At the core of SME competitiveness is the knowledge and skills of the workforce. This cluster examines how these are developed across the lifecycle, starting with how education systems foster entrepreneurial skills and align practical training with SME needs. It then considers how SMEs access relevant skills, leveraging skills intelligence, upskilling and reskilling, and empowering women entrepreneurs. It also explores the role of the social economy and support for social enterprise development.
SME Policy Index for Western Balkans and Türkiye 2026 – Economy Profile for Kosovo
Abstract
Workplaces worldwide are undergoing rapid transformation: driven by demographic changes and the twin challenges of digitalisation and the green transition, businesses are rethinking both their operations and the skills they need. In response to these global trends, small and medium-sized enterprises (SMEs) in Kosovo are actively exploring how to navigate this evolving landscape. Developing a workforce equipped for the future begins within schools and training institutions, which must extend beyond a narrow focus on disciplinary knowledge to cultivate transversal competencies such as adaptability, problem-solving and teamwork while placing a greater emphasis on experiential and practice-based learning.
Yet, education systems are struggling to keep pace with labour market demands, and persistent structural challenges are evident. Foundational learning outcomes are weak and worsening: while Kosovo exhibited relatively small decreases in its average score in the latest Programme for International Student Assessment (PISA), with only a 5-point decline in reading (compared to 11 points across the OECD) and a 69-point drop in mathematics (compared to 16 points across the OECD) (OECD, 2023[1]), it remains the weakest performer in the Western Balkans and Türkiye (WBT) region.1 These outcomes have contributed to cumulative learning losses estimated at 4.6 years relative to the European Union (EU) average (World Bank, 2025[2]). Concurrently, more than 40% of employers in Kosovo report that the skills taught in the education system do not meet the needs of their business (RCC, 2023[3]). For Kosovo’s SMEs to remain resilient and competitive, education and training systems must not only raise the quality of learning but also become more agile, equipping students with the resilience to thrive in an ever-changing world of work.
Accordingly, this section considers how the education system equips learners with entrepreneurial capabilities and how education and training pathways connect more effectively with SMEs to support labour market entry and firm-level skills needs.
5.1.1. Fostering entrepreneurial skills and mindsets through education
Within this broader transformation, nurturing entrepreneurial skills and mindsets among students is essential, especially as global trends indicate a growing demand for these skills, which are projected to increase by 32% in Europe alone by 2030 compared to 2016 (European Commission, 2024[4]).
Yet, despite the importance of fostering entrepreneurial learning, the policy framework guiding its development in Kosovo remains incomplete (Table 5.1). The topic is primarily addressed in the Education Strategy 2022-2026; however, its focus is largely confined to vocational and higher education, with limited attention to earlier education levels. This narrow scope overlooks strong evidence that early exposure, starting in primary education, plays a critical role in developing entrepreneurial skills and mindsets (European Commission, 2015[5]). Moreover, the accompanying Action Plan prioritises teacher-related measures and output indicators, such as the share of vocational education and training (VET) schools applying the entrepreneurial school model, rather than student-centred metrics or the measurement of learning outcomes.
Entrepreneurial learning receives only cursory attention in other key strategic documents, including the Employment Strategy 2024-2028 and the Reform Agenda, where it is mentioned without associated activities, targets or indicators. It is also absent from several core policy areas, either because relevant strategies have expired (such as the Strategy for Innovation and Entrepreneurship 2019-2023) or because they make no reference to entrepreneurial learning at all, as is the case with the Strategy for Industrial Development and Business Support 2030 and the Strategy for Youth 2024-2032.
Entrepreneurship is not formally defined as a key competence in pre-university curricula, diverging from the European Union’s Reference Framework for Key Competences for Lifelong Learning. Instead, entrepreneurial skills are implicitly addressed through broader competences, such as “Thinking” and “Learning”, but are most concretely embedded within the “Life, work and environment” competence. Subjects like “Skills for Life” and “Technology with ICT” include specific modules on entrepreneurial learning, spanning from the preparatory grade (ages 5-6) through Grade 9 (the end of compulsory education). In contrast, as highlighted in Box 5.1, entrepreneurship education at the tertiary level in Kosovo has advanced towards a more systematic, institution-wide approach aligned with European good practice.
An analysis of the learning progression (Table 5.2) indicates that, while the progression is not explicitly aligned with the European Union’s Entrepreneurial Competence Framework (EntreComp) learning outcomes, students move from foundational financial literacy and practical household skills in early education towards more applied business planning in later grades. Early education places a greater emphasis on basic financial management than on cultivating entrepreneurial behaviours, with innovation, risk-taking and market engagement introduced only at later stages, constraining the development of core entrepreneurial competences throughout compulsory education.
In 2023, the University for Business and Technology (UBT) in Kosovo became the first university from the WBT region to receive the European Entrepreneurial University of the Year Award, showcasing the economy’s growing capacity to deliver entrepreneurship education aligned with European standards and good practice. The award recognises UBT’s systematic approach to embedding entrepreneurship across teaching, research and institutional governance.
Entrepreneurship instruction at UBT is characterised by strong experiential and practice-oriented learning. Entrepreneurial competences are embedded across disciplines through project-based learning, student start-up initiatives, business incubators and structured collaboration with industry. Teaching staff are encouraged to apply entrepreneurial pedagogies across programmes, enabling students to develop opportunity recognition, creativity, teamwork and business planning skills regardless of their field of study. This whole-institution approach demonstrates how entrepreneurship education can move beyond isolated courses to shape teaching methods, assessment practices and student engagement.
Source: UBT (2023[12]).
However, the effective integration of entrepreneurship as a key competence is constrained by a lack of pedagogical support. Indeed, although the EntreComp framework has been translated into both Albanian and Serbian, it has not yet been embedded in teacher training or professional development. The 2024 Catalogue of Approved Programmes for the Professional Development of Teachers and Educational Workers does not have dedicated training focused on teaching entrepreneurship as a cross-curricular competence, nor on developing entrepreneurship-related skills (Kosovo Ministry of Education, Science and Technology, 2024[13]). Only a few programmes, such as “Teaching 21st Century Skills in the English Classroom,” indirectly address relevant dimensions of entrepreneurship, such as creativity and critical thinking. While the ALLED2 project previously developed a range of supporting materials, these efforts were largely project-based and have not been sustained beyond the project’s lifetime, with limited evidence of continued use or institutional uptake. In the absence of dedicated guidance, structured courses or incentives to embed these resources systematically, teachers are left without the tools or confidence2 to meaningfully integrate entrepreneurship into their teaching practice.
These instructional and training gaps are further compounded by the limited availability of opportunities for practical entrepreneurial experiences. Most activities are confined to classroom-based exercises or simulations, which provide some exposure to entrepreneurship but fall short of replicating real-world business environments. At the upper secondary level, students can participate in “practice enterprises,”3 yet these opportunities remain limited due to broader structural constraints, including the absence of an overarching strategy or clear legal framework governing school-enterprise co-operation for work-based learning (WBL). Implementation is further hindered by weak co-ordination at the school level, as many schools lack a designated co-ordinator to facilitate engagement with businesses. While the Practice Firm Centre operated by the Ministry of Education, Science, Technology and Innovation (MESTI) remains active and Kosovo continues to participate in the international Practice Enterprise Network, the absence of a formally appointed coordinator since early 2025 has limited its capacity to scale participation. Combined with the discontinuation of Junior Achievement Kosovo due to funding constraints, these gaps have left applied entrepreneurial learning fragmented and limited in reach, with no high-level policy commitment to systematically expand student co-operatives or student company models.
Fully harnessing the benefits of entrepreneurial learning requires that all students, particularly girls, are equally encouraged and empowered to participate. Results from PISA 2022 indicate that girls perform on par with or better than boys in these subjects: girls and boys achieved the same average score in mathematics (compared to boys outperforming girls by nine points across OECD countries), while girls outperformed boys in science by six points (versus no gender gap in the OECD average) (OECD, 2023[1]). However, findings from a study of high school students reveal that girls tend to exhibit less confidence in their abilities: only 26% of girls considered themselves talented in mathematics, compared to 57% of boys, highlighting a pronounced gender gap in self-perception despite comparable performance (Prebreza et al., 2025[14]). Nevertheless, trends observed in higher education suggest that many overcome these barriers: although comprehensive data on women’s participation in science, technology, engineering and mathematics (STEM) fields at the tertiary education level are lacking, data from the University of Pristina show strong female representation across its 30-plus STEM programmes. In 2023, women accounted for 50.7% of students in the Department of Computer Science and 55.9% in the Department of Computer Engineering (UNICEF Kosovo Programme, 2024[15]).
