvantaged groups like older and low skilled persons. Their scope and duration are inherently limited by the constrained human and financial resources of employment agencies in the region. For instance, staff shortages affect all economies, with the ratio of counsellor to registered unemployed individuals ranging from 1:159 in Montenegro to 1:1 160 in Bosnia and Herzegovina (in the Federation of Bosnia and Herzegovina) (OECD, 2024[20]). Consequently, any efforts to expand these programmes would necessitate substantial increases in dedicated budget allocations and the expansion of staff capacity.
It is also important to note that the region’s average employment rate may be artificially inflated due to high levels of emigration, which, in combination with declining birth rates and an ageing population, has resulted in a shrinking workforce. In 2024, the region’s estimated emigration rate – calculated as the proportion of the native population living abroad – was 23.6%. Individual economies’ rates spanned from 14.0% in Serbia to 33.8% in Bosnia and Herzegovina.7 Moreover, between 2015 and 2024, the total number of emigrants from the region grew by more than 635 000 – rising from 3.8 million to 4.4 million –resulting in modest increases in emigration rates across most Western Balkan economies, from 3.1 percentage points in Serbia to 5.2 percentage points in Albania (United Nations, 2024[21]). As emigration trends upward, individuals who struggle to find employment in their home economies increasingly seek opportunities abroad, reducing both the number of unemployed individuals and the overall base population used to calculate employment rates. Indeed, the impact of emigration on the workforce is evident for businesses, with firms in the region ranking shortage of labour force as the single most prevalent obstacle to doing business in 2024 (RCC, 2024[22]).
Given the critical role of early education in shaping skills development, the below-average student performance in OECD's PISA 2022 highlights challenges in providing quality education in the region. In the 2022 assessment, the Western Balkans averaged 390 points in mathematics, with variation across economies: Serbia scored the highest at 440 points, while Kosovo had the lowest at 355 points (Figure 3.4).8 While the regional average decreased slightly from 396 points in the 2014-16 period (a drop of six points), this decline was only half of that observed among EU member states. Thus, despite a dip in performance, the Western Balkans has effectively – albeit slightly – narrowed the gap with the EU.
Score points
Note: Bosnia and Herzegovina has only participated in PISA in 2018. As a result, its scores for both the 2014-16 and 2020-22 periods were estimated through imputation. Similarly, Serbia did not participate in PISA 2015, so its data for that period was also imputed. For more details on this process, please refer to the Methodology Annex.
Sources: (OECD, 2015[23]; 2022[24]).
The Western Balkans’ regional average PISA 2022 scores were 82% of EU levels, which may initially appear promising; however, a considerable issue remains: 57% of students were classified as low performers, lacking baseline proficiency in mathematics as either a standalone subject or in conjunction with reading and/or science. This figure significantly exceeds the OECD/EU average of 27%.
The low proficiency levels observed among students can be attributed to barriers that hinder the region's education systems from meeting international learning standards. A critical factor in this issue is insufficient and inefficient public spending on education, which in the Western Balkans amounts to 3.9% of GDP – approximately 20% lower than the EU average of 5.0% (OECD, 2024[20]). Limited funding constrains economies’ ability to provide essential materials for students, such as textbooks and classroom supplies, and hampers the development of adequate infrastructure. As a result, student-to-computer ratios remain high, reaching 20:1 in economies like Kosovo and Bosnia and Herzegovina (OECD, 2024[20]). Indeed, more than 50% of students in the region attend schools that have constrained capacity due to these material shortages, limiting learning opportunities and thus negatively impacting learning outcomes. Inadequate funding also hampers teaching quality, as 80% of budgets are devoted to salaries, leaving scant resources for professional development and talent retention.
Another relevant factor is the relatively low participation rates in early childhood education and care (ECEC). Enrolment in high-quality ECEC has been shown to significantly enhance educational success later in life (OECD, 2023[25]). Yet, in the Western Balkans, only 50% of children from age 3 to the starting age of compulsory education are enrolled in pre-primary education – more than 40 percentage points below the EU average (OECD, 2024[20]). Thus, without early exposure to structured learning environments, students may struggle to acquire the skills needed to keep pace with curriculum demands, leading to weaker academic performance and widening disparities in educational outcomes.
