Foreign Direct Investments (FDIs) are a significant source of employment in the Western Balkans, playing a vital role in skills development.

An analysis commissioned by the World Bank on labor market developments in the Western Balkans revealed that nearly two-thirds of the jobs created by foreign investors in the region are geared towards secondary education.

In Albania, it’s evident that the quality of jobs offered by foreign investors has witnessed a decline in the latter half of the past decade. Out of the total workforce employed by foreign companies, only 18% possessed higher education during 2016-2021, compared to 22% during 2010-2015.

Recent years have witnessed a rise in the share of employees with secondary education, while the category with lower education has seen a decline.

Within the region, Bosnia and Herzegovina and Kosovo have seen an improvement in the skills required for jobs offered by FDIs during the second half of the analyzed period (2016-2021), compared to the first half (2010-2015).

This is marked by an increase in the percentage of jobs with high skills and a decrease in the percentage of jobs with low skills. However, the opposite trend was observed in Albania and Montenegro, where a decline was recorded, with no significant changes noted in North Macedonia and Serbia.

In the Western Balkans, the majority of jobs created by foreign investments were not concentrated in the capital cities. Kosovo, with 41% of employment, had the highest percentage of FDI jobs in its capital, followed by North Macedonia with 39%, and Albania with 36%.

Foreign investments have been a cornerstone of the economic model for Western Balkan economies as they continue to transition from post-communist regimes.

They have played a pivotal role in the region, employing around 180,000 individuals over the past decade, constituting 19% of the total employment growth in the region during this period. For every 5 jobs created in the region over the past decade, one can be attributed to foreign investments.

The majority of FDI-related employment in the region was found in the manufacturing sector (53%), followed by construction (23%), and wholesale trade (12%).

It’s worth noting that the skills required for employment by FDIs were generally lower than the skills offered by the domestic market.