Building on girls’ strong performance in STEM, the government of Kosovo has taken proactive steps to further strengthen their representation in these fields. One of the most prominent measures has been the introduction of targeted scholarship programmes. Since 2021, the Ministry of Education, Science, Technology and Innovation has implemented a scheme providing one-year scholarships (worth EUR 1 000) to girls and young women pursuing studies in STEM. By 2024, more than 4 600 women had benefitted from the programme, with the number of scholarships increasing from 1 365 in the 2021/22 school year to 1 882 in 2023/2024, marking a 38% rise (UN Women, 2024[16]). Complementing these financial incentives, awareness-raising efforts such as the “STEMinists Conference” bring together women studying and working in STEM in Kosovo and abroad, helping to challenge stereotypes and inspire future generations of girls to pursue STEM-related careers. While these initiatives have been effective in increasing participation, support linkages that connect STEM education to entrepreneurship and business creation in these sectors remain limited, leaving potential for girls to translate their skills into entrepreneurial ventures largely untapped.
5.1.2. Bridging the divide between education and training systems and SMEs
Ensuring that students develop high-quality, in-demand skills is crucial to facilitate their school-to-work transition and ensure they meet labour market demands. Yet, persistent skills mismatches and weak training outcomes have contributed to limited progress in reducing the youth not in employment, education or training (NEET) rate over the past decade, which fluctuated between 30% and 35% from 2015 to 2024 (Figure 5.1). This positions Kosovo among the economies with the highest youth NEET rates in the WBT region, around 10 percentage points above the regional average and over 21 points higher than the EU average. In contrast, the youth unemployment rate is significantly lower, at 19.0% in 2024 (World Bank, n.d.[17]), highlighting a substantial gap between young people actively seeking work but unable to find it and those not participating in the labour market at all. Indeed, 41% of young unemployed people in Kosovo are currently not looking for work (Berisha, 2024[18]).
Percentage of 15-24 year-olds
Note: Gender-disaggregated data for Kosovo are not available.
Sources: OECD (2025[19]); Eurostat (2024[20]); Kosovo Agency of Statistics (2025[21]).
Elevated youth NEET rates are closely linked to the limited availability of work-based learning (WBL), a challenge particularly acute for VET graduates, whose fields require hands-on, technical skills. Despite past reform efforts, WBL remains marginal, with only around 7% of VET students engaged in workplace learning (ETF, 2024[22]). This weak integration has contributed to persistent employer dissatisfaction with graduate skill levels, reflecting a disconnect between school curricula and labour market needs. Early pilots already exposed these structural mismatches, as nearly one-quarter of offered placements went unfilled because VET schools did not provide training profiles corresponding to the occupations sought by firms (Bajraktari and Hallaqi, 2019[23]). For SMEs, already constrained by limited financial and human resources, the cost of hosting and supervising inadequately prepared trainees further discourages participation.
To address these challenges, Kosovo introduced dual VET programmes aimed at aligning vocational education more closely with labour market needs through a structured combination of classroom instruction and workplace training. Roll-out has gradually expanded, from four profiles in the first year of implementation (2022/2023) to sixteen4 by the 2025/2026 academic year, reaching the 2025 target of fifteen profiles set in the Economic Reform Programme 2023-2025 (Government of Kosovo, 2024[8]). Participation has reached approximately 2 000 students and approximately 1 000 companies,5 representing a solid starting point but leaving significant scope for further expansion. Indeed, a 2024 survey suggests a gap between interest and participation in dual education: although around 70% of firms expressed interest in hosting students, only 17% are currently engaged in the system (Institute for Development Research Riinvest, 2024[24]).
To support implementation, Kosovo has developed a clear, step-by-step guide outlining the procedures for all stakeholders (including enterprises) to participate in dual VET. For companies, the guidance covers eligibility criteria and the full participation process, from expressing interest to evaluating trainees, helping to reduce administrative complexity and improve accessibility, particularly for SMEs (Table 5.3).
The dual VET reform has strengthened both the quality and duration of workplace learning, increasing its share to at least 50% of total instruction time (equivalent to an average of 2.5 days per week of education), compared with 28% under traditional WBL, as illustrated in Table 5.4. In terms of teaching hours, this corresponds to at least 1 632 hours dedicated to professional practice out of a total of 3 264 hours (ETF, 2025[26]). Progress is particularly notable in Grade 12, where students now spend 3.5 days per week (around 70%) in-company, approaching the levels observed in leading dual VET systems, such as Austria and Switzerland. Such increases are particularly important in light of sectoral analyses that consistently point to insufficient practical experience as a key factor limiting graduates’ readiness for work (Institute for Development Research Riinvest, 2024[24]); however, the absence of systematic monitoring tools and outcome indicators makes it difficult to assess whether students in dual pathways ultimately experience stronger labour market outcomes than their peers in traditional VET programmes (Jahja Lubishtani, 2025[27]).
Notes: Apprenticeships in the dual system in Austria last between two and four years. However, the majority (139 of 210) last three years, which is why three years are included in the table above. For more on Austria’s system, please see Austria Ministry of Labour and Economy (2022[28]).
* In-company placements in Grade 10 only start in the 2nd semester.
Sources: Adapted from ETF (2025[26]); DC-VET WB (2024[29]).
Financial barriers remain one of the most significant obstacles to SME participation. Although student remuneration is now being piloted, ranging from 20% to 30% of the average salary depending on grade,6 no cost-sharing mechanisms or public incentives exist for firms. Without measures such as training subsidies, tax deductions or sectoral training funds, SMEs can face difficulties in absorbing the costs of supervision, materials and potential productivity losses. To partially offset these constraints, a dedicated innovation grant scheme was launched to encourage private sector companies to collaborate with public VET institutions through consortia for the implementation of dual VET.7 The grants support investments critical to delivery, including the procurement of equipment for dual education profiles, provision of materials for training development, and adaptation of existing workshops and premises within both public VET institutions and participating firms. The scheme prioritises employers in strategic sectors (e.g. energy efficiency and renewable energy, ICT, wood processing, and food and beverage processing). Yet, while promising, this support remains project-based and does not yet substitute for a broader, systemic approach to easing the cost burden for SMEs.
Additionally, Kosovo has made initial strides in rolling out the Youth Guarantee to improve youth labour market integration. The pilot phase began in January 2024 in Mitrovica and Ferizaj, selected based on previous analyses of the NEET population, with an initial ambition to reach around 3 000 young people by the end of 2025 (ETF, 2024[30]). However, the 2022 Youth Guarantee Implementation Plan set out more ambitious planned volumes by measure, including wage subsidies (2 000 beneficiaries), self-employment grants (500), traineeships/apprenticeships (2 940) and continued education or training (600). At the time of writing, no publicly available data are available to assess whether these participation targets or measure-specific objectives have been achieved.
Implementation has faced several constraints. First, only around 5% of young NEETs are officially registered with the Employment Agency, limiting the scheme’s ability to reach its intended beneficiaries and to deliver effective profiling and tailored support. At the same time, the Employment Agency also faces acute capacity limitations, with a staff-to-registered-person ratio exceeding 1:1 000, severely restricting its ability to provide individualised guidance and outreach (Kosovo Ministry of Education, Science Technology and Innovation, 2024[31]). Moreover, the suspension of EU funding under the Instrument for Pre-accession Assistance (IPA) in 2023 forced the authorities to launch the pilot with minimal resources and later scale it down, significantly limiting its reach and impact (ETF, 2024[30]).
In parallel, the government launched Superpuna (https://superpuna.rks-gov.net/) in 2023 as a centralised platform to promote youth employment in the private sector. It initially targeted young people aged 18-25 but was later expanded in 2024 to those aged 18-29. One of its key objectives has been to raise awareness among social partners, particularly SMEs, by offering full wage subsidies of EUR 350 per month for 6 months for each young person employed under the framework of this Youth Guarantee scheme. In its first year of operation, the platform showcased mixed but encouraging results: it facilitated 9 394 employment placements, though only 4 625 participants (49.2%) completed the 6-month subsidised period, indicating a significant level of attrition (Sulaj, 2024[32]). However, among those who completed the programme, retention outcomes were relatively strong: 3 108 transitioned into regular employment, meaning that roughly two-thirds remained active in the labour market after programme completion. The programme continued to expand thereafter, and by early 2025, the platform had facilitated nearly 14 000 placements in total (Government of Kosovo, 2024[33]).
The way forward
Revise the pre-university curricula framework to formally recognise entrepreneurship as a key competence aligned with EntreComp, including clear learning outcomes defined for each education level. This should build on existing work undertaken through projects such as ALLED2,8 and be accompanied by updating the Education Strategy 2022-2026 to explicitly include entrepreneurial education in primary and secondary education, addressing the current gap in early exposure. As illustrated in Box 5.2, early and competence-based integration of entrepreneurship into basic education can effectively foster initiative, creativity and problem-solving from the earliest grades. Furthermore, the successor strategy to the expired Strategy for Innovation and Entrepreneurship 2019-2023 should include a dedicated chapter addressing entrepreneurial learning from primary education onwards, not only in VET and higher education.