Between 2020 and 2023, the youth NEET rate in the Western Balkans averaged 21.6%, reflecting a 2.4 percentage-point decrease since the 2014-16 period (Figure 3.5). However, progress has been uneven: Serbia reduced its youth NEET rate by nearly 5 percentage points,9 while Kosovo’s rate remains more than triple the EU level. Despite decreases in four of the six Western Balkan economies, the overall gap with the EU has only marginally narrowed, as the EU has similarly sustained efforts to lower the proportion of youth NEET. As noted earlier, some of the improvement in the youth NEET rate may be attributed to high rates of youth emigration.
Percentage of 15-24 year-olds
Sources: (Eurostat, 2024[26]) and (ILO, 2024[27]). Additional data for Albania sent to OECD from INSTAT. Additional data for Montenegro from (MONSTAT, 2024[28]). Additional data for North Macedonia from (MAKSTAT, 2024[29]). Additional data for Kosovo from (KAS, 2024[30]).
Insufficiently developed vocational education and training (VET) also negatively affects the school-to-work transition for youth. As the region’s economies boast relatively high VET enrolment rates compared to the EU average (44.5% versus 18.6%, respectively), the quality and relevance of VET is crucial (OECD, 2023[31]). However, VET programmes in the Western Balkans are frequently characterised by outdated curricula, obsolete technologies and inadequate equipment, all of which impede learners’ skills development. While there have been efforts to enhance the relevance of curricula through engagement with the private sector, the efficiency and systematic nature of these partnerships remain limited in most economies.
VET programmes in the Western Balkans also fail to provide sufficient opportunities for learners to gain practical experience and develop workplace-relevant skills. The majority of firms in the region report challenges in hiring workers for “routine jobs” (those typically associated with VET) due to a lack of necessary skills and experience among applicants (OECD, 2024[20]). Although there has been momentum in developing dual education systems that promote work-based learning (WBL), with initiatives ranging from pilot programmes in Albania and Bosnia and Herzegovina to national roll outs in Montenegro and Serbia, these advances have not yet been complemented by concrete mechanisms for bolstering employers’ willingness to offer WBL opportunities.
Like their VET counterparts, students enrolled in higher education face significant challenges regarding how well their studies align with labour market demands. This misalignment does not necessarily arise from students selecting fields with limited demand – for instance, the Western Balkan economies, on average, produce a higher proportion of tertiary graduates in ICT programmes than the EU.10 Instead, there is often outdated and insufficient infrastructure at universities. In one tracer survey of students who attended university in the region, over 70% recommended that their home university modernise its facilities, with responses ranging from 65% in Serbia to 79% in Kosovo (Unger et al., 2022[32]). Another issue, again echoing that of VET, is the rigidity of curricula, which often lacks opportunities for practical application. Indeed, nearly three-quarters of students expressed a need for universities to develop more practice-oriented courses or adopt a more application-based approach to teaching and learning.
To further reduce youth inactivity and unemployment, Western Balkan governments have committed to implementing Youth Guarantees, a flagship project under the Economic and Investment Plan for the Western Balkans aimed at expanding access to education, training and employment opportunities for young people. By the end of 2023, only North Macedonia had achieved national implementation.11 However, recent developments include Albania and Serbia launching their pilot programmes in October 2023 and January 2024, respectively, and Montenegro being expected to initiate its pilot in 2025. As these economies gradually expand the scope of their initiatives, it is anticipated that youth NEET rates will decline further (OECD, 2024[20]).
While the region grapples with challenges related to educational quality and relevance, it nonetheless has achieved high levels of advanced educational attainment among its working-age population. With 76.7% of the labour force holding advanced qualifications, this represents a convergence of 99% with EU levels (77%) (Figure 3.6). Notably, several economies, including Montenegro, Bosnia and Herzegovina, Albania and North Macedonia, exceed the EU average; even Kosovo, the region’s lowest performer, trails by only a few percentage points.
Percentage of total working-age population
Notes: Advanced education includes short-cycle tertiary education, a bachelor's degree or equivalent education level, a master's degree or equivalent education level, or doctoral degree or equivalent education level according to the International Standard Classification of Education 2011. For economies without 2023 data, the average for the period was calculated using all available data. For more information on the data availability of this indicator, please see the Methodology Annex. Data are unavailable for Kosovo (2023) and Montenegro (2023).
Sources: (ILO, 2024[33]). Additional data for Albania sent by INSTAT to the OECD. Additional data for Montenegro sent by MONSTAT to the OECD.
