Serbia’s labor market showed mixed signals in the first months of 2026, with strong wage growth occurring alongside a decline in formal employment. Average net salaries increased significantly, supporting household purchasing power, while employment data pointed to continued differences between sectors and groups of workers.
Average nominal net pay reached RSD 119,504, or approximately €1,018, during January–April 2026. Compared with the same period a year earlier, wages increased by 11.6% in nominal terms and by 8.6% in real terms after adjusting for inflation.
Household Purchasing Power Improves with Higher Salaries
The increase in wages strengthened household purchasing capacity. The average salary covered 108.7% of the consumer basket in the first quarter of 2026, while coverage reached a record 110.9% in March.
Higher incomes are supporting household consumption and improving the repayment capacity of existing borrowers. At the same time, rising compensation levels indicate continued pressure on employers to increase wages due to labor shortages, minimum-wage adjustments, competition for skilled employees and productivity improvements in certain industries.
Employment Trends Show Different Signals
Labor Force Survey data indicated a gradual improvement in unemployment. The unemployment rate stood at 8.9% in the first quarter of 2026, which was 0.2 percentage points lower than a year earlier. Youth unemployment also declined but remained significantly elevated at 23.1%, showing that younger workers continued to face greater difficulties entering the labor market compared with the broader working population. Administrative employment data, however, showed a different trend. The number of formally employed people decreased by 0.5% year-on-year between January and May 2026, reaching approximately 2.357 million workers.
Manufacturing Records Formal Job Declines
The reduction in formal employment affected both public and private-sector employers. Private-sector employment declined by 0.6%, while public-sector employment also recorded a decrease. Manufacturing accounted for the largest share of formal job losses, while service-sector activities continued to increase employment.
The sectoral differences point to changes in Serbia’s employment structure. The movement toward services may reflect a broader shift in economic activity, while manufacturing losses may also be linked to industrial restructuring, automation processes or weaker demand in specific segments.
Labor Market Indicators Reflect Different Conditions
Differences between unemployment statistics and formal employment records do not necessarily represent conflicting trends, as the indicators measure separate aspects of the labor market.
Unemployment rates can be influenced by changes in labor-force participation, demographic trends, informal employment and the number of people actively searching for work. As a result, unemployment can decline even when formal employment decreases. The combination of rapid wage growth and narrower employment expansion remains an important factor for companies and policymakers. Continued wage increases without corresponding productivity growth could affect business decisions through higher costs, reduced hiring or greater automation.
At the same time, wage growth supported by productivity improvements and movement toward higher-value occupations could contribute to longer-term improvements in living standards. Future labor-market priorities include skills development, youth employment, manufacturing competitiveness and the transition of workers into more productive service activities. These factors will influence whether wage increases translate into broader economic gains across the workforce.