Once the revised framework is in place, priority should shift to system-wide implementation, with EntreComp operationalised as a reference framework to inform curriculum alignment, pedagogical approaches and assessment practices.
Design and implement a comprehensive teacher training programme on entrepreneurship education aligned with EntreComp, integrated into both initial teacher education programmes and continuous professional development. This should include the creation of a dedicated module in the Catalogue of Approved Programmes for the Professional Development of Teachers focused on teaching entrepreneurship as a cross-curricular competence. The programme should be supported by practical teaching resources, guidance on applying the entrepreneurial school model at school level and tools for establishing partnerships with local businesses to provide teachers with real-world entrepreneurial insights and reinforce whole-school approaches to entrepreneurial learning.
Develop a comprehensive SME participation guide for dual VET that provides clear, step-by-step procedures from initial interest through to the evaluation of trainees and including guidance on providing practical entrepreneurial experiences within the traineeship. This guide should be complemented by introducing financial incentives for SME participation, including: training subsidies; tax deductions for workplace learning costs; or sectoral training funds to offset supervision, materials and potential productivity losses associated with hosting dual VET students.
Strengthen the Youth Guarantee scheme implementation by implementing a digital registration process to overcome the current constraint of low registration among youth NEET, expanding the capacity of the Employment Agency through increased staffing and training and introducing retention support mechanisms to address the high attrition rate in the Superpuna programme, such as mentoring, career guidance counselling and employer engagement initiatives to improve transition rates from subsidised to regular employment.
Finland’s 2014 Basic Education Curriculum has embedded entrepreneurship from the earliest grades through a competence-based approach. "Working Life Skills and Entrepreneurship" is one of seven transversal competence areas that are cross-cutting to all teaching from Grade 1 onwards.
The curriculum provides age-appropriate progression across three grade bands (1-2, 3-6 and 7-9) focusing on developing initiative, creativity and collaborative project work. In the youngest grades, pupils engage in activities that foster a positive attitude towards entrepreneurship while building foundational skills through experiential learning. Learners are encouraged to discover new experiences and reflect upon their particular skills and their potential for further development. Implemented across all schools from August 2016, the curriculum emphasises developing pupils’ ability to set goals, solve problems and take responsibility – core entrepreneurial competences introduced through everyday classroom activities rather than stand-alone business education.
Embedding entrepreneurship as a transversal competence from early education, as in Finland, offers a valuable model for Kosovo’s curriculum reform. Such an approach would help mainstream entrepreneurial learning across subjects and grade levels, fostering key transversal skills from an early age while aligning more closely with the EntreComp framework.
Sources: European Commission (2025[34]); Finnish National Agency for Education (n.d.[35]).
While ensuring a skilled workforce for SMEs in Kosovo begins with education, it cannot end there. The pace and complexity of changes in the labour market, particularly in the types of skills and occupations in demand, mean that workers are increasingly required to adapt to new roles or undergo major shifts within their existing jobs. Indeed, by 2027, an estimated 60% of workers worldwide will need to undertake some form of training to keep pace with rapid technological advancements (World Economic Forum, 2023[36]). For Kosovo, this challenge is closely tied to competitiveness and convergence with the EU Single Market, as firms’ ability to meet EU standards and integrate into regional and global value chains depends on a workforce capable of continuous upskilling and reskilling. Strengthening adult learning is therefore not only a labour market imperative, but also a prerequisite for enhancing SME productivity, export readiness and long-term economic integration with the EU.
However, persistent skills imbalances continue to shape Kosovo’s labour market, affecting both employees and businesses. Despite significant rates of overqualification – approximately 25% of men and 29% of women employees hold qualifications exceeding the requirements of their current roles – 65% of workers in the economy report high unmet learning needs, highlighting a substantial mismatch between the outputs of the education system and the evolving demands of the labour market (ETF, 2025[37]; Badescu, 2023[38]). From an employer perspective, these gaps are a critical constraint on economic development: 58% of businesses identify a lack of qualified workers as a high-risk factor for growth (German-Kosovar Chamber of Commerce in Kosovo, 2023[39]). The situation is further compounded by continued emigration of skilled labour, which narrows the domestic talent pool and limits access to key competencies. Consequently, enhancing the agility and responsiveness of Kosovo’s skills systems is essential to support SME competitiveness and growth.
Therefore, this section focuses on improving the responsiveness and inclusiveness of the SME skills ecosystem through four interrelated dimensions: more effective skills intelligence, stronger adult learning provision, targeted upskilling to manage the impacts of artificial intelligence and dedicated measures to support women entrepreneurs.
5.2.1. Understanding and anticipating skills needs
Adapting to labour market changes requires more than responding to developments as they occur; it depends on anticipating emerging skills gaps and understanding how workforce needs may evolve. Skills intelligence plays a key role in this process, providing the evidence necessary to align education and training with current and future demand. 9 It informs recruitment strategies, shapes the design of adult learning and reskilling initiatives and ensures that workers and businesses are equipped to manage technological and structural shifts. In many EU countries, systematic application of skills intelligence has proven effective in identifying labour shortages, targeting subsidies for adult education and guiding reforms to career guidance systems (Cedefop, 2024[40]).10
However, the skills intelligence landscape in Kosovo has stagnated since the previous assessment cycle. In 2022, the OECD observed significant progress, marked by strong efforts to ensure sustainability, including the launch of three statistical barometers and growing government ownership. As of 2025, however, these tools (e.g. the Labour Market Barometer, VET Barometer and Skills Barometer) are no longer being updated. This loss of momentum represents a setback at a time when Kosovo faces mounting demographic pressures and a growing need for more robust skills anticipation capacities.
Consequently, there is significant scope to strengthen the policy framework guiding Kosovo’s approach to skills intelligence (Table 5.5). Recent strategies lack ambitious and detailed commitments to anticipate labour market needs and address structural skills gaps and to implement skills anticipation through a forward-looking forecasting system. Indeed, few measures had been effectively implemented or operationalised at the time of writing: for example, the 2024-2025 Action Plan of the Employment Strategy only includes one relevant outcome: the preparation of a “concept to develop reliable intelligence on the labour market,” which, at the time of writing, had not yet been finalised (Kosovo Ministry of Finance, Labour and Transfers, 2024[41]). Actions to introduce regular employer surveys, which could provide consistent, long-term data for skills forecasting, are also still pending. The absence of such data constrains the system’s ability to generate actionable, forward-looking insights on emerging occupational demands. Although employer surveys could help establish a more robust skills monitoring framework, this work has yet to commence. Persistent co‑ordination gaps further undermine progress, as reflected in inconsistent linkages between strategic documents and conflicting target values, such as those between the Employment Strategy and Kosovo’s Development Strategy.
Sources: Kosovo Ministry of Education, Science Technology and Innovation (2024[31]; 2022[42]); Kosovo Ministry of Industry, Entrepreneurship and Trade (2023[43]); Government of Kosovo (2023[44]).
Nonetheless, a number of valuable initiatives have emerged in recent years, including the Barometers and more recent sectoral-level studies in areas such as metal processing, retail11 and manufacturing (Box 5.3). However, these tools have largely been implemented as isolated, donor-driven projects rather than as part of a coherent domestic framework. While they provide useful evidence, their results are rarely updated or systematically integrated into a unified system. Consequently, their relevance diminishes over time, and the overall skills intelligence landscape has become increasingly fragmented, with methodologies and coverage varying by implementing partner (e.g. Luxembourg Development Agency [LuxDev], ALLED, Swiss Agency for Development and Cooperation). The absence of a standardised methodology for labour market research and skills forecasting further limits coherence and continuity across these efforts.
Among the various initiatives supported by development partners, the establishment of sectoral skills councils12 (also referred to as “sectoral workforce councils”) stands out as one of the more structured efforts that could lay the groundwork for stronger domestic ownership. Within the framework of the United States’ Agency for International Development’s (USAID) “Private Sector-Led Workforce Development Activity in Kosovo” initiative, councils have been created in three priority sectors: agribusiness, ICT and wood processing – all of which were identified as priority areas in the ongoing development of the economy’s Smart Specialisation Strategy (Western Balkans Info Hub, 2025[45]). While donor-initiated, these bodies initially established functional platforms for structured dialogue between the education and business communities, reflecting a repeated policy priority to better align skills provision with labour market needs and thus shift toward demand-driven skills governance. However, following the closure of the USAID project, these councils became inactive. Given that they were never embedded within a government-mandated framework, their long-term sustainability, operationalisation and institutional anchoring remain uncertain. The challenge ahead lies in consolidating and integrating such initiatives into a domestically-driven skills intelligence framework that ensures continuity beyond external funding cycles.
The recent sectoral study, “A comprehensive study to identify skills gaps in the industrial sector labour market”, is a strong good practice example in strengthening Kosovo’s skills intelligence system and supporting evidence-based policy design. Conducted jointly by the Ministry of Industry, Entrepreneurship and Trade and the Ministry of Education, Science, Technology and Innovation, with support from the Luxembourg Development Agency, the study provides an up-to-date, comprehensive assessment of skills needs across Kosovo’s industrial sector.
