BALKAN

BAROMETER
2020

BUSINESS OPINION
Analytical report

This project is funded

by the European Union
Title: BALKAN BAROMETER 2020
Business Opinion
Analytical report

Publisher: Regional Cooperation Council

Trg Bosne i Hercegovine 1/V, 71000 Sarajevo
Bosnia and Herzegovina
Tel: +387 33 561 700; Fax: +387 33 561 701
E-mail: rcc@rcc.int
Website: www.rcc.int

Authors: Group of authors - OUTBOX CONSULTING d.o.o.

Editor: Maja Pinjo Talevska, Senior Policy Analyst, RCC

Design & Layout: Šejla Dizdarević

April 2020

©RCC2020 All rights reserved. This document is prepared and developed in cooperation between
Regional Cooperation Council and the Outbox consulting.
This survey has been funded by the Regional Cooperation Council.
The responsibility for the content, the views, interpretations and conditions expressed herein
rests solely with the authors and can in no way be taken to refect the views of the Outbox
consulting, the views of the RCC or of its participants, partners, donors or of the European
Union.
CONTENTS
Foreword.......................................................................................................................................................................... 11
Introduction..................................................................................................................................................................... 12
Main Findings.................................................................................................................................................................. 13
Regional Overview.......................................................................................................................................................... 15
Balkan Business Sentiment Index............................................................................................................................... 18
Perceptions of the Business Environment and Economic Trends........................................................................ 21
Business Trends in the Western Balkans................................................................................................................... 28
Business Environment in the Western Balkans........................................................................................................ 33
Legal and Regulatory Framework............................................................................................................................... 53
Accessibility of loans..................................................................................................................................................... 78
Corruption........................................................................................................................................................................ 83
Trade and Investment.................................................................................................................................................... 92
Innovation and Technology........................................................................................................................................111
Skills Needs...................................................................................................................................................................122
Employment practices.................................................................................................................................................131
Focus on Large Companies.......................................................................................................................................141
Focus on Exporters......................................................................................................................................................153
Conclusions and Recommendations.......................................................................................................................163
Note on Methodology..................................................................................................................................................164

