A planned single-permit system would strengthen fiscal and employment controls, but employers warn that another approval layer could slow recruitment in tourism, hospitality and construction just as Montenegro’s dependence on imported labour reaches record levels.
Montenegro is moving towards tighter control of foreign employment at a point when foreign workers have become structurally important to some of the country’s largest private-sector industries. The government’s proposed overhaul of residence and work permits is designed to reduce undeclared employment, improve tax collection and bring the system closer to European Union standards. For businesses, however, the central issue is less the principle of stronger supervision than the possibility that a new administrative checkpoint will make an already difficult recruitment market slower and less predictable.
Under the model endorsed by the government in July, the Ministry of Interior would continue to receive applications and formally issue temporary residence and work permits. It would verify identities, documentation and information held in official registers. The substantial change is that the Employment Agency of Montenegro, ZZZCG, would have to provide its consent before a permit could be issued. The agency would assess labour-market conditions, whether the employer satisfies the relevant requirements and whether restrictions such as quotas or employment prohibitions apply. The government argues that Montenegro’s progress towards EU membership requires stronger institutional controls over the entry, residence and employment of foreign nationals and better mechanisms for preventing irregular residence and undeclared work.
That change goes well beyond an administrative redesign. It effectively shifts Montenegro towards a system in which immigration control and labour-market approval become more closely integrated. The government also envisages clearer responsibilities for the Tax Administration, Health Insurance Fund and Labour Inspectorate, creating a system in which information on immigration status, employment, payroll obligations and irregularities can increasingly be cross-checked between institutions. From the state’s perspective, this addresses a genuine weakness: issuing a residence and work permit does not necessarily prove that the worker is subsequently employed, registered for social insurance and generating the expected fiscal payments.
The scale of foreign employment explains why Podgorica now regards the issue as more than a technical migration-policy question. Montenegro issued 20,580 temporary residence and work permits in 2021, rising to 29,319 in 2022 and 38,943 in 2023. The figure eased slightly to 38,019 in 2024 before reaching a record 40,567 permits in 2025. In only four years, the annual number therefore increased by approximately 97%.
The Employment Agency’s detailed 2025 figures show that 27,689 of those 40,567 permits were issued within the quota system and 12,878 outside the quota. That distinction is important because the annual quota announced by the government does not represent the maximum number of foreign workers who can necessarily receive permits during the year. Different legal categories can fall outside the quota, which partly explains why the total number of permits issued can substantially exceed the headline quota.
Foreign workers are also highly concentrated geographically and economically. In 2025, Podgorica accounted for 13,568 permits, while Budva accounted for 10,318. Herceg Novi recorded 3,889, Bar 3,807, Tivat 2,767, Kotor 2,102 and Ulcinj 1,232. Together, those seven municipalities represented almost 93% of all permits issued, underlining the extent to which imported labour is connected to the capital and the tourism-intensive Adriatic coast. Turkey was the largest source country with 10,346 permits, or 25.5% of the total, followed by Serbia with 8,148, Russia with 7,429, Azerbaijan with 2,513, Albania with 2,098 and Bosnia and Herzegovina with 1,902. Those six countries accounted for almost 80% of permits.
These are unusually large numbers relative to the size of Montenegro’s economy. MONSTAT estimated that the country had an average 277,300 employed people in 2025, alongside 33,100 unemployed people, producing an unemployment rate of 10.7%. The 40,567 foreign-worker permits issued during the year are numerically equivalent to roughly 14.6% of the average employed population. The two measures are not directly comparable — permits are an annual administrative flow rather than a snapshot of foreign workers simultaneously employed — but the ratio illustrates how material labour migration has become for a country with a workforce of fewer than 300,000 people.
That apparent contradiction between unemployment and labour shortages sits at the centre of the debate. Economist Mirza Krnić has warned that Montenegro is facing increasingly serious shortages in services, tourism, hospitality and construction, while employers are becoming progressively more dependent on foreign labour. His argument is that tighter supervision may be justified, particularly where it targets undeclared employment and unfair competition, but it does not solve the structural causes of the shortage. Montenegro has a small labour market, pronounced seasonality and significant demand for workers in sectors where domestic supply is insufficient or unwilling to fill available positions. Future EU membership could intensify those pressures by making labour mobility easier for Montenegrin citizens seeking opportunities elsewhere.
The numbers behind the government’s 2026 foreign-worker quota reinforce that assessment. Montenegro has set a quota of 28,988 permits for the year, of which 21,668 are allocated to regular employment and 2,320 to seasonal employment, while another 5,000 permits remain available for additional allocation depending on labour-market needs. The largest sectoral allocations are 6,150 permits for accommodation and food services, 6,000 for construction and 5,268 for other service activities. Wholesale and retail trade receives 1,453, professional and technical activities 1,200, information and communications 878, and manufacturing 527.
The allocation itself effectively acknowledges that foreign labour is no longer a peripheral element of Montenegro’s economic model. Accommodation and food services together with construction account for more than 12,000 allocated permits, reflecting the two sectors in which timing is particularly important. A hotel that cannot recruit staff before the summer season cannot simply recover the lost room revenue several months later. A contractor that lacks construction workers can face delayed milestones, higher subcontracting costs and slower recognition of project revenues. For companies financing development through bank debt or staged investor capital, labour availability increasingly feeds directly into project execution risk and working-capital requirements.