The analysis combines quantitative and qualitative data, drawing on inputs from businesses, sector associations, donors and industry experts to identify specific occupational and skills gaps across nine industrial sectors.
The report provides insights across several key pillars:
Current state of play: employment trends in industrial sectors, share of firms opening new positions in the past three years, and workforce training, including spending on upskilling, participation rates and barriers to training.
Anticipation and projections: occupations in high, moderate and low demand, assessed both by the share of firms employing in these roles and projected growth over the next three years. It also identifies emerging professions in each sector.
Labour market relevance of education programmes: analysis of the potential of dual education to address skills gaps while highlighting current shortcomings, as many training providers and educational institutions were shown to not keep pace with evolving technological and production requirements in manufacturing.
This study is important for several reasons. Most notably, 59% of small and medium-sized enterprises reported never having conducted their own analysis of skills needs, meaning this sector-level assessment provides a critical evidence base for policymaking. In addition, it offers forward-looking insights that can guide the development of policies and programmes, such as expanding upskilling opportunities aligned with specific occupational requirements and introducing incentives to encourage students to pursue careers that meet industrial sector needs.
Note: The study covers the following industrial sectors: food processing and beverage industry; textile, clothing and leather products processing industry; wood processing; chemical products processing industry; rubber and plastics processing industry; non-metallic mineral products industry; base metal and fabricated metal products processing industry; furniture processing industry; installation and repair of machinery and equipment.
Source: Institute for Development Research Riinvest (2024[46]).
Demographic trends further reveal the pressing need to strengthen skills intelligence systems to better anticipate and plan for future labour supply. Kosovo’s population has declined sharply in recent years, with the 2024 Census recording a drop from 1.74 million in 2011 to 1.58 million, a 9% decrease, while World Bank estimates suggest an even larger decline of 14.8% over the same period (Kosovo Agency of Statistics, 2024[47]; World Bank, n.d.[48]). Although Kosovo’s population is one of the youngest in the WBT region, the average age has risen from just under 30 in 2011 to nearly 35 in 2024, and the share of people aged 65 and over has increased from 6.7% to 11%, still low by regional and EU standards13 but clearly indicative of an ageing trend.
At the same time, birth rates have fallen dramatically, from 2.7 births per woman in 2003, which was well above the regional average of 1.9, to just 1.5 in 2023, now in line with the WBT average and thus representing one of the sharpest declines in the region (World Bank, n.d.[49]). Emigration further reduces the available workforce, with an estimated 359 244 citizens, or about 23% of the population, living abroad in 2023 (Kosovo Ministry of Internal Affairs, 2023[50]). By 2024, this figure had risen to approximately 396 700,14 reflecting sustained outward emigration (Kosovo Agency of Statistics, 2025[51]), likely influenced in part by EU visa liberalisation. The impact is strongly felt in the private sector: in 2024, 66% of businesses reported that emigration represents a major or moderate obstacle to growth (RCC, 2024[52]). Taken together, these factors point to a shrinking and gradually ageing labour force, while falling birth rates and high emigration suggest that the pool of future talent may be insufficient to meet evolving labour market demand.
5.2.2. Addressing skills needs of SMEs through adult education
Given the role of skills intelligence in mapping current and emerging labour market demands, it is equally important to ensure that these insights guide the development and implementation of adult education programmes. Providing relevant learning opportunities for employed and unemployed individuals supports continuous reskilling and upskilling, particularly for SMEs, where employees often perform multiple roles and benefit the most from targeted training.
Participation in adult learning has historically been low in Kosovo, roughly in line with the WBT average (Figure 5.2). Notably, a dramatic increase occurred between 2020 and 2022, likely driven by the COVID‑19 pandemic, which accelerated the development of online learning platforms and prompted individuals to upskill or reskill in response to employment uncertainties. However, this spike proved short-lived, as participation fell sharply to 4.5% in 2023 – slightly above the WBT average of 3.7% but only around one‑third of the EU average of 12.8%. This highlights that the pandemic-driven increase did not translate into a sustained shift in lifelong learning culture.
Recognising the importance of adult learning, the Employment Strategy 2024-28 sets a target of 10% adult participation by 2027 (Kosovo Ministry of Education, Science Technology and Innovation, 2024[31]). Achieving this goal would require roughly doubling the current participation rate, a significant challenge given that 2023 levels remain slightly below those observed in 2015, underscoring the need for more consistent and systemic efforts to embed lifelong learning across the workforce.
Percentage of population aged 25-64 years old
Note: Gender disaggregated data are not available for Kosovo.
Source: OECD (2025[19]).
These low participation rates persist despite substantial workforce needs. Despite progress in reducing unemployment in recent years, the rate remains high at 10.8% in 2024 (Kosovo Agency of Statistics, 2025[53]),15 reflecting several underlying challenges, including: 1) the likely artificial dampening effect of sustained emigration and 2) persistently high levels of long-term unemployment, with 77.4% of unemployed individuals out of work for more than a year (Kosovo Agency of Statistics, 2025[53]). This combination points to structural skills mismatches, wherein existing jobs do not align with the skills and qualifications of the long-term unemployed. Similar mismatches are also observed among the employed: the most recent available data suggest that 54% experience horizontal mismatches (i.e. their field of study is unrelated to their job) and 36% face vertical mismatches (i.e. over- or underqualification) (ETF, 2025[37]; GAP Institute, 2020[54]), highlighting misalignment between workforce skills and labour market needs.
However, despite this strong demand, participation in adult learning remains in part constrained by cost-related barriers. The Ministry of Education, Science, Technology and Innovation does not allocate a specific budget line for adult education and training that could provide such incentives (ETF, 2024[30]), while most free programmes are reserved for the unemployed, excluding employed individuals seeking to upskill or reskill. One study estimated the average cost of adult learning at EUR 50 for practical training and EUR 30 for final exams and certification (ETF, 2026[55]). Given the average private sector net salary of EUR 513 in 2024 (Kosovo Agency of Statistics, 2024[56]), these expenses amount to roughly 15% of a worker’s monthly income, excluding any foregone earnings. Without government or employer support, even short training programmes can consequently impose a significant financial burden, skewing participation towards higher-income groups and excluding low-skilled or low-wage workers (i.e. those the most in need of upskilling).
To address this challenge in the manufacturing sector, the Strategy for Industrial Development and Business Support 2030 introduces a proposed skills credit scheme targeting youth aged 18-35, offering coupons to cover up to 50% (up to EUR 5 000) of enrolment fees in non-public accredited industrial training programmes (Kosovo Ministry of Industry, Entrepreneurship and Trade, 2023[43]). Yet, while promising and aligned with economic priorities, this initiative has not yet been operationalised or translated into tangible support.
Beyond financial constraints, many training programmes remain outdated or misaligned with market needs, limiting their effectiveness in preparing workers for the twin transitions. Expanding participation in adult learning is therefore critical to ensure SMEs have employees with both foundational and emerging skills. Digital skills illustrate this challenge: only around 25% of adults in Kosovo possess basic digital competences, less than half the EU average, while 59% of employees in Kosovo report needing further digital skill development for their current jobs (for more on digital skills, see Cluster 3) (ETF, 2025[37]; OECD, 2025[19]). As seen in Table 5.6, while the offer of programmes for advanced digital skills is well-developed, there is a gap in opportunities for foundational digital training, which risks leaving SMEs without sufficiently skilled ICT talent to benefit from upskilling initiatives.
The lack of basic digital skills in Kosovo risks exacerbating disparities across economic sectors, leaving SMEs in areas with the most pronounced digital deficits at a disadvantage. Agriculture exemplifies this challenge: it employs 23% of the workforce but contributes only 7% of GDP, highlighting low average value added and considerable potential for productivity gains (World Bank, n.d.[57]; Kosovo Ministry of Agriculture, Forestry and Rural Development, 2024[58]). Yet, adoption of digital tools remains limited, with 72% of farmers not using ICT. This phenomenon is partly due to the sector’s older demographic (with an average age of 52) and partly due to lower overall skill levels: in terms of educational attainment, agricultural workers in Kosovo lag significantly behind those in other sectors, such as construction, industry and services (World Bank, 2025[2]). As a result, farmers often lack the confidence and knowledge to engage with platforms such as the Digital Agricultural Technical and Advisory Services Platform or the e-Agriculture Portal (eBujqësia), and struggle to adopt innovative methods (e.g. precision farming, satellite-based analytics, etc.). Awareness of upskilling opportunities is also extremely low, with 96% of farmers reporting that they are unaware of any digital skills training programmes (Open Data Kosovo, 2024[59]). Realising the sector’s full potential thus requires providing farmers with foundational (and over time, more advanced) digital skills.