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 BALKAN BAROMETER 2020
TABLE OF FIGURES
Figure 1: Real GDP Growth in the Western Balkans
2008-2021.......... ............................................................15
Figure 2: Unemployment rates in the Western Bal-
kans, 2009 - 2019......................................................... 16
Figure 3: Balkan Business Sentiment Index –
BBSI.......................................................................... 18
Figure 4: Balkan Business Sentiment Index
(BBSI).............................................................................. 19
Figure 5: Balkan Business Sentiment Index (BBSI) –
Present Situation Index............................................... 19
Figure 6: Balkan Business Sentiment Index (BBSI) –
Expectation Index......................................................... 20
Figure 7: How has the general economic situation
in your economy changed over the past 12 months?
Has it deteriorated, remained unchanged or im-
proved?........................................................................... 21
Figure 8: How do you expect the general economic
situation in your place of living to develop over the
next 12 months? Will it mostly deteriorate, remain
unchanged or improve?............................................... 22
Figure 9: How do you expect the number of people
employed in your company to change over the next
12 months?.................................................................... 23
Figure 10: Do you believe that your economy is a
good place to invest?................................................... 24
Figure 11: How has your business situation devel-
oped over the past 12 months? Has it deteriorated,
remained unchanged or improved?.......................... 25
Figure 12: How important is the quality of regional
cooperation in SEE to your business? Please use the
scale from 1 to 4, where 1 means - not important at
all..................................................................................... 26
Figure 13: Do you think that your economy’s EU
membership would be a good thing, a bad thing, or
neither good nor bad for your company?................ 27
Figure 14: How has the demand for your compa-
ny’s products/services changed over the past 12
months? Has it deteriorated, remained unchanged
or improved?.................................................................. 28
Figure 15: How do you expect the demand for your
company’s products/services to change over the
next 12 months? Will it decline, remain mostly un-
changed or increase?................................................... 29
Figure 16: How has your company’s total employ-
ment changed over the past 12 months?................ 30
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BUSINESS OPINION | Analytical report
Figure 17: Could you please tell me what percentage
of your company’s total investment in 2019 went to
each of the following?................................................. 30
Figure 18: How have your labour and other
costs (e.g. energy, etc.) changed over the past 12
months?......................................................................... 31
Figure 19: Has your business taken any steps to
reduce the environmental impact it makes, such as
reducing energy consumption, waste reduction or
switching to recycled/sustainable materials etc.?..32
Figure 20: Can you tell me how problematic are
these different factors for the operation and growth
of your business? Can you please rate each?......... 33
Figure 21: How do you perceive the following fac-
tors related to transparency and predictability of
government conduct, based on your experience or
of other investors that you have heard of?.............. 35
Figure 22: How do you perceive the following fac-
tors related to transparency and predictability of
government conduct, based on your experience or
of other investors that you have heard of?.............. 36
Figure 23: In the process of obtaining licences for
your business, how much of an obstacle were the
following factors?......................................................... 39
Figure 24: In the process of obtaining licences for
your business, how much of an obstacle were the
following factors?......................................................... 39
Figure 25: How have the following characteristics
of business environment in your economy changed
over the last 12 months? ........................................... 42
Figure 26: How have the following characteristics of
the business environment in your economy changed
over the last 12 months?............................................ 43
Figure 27: For your business purposes, how would
you rate the combination of availability, quality and
affordability of road, railroad, waterway and air trans-
port in your economy?................................................. 48
Figure 28: For your business purposes, how would
you rate the combination of availability, quality and
affordability of electricity, gas and water supply in
your economy?.............................................................. 49
Figure 29: In your opinion, which infrastructure up-
grades would have the highest positive impact on
your business?.............................................................. 50
Figure 30: How did the Regional Roaming Agree-
ment impact your business operations? It had...... 50
Figure 31: How would the complete elimination of
roaming charges impact your business operations?
It would have................................................................. 51
Figure 32: Have any of your company’s owners or
senior managers spent time living and working
abroad as members of the diaspora?...................... 51
Figure 33: How much do you feel the Government
of your economy takes into account the concerns of
businesses?................................................................... 53
Figure 34: What percentage of total annual sales
would you estimate a typical firm in your area of
business reports for tax purposes?.......................... 54
Figure 35: What percentage of the actual wage bill
would you estimate a typical firm in your area of
business reports for tax purposes?.......................... 55
Figure 36: What percentage of the total number of
employees would you estimate a typical firm in your
area of business registers with the relevant authori-
