Serbia’s labour market recorded stronger earnings growth in 2026, but the increase in household income has not been accompanied by a comparable rise in employment. Average net wages reached RSD 121,805 in April 2026, representing an annual increase of approximately 11.5%.
With headline inflation at 3.3% in April, wage growth translated into a significant increase in real purchasing power. Higher incomes have supported retail activity, household savings growth and demand for bank loans. At the same time, registered employment remained broadly unchanged, indicating that stronger earnings are being driven more by wage pressures than by a major expansion in the number of employed workers.
Employment remains stable despite lower unemployment
Registered employment stood at approximately 2.321 million people in May 2026, compared with 2.333 million a year earlier. The decline was limited but showed that wage increases were not primarily the result of broad-based job creation.
Registered unemployment decreased during the same period, falling from around 351,000 to 337,000 people. The combination of lower unemployment and almost unchanged employment can reflect several factors, including demographic decline, emigration, retirement, movement into informal employment or changes in registration patterns rather than a direct increase in labour-market absorption.
Skilled labour shortages push companies to raise costs
Businesses continue to report difficulties in finding qualified workers, particularly in engineering, construction, information technology, transport, energy and industrial maintenance. Companies are responding through higher salaries, recruitment of foreign workers, automation investments and internal employee training programmes.
The relationship between wages and productivity has become a central issue for competitiveness. When wage growth is supported by higher output per employee, it can improve living standards without weakening business performance. However, if wages rise faster than productivity for an extended period, companies face higher unit labour costs that must be absorbed through lower margins or higher prices.
Services and exporters face different wage pressures
Services sectors are already experiencing stronger cost effects. Services inflation reached 6.6%, reflecting the significant role of labour expenses in industries such as hospitality, transport, healthcare, maintenance and professional services. Companies with limited opportunities for automation are more exposed because they have fewer options to offset higher labour costs.
Export-oriented manufacturers face additional pressure from international competition. Serbian suppliers compete with companies from Central and Eastern Europe, Turkey, North Africa and Asia, while the stable dinar exchange rate limits the possibility of offsetting domestic wage increases through currency depreciation. To protect margins, exporters increasingly need productivity improvements and higher-value products.
Higher incomes support credit growth and household balance sheets
Rising wages are also strengthening household financial conditions. Higher earnings support loan repayment capacity, while household deposits continue to expand. Rapid household credit growth depends on the assumption that income levels and employment conditions will remain stable throughout loan repayment periods.
Serbia’s labour-market performance therefore shows stronger progress in income growth than in employment creation. The economy is generating higher wages for a workforce that has not significantly expanded, increasing the importance of productivity investment, vocational education and targeted labour-market immigration.