The development of skills for the green transition faces similar challenges: despite the importance of equipping Kosovo’s workforce to navigate the transition and achieve the economy’s net zero ambition by 2050 (see Cluster 3), existing training opportunities for SMEs remain limited. Full implementation of the Energy Strategy 2022-2031, for example, is projected to create over 4 000 new jobs in energy efficiency alone, underscoring the importance of aligning training initiatives with these emerging roles (GAP Institute, 2025[60]). However, while progress has been made in secondary and VET education through curriculum updates and expanded WBL in the clean energy sector, these efforts to build a future green workforce have largely overshadowed initiatives aimed at providing targeted support for the current workforce, particularly those employed in high-risk or high-emission sectors such as coal mining and manufacturing.
Workers with lower education levels are disproportionately concentrated in roles most at risk from the green transition: over 30% of low-educated workers occupy such positions, compared to less than 15% of highly educated workers (World Bank, 2025[2]). At the same time, these individuals participate in training at much lower rates, with skilled workers engaging nearly three times more often than those in elementary occupations (ETF, 2025[37]). This combination of higher exposure to job displacement and lower access to retraining opportunities is particularly pronounced in sectors heavily affected by decarbonisation, such as mining and construction, where 69% and 59% of the workforce, respectively, are low-skilled (World Bank, 2025[61]). Consequently, without targeted reskilling and upskilling initiatives, these dynamics risk entrenching existing inequalities and limiting the ability of vulnerable workers to transition into emerging green sectors.
While prioritising reskilling for workers in traditionally high-emission, or “brown”, sectors remains important, the need for workforce adaptation extends far beyond these occupations. Kosovo has the lowest share of brown jobs in the WBT region16 (4% compared to the regional average of 7%), yet it faces the highest proportion of positions at risk of task reconfiguration, with 17% of jobs expected to undergo significant changes requiring upskilling or retraining (World Bank, 2025[62]). With an active labour force of roughly 464 500 in 2024, this implies that around 79 000 employed workers will experience substantial changes in task content, necessitating training, underscoring the urgent need for broad-based, targeted programmes that extend beyond brown sector occupations (Kosovo Agency of Statistics, 2025[21]).
Given the need to expand upskilling and reskilling opportunities – particularly in areas linked to the twin transitions – and the need for affordable, accessible options, micro-credentials offer a promising avenue. Their short duration, modular design and targeted approach render them particularly well-suited for addressing specific skills gaps and responding to evolving or emerging labour market demands. However, at the time of writing, micro-credentials are not yet regulated under the Law on Adult Education and Training, nor are they referenced in the Education Strategy 2022-2026 nor, most notably, Kosovo’s Qualifications Framework.17 As a result, critical elements such as definitions, structural requirements and provider standards remain undefined, limiting their current potential to systematically support workforce development.
5.2.3. Upskilling to support artificial intelligence (AI) adoption and use
AI is rapidly transforming skill requirements across industries, with 32% of global professions expected to undergo significant change, making workforce upskilling essential for SMEs to remain competitive (European Commission, 2024[63]). Similar trends are emerging in Kosovo, where the labour market faces high exposure to automation, with approximately 7% of employment considered to be “at risk”, and significant opportunities from AI-driven productivity gains (World Bank, 2025[2]). Reflecting this shift, one survey found that 40% of SMEs in Kosovo reported changes in job composition due to AI, highlighting the growing importance of adapting workforce skills to evolving technological demands (Shllaku, 2024[64]).
Training programmes in Kosovo fall into two main categories: those focused on developing specialised AI knowledge and technical skills18 and those aimed at equipping the wider workforce with general competencies to engage with AI technologies effectively, such as digital literacy, analytical thinking and creativity (OECD, 2023[65]). Kosovo offers one of the region’s most developed AI training portfolios, particularly for specialised skills (Table 5.6). Although many programmes are not specifically designed for SMEs, often targeting unemployed youth and women, they remain accessible to employees and, being free, help reduce the financial burden on employers. This is notable given that in 2020, only around 1% of enterprises offered ICT-related training to their staff (Kosovo Ministry of Economy, 2023[66]). While updated data are limited, the rapid expansion of AI, including generative AI, has likely driven increased employer investment in upskilling, with recent evidence suggesting that a majority of firms have begun providing AI-related training to their workforce (Shllaku, 2024[64]).
Sources: RIT Kosovo (2023[67]); Innovation Centre Kosovo (2025[68]; 2024[69]); Innovation and Training Park (ITP) Prizren (n.d.[70]; n.d.[71]).
Sector-specific approaches are essential, given that AI-driven technological change affects sectors differently. In the ICT sector, exposure to AI is particularly high, reflecting the global trend that AI adoption remains concentrated in technology-intensive industries (Kergroach and Héritier, 2025[72]). This is especially relevant for Kosovo, where the government has identified ICT as one of six priority economic sectors in its strategy to develop a highly skilled “knowledge economy” workforce. The sector benefits from a relatively young and skilled labour force: 48% of ICT employees are aged 15-34 (Open Data Kosovo, 2024[59]), and younger workers generally possess stronger digital skills due to increased emphasis on ICT in school curricula and greater exposure to technology in daily life. Sector surveys highlight strong demand for specialised competencies, including back-end and front-end programming, software engineering, and database development. Upskilling in ICT is therefore necessary but highly specialised, with access largely dependent on private provision, which ICT SMEs are comparatively better positioned to support given their greater resources and incentives to invest in workforce development.
In contrast, AI is expected to disproportionately affect sectors with a high concentration of manual tasks, with manufacturing particularly exposed due to the prevalence of routine, manual work (OECD, 2023[65]). In Kosovo, manufacturing accounted for 13% of GDP in 2024 and has consistently contributed to employment growth (World Bank, 2025[73]; World Bank, 2025[2]). As automation intensifies, workers will need to transition from manual roles to tasks involving machine supervision, programming and control. The workforce profile, characterised by lower education levels and significant digital skill gaps, further complicates the sector’s transition. Among low-skilled occupations, 60% require no digital competencies, and only 4% demonstrate medium or advanced digital skills (ETF, 2025[37]), leaving many employees ill-prepared to engage with AI technologies. Yet, targeted upskilling initiatives are currently lacking, restricting workers’ abilities to develop the foundational digital competencies needed to operate AI systems (in tasks such as predictive maintenance, quality control and process optimisation) and thus limiting the potential for automation to complement rather than displace human labour.
5.2.4. Improving talent availability by empowering women entrepreneurs
Persistent skills imbalances in Kosovo continue to constrain the development of a highly skilled and inclusive workforce, with the underutilisation of women’s entrepreneurial potential representing a key structural barrier. In general, women’s participation in the labour market remains strikingly low: in 2024, only 25.9% of women aged 15-64 were active in the labour market, compared with 60.6% of men (Kosovo Agency of Statistics, 2025[53]). Beyond this domestic disparity, Kosovo records the lowest activity rate of women in the WBT region and among the lowest in Europe, far below the regional average of 48.6%19 and the EU average of 70.7% (Eurostat, 2025[74]). Women are similarly underrepresented in entrepreneurship, accounting for ownership or co-ownership in 26% of all registered businesses in the economy in 2024,20 in line with the broader European phenomenon of “missing women entrepreneurs” (OECD/European Commission, 2023[75]).
Despite the scale of the challenge, policy attention to women’s entrepreneurship in Kosovo remains limited (Table 5.7). Several key strategies that previously included explicit measures to promote women’s entrepreneurship have expired, and no comprehensive successor framework has been adopted. Within the current policy landscape, women entrepreneurs are addressed primarily through broader labour market participation measures, which only indirectly support entrepreneurial activity. The Reform Agenda 2024-2027 is the main exception, as it explicitly references women entrepreneurs; however, its focus is largely confined to financial support measures, with limited attention to non-financial barriers such as skills development, networks or access to markets. Compared to the previous assessment cycle, when multiple gender equality and entrepreneurship strategies explicitly targeted women’s entrepreneurship, this represents a narrowing of both policy scope and ambition.
Note:
* In 2021, the Ministry of Innovation and Entrepreneurship was restructured and renamed the Ministry of Industry, Entrepreneurship and Trade.
Sources: Kosovo Ministry of Education, Science Technology and Innovation (2024[31]); Kosovo Ministry of Industry, Entrepreneurship and Trade (2023[43]); Government of Kosovo (Government of Kosovo, 2024[8]).
Gaps in sector-specific strategies exacerbate the underrepresentation of women entrepreneurs in Kosovo. While the Strategy for Industrial Development and Business Support 2030 and the Energy Strategy 2022-2031 promote women’s participation in sectors such as manufacturing and energy, they do not explicitly target women-owned or women-led businesses. As a result, women remain concentrated in lower-capital, service-oriented sectors: over one-quarter of women-owned businesses operate in wholesale and retail trade (27.2%), where entry barriers and start-up costs are relatively low, while their participation in high-tech or knowledge-intensive fields is very limited (Figure 5.3). This concentration restricts women’s access to higher wage, high-growth opportunities and suggests that translating formal education and technical skills into entrepreneurial activity remains a challenge.