ties? (New Question).................................................... 56
Figure 37: To what extent do you agree with the fol-
lowing statement - Laws and regulations affecting
my company are clearly written, not contradictory
and do not change too frequently?........................... 57
Figure 38: To what extent do you agree with the
following statement - Information on the laws and
regulations affecting my company is easy to obtain
from the authorities..................................................... 57
Figure 39: To what extent do you agree with the fol-
lowing statement – The state administration’s inter-
pretations of the laws and regulations affecting my
company are consistent and predictable?.............. 58
Figure 40: To what extent do you agree with the fol-
lowing statement - Requests for information held
by a government agency are granted in timely man-
ner?.................................................................................. 59
Figure 41: To what extent do you agree with the fol-
lowing statement - The information provided is perti-
nent and complete?..................................................... 59
Figure 42: To what extent do you agree with the
following statement - Requests for information are
granted at a reasonable cost?................................... 60
Figure 43: In the past three years, has your company
decided not to take part in a public tender or a public
procurement procedure even though you could have
offered the goods or services solicited?.................. 60
Figure 44: If yes, was it for any of the following rea-
sons? - Multiple answers allowed............................ 61
Figure 45: What is the share of the public procure-
ment market in your company’s last year overall
turnover?........................................................................ 62
Figure 46: Have you been contacted for any reason
by some public procuring entities over the previous
3 years?.......................................................................... 63
Figure 47: Over the past three years, how often have
public procuring entities been in contact to consult
you on the following? .................................................. 63
Figure 48: Over the past three years, how often have
public procuring entities been in contact to consult
you on the following?................................................... 64
Figure 49: Have you used guidelines or manuals pro-
duced by the national procurement authority in the
past three years?.......................................................... 66
Figure 50: In general, how useful were the guidelines
and manuals you used for solving your practical
problems?...................................................................... 66
Figure 51: When participating in public procure-
ments, have you used the standard forms or models
provided by the national procurement authority in
the past three years?................................................... 67
Figure 52: How would you rate the usefulness of the
standard forms or models?........................................ 67
Figure 53: Have you or somebody else from your
company attended any training on public procure-
ment in the past three years?..................................... 68
Figure 54: How would you rate the usefulness of the
training in general?....................................................... 69
Figure 55: Have you contacted the national procure-
ment authority for advice or other support in the
past three years?.......................................................... 69
Figure 56: Were the answers provided generally
helpful?........................................................................... 70
Figure 57: Could you please tell me how satisfied
you are with each of the following in your place of
living - Public services for businesses?.................... 70
Figure 58: Could you please tell me how satisfied
you are with each of the following in your place of liv-
ing - Digital services currently provided by the public
administration for businesses?................................. 71
Figure 59: To what extent are you satisfied with how
the government consults and involves the private
sector when developing new laws and regulations
relevant for doing business?...................................... 71
Figure 60: Which regulations do you consider to be
an obstacle to the success of a business?............. 72
Figure 61: Has your company had any cases in arbi-
tration courts in the last 36 months?....................... 74
Figure 62: How many cases in civil or commercial
arbitration courts have involved your company either
as a plaintiff or defendant in the last 36 months?75
Figure 63: Do you agree with the following state-
ment about state aid - Citizens and companies have
full access to information related to state aid poli-
cies and grants awarded to companies by the public
authorities? (New Question)....................................... 75
Figure 64: Do you agree with the following state-
ment about state aid - Sufficient information on the
state aid given to companies by the public authori-
ties is already publicly available? (New Question). 76
Figure 65: Do you agree with the following state-
ment about state aid - Information about state aid
received by companies should remain confidential
between public authorities and companies? (New
Question) ....................................................................... 77
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 BALKAN BAROMETER 2020
Figure 66: What proportion of your company’s work-
ing capital and new fixed investment has been fi-
nanced from each of the following sources, over the
past 12 months?........................................................... 78
Figure 67: Which of the following sources of finance
has your company used over the past five years?.79
Figure 68: Has your company applied for a loan
from a bank in the past 12 months?......................... 80
Figure 69: How many days did it take to agree the
loan with the bank from the date of application?... 81
Figure 70: You said that you company’s loan appli-
cation was rejected, what was the main reason for
this?................................................................................. 82
Figure 71: Thinking about officials, to what extent
would you agree with the following statements? It
is common for companies in my line of business to