Across the region, high levels of advanced education among the workforce seem to signal rising demand for highly skilled workers. For example, unemployment drops from 16.5% for individuals with basic education to 9.9% for those with advanced qualifications (World Bank, 2025[34]). However, these levels may also have been artificially boosted by the persistently elevated unemployment rates across the region (10.9% in 2023) and not be linked to a corresponding need for more specialised skills (World Bank, 2024[35]). For example, when facing a tight labour market, individuals may pursue advanced education to increase their competitiveness and stand out among other jobseekers. Higher education may also be seen as a temporary alternative to job searching, especially when employment opportunities are scarce. This can lead to a workforce that is overqualified for existing roles, resulting in more time spent in education and fewer productive years. Data indeed points to the prevalence of over-education, with 20.8% of employees in Western Balkan economies reported as over-educated, ranging from 13.2% in North Macedonia to 28.4% in Serbia.12
While the high levels of educational attainment in the Western Balkans may initially appear promising for the region’s skills development, they do not necessarily equate to relevant skills or direct pathways to employment. In fact, among the unemployed, many recent graduates struggle to find jobs soon after completing their studies, with the Western Balkans reporting significantly longer transition periods between university and first employment than in the EU (RCC, 2021[36]).
Lifelong learning participation across the region remains limited at 4.2% in 2020-23, reaching just over one-third of the EU average (Figure 3.7). This low engagement persists despite existing gaps in education and training systems that hinder individuals from acquiring the skills demanded by employers. Kosovo distinguishes itself as the regional leader, demonstrating a 2.5-fold increase in participation rates from 2014-16 to 2020-23, with an average surpassing even that of the EU (11.5% versus 11.2%, respectively). Conversely, Albania reports the region’s lowest rate, at just 0.7%.
At first glance, it appears that the region made some, albeit marginal, progress in improving participation rates in lifelong learning over the observed period. However, this increase is largely driven by Kosovo’s substantial gains. Without Kosovo’s contribution, the regional average participation rate for 2020-23 drops to 2.7% – falling below the level recorded in 2014-16 (3.1%13)- as most of the Western Balkan economies either stagnated or regressed over the assessed period.
Percentage (of 25-64 years old population)
Notes: Participation in lifelong learning is measured as the percentage of persons aged 25-64 who have taken education or training.
Data are unavailable for Albania (2014, 2015), Bosnia and Herzegovina (2014, 2015), Kosovo (2014).
Sources: (Eurostat, 2024[37]). Data for Albania and Bosnia and Herzegovina from (European Commission, 2024[38]). Additional data for Albania sent by INSTAT to the OECD. Data for Kosovo sent by KAS to the OECD.
A key constraint on participation in lifelong learning is the limited availability of programmes that develop skills in demand in the labour market. The rapid pace and transformative nature of the digital and green transition changes the skill composition desired by the market. However, programmes are often ad hoc or dependent on donor funding, leading to inconsistent, short-term implementation.
Most existing initiatives focus on cultivating digital skills among the unemployed, with employment agencies in Albania and Kosovo, for example, training jobseekers in programming and coding. While targeted efforts are important given the high incidence of long-term unemployment across the region, the limited availability of training restricts workers’ adaptability to evolving skills demands and thus their ability to maintain relevant competencies (OECD, 2024[20]). By contrast, initiatives supporting skills for the green transition are nearly non-existent. As the region phases out fossil fuels – and with nearly 140 000 jobs tied to coal mining and coal-based power generation – workers in carbon-intensive industries may face job displacement (Ruiz Castello et al., 2021[39]). This shift underscores the need for robust reskilling and upskilling programmes to support a smooth transition and to enhance workers’ preparedness – an area where the region currently lacks sufficient development.
Insufficient financial incentives – such as vouchers, grants or tax breaks – also present a barrier to participation in training offered by private providers. This issue is particularly critical for low-skilled workers, who would most benefit from reskilling and upskilling to enhance their labour market prospects but often face financial barriers that limit their participation (OECD, 2019[40]).
Investments in R&D and skills development are mutually reinforcing: increased R&D investment drives demand for advanced skills and promotes knowledge transfer, while a more skilled workforce enhances the effectiveness of R&D activities, improving returns on investment and potentially incentivising further R&D expenditure. Yet, R&D expenditure for all six Western Balkan economies remains significantly below the EU average (Figure 3.8). At the regional level, investment in R&D is 0.37% of GDP, corresponding to 17% of EU levels, with most investment financed by the public sector. This average is bracketed by Serbia, which achieved 40% of the EU average, and Kosovo, which reached only 4% of EU levels. These low levels of R&D expenditure can constrain innovation, as investments have typically correlated with increased innovation output in higher-income economies (Dritsaki and Dritsaki, 2023[41]; OECD, 2023[42]).
