Since the demise of Yugoslavia, the Republic of Serbia still faces great political and economic challenges even today. Despite steady economic growth, average monthly income is comparatively low and inflation is rapidly getting out of control. About a quarter of the population is unemployed. But: Serbia has potential.

Due to the international economic crisis, an increasing number people have slipped below the poverty line in Serbia as well. Particularly severely affected are older people, children, single parents, families with six or more members and those running farming enterprises. Under the Serbian poverty reduction strategy, the country is pursuing a policy of economic, social and political reform geared to rapid convergence with the European Union. Social inequality in the country is exacerbated by the enormous refugee burden. Besides poverty reduction and job creation, a major concern is alleviating social tensions and inequalities. This constitutes one of the core tasks of the government.

As EU convergence makes slow progress, Austrian Development Cooperation (ADC) contributes to safeguarding peace, stability and growth in the region through various projects and programmes. Especially in times of social and economic tension there is a particular need to support sustainable, balanced, economic development, European convergence as well as the modernisation of the society of Serbia.

Future prospects: education and economic development

Serbians are quite well educated. Industry, agriculture and forestry as well as the service sector also have considerable scope for development. This is why Austrian Development Cooperation supports the development of Serbia with programmes to promote business and employment. Its foremost aim is to reduce poverty in line with the Serbian strategy. Improving labour market administration and introducing quality standards will improve the climate for investment and thus facilitate regional development. New jobs and vocational education and training geared to the labour market will provide in particular young people future prospects in their home country. Projects in higher education and vocational training, but also specific training for working people and job-seekers, aim to raise the standard of qualifications in the population.

European convergence and integrated regional development

Austria also supports Serbia in EU convergence and in safeguarding stability and peace. After the disintegration of Yugoslavia and since the end of the Milosevic era, Serbia has had to cope with major political challenges. The secession of Kosovo has left a deep political rift in the country. The European convergence course adopted after regime change and the assassination of the Serbian Prime Minister Djindjic in 2003 is ongoing, but there has been a repeated resurgence of former authoritarian-nationalistic forces seeking to regain political power. Since 2000 no government has yet remained in office for its whole legislature.

To ensure the most effective development cooperation with Serbia, ADC aligns its programmes with the partner country and other donors, such as the European Union. Austria has been engaged in Serbia since 1999 and a coordination office was opened in Belgrade in 2002. Geographically, ADC concentrates mainly on the regions of Vojvodina and southern Serbia, with integrated regional development proving to be a very effective approach. ADC in Serbia is the lead donor in implementing the Paris Agenda, especially when it comes to the principles of ownership and alignment.