The brain drain of highly skilled individuals is a pressing issue in the Western Balkans region. To address this challenge, the Germany-supported Regional Challenge Fund (RCF) has been established to support businesses in these countries in their search for skilled employees, Frieder Woehrmann, Team Leader of the RCF Fund Management Unit said.

RCF, a financing facility designed to increase youth employability, pledged nearly €75mn to support various training projects in the WB6 – Albania, Bosnia & Herzegovina, Kosovo, North Macedonia, Montenegro and Serbia.

“Youth unemployment, combined with a lack of skilled labour among the enterprises, characterises the economic situation in the Western Balkans,” Woehrmann told bne IntelliNews.

Woehrmann emphasises the commitment of the fund to fostering collaboration between vocational education and training (VET) institutions and companies across all WB6 economies to bridge the gap between the skills possessed by the workforce and the demands of the labour market.

“Citizens across economies in the Western Balkans lack the skills needed to compete in an integrated global economy and are incapable of adapting quickly to shifting demands in the labour market. Western Balkan employers often complain about skills mismatches,” Woehrmann said.

Emigration

According to Woehrmann, one of the primary reasons behind the skills mismatch is emigration as skilled individuals from the Western Balkans often seek opportunities abroad, attracted by better working conditions, higher salaries, and more extensive career prospects.

This brain drain exacerbates the shortage of skilled labour within the region, leaving employers struggling to find qualified candidates for their businesses.

In the latest development, many people are leaving North Macedonia this summer to work in Croatia's hotels and restaurants in search of better pay. According to an employee of one of the largest telecommunications company in the country A1, part of Austria’s namesake group, five young people left the company only in one day to work in Croatia’s hospitality sector.

Media reports in the country suggest that some employees in the public administration are taking unpaid leave to work in Croatia during the summer, where the salaries, depending on the job, reach over €1,000, plus they get free meals and accommodation. Compared to an average net salary of just over €500, the move seems very attractive.

Slovenia has also witnessed a rise in the issuance of work permits for foreigners, mostly from the Balkan countries, particularly in sectors such as construction, manufacturing, transport, storage, catering and trade.

In the first half of the year more than 22,000 permits and consents for work of foreigners were issued. Kosovo (7,000), Bosnia & Herzegovina (over 6,000), and Serbia (1,700) lead in work permits.

Recently, Slovenia also held two career events in North Macedonia, which attracted 3,500 people. This response demonstrates the employment potential in North Macedonia, a country with approximately 140,000 unemployed individuals. In Bosnia, there are still over 350,000 individuals categorised as unemployed, while Serbia has around 400,000.

Outflow of young people

Woehrmann cited official data, which show that the jobless rate of young people, as well as the rate of young people who are neither in education nor employed, is significantly higher than the EU average.

“Although it is difficult to highlight individual sectors that require more attractiveness and focus, we could only say what demand we see, evidently the sectors such as mechanical engineering in Serbia, North Macedonia and Bosnia and Herzegovina; ICT in Albania and Kosovo; hospitality in Albania and Montenegro, as well as the health sector in Kosovo,” he said.

Woehrmann stated that developed countries faced with a chronic shortage not only in tourism but as well in construction and all industrial sectors, are recruiting people in neighbouring Balkan countries to fill the gap.

In support of the RCF, the German Federal Ministry for Economic Cooperation and Development has allocated a significant sum of €64.4mn. Additionally, the Swiss government, represented by the SDC Swiss Development Cooperation, has provided co-financing of CHF9.7mn (€10mn).

These funds have been entrusted to the KfW Development Bank and implemented through the Western Balkans 6 Chamber Investment Forum (WB6-CIF), a collaborative initiative involving chambers of commerce from the region.

The RCF, as Woehrmann stated, aims to make it easier for businesses in the WB6 to find skilled employees. It does this by connecting companies in need of skilled labour with vocational training institutes (VTIs) that use a cooperative training approach.

“This approach is more effective than traditional vocational education and training (VET). With the RCF, VTIs partner with companies to customise cooperative training programmes that teach students the skills companies need. The RCF will fund investments in the equipment and infrastructure that VTIs need to help their students build those skills,” Woehrmann explained.

Together with the Western Balkans 6 Chamber Investment Forum, which is a joint initiative of chambers of commerce and industry from the six Western Balkan countries, as well as the chambers of commerce in each economy, the RCF is promoting and bringing closer the benefits of the funding mechanisms.

Calls for expression of interest are published twice per year, on which consortia of VET institutes and businesses in need of skilled labour are welcome to apply for funds to purchase equipment or machinery, do construction or renovations, improve curricula and training materials, or train teachers or in-company trainers to strengthen the practical aspects of training courses.

The deadline of the RCF’s third call for expressions of interest, which was published simultaneously in the six Western Balkan economies, expired on July 7. The size of the grants ranges from €150,000 to €600,000.

Innovation, digitalisation, greening jobs

Innovation, digitalisation and greening jobs are important part of the training process.

According to Woehrmann, the innovation in VET should aim to equip young people with the necessary skills to navigate rapidly changing labour markets.

Additionally, it should empower the workforce with creativity and aptitude to address the increasing complexity of societal challenges, such as climate change, biodiversity preservation, clean energy, public health, digitaliaation, automation, artificial intelligence, robotics, and data analysis.

“Greening jobs and green TVET play a crucial role in fostering sustainable development. They empower individuals, organiaations, enterprises, and communities, promoting employment, decent work, and lifelong learning. This approach contributes to inclusive and sustainable economic growth, enhances competitiveness, fosters social equity, and ensures environmental sustainability,” he said.

“By aligning vocational education and training with the principles of sustainability, green TVET becomes a significant driver of positive change in societies”.

The first and the second round of applications attracted more than 300 wxpressions of interest from the six Western Balkan economies.

The selection process led to selecting 63 projects for financing, allocating approximately €27mn for the investments in equipment, infrastructure, and training at the vocational training providers and partnering enterprises.

 

(From left) Tatjana Shterjova Dushkovska, WB6-CIF, Frieder Woehrmann, Regional Challenge Fund, Besir Saliu, Technical School Gostivar, North Macedonia, at the RCF Award Ceremony in Skopje, May 2023.