Percentage of GDP
Notes: R&D expenditure as a percentage of GDP encompasses spending by governments, higher education institutions, business enterprises and private non-profit organisations. OECD imputations for 2021 and 2022 values for Albania. For more details on this process, please refer to the Methodology Annex. Data are unavailable for Albania (2014, 2016, 2020, 2023), Bosnia and Herzegovina (2022), Kosovo (2014, 2015), Montenegro (2021, 2022, 2023) and North Macedonia (2014, 2021).
Sources: (Eurostat, 2024[43]) and (World Bank, 2024[44]). Additional data for Albania from (Hach and Trenkmann, 2019[45]) and sent by INSTAT to the OECD. Additional data for Bosnia and Herzegovina sent by the Agency for Statistics of Bosnia and Herzegovina to the OECD. Data for Kosovo from (Bertelsmann Stiftung, 2020[46]; 2022[47]). Data for Montenegro from (European Commission, 2024[38]). Additional data for North Macedonia sent by MAKSTAT to the OECD. Additional data for Serbia sent by SORS to the OECD.
Current funding levels for research and development not only fall significantly short of the EU average but also highlight widespread challenges in meeting economy-specific commitments to enhance investments in R&D. Several economies have established targets for increasing R&D funding: for example, Albania aims to reach 1% of GDP by 2030, necessitating a more than five-fold increase, while Serbia's government has pledged to raise R&D funding by 50%, with aims to reach 1.5% of GDP by 2028. Kosovo has taken an additional step by implementing a legal requirement to allocate at least 0.7% of GDP to R&D funding, more than eight times its expenditure in 2023. These pledges have yet to result in sustained growth in actual funding.
Although government spending on R&D is limited, private sector investment in innovation is even lower. Private investment typically targets commercially viable solutions, driving the development of competitive, market-driven products that are readily adopted by consumers and industries. Such investment can thus accelerate growth. However, while most Western Balkan economies do not report precise data on the private sector’s share of overall R&D expenditure, governments acknowledge that private contributions remain minimal.14 The exception is Serbia, where 44% of overall investment in R&D originates from the private sector.
However, raising R&D expenditure in the Western Balkan economies is unlikely to yield innovation gains comparable to those seen in the EU without simultaneous improvements in foundational enablers such as infrastructure and skills. In terms of infrastructure, critical gaps remain in several economies; for example, Albania and North Macedonia still lack established science and technology parks (OECD, 2024[20]). At the same time, persistent skills shortages, intensified by the brain drain of highly skilled individuals and limited success in attracting new talent, continue to constrain domestic R&D capacity. The number of researchers in the region ranges from 447 per million inhabitants in Bosnia and Herzegovina to 2 781 in Serbia15 – all well below the EU average of 4 450 researchers per million inhabitants (OECD, 2024[20]).Moreover, financial incentives designed to stimulate R&D, such as voucher schemes, competitive co-operative grants and tax incentives (which include R&D tax credits and VAT exemptions), are unlikely to be fully effective until firms have the internal capacity – namely, the skilled staff, management practices and knowledge – to utilise these incentives effectively.
Thus, as the region’s economies ramp up their R&D spending, they would need to concurrently prioritise infusion – the adoption and diffusion of ideas, technologies, capital and knowledge from abroad – to achieve greater economic gains in the short to medium term (Iacovone et al., 2025[48]). A key step for infusion is ensuring that local businesses have the absorptive capacity to understand and integrate external innovation so that they can fully take advantage of these positive spillovers.16 In this context, deeper integration into EU value chains presents an opportunity to accelerate the infusion of technology and expertise by leveraging existing cross-border linkages.
References
[47] Bertelsmann Stiftung (2022), BTI 2022 Country Report – Kosovo, Bertelsmann Stiftung, https://bti-project.org/fileadmin/api/content/en/downloads/reports/country_report_2022_RKS.pdf.
[46] Bertelsmann Stiftung (2020), BTI 2020 Country Report - Kosovo, https://bti-project.org/fileadmin/api/content/en/downloads/reports/country_report_2020_RKS.pdf.