Percentage
Note: Sectors in which women-owned and co-owned enterprises accounted for less than 1% of the total were excluded from this figure.
Source: GAP Institute (2023[76]).
Limited access to finance remains a major barrier preventing women from entering higher growth, capital-intensive sectors. Historically, women entrepreneurs in Kosovo have struggled to secure bank loans from traditional financial institutions. While women hold 42% of individual bank accounts – a slight underrepresentation – the gap widens dramatically for business accounts, where women represent only 16% of the total (GAP Institute, 2023[77]). The challenge goes beyond access to basic financial services: another significant constraint is the lack of adequate collateral, as only an estimated 18% of women in Kosovo own property, limiting their ability to leverage loans to start or expand businesses (D4D Institute, 2024[78]). Professional experience further compounds these barriers, with many women economically inactive or unemployed and younger women entrepreneurs often lacking the track record banks require, reducing lenders’ confidence and making loans harder to secure (Whiteman, 2023[79]). As a result, women‑owned businesses hold 2.4 times fewer loans than their male counterparts (GAP Institute, 2023[77]), reinforcing structural disadvantages and limiting opportunities for scaling.
Recognising the challenges women face in accessing traditional funding, key actors, including domestic financial institutions and international partners, have undertaken substantial efforts to expand financing opportunities for women entrepreneurs (Table 5.8).
Note: For more information on the Kosovo Credit Guarantee Fund, see Cluster 1.
Sources: Kosovo Press (2025[80]); Kosovo Credit Guarantee Fund (n.d.[81]); TEB Bank (n.d.[82]); FINCA Kosovo (n.d.[83]); EU Office in Kosovo (2024[84]).
Access to dedicated financing may not fully address the challenges faced by women entrepreneurs unless it is complemented by broader training and capacity building to develop the financial and business management skills needed. Indeed, as shown in Table 5.8, loans offered through banks often require documents such as a business or investment plan (materials that new women entrepreneurs may not know how to prepare), and repayment plans can be difficult to manage without financial literacy. In response, some of the programmes listed above combine financial products with non-financial components, such as in-person training on key skills, to ensure women can fully benefit from these offerings.
Beyond financial constraints, family obligations continue to represent a significant barrier. First, the current legal framework does not guarantee the right to maternity allowance for self-employed women, leaving many female entrepreneurs without income protection during maternity. Although the Ministry of Labour and Social Welfare drafted a Law on Maternity and Parental Leave to introduce six months of government-funded maternity leave for self-employed women (at 50% of the average wage21), this proposal was never adopted. In its absence, women entrepreneurs must rely on their personal savings or forgo income during maternity, which can discourage business formation, expansion or continued operation.
Limited childcare availability compounds these constraints. As of November 2025, only 65 public kindergartens were operational, with ten municipalities lacking public provision altogether (ETF, 2024[30]; Ahmeti, 2024[85]; Kosovo Ministry of Education, Science, Technology and Innovation, 2025[86]). An additional 177 private kindergartens, largely concentrated in urban areas, partially fill this gap, yet supply remains insufficient to meet demand. Private options are also substantially more expensive (ranging from EUR 80 to EUR 250 per month compared to around EUR 50 in public facilities), placing them out of reach for many families and reinforcing socio-economic and urban-rural disparities (Lumezi, 2025[87]). This inadequate access to affordable childcare disproportionately affects women, who frequently cite family responsibilities, particularly childcare, as the main reason for inactivity (Kapsoli and Mohona, 2025[88]).
The way forward
Establish a permanent and government-led skills intelligence governance framework to ensure that policy and investment decisions are based on reliable, shared evidence about current and future skills needs. This should be initiated through the Employment Strategy 2024-2028, working in close collaboration with cross-governmental representatives, relevant institutional stakeholders and the sector skills councils. A key responsibility of the board should be to agree on a standardised methodology to ensure consistency across all skills assessments, establish a centralised data repository managed by the Kosovo Agency of Statistics and create a formal inter-ministerial co-ordination mechanism across the Ministry of Finance, Labour and Transfers; the Ministry of Education, Science, Technology and Innovation; and the Ministry of Industry, Entrepreneurship and Trade to align efforts and ensure regular reporting on skills mismatch trends.
Restore and systematically update existing Barometers as core operational tools for skills monitoring and anticipation. Reactivating the Labour Market, VET and Skills Barometers requires ensuring they are updated on a regular basis and aligned with a common analytical approach. Sectoral studies developed with donor support should be consolidated into these tools where possible, rather than operating in parallel. Maintaining the Barometers as “living” instruments would help preserve accumulated knowledge; improve comparability over time; and ensure that skills intelligence remains timely, policy-relevant and usable for education, employment and economic planning.
Expand and target learning provision for SMEs in priority sectors, informed by regular enterprise-level training needs analysis. Kosovo should prioritise the expansion of short, modular training programmes for SME workers in sectors identified as economically strategic, such as manufacturing, ICT, agri-food and construction. Rather than introducing complex eligibility conditions, training content should be informed by simple, periodic consultations with SMEs – through sector skills councils, the Kosovo Chamber of Commerce or project-based employer surveys – to identify common skill gaps. Publicly supported training offers should be delivered in formats compatible with SME constraints (short duration, flexible scheduling, on-the-job or blended delivery) and integrated into existing adult education and VET provider networks. This approach would improve the relevance of adult learning provision while remaining administratively feasible within Kosovo’s current institutional capacity.
Establish targeted digital and AI literacy programmes for workers most at risk of being adversely affected by AI-driven transformation (e.g. older employees, women, those in precarious employment). Programmes should begin with foundational digital skills and progressively advance to AI-specific competencies. To ensure accessibility and engagement, training could be delivered through community-based models, leveraging trusted local institutions like public libraries or community centres. Financial support should be provided through simple, low-burden instruments, such as vouchers or direct subsidies, that minimise administrative requirements. Where digital delivery mechanisms (e.g. e-vouchers) are used, they should be complemented by assisted access through employment services, community centres or training providers to avoid excluding participants with low digital skills.
Amend Law No. 02/L-24 for Adult Education and Training to establish an overarching micro‑credentials framework, enabling rapid and flexible upskilling that allows individuals and businesses to respond swiftly to emerging economic opportunities and technological change. The framework should define clear standards for micro-credentials, including minimum learning hours, quality assurance requirements and recognition procedures (as done in Ireland, evidenced in Box 5.4). Institutional responsibility for accrediting providers and credentials and maintaining a public registry of approved micro-credentials should rest with Kosovo’s Qualifications Authority, or its successor body should the proposed merger with the Agency for VET and Adult Education be enacted, ensuring coherence with existing qualifications governance arrangements. Priority should be given to micro-credentials aligned with the twin transitions (i.e. digital, green, AI-related skills) and sectors undergoing significant task transformation. To ensure long-term relevance, micro-credentials should be designed to stack toward formal qualifications and incorporate recognition of prior learning, in line with global good practices.
Strengthen the legal framework to guarantee equal maternity protection for self-employed women entrepreneurs. The government should ensure equality by enacting legislation to provide self-employed women with financial compensation for maternity leave equivalent to that of employed women. Additionally, a dedicated budget line within the Ministry of Labour and Social Welfare should be established to fund these benefits, with supporting provisions for flexible return-to-work arrangements and advisory sessions to support the business. This can be supported by an awareness campaign launched through the media and business support organisations to inform women entrepreneurs of their new entitlements.
Ireland is one of the few European countries where microcredentials are being implemented inside the national VET system. The reform is driven by SOLAS, the state agency responsible for planning, funding and monitoring “further education and training” (the equivalent of VET in Ireland). Through the national Skills to Advance initiative, education and training boards across the country are commissioned to design short, accredited learning units which can be taken individually or accumulated over time. These micro-qualifications are explicitly shaped by labour market needs: education and training boards consult employers on skill shortages in areas such as advanced manufacturing, logistics, and digitalisation, and rapidly create modules that enable workers, especially those in SMEs, to upskill without leaving employment.
Quality assurance and system coherence is being addressed in parallel. Quality and Qualifications Ireland, the national awarding and regulatory body, has opened a consultation to formalise microcredentials across both VET and higher education. The consultation proposes a single definition, clear rules for credit value, and processes for recognising prior learning, ensuring microcredentials can be combined into larger awards where appropriate. The intention is to avoid fragmentation and guarantee that each microcredential carries the same standing as any other qualification placed on the National Framework of Qualifications.
Taken together, these factors coalesce to create a coherent national model: SOLAS drives implementation and labour-market relevance; education and training boards deliver flexible, stackable courses; and Quality and Qualifications Ireland ensures microcredentials are recognised and portable. Ireland’s approach demonstrates how microcredentials can be integrated into a national VET system from the outset rather than introduced via pilots, using the right allocation of resources, quality assured and shaped by employer demand.
