Policy area

Labour and employment

Sustainable development goals and international commitments

Decent work and economic growth is one of the sustainable development goals under the UN Agenda 2030. The SDG 8 promotes entrepreneurship and job generation along with the measures to eradicate forced labour, end modern slavery and human trafficking. It aspires to achieve full and productive employment of men and women, as well as decent work for all. The SDG 5 – Gender equality, SDG 4 – Quality education (including life-long learning) and SDG 10 – Reduced inequalities help achieve the same results.  SDG 8 covers the achievement of full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value (SDG 8.5) and substantial reduction of the proportion of youth not in employment, education or training (SDG 8.6).

The National Sustainable Development Strategy 2015-2030 nationalises sustainable development goals, including stimulating employability and social inclusion primarily through self-sustainable and balanced economic growth (goal 4.2.5). The NSDS recognises the need for establishing enabling social and socio-economic environment to prevent further negative demographic trends in the northern region (goal 4.2.8), which has a definite bearing on the labour supply and structure. Strengthening the business environment conducive to business growth and development, SMEs and investment (goal 4.4.7 Growth of Montenegrin economy competitiveness) aspires to boost job generation and employment. In addition, the issue of employment is also highlighted in the context of the need to foster employment of vulnerable groups, such as the Roma (, persons with disabilities (, as well as youth and the hard-to-employ.

Obligations in the EU accession process

An overview of obligations from negotiation chapters

Pertinent EU Acquis chapters for the labour policy are primarily Chapter 2 – Freedom of movement for workers and Chapter 19 – Employment and social policy. The employment and social policy Acquis sets the standards in the area of labour law, safety at work, equality and health. Particularly binding are the antidiscrimination rules on various grounds. EU employment and social inclusion policy is primarily supported through a specific financial instrument – the European Social Fund. Closing benchmarks for Chapter 19 include required amendments to the Labour Law and the Occupational Health and Safety Law, the non-discrimination legislation, and building administrative capacities (particularly through labour inspection, equality bodies and the Ombudsperson) to ensure their full implementation.

Freedom of movement for workers, one of the fundamental EU principles and one of the four freedoms within the EU internal market, is covered by Chapter 2. It enables EU citizens to work in other Member States and enjoy the same labour conditions, tax and social facilities as domestic workers. EURES, the European cooperation network of employment services, was launched to enable matching skills and vacant jobs in the EU labour market. Montenegro is getting ready to introduce the system that will be available to it upon accession. Montenegro received one closing benchmark for Chapter 2, namely, before accession it is to show it has adequate structures and capacities in place for proper implementation of the acquis on the freedom of movement for workers.

Starting from the strategic commitment to the European perspective of the Western Balkans, expressed at the Thessaloniki Summit in 2003, and then confirmed in the Enlargement Strategy in February 2018, the European Union proposed, two years later, the new accession methodology for the Western Balkans (Enhancing the accession process – A credible EU perspective for the Western Balkans), aimed at more dynamic and credible pre-accession negotiations. One of the key novelties introduced by the new methodology was introduction of the so-called thematic clusters, grouping several negotiating chapters, introduced in order to shift the political focus of the candidate countries to the key sectors, but also introduce sanctions in case of lack of implementation of the necessary reforms and fulfillment of pre-accession obligations. Negotiations on each of the six clusters will be opened as a whole, once the benchmarks have been met. Cluster 3 – Competitiveness and Inclusive Growth, according to the new EU methodology for the Western Balkans, includes negotiating chapters: 10, 16, 17, 19, 20, 25, 26 and 29.

The latest European Commission Montenegro 2021 Report  notes some level of preparation on social policy and employment, whereas the noticeable progress has been made in employment and social inclusion. More has to be done in order to secure alignment with the EU Acquis. The main topic remains critical situation in the labor market. In the coming year, Montenegro should implement more effectively quality employment measures aimed at young people and women, long term unemployed and marginalized groups, strengthen the capacities of the institutions implementing social and labor reform, as well as stronger cooperation with social partners and NGOs.

An outline of the EU strategic framework

Inclusive growth fostering high employment economy delivering social and territorial cohesion is one of the priorities set by the Europe 2020 strategy. To that effect, the EC proposed An agenda of new skills and jobs. It is aimed to modernise labour markets and empower people by developing their set of skills throughout the lifecycle with a view to increase labour participation and better match labour supply and demand, including through labour mobility. By 2020 the EC intends to increase the employment rate of the population aged 20-64 to at least 75%, including through the greater involvement of women, older workers and the better integration of migrants in the work force.

The European Employment Strategy dates back to 1997, and its main aim is the creation of more and better jobs throughout the EU. It now constitutes part of the Europe 2020 growth strategy and it is implemented through the European semester.

Political guidelines for the new EC refer to the need to ensure that every worker in the Union has a fair minimum wage and to support those who lose their jobs because of external events that affect the economy. The guidelines also refer to better implementation of the Work-Life Balance Directive (that should return more women to the labour market), and the need to turn the Youth Guarantee into a permanent instrument to fight youth unemployment.

Labour policy in Montenegro’s strategic framework

Montenegro is dedicated to improving economic development by reforming the labor market in order to provide a favorable business environment that attracts investors, creates opportunities for quality jobs and increases employment. Reducing unemployment is the first priority, as well as the adoption of a new National Strategy for Employment and Human Resource Development. It will be achieved by improving the business environment and increasing competitiveness and economic growth as the main generator of employment growth. Evident increase in the employment rate is noticeable from 2014 to 2019 (from 50 to 56%) and a decrease in the unemployment rate (from 18 to 15%). However, Montenegrin labor market is still characterized by a low activity rate (68%, compared to the EU average of 74% in 2018); unfavorable age structure of employees; significant regional differences; employment of foreigners during the tourist season. The long-term unemployment rate (11.5% in 2018) is extremely high compared to the EU (2.9%).