[7] De Silva, S. (2024), Labour Migration in the Western Balkans: Consequences for the Region’s Democratic Life, Foundation for European Progressive Studies, Vienna, https://feps-europe.eu/wp-content/uploads/2024/04/The-Western-Balkans-labour-migration-1.pdf (accessed on 15 April 2025).
[41] Dritsaki, M. and C. Dritsaki (2023), “R&D Expenditures on Innovation: A Panel Cointegration Study of the E.U. Countries”, Sustainability, Vol. 15/8, p. 6637, https://doi.org/10.3390/su15086637.
[52] ETF (2022), Skills Mismatch in ETF Partner Countries: Cross-Country Report, European Training Foundation, https://www.etf.europa.eu/sites/default/files/2022-08/Skills%20Mismatch%20Measurement_final%20report_EN.pdf.
[51] European Commission (2025), Youth Wiki: Republic of North Macedonia. 3.6 Integration of young people in the labour market, https://national-policies.eacea.ec.europa.eu/youthwiki/chapters/republic-of-north-macedonia/36-integration-of-young-people-in-the-labour-market (accessed on 31 March 2025).
[12] European Commission (2024), Albania Report 2024, https://enlargement.ec.europa.eu/albania-report-2024_en.
[14] European Commission (2024), Bosnia and Herzegovina 2024 Report, https://enlargement.ec.europa.eu/bosnia-and-herzegovina-report-2024_en.
[38] European Commission (2024), European Innovation Scoreboard – EU Countries and Neighbouring Countries Database, https://research-and-innovation.ec.europa.eu/document/download/e0f6f806-6f34-4574-a06f-32be59b47a70_en?filename=ec_rtd_eis-2024-neighborhood-database.xlsx (accessed on 5 November 2024).
[16] European Commission (2024), Kosovo Report 2024, https://enlargement.ec.europa.eu/kosovo-report-2024_en.
[11] European Commission (2020), Albania Report 2020, https://enlargement.ec.europa.eu/albania-report-2020_en.
[13] European Commission (2020), Bosnia and Herzegovina 2020 Report, https://enlargement.ec.europa.eu/bosnia-and-herzegovina-report-2020_en.
[15] European Commission (2020), Kosovo Report 2020, https://enlargement.ec.europa.eu/kosovo-report-2020_en.
[9] Eurostat (2025), Employment and Activity by Sex and Age - Annual Data, https://doi.org/10.2908/LFSI_EMP_A (accessed on 6 March 2025).
[43] Eurostat (2024), GERD by Sector of Performance, https://ec.europa.eu/eurostat/databrowser/view/rd_e_gerdtot/default/table?lang=en (accessed on 5 November 2024).
[57] Eurostat (2024), Individuals’ level of digital skills (2015-2019), https://doi.org/10.2908/ISOC_SK_DSKL_I (accessed on 31 March 2025).
[56] Eurostat (2024), Individuals’ level of digital skills (from 2021 onwards), https://doi.org/10.2908/ISOC_SK_DSKL_I21 (accessed on 31 March 2025).
[37] Eurostat (2024), Participation Rate in Education and Training (Last 4 Weeks) by Sex and Age, https://ec.europa.eu/eurostat/databrowser/product/view/trng_lfse_01 (accessed on 5 November 2024).
[49] Eurostat (2024), Statistics Explained: Gender Statistics, https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Gender_statistics#:~:text=The%20EU%20employment%20rate%20for,%25)%20by%2010.2%20percentage%20points (accessed on 31 March 2025).
[26] Eurostat (2024), Young People Neither in Employment nor in Education and Training by Sex, Age and Labour Status, https://doi.org/10.2908/EDAT_LFSE_20 (accessed on Day March 2025).
[6] Filippucci, F. et al. (2024), “The impact of artificial intelligence on productivity, distribution and growth: Key mechanisms, initial evidence and policy challenges”, OECD Artificial Intelligence Papers, No. 15, OECD Publishing, Paris, https://doi.org/10.1787/8d900037-en.
[5] Government of Kosovo (2023), Economic Reform Programme (ERP) 2023-2025, https://mfpt.rks-gov.net/desk/content/media/131FBDC9-AD9B-48D9-9714-29A7F2F1C5F4.pdf.
[4] Government of Kosovo (2022), Economic Reform Programme (ERP) 2022-2024, https://kryeministri.rks-gov.net/wp-content/uploads/2022/08/Economic-Reform-Programme-2022-24.pdf.
