Will Serbia become a base for Asian immigration?
Employment in Serbia in the second and third quarters fell slightly under the influence of a combination of factors. Migration, both internal and external, the departure of certain investors, a lack of inflows of foreign direct investment, as well as wage growth, all contributed to employment not being on an upward trajectory.
According to data from the Statistical Office of the Republic of Serbia (SORS) for the third quarter of this year compared to the previous quarter, the total number of employed persons was lower by 4,358, that is by 0.2 per cent. The number of employees in legal entities decreased by 5,329 persons, or 0.3 per cent; the number of entrepreneurs, people employed by them and those who are self-employed increased by 2,259 persons, or 0.5 per cent; while the number of registered individual agricultural workers fell by 1,288 persons, or 2.8 per cent.
“As far as employment and unemployment are concerned, it is evident that the situation has deteriorated slightly compared to before. The unemployment rate in the second quarter of this year was 8.5 per cent, which is somewhat higher than the 8.2 per cent recorded in the second quarter of last year. The number of employed persons in the second quarter of 2025 was about 14,000 lower than in the same period of the previous year, while the number of unemployed increased by about 9,000, alongside a reduction in the active population of around 5,000,” says Branimir Jovanović from the Vienna Institute for International Economic Studies.
Lack of new investments, departure of old ones
The reason for this development likely lies in factory closures and investors relocating to cheaper destinations. Since the beginning of this year, three companies operating in Serbia, Benetton, Johnson Electric and Draxlmaier, have announced layoffs. The German company Leoni has announced that it will close its factory in Malošište by the end of this year due to losses, with around 1,900 jobs to be gradually abolished and severance pay to be paid to workers. This is not the end of the list of those who have decided to shut down their operations in Serbia.
“Special attention here should be paid to movements in investment income. The expenditure side of primary income shows that inflows from equity capital in 2024 amounted to 2.56 billion, while outflows related to dividend payments and capital withdrawals amounted to 2.594 billion. This trend has definitely reversed direction; we are now entering a period of far greater outflows from direct investments than inflows. The spiral has been set in motion and Serbia is not particularly different in this respect from other investment recipient countries,” says Dragovan Milićević, former State Secretary at the Ministry of Trade.
What we can expect in the coming period, at least in the short term, is an increase in unemployment due to factory closures, this economist believes.
Migration
Milićević explains that there is a real lack of good data, especially on issues that have troubled the population for decades, because no institution in the country provides accurate figures on how many working-age people are leaving this territory in search of a better life.
“The answer lies primarily in a topic that is almost taboo in Serbia, namely migration. It is almost impossible to find precise data on this negative trend, and official statistics operate with an estimate of the population that is nothing more than the census population minus population movements, that is, the difference between live births and deaths. The population of Serbia is declining. The natural increase table shows that from 2012 to 2024 Serbia lost more than 541,000 inhabitants, meaning that there were that many more deaths than births. However, a far more accurate answer to questions about the relationship between the employed and the unemployed is provided by another table. According to OECD (Organisation for Economic Co-operation and Development) data, from 2012 to 2023 a total of 551,800 people emigrated from Serbia, mostly of younger age. When the negative natural increase is added, Serbia has lost 1.1 million inhabitants over the past 13 years,” says Milićević. As he adds, there are still no up-to-date OECD data for 2024.
Another piece of information that is not discussed in Serbia concerns the import of foreign workers, who are still recorded in statistics as tourists, but based on statements by politicians and other public institutions we know that workers are being brought in from Ghana, Ethiopia, Turkey and Nepal.
The Ministry of Foreign Affairs has announced that 100,000 work permits will be issued, with only part of them going to people from Ghana. The Serbian Chamber of Commerce announced back in May the arrival of workers from Egypt for EXPO. According to reporting by Radio Free Europe, the Office for IT and e-Government of the Government of Serbia announced in January that from February to the end of December last year “a total of 37,934 applications for a Single Permit for temporary residence and work of foreign nationals in the Republic of Serbia were approved”.
However, as RFE notes, Serbia’s Foreign Minister Marko Đurić stated on 19 July that last year Serbia issued a total of nearly 80,000 work visas. Based on employment data, we were unable to determine whether and how these workers are recorded in official statistics.
“SORS keeps data based on a survey that is imprecise. But foreign workers must obtain work permits and health insurance, so they should be recorded as employed in the statistics,” Milićević explains.
The cost of labour
Given thLinkat the minimum wage in Serbia is determined on the basis of a combination of factors such as GDP growth, inflation, the minimum consumer basket, as well as employment and productivity, it is unclear why the state decided this year on an extraordinary increase in the minimum wage, which then pulls up all other wages as well. According to all forecasts, the year will be much worse in terms of the economy, inflation is around four per cent throughout the period, and many investors have already clearly stated that wages are too high for them.
“The looming energy crisis, as well as the withdrawal of foreign investors as a consequence of a possible rise in energy prices and the minimum wage, could lead to capital flight. Migration movements and negative natural increase threaten to disrupt the demographic structure, as the need for labour is compensated by issuing work and immigration visas to people from other countries (India, Pakistan, Sri Lanka, Bangladesh and the like). Whether Serbia will become an immigration base, like a large part of Europe where its mostly educated population moves to more developed countries while populations from the mentioned countries settle in, is not difficult to assume,” says Milićević.
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