Montenegro Development Directions 2018-2021 as a key reform measure envisages strengthening active labor market policies in order to increase their effectiveness, focus, scope, areas covered and individual approach in the interest of increasing overall employment, especially youth, persons with disabilities and other vulnerable groups. Improvement in the position of women in the labor market is provided by means of special support measures for the development of entrepreneurship and self-employment at the national and local level, which is also recognized as one of the priorities of the Government in the area of labor and social welfare, further elaborated in the Action Plan for Achieving Gender Equality and Women Entrepreneurship Development Strategy. It is important to mention that sectoral strategic documents aimed at improving the quality of life of certain population groups (e.g. Roma population, LGBTI, persons with disabilities, minorities, youth) include the issue of employment within the specific objectives.

Montenegro Economic Reform Programme 2021-2023 notes the need to regulate further labour market is conditioned additionally by COVID-19 outbreak. The necessary health measures that were, and still are, applied have impacted functioning on the labour market. Many enterprises, particularly SMEs have been affected by this crisis despite measures taken by the Government of Montenegro to resolve the newly emerged problems. This is, amongst other things, also evidenced by labour market indicators which, according to the Labour Market Survey for the 3rd quarter 2020, recorded a decline compared to the 1st and 2nd quarters of this year, and decline compared to the 3rd quarter 2019. Activity rate (15+) is 53.1 percent, employment rate is 43 percent and unemployment rate reached 19 percent.

Legal framework for the labour market, particularly in extraordinary conditions resulting mainly from the corona-virus, is not sufficiently regulated, nor adjusted to the newly emerged circumstances. The new Labour Law, which entered into force on 7 January 2020, will further increase flexibility in the labour market through various forms of employment (employment contracts), including employment contracts through temporary employment agencies, as well as through easier dismissal of workers and transformation of employment contracts from fixed-term to open-ended, from full-time to part-time etc. More comprehensive regulation of labour relations from the perspective of protection of workers through the employment contract, which will ensure that workers are entitled to annual leave, wage, working hours etc, will contribute to creating conditions for regular and dignified work. The ministry competent for labour affairs cooperates with social partners, Union of Employers of Montenegro, Trade Union Confederation of Montenegro and Union of Free Trade Unions of Montenegro, as appropriate representatives of the employers and workers, in adopting the new General Collective Agreement which will, to the extent legally possible, regulate matters related to extraordinary circumstances.

In addition, active employment policy measures are continuously implemented in order to support and maintain current employment trend, as well as support the social inclusion of particularly vulnerable categories of unemployed persons in the labor market. Composition of participants in the active employment policy programmes implemented in 2020 is as follows: share of female participants was 57.18 percent, youth 49.39 percent, while the share of long-term unemployed was 1.86 percent. Participants of Roma and Egyptian population had a share of 2 percent, while the share of persons with disabilities was 6.79 percent.[1] Additional support to bringing the unemployed to the labour market is provided through financing under the Employment, Education and Social Policies Sectoral Operational Programme – SOPEES 2015-2017, IPA II, in which 8.7 million euro were allocated for various activities with the aim of increasing employability and creating new jobs.

Within the second and third packages of the measures for support to the economy under the Program for support to the economy and workers, a measure for new employment was defined for business organisations which did not reduce the number of workers compared to February 2020, and the aim was to mitigate negative effects of the coronavirus pandemic. The measure was applied in the period from 01 April to 31 December 2020. The measure set out that a business entity is entitled to a subsidy for the newly employed for a six-month period, provided that the business entity commits to register these workers as employees for at least 12 months after expiry of this measure. Based on this measure, 2.335 workers were employed and subsidies amounting to €2,076,207.59 were paid. One of the adopted Measures to Support the Economy and Citizens for the 1st Quarter is ”support to the new employment” under which the employer who employs until 31 December 2021 under an open-ended contract the person domiciled in Montenegro, who is also registered with the Employment Office of Montenegro longer than three months, is exempt from the payment of personal income taxe and contributions for pension and disability insurance charged to the employee and charged to the employer, pn the account of wage paid for a period of three years from the day on which the employment starts. The only requirement to be met by the employer is that this employment increases a number of employees of that employer relative to 31 December 2020. Employer will be exempt from the obligation to pay for the tax and contributions on wages mentioned above, up to the maximum amount of the average gross wage in Montenegro in the previous before, in the following manner: 90% of taxes and contributions – for wages paid in 2021; 60% of taxes and contributions – for wages paid in 2022; 30% of taxes and contributions – for wages paid in 2023. Support was continued by adoption of Measures to Support the Economy for the 2nd Quarter of 2021 on April 29, 2021, complementary to the measures from the 1st Quarter, extending deadline for implementation of the measures until December 31, 2021.

Occupational health and adequate working conditions contribute to the increased productivity rate and economic development, where special attention should be paid to certain risk sectors (construction, transport, agriculture), but also to certain categories of workers who are more exposed to risks (pregnant women, youth, persons with disabilities), in order to reduce the number of injuries at work, the number of occupational diseases and work-related diseases.

This is a highly cross-sectoral policy, closely linked to agricultural policy and rural development, which tends to increase the number of young people employed in rural areas, which enables greater connectivity between agriculture, trade and, finally, tourism as a strategic development branch. Balanced economic growth and increased employment are influenced by the improvement of infrastructure and investments at the local level.


[1] Economic Reforms Program 2021-2023, pp.160

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