Labor productivity in the Western Balkans, measured as output per employee, shows diverging trends across countries, reflecting different development models. Albania ranks last, with relatively low labor efficiency, while Montenegro and Serbia lead the region.

According to the latest data processed by the Vienna Institute for International Economic Studies (wiiw), Montenegro records the highest productivity in the region, with Euro 47,050 per employee in 2024, equivalent to 57% of the EU average. This strong performance is largely linked to the structure of the Montenegrin economy, which is oriented towards higher-value services and niche industries.

Serbia follows closely, with output per employee of Euro 46,260 in 2024, or 56% of the EU average. The higher labor value in Serbia reflects strong foreign direct investment in manufacturing and technology sectors.

Based on the Vienna Institute’s analysis, Kosova shows solid performance, with Euro 44,970 per employee, reaching 55% of the EU average, while North Macedonia follows with Euro 43,810 in 2024, or 53% of the EU average.

North Macedonia has increased labor productivity through the development of free economic zones, which have attracted investment from the automotive industry.

Kosova, meanwhile, benefits from having one of the youngest populations in Europe, alongside rapid growth in the IT and outsourced services sectors (BPO). These are high-productivity activities, where a young worker with a computer can generate significantly more economic value than a worker in agriculture or construction.

At the lower end of the ranking are Bosnia and Herzegovina and Albania, both showing a stronger need for structural reforms to raise output per employee. With Euro 35,950 per worker, Bosnia and Herzegovina ranks above Albania, which comes last with Euro 34,580 per employee in 2024. Estimates show that Albania reaches only 42% of EU productivity levels, reflecting its high reliance on low-value-added sectors such as agriculture and garment manufacturing, as well as lower levels of automation compared with other countries in the region.

The Vienna Institute’s data underline that productivity growth remains the key challenge for the entire region. The wide gap between Montenegro’s 57% and Albania’s 42% highlights that convergence with the European Union will require a decisive shift towards innovation, vocational education, and investment in technology, as the main drivers of higher living standards and greater labor value across the Western Balkans.