In 2025, Montenegro recorded the highest labor productivity in the region, at $31.1 in international dollars per hour worked, followed by North Macedonia at $34, while Serbia stood at $29.8. Bosnia and Herzegovina recorded $26.3, while Albania ranked last at $18.7 per hour, a 4.1% decline compared with the previous year. The global average was $23.3 per hour.
The figures measure the economic value generated per hour worked rather than workers’ earnings. The ILO calculates labor productivity by comparing gross domestic product with the total number of hours worked by employed people, using purchasing-power-parity-adjusted international dollars to enable comparisons between countries.
Kosovo is not included in the ILO’s comparable dataset, although World Bank analyses indicate that its labor productivity declined by around 1.4% in 2023, following a 1.1% decline in 2022 and modest growth of 0.4% in 2021. Experts point to investment in technology, digitalization, education, professional skills, innovation and modern equipment as key factors that could improve productivity across the region. Better management, a stronger business environment and the movement of workers into higher-value-added sectors are also considered important.
The relatively low productivity levels highlight a broader challenge for Western Balkan economies: raising economic output without relying simply on longer working hours. For countries seeking stronger growth and higher wages, improving productivity will be essential to increasing the value generated by their workforces.
