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Is Balkan Becoming A Europe's Top Outsourcing Destination?

Fri, 12/11/2015 - 11:38 By Sanja Stamenkovic, Jefferson Institute

The struggling economy of the Balkans is looking up, but far from the EU's standard. Salaries in some of the regions of the Balkans are more than 10 times lower than salaries in some of the EU countries. According to the national statistical offices of Serbia, Bulgaria and Macedonia, in 2013 the region of the capital of Bulgaria - Sofia had the highest average salaries in the region - nearly 750 $US. Average monthly salaries are highest in the regions of the capitals as well - Belgrade (635 $US) and Skopje (554 $US).  

Wage curve is a negative relationship between the unemployment rate and a wage. This means the higher the unemployment is, the lower the wages are. In other words, lack of jobs is causing low wages. Because of the such low average salaries in the Balkans, compared to the other European countries, the Balkan region became popular outsourcing destination. This trend went as far as Serbian government paying CNN to promote Serbian workers as "low-cost". 

The commercial outraged Serbian general public, but the fact is that Balkan's economy is highly dependant on foreign companies and investments. In 2012, the region of Sofia received around 9,000 euros worth of foreign investment per capita. It seems that regions with more foreign investments have lower unemployment rates and higher average salaries. After the painful and semi-successful transition, thousands of Balkan's workers lost their public-sector jobs. The only hope for them and young people deciding not to flee the country is a job in a foreign company. Bulgaria even got an award as for most attractive outsourcing destination in 2015. Many individuals and companies are working hard to attrackt foreign companies to the Balkans, while government talks, but does not act. 

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