Regional labour market differences in Serbia: assessment and policy recommendations

Creating effective employment policy to combat rising unemployment and widening regional labour market differences is a major task facing Serbian economic policy makers. In this paper we argue that the best results would be achieved if a differentiated approach to regional labour markets is adopted, resulting in regionally specific employment policies. Our paper presents an original methodology which uses relevant statistical data from various sources (altogether 21 indicators) in order to create compound indices which serve as means of a comprehensive regional labour market classification. The main composite indices contain indicators standardised and grouped so that they reveal multifaceted features of the regions. The first classification distinguishes between indicators depicting regional economic situation and development prospects, and the second between those of general economic conditions, labour market situation and restructuring dynamics. Finally, we suggest a simple two-dimensional taxonomy of regions with regard to their labour market situation and prospects. While regions with positive composite indices of both situation and prospects in general do not require additional intervention, regions in other three quadrants are recommended specific policy mix of employment policy measures and active labour market programmes tailored according to their characteristics revealed by the analysis