[3] Government of Kosovo (2020), Economic Reform Programme 2020-2022, https://mfpt.rks-gov.net/desk/content/media/8578F7DC-479A-4C30-BE55-69D44F7988C7.pdf.
[2] Government of Kosovo (2019), Economic Reform Programme (ERP) 2019-2021, https://neighbourhood-enlargement.ec.europa.eu/system/files/2019-04/kosovo_erp_2019-2021.pdf.
[45] Hach, K. and E. Trenkmann (2019), Entrepreneurial Ecosystem in Albania with Focus on Tirana, https://challengefund.euforinnovation.al/entrepreneurial-ecosystem-in-albania-with-focus-on-tirana/.
[48] Iacovone, L. et al. (2025), Greater Heights: Growing to High Income in Europe and Central Asia, International Bank for Reconstruction and Development/The World Bank, Washington DC, https://openknowledge.worldbank.org/server/api/core/bitstreams/c8e58c9b-3c03-48af-947f-a07e28d1f8f7/content (accessed on 15 April 2025).
[33] ILO (2024), Labor Force with Advanced Education (% of Total Working-Age Population with Advanced Education), International Labour Organisation, https://data.worldbank.org/indicator/SL.TLF.ADVN.ZS (accessed on 5 November 2024).
[1] ILO (2024), SDG indicator 8.2.1 – Annual Growth Rate of Output per Worker (GDP Constant 2017 international $ at PPP) (%), International Labour Organisation, https://ilostat.ilo.org/data/# (accessed on 5 November 2024).
[27] ILO (2024), SDG indicator 8.6.1 - Proportion of Youth (aged 15-24 years) not in Education, Employment or Training, International Labour Organisation, https://ilostat.ilo.org/data/# (accessed on 5 November 2024).
[10] INSTAT (2024), Publications: Labour Market Books, Institute of Statistics, https://www.instat.gov.al/en/publications/books/ (accessed on 6 March 2025).
[54] INSTAT (2024), Quarterly Labour Force Survey: Fourth quarter 2023, Institute of Statistics, https://www.instat.gov.al/media/13103/lfs-q4-2023-pressrelesase-anglisht.pdf.
[58] Kacani, J. and G. Shaqiri (2023), “Emerging ICT clusters in the Western Balkans: A convergence model based on financial statement analysis”, Regional Science Policy & Practice, Vol. 16/4, pp. 1-16, https://doi.org/10.1111/rsp3.12687.
[50] KAS (2025), Të punësuar dhe raporti punësim ndaj popullsisë - shkalla e punësimit, sipas gjinisë dhe grupmoshës 2012 - 2023 [Employed and employment ratio to population - employment rate, by gender and age group 2012 - 2023], Kosovo Agency of Statistics, https://askdata.rks-gov.net/pxweb/sq/ASKdata/ASKdata__Labour%20market__Anketa%20e%20Fuqis%c3%ab%20Pun%c3%abtore__Annual%20labour%20market/tab2.px/ (accessed on 31 March 2025).
[30] KAS (2024), Labour Force Survey, Kosovo Agency of Statistics, https://askdata.rks-gov.net/pxweb/en/ASKdata/ASKdata__Labour%20market__Anketa%20e%20Fuqis%C3%AB%20Pun%C3%ABtore__Annual%20labour%20market/ (accessed on 7 March 2025).
[19] MAKSTAT (2024), Active Population in the Republic of North Macedonia, 2023, State Statistical Office, https://www.stat.gov.mk/pdf/2024/2.1.24.05_mk.pdf.
[29] MAKSTAT (2024), Labour Market Survey - Revision, State Statistical Office, https://makstat.stat.gov.mk/PXWeb/pxweb/en/MakStat/MakStat__PazarNaTrud__PazarTrudRevizija/ (accessed on 7 March 2025).
[18] MAKSTAT (2023), Active Population in the Republic of North Macedonia: Results from the Labour Force Survey, 2022, State Statistical Office, https://www.stat.gov.mk/pdf/2023/2.1.23.05_mk.pdf.
[28] MONSTAT (2024), Statistical Yearbook 2024, Statistical Office of Montenegro, https://monstat.org/eng/novosti.php?id=4064 (accessed on 7 March 2025).
[17] MONSTAT (2024), Statistical Yearbook 2024: Employment and Earnings, Statistical Office of Montenegro, https://monstat.org/eng/publikacije_page.php?id=2005 (accessed on 6 March 2025).
