New Economy in Serbia: Longer Hours, Lower Pay

July 17, 2026 8 min read Business 0 views

Across Serbia, many employees feel caught in a paradox: they are putting in longer hours than their peers in much of the European Union, yet their paychecks remain comparatively small. This tension defines what many describe as the country’s "new economy"—a mix of post-transition capitalism, low labor costs and fierce competition for jobs. Understanding why this gap exists, who benefits from it, and how it might be reduced is critical for workers, employers and policymakers alike.

Serbia’s New Economy: Why People Work More and Earn Less

In Serbia, a striking imbalance has emerged: employees often work more hours than their counterparts in the European Union, but take home noticeably less money. This reality shapes daily life, career choices and even long‑term demographic trends, from emigration to declining birth rates. Understanding the forces behind this “new economy” is the first step toward meaningful change.

Several intertwined factors explain the gap: Serbia’s position as a lower‑income country competing on labor costs, a legacy of economic transition, weaker bargaining power for workers, and an often fragile social safety net. Together, these elements create a system in which time is plentifully given but poorly rewarded.

Office employees in Serbia working late into the evening

How Serbia Compares to the European Union

Across the EU, there has been a gradual move toward shorter working hours, stronger protections, and more predictable income. Serbia’s trajectory has been different. While each country has its own specifics, the broad contrasts are clear enough to map out.

Aspect	Typical EU Trend	Serbia’s Situation (generalised)
Average working hours	Moderate, with strong limits on overtime	Often long, with frequent overtime or second jobs
Average wages	Higher, linked to productivity and cost of living	Lower, even when productivity rises
Job security	Relatively strong protections	More short‑term, project‑based and precarious roles
Social protections	Robust unemployment and family support	More limited benefits and coverage gaps

These differences influence not just paychecks but how secure people feel planning a family, taking a loan or investing in their own education. In Serbia, a single job is often insufficient for a decent standard of living, pushing many people into overtime or informal side work.

The Engines of Serbia’s New Economy

Serbia’s economic model has been built around several recurring themes: attracting foreign investment, offering relatively cheap labor, and embracing flexible employment arrangements. While this has created jobs and boosted exports, it also locks the country into a position where long hours are common and wages lag behind.

Low labor costs as a selling point: To compete with EU member states, Serbia often markets itself as a location with affordable, disciplined labor.
Post‑transition restructuring: The shift from a socialist system to market capitalism dismantled many former state enterprises and job guarantees, replacing them with competitive, often insecure roles.
Foreign‑owned production: Many new factories and service centers focus on labor‑intensive work, where each saved euro on wages matters to investors.
Informal work and grey economy: Off‑the‑books jobs help people survive but suppress official wage statistics and weaken contributions to social systems.

These engines sustain employment but make it difficult to move beyond a low‑wage equilibrium. Once a country becomes known for cheap labor, it can be hard to pivot toward higher‑value, better‑paid work without deliberate policy shifts.

Long Hours, Precarious Contracts

Behind the aggregate data are everyday work realities. In many sectors—manufacturing, retail, hospitality, logistics and call centers—long hours and irregular schedules are normalized. People may officially work full‑time, yet effectively spend far more time on the job.

Overtime as routine: Overtime can be formally recorded and paid, or informally expected with minimal compensation.
Multiple jobs: Teachers, health workers, IT specialists and service workers may all take secondary gigs to supplement income.
Short‑term contracts: Fixed‑term agreements or temporary agency work reduce workers’ bargaining power.
On‑call expectations: In some offices, remote connectivity keeps people reachable after hours, blurring work‑life boundaries.

The result is a culture where being constantly available can feel like the only way to keep a job or inch ahead financially, even when the legal framework formally protects rest periods and maximum working hours.

Why Wages Stay Low Despite Hard Work

Working harder does not automatically translate into higher wages, especially when broader structural and institutional factors limit how productivity gains are shared. Several forces help explain Serbia’s persistent wage gap with the EU.

Structural Factors

Productivity vs. pay: Even when productivity rises, a large share of the gains can flow to owners and investors rather than wages.
Sector mix: A high proportion of jobs in low‑value production and basic services caps average earnings.
Tax and contribution design: High payroll charges on low wages can discourage employers from raising salaries or formalizing all income.

Institutional and Social Factors

Weak bargaining power: Limited union presence in new private sectors and fear of job loss make collective demands difficult.
High competition for jobs: When many people are willing to work for low pay, individual workers have little leverage.
Emigration pressure: Ironically, knowing that the most dissatisfied can leave can slow domestic reform if employers find new workers to replace them.