That is why the Montenegrin Employers Federation, UPCG, has been critical of adding the Employment Agency to the approval chain. Its concern is that the reform may become another administrative obstacle for companies trying to secure workers they already struggle to find. The issue is particularly sensitive in industries that have faced shortages for several years. In practice, the commercial impact will depend heavily on whether the Employment Agency’s approval becomes an essentially digital, rapid verification process or a substantive additional procedure capable of delaying applications.
A delay of a few days may have little macroeconomic relevance in ordinary recruitment. A delay of several weeks during April, May or June is very different for a Budva hotel, coastal restaurant or construction company trying to mobilise workers before peak activity. Montenegro’s labour market is unusually exposed to this timing problem because seasonal demand is concentrated into a relatively short period while many foreign workers are simultaneously considering opportunities in Croatia, Slovenia and other European markets.
The government nevertheless has a strong fiscal argument for reform. According to the official information underpinning the proposed system, employers are required to conclude an employment contract and register a foreign worker for compulsory social insurance after a permit has been issued. The government presented an illustrative calculation suggesting that, with approximately 40,000 permits and minimum monthly public obligations of around €120 per worker, the state should theoretically receive about €4.8mn each month, or close to €60mn annually, assuming all workers are properly registered and the obligations are paid. The document explicitly raises the question of whether that level of revenue was actually collected in 2025.
The authorities also found evidence that the foreign-residence framework can be used without corresponding genuine economic activity. Checks by the Ministry of Interior, Police Directorate and Tax Administration identified more than 1,000 foreign nationals, predominantly company owners and executive directors, whose businesses recorded no fiscalised inflows or outflows during the examined period in 2025. The government has separately tightened rules affecting foreign company owners and directors, including requirements intended to distinguish active businesses from corporate structures used primarily as a basis for residence.
For legitimate employers, this is also a competition issue. A hotel, restaurant, retailer or construction company that registers its workers, pays wages through formal channels and settles taxes and social contributions operates with a higher cost base than a competitor using undeclared labour. Better enforcement could therefore improve conditions for compliant businesses even if the initial reaction from employers is resistance to additional bureaucracy.
The problem is that enforcement effectiveness and administrative complexity are not the same thing. Requiring another state institution to approve every application will only improve the system if the agencies involved can exchange information quickly enough to make the process effectively seamless for compliant employers. A digital system that automatically checks a company’s registration, tax status, labour-inspection history and available quota could strengthen enforcement while reducing opportunities for abuse. A sequential paper-based process in which employers move between institutions would achieve the opposite economic effect, increasing transaction costs while potentially encouraging companies to look for informal alternatives.
Capacity at the Employment Agency therefore becomes one of the most important unresolved variables. ZZZCG is being asked not merely to record labour-market information but potentially to participate directly in tens of thousands of permit decisions. The 40,567 permits handled in 2025 indicate the administrative scale involved. Even without assuming further growth, processing volumes can become intense ahead of the tourist season. The state will need sufficiently automated systems, clear statutory deadlines and objective criteria if labour-market assessments are not to evolve into an unpredictable discretionary process.
There is also a broader structural issue that the permit reform cannot resolve. Montenegro simultaneously records unemployment above 10% and imports tens of thousands of workers. That mismatch points to problems of skills, geography, wage expectations, seasonality and incentives rather than simply a shortage of people. Employers need workers in Budva, Tivat, Kotor, Herceg Novi and major construction locations, while registered unemployment is not necessarily concentrated in the same places or among people with the required skills and willingness to relocate. Accommodation costs on the coast create another practical constraint, particularly for relatively low-paid seasonal employees.
The attraction of public-sector employment also affects the private labour pool. Krnić has pointed to the preference among some workers for the security offered by state employment while private companies struggle to recruit. Whatever the precise scale of that effect, Montenegro faces a policy tension familiar across the Western Balkans: a relatively large public sector competes for domestic labour while tourism, construction, retail and services increasingly import workers to sustain economic activity.
EU accession could make the equation still more complicated. Alignment with European migration and labour rules is pushing Montenegro towards stronger controls and more sophisticated data exchange at the same time that eventual membership may increase opportunities for Montenegrin workers to seek employment elsewhere in the EU. Podgorica therefore needs a foreign-worker system capable of achieving two objectives that can easily conflict: preventing fictitious employment and tax avoidance while allowing productive companies to recruit quickly when domestic labour is unavailable.
The decisive metric for businesses will consequently be processing time. Stronger verification is unlikely to cause major resistance if an application from a compliant employer can be validated electronically within a predictable period. The same reform becomes economically costly when several institutions review the same information sequentially and there is no enforceable deadline for a decision.
Montenegro’s experience with foreign labour has already moved far beyond the stage at which permits can be treated simply as an immigration issue. With more than 40,000 permits issued in 2025, almost double the 2021 level, foreign recruitment has become part of the operating infrastructure of the tourism, hospitality, service and construction economies. The state now has a legitimate reason to determine whether those permits translate into real employment and fiscal payments. Businesses have an equally legitimate reason to demand that greater control does not become a slower labour market.
The quality of the new system will therefore be determined not by the number of additional checks it introduces, but by whether Montenegro can distinguish compliant employers from abusive structures quickly enough that fiscal control becomes stronger without turning labour availability into another constraint on investment and growth.