[53] OECD (2024), Western Balkans Competitiveness Outlook 2024: Kosovo, Competitiveness and Private Sector Development, OECD Publishing, Paris, https://doi.org/10.1787/ff74ae0e-en.
[20] OECD (2024), Western Balkans Competitiveness Outlook 2024: Regional Profile, OECD Publishing, Paris, https://doi.org/10.1787/170b0e53-en.
[59] OECD (2024), Western Balkans Competitiveness Outlook 2024: Serbia, Competitiveness and Private Sector Development, OECD Publishing, Paris, https://doi.org/10.1787/3699c0d5-en.
[25] OECD (2023), Education at a Glance 2023: OECD Indicators, OECD Publishing, Paris, https://doi.org/10.1787/e13bef63-en.
[42] OECD (2023), OECD R&D tax incentives database, 2022 edition, Working Party of National Experts on Science and Technology Indicators, OECD, Paris, https://one.oecd.org/document/DSTI/STP/NESTI(2023)2/FINAL/en/pdf.
[31] OECD (2023), PISA 2022 Results (Volume II): Learning During – and From – Disruption, OECD Publishing, Paris, https://doi.org/10.1787/a97db61c-en.
[8] OECD (2022), Labour Migration in the Western Balkans: Mapping Patterns, Addressing Challenges and Reaping Benefits, OECD Publishing, Paris, https://doi.org/10.1787/af3db4f9-en.
[24] OECD (2022), PISA 2022 Database, OECD, Paris, https://www.oecd.org/en/data/datasets/pisa-2022-database.html (accessed on 29 April 2024).
[40] OECD (2019), Getting Skills Right: Engaging Low-Skilled Adults in Learning, OECD, Paris, http://www.oecd.org/employment/emp/engaging-low-skilled-adults-2019.pdf.
[23] OECD (2015), PISA 2015 Database, OECD, Paris, https://www.oecd.org/en/data/datasets/pisa-2015-database.html.
[22] RCC (2024), Balkan Barometer 2024: Business Opinion, Regional Cooperation Council, https://www.rcc.int/balkanbarometer/publications (accessed on 18 March 2025).
[36] RCC (2021), Study on Youth Employment in the Western Balkans, Regional Cooperation Council, https://www.rcc.int/download/docs/Study-on-Youth-Employment-in-the%20Western-Balkans-08072021.pdf/7464a4c82ee558440dfbea2e23028483.pdf.
[39] Ruiz Castello, P. et al. (2021), Recent trends in coal and peat regions in the Western Balkans and Ukraine, Publications Office of the European Union, https://doi.org/10.2760/238209.
[32] Unger, M. et al. (2022), WBAA Tracer Study 2021, Institute for Advanced Studies/Western Balkans Alumni Association, https://www.western-balkans-alumni.eu/uploads/download-content/wbaa_tracer-study_2021.pdf.
[21] United Nations (2024), International Migrant Stock, United Nations Department of Economic and Social Affairs, https://www.un.org/development/desa/pd/content/international-migrant-stock (accessed on 15 April 2025).
[55] World Bank (2025), Population, total, https://data.worldbank.org/indicator/SP.POP.TOTL (accessed on 26 April 2025).
[34] World Bank (2025), Unemployment by level of education (%), https://genderdata.worldbank.org/en/indicator/sl-uem-elv-zs?gender=total&education=Advanced (accessed on 31 March 2025).
[44] World Bank (2024), Research and Development Expenditure (% of GDP), https://data.worldbank.org/indicator/GB.XPD.RSDV.GD.ZS (accessed on 5 November 2024).
[35] World Bank (2024), Western Balkans Regular Economic Report No. 25, Spring 2024: Invigorating Growth, World Bank, Washington DC, https://openknowledge.worldbank.org/entities/publication/272078c3-53ca-4047-9b3e-23a4a7801dcc (accessed on 6 November 2-24).
← 1. "Basic" digital skills refer to individuals who demonstrate at least a basic level (i.e. completion of at least one activity) in each of the five assessed areas: information and data literacy, communication and collaboration, digital content creation, safety, and problem solving. To be classified as having "above-basic" digital skills, an individual must achieve an above-basic level in all five areas, typically by completing multiple activities. For detailed methodology, see the indicator’s metadata at (Eurostat, 2024[56]).