The Human Cost: Burnout, Families and Future Plans

Beyond statistics, the combination of long hours and low wages carries a human price. Tired workers, delayed family decisions and chronic financial stress affect the entire social fabric.

Health and burnout: Extended workdays reduce time for rest, exercise and preventive healthcare, contributing to stress‑related illnesses.
Family life: Parents working late shifts or weekends struggle with childcare and quality time, which can deepen gender inequalities at home.
Financial fragility: With modest savings, even small shocks—car repair, illness, job loss—can trigger debt or migration plans.
Long‑term planning: Unstable income makes it risky to take out mortgages, invest in education or start businesses.

Over time, these pressures can erode trust in institutions and feed a sense that economic progress benefits only a narrow layer of society.

How Workers Can Respond Within the Current System

Individual strategies cannot fix structural problems, but they can help people navigate Serbia’s demanding labor market more safely and effectively.

Practical Steps for Employees

Track your hours: Keep personal records of work time and overtime to understand your real hourly rate and potential violations.
Know your rights: Familiarize yourself with national labor law regarding contracts, rest periods, holidays and dismissals.
Skill upgrading: Prioritize training that opens doors to higher‑value sectors—IT, advanced manufacturing, finance, specialized trades.
Network strategically: Professional networks can reveal better opportunities and reduce dependence on a single employer.
Plan an emergency buffer: Even a small savings cushion gives you more negotiating power when conditions become intolerable.

Copy‑Paste Checklist: Before You Accept a Job Offer

– Ask for the contract in writing and read notice periods carefully.
– Clarify how overtime is recorded and paid.
– Check whether all contributions (pension, health, unemployment) are fully paid on your real salary.
– Confirm regular working hours and weekend expectations.
– Compare the net salary with your monthly budget for housing, food, transport and savings.

What Employers Can Do Differently

Employers in Serbia face their own pressures—competition, tight margins, regulatory uncertainty. Still, there is room to build more sustainable business models that do not rely solely on long hours and low wages.

Focus on productivity, not just hours: Invest in training, better tools and process improvements that let employees achieve more in less time.
Transparent pay structures: Clear wage scales and performance criteria reduce mistrust and can motivate workers more effectively than unpaid overtime.
Flexible but fair scheduling: Rotating shifts, predictable rotas and real rest periods lower burnout and turnover.
Long‑term retention strategies: Reasonable pay progression, benefits and respect reduce the constant churn that erodes productivity.

Policy Levers: From Low‑Wage Model to Shared Prosperity

Lasting change requires policy choices. While national specifics vary, several levers are commonly debated in countries facing similar challenges.

Key Policy Directions

Strengthening labor inspection: Ensuring that existing laws on hours, safety and contributions are actually enforced.
Rebalancing taxes and contributions: Reducing the burden on low wages while securing stable funding for pensions and healthcare.
Supporting higher‑value sectors: Incentives for investments that create skilled, better‑paid jobs rather than just low‑cost assembly.
Backing social dialogue: Encouraging negotiations between employers, unions and the state to set realistic, fair standards.

These shifts take time and political will, but without them Serbia risks remaining stuck in a model where each pay rise feels hard‑won and fragile.

Workers in Serbia participating in a labor rights demonstration

Staying or Leaving: The Emigration Dilemma

One of the starkest outcomes of the long‑hours, low‑pay equilibrium is migration. Many younger and mid‑career professionals weigh the choice between enduring local conditions or seeking better pay and protections abroad.

Short‑term gains: Moving to an EU country can quickly multiply income for the same or even fewer working hours.
Long‑term losses for Serbia: Each departure means fewer skilled workers, less tax revenue and slower modernization.
Psychological impact: The constant idea of leaving can undermine commitment to local civic and political life.

Reducing the wage and security gap is essential not only for fairness today, but for ensuring that future generations see a viable future in Serbia itself.

Final Thoughts

Serbia’s “new economy” is marked by a stark contradiction: people give more of their time than many in the European Union, yet receive less in return. This is not simply a matter of individual effort or employer goodwill, but a product of deeper structural choices about how the country competes, how work is organized and how gains are shared.

Closing the gap will require action on several fronts at once—workers better informed and organized, employers focused on productivity rather than exhaustion, and policymakers committed to moving beyond a low‑wage model. The path is challenging, but the alternative is a future where long hours and low pay remain the norm, and too many people feel their only real option is a one‑way ticket out of the country.

Editorial note: This article offers general analysis based on widely discussed trends in Serbia’s labor market and wage levels. For original reporting and additional context, see the source at vreme.com.