Serbia’s labour market is sending two very different signals. Household incomes are still rising rapidly, but employment growth has turned negative.
Average net monthly wages reached RSD 120,102, or about €1,023, in April-May 2026. Nominal wages were 10.7% higher year on year and real wages increased 7.0%. The median net wage rose 11.6% to RSD 93,931.
At the same time, the number of formally employed workers fell by around 14,000 from a year earlier, taking formal employment to 2.36mn in the second quarter. Employment was 0.6% lower year on year, following a 0.4% decline in Q1.
This divergence makes the labour market one of the more important indicators for Serbia’s next phase of growth. The economy is producing stronger income gains with slightly fewer formal workers, helped by a sharp increase in productivity.
The NBS estimates economy-wide productivity rose 4.2% year on year in Q2. That is a key number for inflation because wage growth that is matched by productivity is less likely to produce the same increase in unit labour costs as wage growth driven purely by labour scarcity.
For now, wages are still rising faster than productivity. But the gap has narrowed enough for the central bank to expect wage growth to move closer to productivity growth during 2027, contributing to a gradual weakening of domestic inflation pressure.
Sectoral wage growth remains strong. In April-May, average wages increased by double digits in more than half of economic activities. Education recorded an increase of 19.6%, accommodation and food services 13.1%, and healthcare 13.0%. Public-sector wages grew 11.8%, compared with 10.2% in the private sector.
The total nominal net wage bill increased 9.8% year on year, entirely due to higher wages rather than employment. For consumption, that distinction is important: the income base available to households continues to expand even though the number of formal jobs is no longer rising.
Private-sector employment averaged 1.74mn in Q2 and was 0.8% lower year on year. Public-sector employment declined only 0.1%, with reductions in public administration partly offset by higher employment in education and healthcare. Manufacturing and trade recorded some of the largest declines, while administrative, professional, scientific, innovation and technical services added workers.
Registered unemployment nevertheless fell further. The National Employment Service counted 333,804 unemployed people in June, almost 11,000 fewer than a year earlier and the lowest number on record. The Labour Force Survey showed an unemployment rate of 8.9%, down 0.2 percentage points year on year.
A simultaneous decline in both employment and unemployment can occur when labour-force participation weakens. The survey data point in that direction: the participation rate for the working-age population was 72.9%, and the overall activity rate 55.7%, both lower than a year earlier.
Demographic and participation dynamics therefore matter increasingly for the supply side of the labour market. Serbia may find it progressively harder to expand employment simply by drawing down unemployment if the active workforce itself is not growing.
For employers, this creates a complicated environment. Labour demand in construction, services and infrastructure-related activities is likely to strengthen as the Expo investment cycle accelerates. Yet manufacturing employment has already been weakening despite stronger industrial output in several branches. That is consistent with productivity growth and the possibility that newer investment is more capital-intensive.
The automotive sector is a good example. Motor-vehicle production increased 43.3% year on year in Q2, driven by faster electric-vehicle production in Kragujevac, but the broader labour data do not show an equivalent increase in manufacturing employment.
For monetary policy, the wage data are more important than the mild employment decline. Service inflation was still running 6.6% year on year in June, and services accounted for roughly four-fifths of core inflation. Strong nominal wage growth can sustain those pressures even when headline inflation is temporarily pulled down by food.
The NBS therefore expects wages to become a less inflationary force gradually rather than abruptly. Real incomes will remain an important support for private consumption, alongside pensions, remittances and consumer credit. Household lending itself was growing 20% year on year in June, reinforcing the spending capacity created by higher earnings.
There is a positive side to this combination. The coverage of the average consumer basket by the average wage reached 109.1% in the first four months of 2026, while the minimum-wage coverage of the minimum consumer basket reached 113.0%, both record highs according to the NBS.
That represents a genuine improvement in real purchasing power after several years in which inflation eroded household incomes.
The question is whether Serbia can preserve that gain while moving towards a more sustainable relationship between wages, productivity and employment. A labour market driven increasingly by higher output per worker can support living standards without recreating the inflation pressure of earlier cycles. A labour market in which wages continue to rise at double-digit rates while participation and employment contract would be more difficult to sustain.
The 7% real wage increase is therefore one of the strongest supports to the 2026 consumer economy. The 0.6% fall in formal employment is the early warning that the supply of labour, productivity and sectoral restructuring will become more important constraints as the infrastructure and services boom approaches 2027.