have to pay some irregular “additional payments/
gifts” to “get things done”............................................ 83
Figure 72: Thinking about officials, to what extent
would you agree with the following statements?
Companies in my line of business usually know in
advance how much this ‘additional payment/gifts’
will cost........................................................................... 84
Figure 73: Thinking now of unofficial payments/gifts
that companies like yours would make in a given
year, could you please tell me how often they would
make payments/gifts for the following purposes?.84
Figure 74: Thinking now of unofficial payments/gifts
that companies like yours would make in a given
year, could you please tell me how often they would
make payments/gifts for the following purposes?
(results by economies)................................................ 85
Figure 75: Please estimate what is the approximate
amount (in EUR) of unofficial payments/gifts that
companies like yours would make in a given year for
the following purpose. ................................................ 90
Figure 76: In different societies, there are different
views on the most effective ways to stop wrongdo-
ing. Which one of these do you think is the most ef-
fective way in your economy society?...................... 91
Figure 77: To what extent do you believe the digital-
isation of public services would have a positive im-
pact in preventing corruptive practices?.................. 91
Figure 78: Has your company invested abroad, or
plans to do so in the next 12 months?..................... 92
Figure 79: Where did you invest or plan to do so?.93
Figure 80: Which of the following reasons best de-
scribes your company’s motivation to invest abroad?
Please rank your answers with 1 being most import-
ant and 5 being least important................................ 94
Figure 81: Which of the following reasons best de-
scribes your company’s motivation to invest abroad?
(Results by economies)............................................... 95
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BUSINESS OPINION | Analytical report
Figure 82: In the process of choosing where to in-
vest abroad, how important were the following fac-
tors?................................................................................ 97
Figure 83: Has your company exported goods or
services over the past 12 months?........................... 97
Figure 84: What percentage of your company’s sales
are made domestically, exported to the Western Bal-
kan................................................................................... 98
Figure 85: Why doesn’t your company export?...... 98
Figure 86: Has your company imported goods or
services over the past 12 months?........................... 99
Figure 87: What percentage of your company’s in-
puts and supplies are…?............................................100
Figure 88: What percentage of your domestic sales
are made to?................................................................100
Figure 89: If you have imported goods in the past 12
months, what is the average number of days to clear
imports through customs?.......................................101
Figure 90: If you have exported goods in the past 12
months, what is the average number of days to clear
exports through customs?.......................................101
Figure 91: If your company exports to the Western
Balkans region, what are the main obstacles to your
exports?........................................................................102
Figure 92: To what extent do you agree that your
company is threatened by global competition?...104
Figure 93: To what t do you agree that your com-
pany is threatened by competition from the Western
Balkans region?...........................................................104
Figure 94: To what extent do you agree with the fol-
lowing statements - My company’s products, goods
and services can compete well with products, goods
and services from Western Balkans?.....................105
Figure 95: To what extent do you agree with the fol-
lowing statements - My company’s products, goods
and services can compete well with products, goods
and services from EU countries?............................105
Figure 96: To what extent do you agree with the
statement - My company has benefited from the re-
gional free trade agreement (CEFTA 2006)...........106
Figure 97: If your company is an exporter, can you
tell us whether it is easier to export to the CEFTA re-
gion, or to the EU?......................................................106
Figure 98: In your opinion, when procuring products
and services, should the governments in the region
give priority to local suppliers or should they be treat-
ed the same as all other suppliers (provided price
and quality is equal)?.................................................107
Figure 99: In your opinion, when procuring products
and services, should the governments in the region
give preferential treatment to suppliers which are so-
cial businesses, or should they be treated the same
as all other suppliers (provided price and quality is
equal)?..........................................................................108
Figure 100: According to your opinion, which market
in the Western Balkans region is the most open one?
Please give us your opinion no matter whether you/
your company had direct experience with it (1 - most
open, 6 - least open)...................................................109
Figure 101: Does your company use Internet
for…?.........................................................................111
Figure 102: What percentage of your total sales is
currently generated through online sales?............112
Figure 103: In the last six months, have you expe-
rienced any of the following Internet security prob-
lems?.............................................................................113
Figure 104: Are you satisfied with your Internet con-
nection?........................................................................114
Figure 105: Which feature is the most important as-
pect for you regarding your Internet access?.......114
Figure 106: In the past 3 years, did you cooperate
with any of the universities on research and develop-
ment (R&D) or technology development projects to
help develop new products or services?................115
