According to the International Monetary Fund’s July 2025 analysis, Serbia faces a significant “skills mismatch” where 40% of graduates work in jobs below their qualifications, while 25% of companies cite a lack of adequately educated workers as a major obstacle to growth. Despite having a higher share of higher-educated population than the EU average, Serbian graduates often lack the skills demanded by the labor market.
Key issues include:
- Lack of soft skills like critical thinking, problem solving, and communication.
- Insufficient practical experience, as graduates often have theoretical knowledge without real business exposure.
- A digital skills gap, with universities struggling to keep pace with rapid technological change.
Youth unemployment in Serbia stood at 24.1% in Q1 2025, slightly improved from late 2024, but the quality of employment and skill alignment remains problematic.
The IMF estimates that closing half of this skills gap could boost Serbia’s GDP by 2.5%, equal to about €1.5 billion annually. Labor productivity has improved since 2021, helped by foreign direct investment and growth in IT, which accounted for nearly 15% of new jobs and 20% of additional value added in 2023.
Recommended solutions:
- Stronger links between education and employers through mandatory internships.
- Aligning curricula with labor market needs.
- Expanding dual study programs modeled on Germany’s system, which combines classroom learning with workplace training and enjoys an 80% employment rate for graduates.
Germany’s success is partly due to private companies funding two-thirds of vocational training costs, ensuring young people acquire relevant skills and jobs.
Serbia has begun adopting similar models but needs more systemic education reforms to improve outcomes. The IMF stresses that increasing productivity and matching skills with market demands will be crucial for Serbia’s economic growth and income convergence with developed economies.
