NewsMontenegro faces workforce shortage by 2030, urgent policy action needed

Montenegro faces workforce shortage by 2030, urgent policy action needed

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Montenegro is projected to experience a significant workforce shortage by around 2030, necessitating the prompt creation of appropriate policies and measures to adapt the labor market to these challenges and prevent negative consequences for the economy.

Raško Konjević, the General Secretary of the Montenegrin Employers’ Association (CPU), stated that the workforce deficit is currently a pressing issue.

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“If we do not take action in the near future, and as soon as possible, I believe this issue will not only become a pressing problem in the long run but a galloping crisis for employers that they will not be able to resolve independently,” Konjević emphasized at a press conference presenting the publication “Labor Market – Workforce Deficit and Analysis of Foreign Employment.”

Seasonal deficits during summer

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Maja Baćović, the author of the study and a professor at the Faculty of Economics in Podgorica, explained that the motivation for creating this study was the long-standing workforce deficit in Montenegro’s labor market, as well as in many European countries.

“This deficit is particularly pronounced in Montenegro during the summer tourist season but also in other periods. Montenegro is not the only country facing this problem; a similar situation exists in many European countries. This deficit can result from various factors, including cyclical changes and structural challenges affecting the labor market, such as declining demographic factors, workforce inactivity, skill shortages, unfavorable working conditions, and pronounced worker mobility,” Baćović noted.

According to her, data from the first quarter of last year in the European Union (EU) shows that 28% of employers in manufacturing and 31% in other sectors reported difficulties in finding suitable labor.

“In such a situation, the Montenegrin labor market loses competitiveness, and one of the key shortcomings is significantly lower average wages compared to the European average. This is why Montenegro is forced to turn to the labor markets of less developed countries to meet its workforce needs,” Baćović stated.

Despite positive trends in the Montenegrin market over the past 17-18 years, such as employment growth and a decrease in unemployment rates, serious structural problems still exist.

“Although unemployment has decreased, many unemployed individuals are long-term unemployed due to the mismatch between labor demand and the skills that the unemployed possess. For example, 30% of the unemployed have been seeking work for more than five years, while 46% have been looking for over three years,” Baćović explained.

She pointed out that the workforce in Montenegro is mainly concentrated in the service sector, where approximately 77% of workers are employed.

“Industries like hospitality, trade, and construction are experiencing the highest employment growth but also face a workforce deficit, which is why Montenegro is importing labor from other countries. Our analysis indicates that Montenegro already has a real workforce deficit, despite certain quantitative surpluses,” Baćović clarified.

She also expressed concern over demographic projections indicating an accelerated aging of Montenegro’s population and a decrease in the number of working-age individuals.

“Projections suggest that this trend will continue until the end of the 21st century, further reducing the labor supply. Our study focused on the next 20 years and showed that Montenegro will face a serious workforce deficit around 2030, even with the current 30,000 unemployed,” Baćović said.

This deficit will increase year by year, meaning it will be necessary to create appropriate policies and measures to adapt the labor market to these challenges.

“Without a suitable workforce, long-term economic growth will not be possible. The workforce has always been and remains one of the key factors of production and economic progress, regardless of technological advancements,” Baćović concluded.

Facilitating work permit issuance for foreigners

Bojan Bugarin, the study’s author and a migration expert, stated that Montenegro will need to address the workforce deficit by bringing in foreign labor.

“According to data from 2010, Croatia issued around 2,500 work permits for foreigners, while last year that number rose to 130,000. This shows that not only Croatia but also other EU member states are facing this problem. As a result, it will become increasingly difficult for Montenegro to find workers with the appropriate profiles,” Bugarin remarked.

He reminded that, in the recent past, the lacking workforce was primarily sourced from neighboring countries such as Serbia, Bosnia and Herzegovina and North Macedonia.

“However, it is now increasingly difficult to find labor in these countries, as workers from these regions are leaving in large numbers for Croatia, Germany, and Austria. Consequently, Montenegrin employers are increasingly considering alternatives to bring in workers from Asian and African countries, especially India,” Bugarin noted.

He highlighted that the process of bringing foreign labor to Montenegro is currently complicated and cumbersome at the administrative and institutional levels.

According to him, the issue also lies in the uncoordinated actions of relevant authorities and their electronic disconnection, which complicates monitoring and tracking foreign workers in Montenegro.

“Additionally, Montenegro lacks sufficient diplomatic and consular representations in African and Asian countries, further complicating the process of bringing in workers from those nations. Employers often have to rely on the diplomatic and consular representatives of Serbia, which increases costs and complicates procedures,” Bugarin explained.

He estimated that the costs of bringing ten workers from India, excluding airfare, accommodation, and meals, could range from five to ten thousand EUR.

“Thus, employers face high costs and additional administrative barriers. There is a need to simplify these procedures, especially regarding the extension of work permits and visas. Once a worker has spent a year or two in Montenegro, all subsequent procedures should be simplified, as these workers have already undergone the necessary checks,” Bugarin added.

He suggested that the government and the Ministry of Foreign Affairs should consider allowing applications for D visas to be submitted directly in the Ministry’s offices, which would significantly ease the procedure and reduce costs.

“Moreover, introducing electronic worker registration through a web portal that facilitates communication between state bodies would streamline the entire process and expedite procedures,” Bugarin noted.

Policy makers must define measures promptly

Vasilije Kostić, the president of the CPU, stated that a significant number of employers have recently complained about the lack of labor or the lack of adequate labor.

“Prompted by this, we wanted to present the current situation to the public and those making decisions. We are facing a dramatic moment regarding the demographic aging of Montenegro, which brings negative consequences for the workforce and the labor market, as well as broader implications for Montenegro’s overall socio-economic development,” Kostić stated.

He explained that this is no longer just about the fact that Montenegro will experience a workforce deficit, which is now evident due to structural unemployment or a mismatch between the qualifications of the workforce and market needs.

“We are talking about an exponential increase in the physical shortage of labor. The question is no longer how we will compensate for this shortage but how we will deal with this challenge,” Kostić said.

He warned that if policymakers do not timely ensure the necessary workforce, which is a key resource and the most important factor of production, meaningful economic or social development cannot be discussed.

“Policymakers must think long-term and strategically, as this is already a global problem – a chronic shortage of labor. Developing or underdeveloped countries will become labor exporters, while economically potent countries will become attractive markets for workers. It is high time we addressed this issue seriously and strategically,” Kostić concluded.

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