Figure 107: Have you introduced new or significant-
ly improved products and/or services in the past 12
months?.......................................................................115
Figure 108: Who developed these product innova-
tions?.............................................................................116
Figure 109: Were any of your product innovations
(goods or services)...?................................................116
Figure 110: To the best of your knowledge, were any
of your product innovations during the three years
2017 to 2019...?..........................................................117
Figure 111: Have you introduced new or significant-
ly improved production and/or service delivery pro-
cesses in the last three years (2017-19)?..............118
Figure 112: Who developed these process innova-
tions?.............................................................................118
Figure 113: Were any of your process innovations
introduced during the three years 2017 to 2019 new
to your market?...........................................................119
Figure 114: During the past three years (2017 to
2019), did your enterprise receive any public and/
or donor’s financial support for innovation activities
from the following levels of government? Include fi-
nancial support via tax credits or deductions, grants,
subsidised loans, and loan guarantees. Exclude R&D
and other innovation activities conducted entirely for
the public sector under contract.............................119
Figure 115: What percentage of your company’s
workforce has the following education levels?.....122
Figure 116: Would you agree that the skills taught
in the education system of your economy meet the
needs of your company?...........................................123
Figure 117: How likely would you hire young person
whose educational profile completely meets the
needs of your business, but without work experi-
ence?.............................................................................124
Figure 118: Did you already have, or plan to intro-
duce in your company, an internship or apprentice-
ship programme?.......................................................125
Figure 119: How important are digital skills for your
company?.....................................................................125
Figure 120: Do you take concrete measures to im-
prove the digital skills of your employees?............126
Figure 121: Did you have vacancies over the past 12
months that have proved hard to fill?.....................127
Figure 122: Why do you think this is the case?....127
Figure 123: Over the past 12 months, has your busi-
ness funded or arranged any training and develop-
ment for staff in the organisation, including any in-
formal on-the-job training, except training required
by the law?...................................................................128
Figure 124: Thinking about skills requirements, does
your company regularly review the skill and training
needs of individual employees?...............................128
Figure 125: How would you assess the readiness
of employees in your company to acquire additional
qualifications in order to advance and get promot-
ed?.................................................................................129
Figure 126: In your opinion, what are the most effec-
tive ways to increase the number of women in the
labour market?............................................................130
Figure 127: How often do you use the following
when hiring new employees?...................................131
Figure 128: How often do you use the following
when hiring new employees? (By economies).....132
Figure 129: TIf you could change the number of
full-time workers your company currently employs
without any restrictions, what would be your optimal
level of employment as a percent of your existing
workforce? Would you decrease, increase or retain
the same level of employees?..................................134
Figure 130: Out of the total number, how many of
your employees are men and how many women?.134
7
 BALKAN BAROMETER 2020
Figure 131: How likely would you hire a Roma per-
son whose educational profile and experience com-
pletely meet the needs of your business?.............135
Figure 132: In your opinion, do companies like yours
have a gender preference in terms of hiring?.......135
Figure 133: Do you have somebody from the below
mentioned vulnerable groups working in your com-
pany?.............................................................................136
Figure 134: How likely would you employ workers
from abroad in your company?................................137
Figure 135: How likely would you employ workers
from the Western Balkans region in your compa-
ny?...............................................................................138
Figure 136: You said that you would employ workers
from the Western Balkans region in your company,
from which economy/economies exactly?...........138
Figure 137: Do you think that employing Roma per-
sons would affect company sales or the working en-
vironment in a positive or a negative way?............139
Figure 138: Have you heard of the Regional Cooper-
ation Council?..............................................................140
Figure 139: How has the general economic situation
in [ECONOMY] changed over the past 12 months?
Has it deteriorated, remained unchanged or im-
proved?.........................................................................141
Figure 140: How has your business situation devel-
oped over the past 12 months? Has it deteriorated,
remained unchanged or improved?........................142
Figure 141: How do you expect the general eco-
nomic situation in [ECONOMY] to develop over the
next 12 months? Will it mostly deteriorate, remain
unchanged or improve?.............................................142
Figure 142: How do you expect the number of peo-
ple employed in your company to change over the
next 12 months?.........................................................143
Figure 143: (left) How has the demand for your com-
pany’s products/services changed over the past 12
months? Has it deteriorated, remained unchanged
or improved?................................................................143
Figure 144: Can you tell how problematic are these
different factors for the operation and growth of your
