This chapter presents key issues hampering social cohesion in the economies of the Western Balkans and puts forward policy recommendations to build more cohesive societies. Improved labour market outcomes and social protection are two complementary, mutually reinforcing ways of fostering social cohesion. Over the past decade, employment has grown in the region; however, unemployment and especially long-term unemployment remain high, and labour market participation is still low. Enhancing active labour market policies and supporting the integration of women and citizens from vulnerable groups are necessary steps to ensure all citizens can contribute to and benefit from social progress. While the Western Balkan economies have created social protection systems to provide necessary safety nets, a large share of citizens continue to face economic hardship and exclusion. More inclusive and fairer social protection systems and integrated social services, are needed to promote equal opportunities and fight exclusion and marginalisation.

Over recent decades, Albania has made remarkable progress in increasing the well-being of its citizens. With rising gross domestic product per capita and higher household consumption, the share of materially deprived households has been decreasing. In turn, extreme poverty is very low and life expectancy is increasing. To sustain the progress in building a socially cohesive society, this chapter puts forward priorities to foster social cohesion through labour market and social protection policies. Action is needed to create employment opportunities and conditions for Albanians from ethnic minorities and vulnerable groups, including citizens with disabilities, to join the labour force. Recently, Albania has put in place a comprehensive set of social protection programmes; however, unequal coverage and generosity leave many vulnerable citizens without sufficient social security. A shift towards community-integrated social services, managed at the local level, has been initiated through legislative reform. Providing those most in need with pathways to integrate into society and the labour market is a key priority for Albania. Aligning social protection and labour policies and programmes in design and operationally is an important step to respond to this challenge.

Over the past decades, Bosnia and Herzegovina has made remarkable progress in improving the well-being of its citizens. Employment rates have been rising and, thanks to fiscal surpluses, there is considerable fiscal space for financing social protection. To sustain the progress in building a socially cohesive society, this chapter puts forward key policy priorities to foster social cohesion through labour market and social protection. Ensuring women’s employability is of particular importance as it can unleash the full potential of the labour force. To this end, key priorities include improving the availability and quality of early childhood education and care, ensuring the flexibility of maternity leave and providing good quality elderly care. Low labour market participation among women and citizens from vulnerable groups, coupled with high long-term unemployment rates, also calls for well-targeted active labour market policies. While Bosnia and Herzegovina has in place a comprehensive set of social protection programmes, gaps in coverage and generosity need to be addressed to provide adequate social security to all. Building on recent policy efforts, further reductions of social security contributions in combination with in-work benefits would help reduce the tax burden for low-wage earners. To provide the most vulnerable with additional pathways to integrate into society, it would be important to improve the delivery of social services.

Since its independence, Kosovo has made remarkable progress in increasing the well-being of its citizens. Despite a narrow productive base, Kosovo had the highest economic growth in the region over the period 2015‑19. Kosovo has also made important steps towards institution building. As a result, living standards have improved. To continue building a socially cohesive society through labour market and social protection, this chapter puts forward key policy priorities for Kosovo. Kosovo should prioritise strengthening links between the skills formation system and labour market needs. To further increase labour market participation, especially among women and vulnerable groups, it is important to also address the existing weakness in maternity leave and provide options for paternity leave, as well as taking action against discrimination. Kosovo has a unique social protection system, with universal social pensions and last-resort income support compensating for missing social insurance mechanisms. While this has benefits in terms of coverage, the absence of financed employment-linked entitlements tends to limit worker protection and to generate adverse labour market incentives. Providing unemployment insurance, improving the functioning of the pensions system and ensuring that social assistance reaches those most in need, would improve access to adequate safety nets. In addition, Kosovo should also improve the delivery of social services.

Over the past decades, North Macedonia has achieved great progress in building a socially cohesive society. With income per capita almost doubling in real terms between 1995 and 2020, extreme poverty was reduced and living standards increased. In recent years, North Macedonia has undertaken important social protection reforms. To sustain this progress, this chapter provides key policy priorities to foster social cohesion through labour market and social protection policies. As creating more jobs is a top priority, growth-enhancing policies need to be complemented by solid active labour market policies that boost participation of many unemployed and vulnerable citizens. This requires solid capacities in the Employment Service Agency (ESA) and broad-based collaboration among the ESA, the private sector, education institutions, social care services and non-governmental organisations. While the social protection system in North Macedonia has benefited from various recent reforms, including the introduction of guaranteed minimum assistance in 2019, existing gaps in adequacy and coverage still need to be addressed. A shift towards community-integrated social services, provided locally, can create pathways by which people in need integrate into society and the labour market.

This chapter provides key policy priorities and suggestions for actions to foster social cohesion in Serbia. The labour market has recovered from the crises of the past decade, which presents opportunities for inclusive growth. Labour market and social protection policies, together, are key tools to address the remaining challenges of high long-term unemployment, low labour market participation among citizens from vulnerable groups and low coverage of social safety nets. Active labour market policies (ALMPs) should play a greater role in supporting youth and persons from vulnerable backgrounds. To that end, ALMPs require adequate funding, increased capacities in the National Employment Service, and greater co-ordination across public and private actors. Fostering integration of citizens from vulnerable groups is a priority objective for Serbia and can be pursued through well-targeted and accessible social assistance support and mechanisms to improve children’s education outcomes in a targeted manner. Ongoing efforts to sustain the integration and coherence of social services are an important step towards more effective provision of the services citizens need to thrive.