Sources: SOLAS (2025[89]); Quality and Qualifications Ireland (2025[90]).
In a context where rapidly evolving global markets outpace the capacity of Kosovo’s education and training systems to equip a fully skilled workforce, strengthening human capital development alone is insufficient. For SMEs, which are often constrained by limited financial and human resources, building and harnessing social capital, encompassing networks, trust and shared norms that enable collaboration and resilience, become crucial.
As such, the social economy22 offers a key channel for SMEs in Kosovo to develop and benefit from social capital. Engagement in social economy networks enables firms to exchange knowledge, pool resources and co-create innovative responses to economic and social issues. Although the social economy is expanding worldwide, representing over 4.3 million organisations and 6.3% of total employment in Europe alone (European Commission, 2025[91]), it remains at an early stage in Kosovo, offering both challenges and opportunities for further development and integration.
Against this backdrop, this section examines the key building blocks for strengthening the social enterprise ecosystem, focusing on improved mapping alongside the development of a more supportive legal and institutional environment.
5.3.1. Mapping the social enterprise landscape
Understanding the structure and scope of the social enterprise landscape is a necessary first step in fostering the broader social economy. In Kosovo, the Law on Social Enterprise (2018) introduced an obligation to register to obtain the “social enterprise” designation. Legal entities23 must submit the required documents to the Ministry of Finance, Labour and Transfers’ Social Enterprise Division. Following submission, the Social Enterprise Status Assessment Commission reviews applications and, if approved, issues a “Certificate of the Status of Social Enterprise”. As individual entities obtain this status, the Ministry of Finance, Labour and Transfers is responsible for compiling their information into a central Register of Social Enterprises, a digital, publicly accessible database intended to include key details such as the enterprise’s name, address, registration number, legal form, scope of activity and amount of initial capital.
In practice, however, the registration process only began in November 2023, five years after the initial adoption of the law (Portal Indeksonline, 2023[92]), and as of October 2025, the register was still not operational and not available online. Moreover, although the Kosovo Business Registration Agency provides an option to view data on social enterprises, the relevant data could not be accessed at the time of writing.24 These limitations have hindered efforts to collect data on the size and composition of the sector, leaving no up-to-date official information on how many social enterprises are active or in which sectors they operate.
To obtain some insight into the sector, the Balkan Green Foundation supported the launch of the “Road Map of Social Enterprises” in May 2024, which recorded 15 registered entities (Balkan Green Foundation, 2024[93]). While this provides a starting point, it is clearly far from comprehensive, as earlier estimates from 2017 suggested there were 30-100 social enterprises in Kosovo (NESsT, 2017[94]), although these figures were also approximative and indicative rather than definitive. Moreover, the ecosystem remains notably underdeveloped compared to EU counterparts: Estonia, despite having a slightly smaller population than Kosovo, counts around 160 social enterprises,25 illustrating the considerable gap in development.
Despite uncertainty around the exact size and scope of the sector, social enterprises in Kosovo are already active and generating positive social impact in their communities (Box 5.5). Notably, among those registered in the Balkan Green Foundation’s Register, Kosovo stands out in the region for the concentration of its social enterprises in the greening sphere (i.e. focusing on environmental sustainability, circular economy and related areas) rather than in education or employment, which are more typical work‑integration missions.
While social enterprises in Kosovo pursue a range of missions, many notable examples focus on environmental sustainability and the promotion of green practices, demonstrating the sector’s potential to address ecological and social challenges:
Agro-Florentina: This enterprise collects and processes mushrooms, wild forest fruits and aromatic plants, supporting rural and remote farmers through training in innovative organic and regenerative agricultural practices as well as mentoring services. Around 90% of employees during peak season are women, who serve as the main financial providers for their households.
Botanic: This all-women company is a pioneer in regenerative agriculture, going beyond organic certification to actively restore ecosystems and combat climate change. The enterprise delivers environmentally conscious products while empowering farmers and their communities and promoting economic resilience and sustainable agricultural practices.
YMCA Shops: Focused on environmental conservation, YMCA Shops sell second-hand textile products and promote recycling and the resale of durable goods. The enterprise also supports youth employment and women’s participation in the workforce, fostering a sustainable mindset within local communities while protecting the natural environment.
Source: Adapted from Balkan Green Foundation (n.d.[95]).
5.3.2. Creating an enabling environment for social enterprises
To support the development of Kosovo’s social enterprise ecosystem, the government has taken steps to establish an enabling legal and regulatory framework. The adoption of the Law on Social Enterprises in 2018 marked a milestone by establishing a dedicated legal framework that not only formally recognises social enterprises but also represents a concerted policy focus for their development within the economy. Moreover, to facilitate the implementation of the law, the government subsequently adopted secondary legislation and operational procedures in key areas (Table 5.9).
One of the strengths of the Law on Social Enterprises lies in its flexibility. It provides a legal definition of social enterprises without restricting them to a specific legal form.26 This approach is well-suited to an emerging ecosystem, as it accommodates diverse business models and allows de facto social enterprises to operate formally without being constrained by rigid legal classifications (OECD, 2022[97]).
However, the law’s main shortcoming lies in its relatively narrow interpretation of social enterprise activity. It divides social enterprises into two categories: Category A enterprises provide direct social and care services aimed at improving the well-being of marginalised populations, while Category B enterprises engage in broader economic or productive activities but must employ at least 30% of their workforce from vulnerable groups (Government of Kosovo, 2018[98]). Consequently, recognition in Kosovo hinges primarily on supporting disadvantaged communities and addressing social exclusion. In contrast, many EU countries adopt a broader and less prescriptive approach: social enterprises are typically defined by the reinvestment of profits into a social mission, which may encompass a wide range of activities beyond work integration.27 In the EU context, employing marginalised populations is encouraged but not mandatory, reflecting a more flexible understanding of how social impact can be achieved.
Despite a comprehensive legal and regulatory framework, challenges remain in translating the existing provisions into practice. While standard templates for registration and reporting are easily accessible, the content and level of detail they require, particularly in areas such as business planning, financial forecasting and impact measurement, can pose difficulties for smaller or early-stage social enterprises with more limited administrative and technical capacity (Table 5.10).
Source: Adapted from templates developed by Kosovo Ministry of Finance, Labour and Transfers (n.d.[96]).
Moreover, capacity building for potential or existing social entrepreneurs (covering both general business skills, such as developing a business plan, and more advanced competencies, particularly in monitoring and evaluation and quantifying social impact) remains very limited. Public provision is minimal: entities such as the Innovation Centre Kosovo and KIESA provide general business and marketing trainings that, although accessible, are not designed to address the specific complexities of social enterprises’ creation and operation.
In practice, the responsibility for providing such training has largely fallen on civil society organisations28 and international partners. While their involvement is valuable, over-reliance on external actors can undermine policy coherence, long-term sustainability and domestic ownership – factors critical for the development of a robust and resilient social enterprise ecosystem. Programmes implemented by these organisations often reflect their own strategic priorities, which may not fully correspond to the needs of the broader sector. For instance, most current capacity-building initiatives focus on young social entrepreneurs (Table 5.11). While this focus is important given social entrepreneurship’s potential to help NEET youth engage in the labour market, it leaves other key groups underserved and risks framing social enterprises too narrowly rather than highlighting their broader potential for social impact and entrepreneurial development.
Note: SWOT: strengths, weaknesses, opportunities and threats; KSF: key success factors.
Sources: UNICEF Kosovo Programme (n.d.[99]); RISE (2023[100]); KMOP (2024[101]).
However, the most significant challenge in fostering an enabling environment for social enterprises is the lack of a clear understanding of the ecosystem’s actual needs. No comprehensive survey or study has been conducted by institutions such as the Ministry of Finance, Labour and Transfers; KIESA; or the Chamber of Commerce, leaving policymakers without an evidence base to assess specific challenges and opportunities. This gap limits the ability to identify weaknesses in awareness, financing, regulatory frameworks and market access, as well as to evaluate the effectiveness of existing measures, such as capacity-building initiatives or fiscal incentives.29 Without such evidence, support measures risk remaining fragmented and insufficiently targeted to the sector’s real needs.
The way forward
Conduct a comprehensive study on the scope and needs of the social enterprise ecosystem. Such an assessment could help to establish baseline data on the number, sectors, geographic distribution, employment, turnover and specific needs of social enterprises. It also should consider and assess challenges regarding awareness, financing, the regulatory framework, access to markets and the effectiveness of existing support measures. Findings should provide the evidence to develop targeted policy actions and support programmes tailored to the identified needs (including training, mentoring and capacity-building actions) and provide the basis for establishing a monitoring framework reviewed regularly to track the development of the sector.
Broaden the legal definition and recognition criteria for social enterprises. Specifically, the Law on Social Enterprises should be amended to recognise organisations pursuing a broader range of social missions, rather than limiting recognition solely to work integration activities. This could be achieved either by creating a new category within the existing system or by restructuring the framework into a single recognition pathway with multiple eligible mission areas, based on core principles of social enterprise (as illustrated in the example of France in Box 5.6). Either of these approaches could help increase the number of recognised social enterprises while promoting greater diversity in their social objectives.