business? Can you please rate each?....................144
Figure 145: What proportion of your firm’s working
capital and new fixed investment has been financed
from each of the following sources, over the past 12
months?.......................................................................145
Figure 146: What percentage of your company’s
sales are made domestically, exported to the SEE
region, to the EU or to the third countries?............146
8
BUSINESS OPINION | Analytical report
Figure 147: (left)To what extent do you agree
that your company is threatened by glob-
al competition? (right) To what extent do you
agree that your company is threatened by com-
petition from the Western Balkans region?
147
Figure 148: To what extent do you agree with the fol-
lowing statements - My company’s products, goods
and services can compete well with products, goods
and services from the Western Balkans? .............147
Figure 149: To what extent do you agree with the fol-
lowing statements - My company’s products, goods
and services can compete well with products, goods
and services from other EU countries?..................148
Figure 150: To what extent do you agree with the
following statements - “My company has benefit-
ed from the regional free trade agreement (CEFTA
2006)”?..........................................................................148
Figure 151: Does your company use the Internet
for…?..............................................................................149
Figure 152: Have you introduced new or significant-
ly improved products and/or services in the past 12
months?.......................................................................149
Figure 153: How often do you use the following
when hiring new employees? Please mark each of
the following methods with 1 often, 2 sometimes or
3 never..........................................................................150
Figure 154: If you could change the number of full-
time workers your company currently employs with-
out any restrictions, what would be your optimal
level of employment as a percent of your existing
workforce? Would you decrease, increase or retain
the same level of employees?..................................151
Figure 155: Over the past 12 months, has your
business funded or arranged any training and devel-
opment for staff in the organisation, including any
informal on-the-job training, except training required
by the law?...................................................................151
Figure 156: How would you assess the readiness
of employees in your company to acquire additional
qualifications in order to advance and get promot-
ed?.................................................................................152
Figure 157: [Left] How has the general economic
situation in [ECONOMY] changed over the past 12
months? Has it deteriorated, remained unchanged
or improved? [Right] How do you expect the general
economic situation in [ECONOMY] to develop over
the next 12 months? Will it mostly deteriorate, re-
main unchanged or improve?..................................153
Figure 158: How has your business situation devel-
oped over the past 12 months? Has it deteriorated,
remained unchanged or improved?........................154
Figure 159: [Left] How has the demand for your com- Figure 175: Sample structure by education.........169
pany’s products/services changed over the past 12
Figure 176: Sample structure by marital status..169
months? Has it deteriorated, remained unchanged
or improved?................................................................154 Figure 177: Sample structure by social status
(self-estimation)..........................................................169
Figure 160: How has your company’s total employ-
ment changed over the past 12 months?..............155
Figure 161: How do you expect the number of peo-
ple employed in your company to change over the
next 12 months?.........................................................155
Figure 162: [Left] For your business purposes, how
would you rate the combination of availability, qual-
ity and affordability of road, railroad, waterway and
air transport in [ECONOMY]?....................................156
Figure 163: In the past three years, has your com-
pany decided not to take part in a public tender or
a public procurement procedure even though you
could have offered the goods or services solicit-
ed?............................................................................157
Figure 164: [Thinking now of unofficial payments/
gifts that companies like yours would make in a giv-
en year, could you please tell me how often would
they make payments/gifts for the following purpos-
es?.................................................................................158
Figure 165: In different societies, there are differ-
ent views on the most effective way to get action to
stop serious wrongdoing. Which one of these do you
think is the most effective way in your society?...159
Figure 166: What percentage of your company’s
sales are made domestically, exported to the West-
ern Balkans, to the EU or to the third countries?..159
Figure 167: Does your company use the Internet
for…?..............................................................................160
Figure 168: Have you introduced new or significant-
ly improved products and/or services in the past 12
months?.......................................................................161
Figure 169: How often do you use the following
when hiring new employees? Please mark each of
the following methods with 1 often, 2 sometimes or
3 never..........................................................................161
Figure 170: (left) How likely would you employ work-
ers from abroad in your company?.........................162
Figure 171: Over the past 12 months, has your busi-
ness funded or arranged any training and develop-
ment for staff in the organisation, including any in-
formal on-the-job training, except training required
by the law?...................................................................162
Figure 172: In your opinion, what are the most effec-
tive ways to increase the number of women in the
labour market?............................................................163
Figure 173: Sample structure by gender...............168
Figure 174: Sample structure by age.....................168