← 2. The regional average was calculated using Eurostat’s Data Browser for the indicator, “Individuals' level of digital skills (from 2021 onwards)”. For the economies for which this data was not available (Kosovo), the predecessor to this indicator, “Individuals' level of digital skills (until 2019)”, was used. To access the datasets used, please see: (Eurostat, 2024[56]) (2021 onwards); (Eurostat, 2024[57]) (until 2019).
← 3. Between 2014-16 and 2020-23, the average regional employment rate in the Western Balkans grew by nearly 8 percentage points, rising from 49.7% to 57.6%. Over the same period, the EU employment rate increased from 69.5% in 2014-16 to 75.3% in 2020-23 (+5.8 percentage points).
← 4. Kosovo’s low employment rate results from several factors, including: 1) high levels of informality, which are exacerbated by the absence of unemployment benefits; 2) high remittance inflows, which have been shown to negative affect activity rates, particularly among women; and 3) population dynamics, notably a relatively young population. For further details on these factors and the overall state of employment policy in Kosovo, please see (OECD, 2024[53]).
← 5. Employment rates for women were calculated using the population aged 15-64 years as the base between the years 2014 and 2023. In the instances where 2023 data were not yet available (North Macedonia), data from 2022 were used to calculate the regional average. Data came from either official databases or the annual labour force surveys conducted by each economy’s national statistical office.
← 6. Data for Albania were provided by the Institute of Statistics – see (INSTAT, 2024[54]). Data for Kosovo came from the Kosovo Agency of Statistics’ annual indicators database (KAS, 2025[50]). Data on the EU average came from (Eurostat, 2024[49]).
← 7. To estimate emigration rates, data from the United Nations Department of Economic and Social Affairs (UN DESA) and the World Bank were used. The number of emigrants for each available economy was drawn from UN DESA figures on international migrant stock by country of origin. Total population figures were sourced from the World Bank, using 2023 data due to the unavailability of 2024 estimates (World Bank, 2025[55]). Emigration rates were calculated as Mi / (Mi + Ni), where Mi refers to the number of emigrants born in origin economy and residing abroad and Ni is the total native population born in origin economy, both at home and abroad. To approximate Ni, the number of immigrants residing in each economy – based on UN DESA international migrant stock by destination –was subtracted from the total population. Data for Kosovo were not available in the UN DESA dataset and are therefore excluded from these estimates
← 8. It is important to note that Bosnia and Herzegovina has participated in the assessment only once, in 2018.
← 9. One of the primary initiatives implemented in Serbia to decrease the youth NEET rate has been the “My First Salary” programme, which was designed to benefit young jobseekers without work experience. These individuals work in selected public and private sector entities for nine months to gain knowledge, skills and competencies to enhance their employability (OECD, 2024[59]).
← 10. An examination of the most recent data for each economy reveals that 6.9% of all graduates from tertiary education in the Western Balkans graduated from ICT programmes, compared to 5.3% among EU member states. For more, please see: https://data.uis.unesco.org/index.aspx?queryid=3830.
← 11. North Macedonia was the first Western Balkan economy to implement a Youth Guarantee scheme, launching its pilot programme in 2018. The economy more recently adopted its new Youth Guarantee Implementation Plan 2023-26. For more information on North Macedonia’s ongoing efforts to reduce youth NEET and unemployment, please see (European Commission, 2025[51]).
← 12. Vertical mismatches are as follows: 18.7% in Bosnia and Herzegovina, 18.3% in Montenegro, 18.9% in Albania, 13.2% in North Macedonia, 27.8% in Kosovo and 28.4% in Serbia. For more, see (ETF, 2022[52]). A direct comparison with the EU is not feasible due to differences in definitions.
← 13. This 2014-16 average includes Kosovo, which recorded the second highest participation rate in the region, at 4.7% (surpassed only by Serbia, which reported 4.8%).
← 14. These acknowledgments were provided in the qualitative questionnaires completed by government counterparts as part of the Western Balkans Competitiveness Outlook 2024 assessment cycle.
← 15. This figure is from 2023 and was provided by counterparts at the Statistical Office of the Republic of Serbia (SORS).
← 16. Evidence suggests that absorptive capacity among businesses remains a key constraint: for example, in the ICT sector, firms in the Western Balkans have struggled to absorb and apply cluster-based technological spillovers from European enterprises operating in the region (Kacani and Shaqiri, 2023[58]).