Operationalise and expand the Register of Social Enterprises as a publicly accessible and searchable online database. The register should include information for each enterprise’s legal form, sector, employment, turnover, and social impact activities. To boost registration, the government should commit to a simplified registration pathway for early-stage enterprises, supported by guidance materials and advisory workshops funded by KIESA.
France adopted Law No. 2014-856 on the Social and Solidarity Economy in 2014 to strengthen the social economy sector and provide legal recognition to a diverse range of organisational forms. The law established an inclusive framework to ensure that social enterprises were formally recognised and to integrate multiple legal structures under a coherent approach.
The legislation defines social and solidarity economy organisations based on three core principles: 1) pursuit of objectives beyond profit distribution; 2) democratic governance with participation not limited to capital contribution; and 3) reinvestment of profits primarily into advancing the organisation’s social mission. This broadened recognition beyond work integration enterprises to include a wider range of social missions, such as environmental sustainability, community development, cultural heritage preservation, local economic development and circular economy initiatives. The law covers co-operatives, mutual societies, associations, foundations and commercial companies that meet these criteria, with an additional voluntary “ESUS” (Enterprise of Social Utility) certification available for organisations pursuing specific social utility objectives.
To further support the sector, the law established representative bodies, including the Higher Council for the Social and Solidarity Economy and regional chambers; introduced tailored financing tools such as solidarity-based participatory loans; clarified the legal regime for subsidies; and promoted social clauses in public procurement to enhance market access.
This principles-based approach illustrates how legal reform can simultaneously expand and diversify the social enterprise ecosystem, providing a clear pathway for recognising enterprises with environmental, community development and cultural missions.
Sources: OECD/European Union (2017[102]); Government of France (2014[103]); France Ministry of the Economy, Finance and Industrial and Energy Sovereignty (2025[104]).
References
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← 1. This excludes Bosnia and Herzegovina, which did not participate in PISA 2022.
← 2. While no large-scale studies exist for Kosovo, broader research consistently shows that teachers often struggle to translate entrepreneurial competences into practical classroom activities without clear pedagogical models or hands-on training, suggesting similar barriers are likely present in Kosovo (Gracia-Zomeño et al., 2025[105]).
← 3. A practice enterprise is a trainee-run company that mirrors the operations, products, and services of a real business. Guided by trainers and business mentors, trainees manage all aspects of the enterprise, from product development and marketing to sales, finance and human resources. The aim of this hands-on approach is to allow trainees to build practical skills, develop entrepreneurial competences and enhance their readiness for the labour market. In 2020, the most recent year for which data are available, 39 of the 68 public VET schools offered practical training placements, amounting to a total of 128 placements (see: https://www.etf.europa.eu/sites/default/files/2020-06/digital_factsheet_kosovo.pdf).
← 4. It is important to note that of these sixteen professional profiles, only fourteen are being implemented, as two did not attract sufficient student interest.
← 5. Figures provided by the European Delegation to Kosovo.
← 6. Compensation is set at 20% of the average salary in Grade 10, 25% in Grade 11 and 30% in Grade 12.
← 7. This information comes from Appendix I of the “Operational Manual for the Grant Programme for the Support of Dual Education”.
← 8. The ALLED2 project translated the EntreComp framework and undertook a comparative study to map it against key competences included in Kosovo’s curriculum framework. It also developed guidance for educators on entrepreneurship and sustainability based on the EntreComp and GreenComp European competence frameworks. This does not appear to have been used following the end of the project.
← 9. “Skills intelligence” can be defined as the “process of identifying, collecting, analysing, synthesising and presenting quantitative or qualitative information on skills and the labour market to: 1) identify key trends and demands in the labour market, 2) assess, anticipate and forecast skills needs, 3) address skills gaps and mismatches and 4) adapt provision of education and training accordingly”. For more, see: https://www.cedefop.europa.eu/en/tools/vet-glossary/glossary/kompetenzanalytik.
← 10. These examples refer to specific examples of Greece, Germany and Cyprus, respectively.
← 11. These studies, “Skills Gap Analysis in Retail Industry” (2020) and “Skills Gap Analysis in Metal Industry” (2021), were carried out as part of the Swiss Agency for Development and Cooperation’s Enhancing Youth Employment project.
← 12. Sector skills councils are collaborative platforms that bring together diverse stakeholders, such as public authorities, employers’ organisations, businesses, trade unions and training providers, to align education and training with labour market needs. By fostering systematic cooperation, these councils play a key role in shaping VET policies from a lifelong learning perspective and promoting the development of skills relevant to specific economic sectors. For more information, see: https://www.etf.europa.eu/sites/default/files/m/8798F8D5E8F7491AC1257E67004A3C9F_INFORM%2022%20Sector%20skill%20councils.pdf.
← 13. In 2024, 21.6% of the EU population was aged 65 years or older. For more information, see: https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Population_structure_and_ageing.
← 14. This figure was calculated by taking the 2023 figure (359 244) and adding 37 451 (the reported number of people who emigrated from Kosovo in 2024).
← 15. Minimal differences are observed between men and women: indeed, the long-term unemployment rate among men was 78.4%, while among women, it fell slightly to 76.3%.
← 16. The relevant study and statistics exclude Türkiye.
← 17. One of the core objectives of Kosovo’s Qualifications Framework is to enable the recognition, accumulation and transfer of learning outcomes across different education and training pathways, including those acquired through formal and non-formal learning contexts. For a more detailed overview of the framework, see: https://www.etf.europa.eu/sites/default/files/2023-05/Kosovo%202023.pdf.
← 18. While there is no standard definition for what constitutes “specialised AI knowledge and skills”, this tends to involve computer programming, database management (especially for big data) and skills for data analysis and visualisation. It might also involve knowledge on specific AI models, tools or software. For more information, see: https://www.oecd.org/en/publications/oecd-employment-outlook-2023_08785bba-en/full-report/skill-needs-and-policies-in-the-age-of-artificial-intelligence_fe530fbf.html.
← 19. This average was calculated using data available in the latest Labour Force Surveys of each economy. For economy-specific figures and sources, please see the regional cluster chapter.
← 20. Data provided by the Statistical Agency of Kosovo.
← 21. The exception is if the woman is also formally employed elsewhere (i.e. she also works for another institution, business, etc.), in which case she is not eligible for such compensation from the government.
← 22. The OECD defines the social economy as “made up of a set of organisations such as associations, co-operatives, mutual organisations, foundations, and, more recently, social enterprises. In some cases, community-based, grassroots and spontaneous initiatives are part of the social economy in addition to non-profit organisations, the latter group often being referred to as the solidarity economy. The activity of these entities is typically driven by societal objectives, values of solidarity, the primacy of people over capital and, in most cases, by democratic and participative governance.” For more information, see: https://legalinstruments.oecd.org/en/instruments/OECD-LEGAL-0472.
← 23. Legal entities must first be formally registered before applying for social enterprise status. For example, a non-governmental organisation would need to first register with the Ministry of Public Administration’s Department for Registration of NGOs, whereas a business would need to register with the Ministry of Trade and Industry before then submitting the application documents to the Ministry of Finance, Labour and Transfers.
← 24. At the time of writing, authors were not able to find data using the interactive interface on the Kosovo Business Registration Agency’s website. Disaggregated data for other business types were available. For more information, see: https://arbk.rks-gov.net.
← 25. This figure is according to the most recent available data, which are from 2021. For more information, see: https://www.oecd.org/content/dam/oecd/en/topics/policy-sub-issues/social-economy-and-social-innovation/country-fact-sheets/country-fact-sheet-estonia.pdf.
← 26. Legal entities that wish to register as a social enterprise can be: associations, foundations, institutes, agricultural co-operatives; limited liability companies; and/or joint stock companies (with the exception of those established as state-owned enterprises).
← 27. The four main fields in which social enterprises in the European Union tend to operate include: 1) work integration; 2) personal social services; 3) local development of disadvantaged areas; and 4) other, which includes recycling, environmental protection, sports, arts, culture and historical preservation, etc. For more information, see: https://single-market-economy.ec.europa.eu/sectors/proximity-and-social-economy/social-economy-eu/social-enterprises_en.
← 28. One such example is Caritas Kosova, a civil society organisation that offers programmes emphasising social entrepreneurship as an avenue for achieving economic independence and well-being. In recent years, it has organised trainings for firms, non-governmental and youth organisations, including one on social economy perspectives, although the context was limited to anti-poverty actions. For more information, see: https://www.caritaskosova.org/en/employability.
← 29. The Law on Social Enterprises states that social enterprises are exempt from profit tax on income generated through their activities, and the importation of raw materials, production equipment, and machinery for production or service provision is subject to a 0% value-added tax.