9
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

LIST OF TABLES
Table 1: Can you tell me how problematic are these different factors for the operation and growth of your
business? Can you please rate each?........................................................................................................................ 34
Table 2: Which regulations do you consider to be an obstacle to the success of a business? (N=1030,
only respondents who have obstacles)..................................................................................................................... 73
Table 3: If your company exports to the Western Balkans, what are the main obstacles to your exports?.103
Table 4: Sample structure by size of settlement...................................................................................................167

10
FOREWORD
Before you lies the 2020 edition of the Balkan Ba- able and responsible politics, better governance, and
rometer, an annual survey of Western Balkans citi- stronger rule of law are foundational principles that
zen and business perceptions produced by the Re- the citizens and businesses had come to expect
gional Cooperation Council. For the sixth time, we from the region’s governments.
have attempted to present and analyse the attitudes
Employment and education are areas whose impor-
of thousands of region’s citizens and businesses
tance will grow over the next period. The success
across a wide array of socio-economic topics im-
in finding gainful employment is currently viewed
pacting everyday lives.
by citizens as a result of personal contacts rather
However, there’s a stark difference between this than merit. With expectations of higher unemploy-
year’s Barometer edition and all those that preceded ment, confidence in the job market needs to be re-
it. While the results that we present here - gathered built in order to rehire employees that have lost jobs
over late 2019 and early 2020 -are ones of continued, during the COVID-19 outbreak, as well as to mobilise
if steady, progress, the time of its release coincides the large but dormant contingent of prospective job
with the biggest public health and economic crisis seekers. Fewer than two-thirds of the region’s gradu-
that the region, and indeed the world, has seen in re- ates secured employment within three years of leav-
cent history. The novel coronavirus (COVID-19) pan- ing school, while only a quarter were  employed  in
demic has brought the world to a standstill while the the first 12 months following graduation, a sobering
governments and public health officials battle the vi- fact that needs addressing through an ever increas-
rus spread with tools that were never seen before at ing dialogue between employers, governments and
this scale and magnitude. More than 3 billion people educational institutions. Businesses are finding it
across the world are in lockdown at the time this re- more difficult to fill vacancies with qualified workers,
port is released, with all of the region’s citizens, apart and almost 80% of managers in the region stresses
from those providing health and essential services, that digital skills are important for conducting their
sharing their fate. businesses. Finally, the need to develop better so-
cial infrastructure, such as hospitals, has risen to
While the focus at the moment is on preserving
a number one priority for government investment
health and lives of citizens, a general consensus is
in the minds of citizens, even before the COVID-19
forming that the region, and the world, will emerge
outbreak.
looking differently once the immediate threat is over.
Large sections of the economy have grinded to a The 2020 Balkan Barometer has recorded the high-
halt during the period, creating immense pressure on est positive sentiments by both businesses and
businesses, particularly the SME segment which ac- citizens since we’ve started off on this endeavour.
counts for more than 90% of our economies. Unem- Thus, the most fitting title for this year’s Barometer
ployment is on the rise again, and the governments should perhaps be - the future is not what it used to
in the region have already hurriedly deployed initial be. Hopefully, we will build a new, better future in its
economic stimulus programmes to alleviate the im- stead.
mediate negative impacts. While a lot remains un-
clear at this time, it is safe to assume that the period
of protracted and increased volatility is upon us.
However, regardless of the immense change that
COVID-19 pandemic will inflict on all of our econo-
mies when we come out on the other end, many of the
issues presented in this report will still be immensely
relevant, perhaps even more so than before. There is
a clear need for a greater substantive engagement
by the region’s governments to improve the public’s
severely shaken confidence in their institutions.
The COVID-19 crisis could present an opportunity
for the governments to begin changing the attitudes
of the region’s population, overwhelmingly unhappy
with the performance of their public officials across
virtually all critical performance indicators. Account-

11
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

INTRODUCTION
The 2020 edition of the Balkan Barometer rep- terests based on six years’ worth of data and a clear
resents the next chapter in the steady evolution of need to act quickly to stem the negative effects of
the region’s foremost survey of public and business COVID-19 outbreak.
opinion. Launched as an attempt to measure impact
of regional actions implemented under the South
East Europe (SEE) 2020 Strategy, the Barometer is
now firmly established as a reliable source of region-
al data widely employed and referenced by media,
business, civil society and decision makers alike.
The 2020 Balkan Barometer surveys were conduct-
ed between November 2019 and January 2020 in
Albania, Bosnia and Herzegovina, Kosovo* This des-
ignation is without prejudice to positions on status,
and is in line with UNSCR 1244 and the ICJ Opinion
on the Kosovo* declaration of independence.], Mon-
tenegro, Republic of North Macedonia and Serbia.
The Public Barometer survey posed 116 questions
to 6,020 citizens and the Business Opinion survey
presented 95 questions to 1,215 business owners,
managers or executives. Answers by survey respon-
dents have been systemised, analysed and present-
ed in the two reports – Public Opinion Survey and
Business Opinion Survey.
This edition of the Barometer has seen some chang-
es in terms of questions and topics covered in an
attempt to remain up-to-date and relevant in a rap-
idly changing regional landscape. The regular emer-
gence of social and economic challenges and topics,
whether global or local, has seldom been unaccom-
panied by regional ripples and the Barometer has al-
ways recorded their effects on the SEE community.
In particular, the Barometer remains a valuable guide
to frequently shifting attitudes towards cooperation
and integration, both at regional and EU levels, help-
ing inform the work of policy makers and other inter-
ested regional stakeholders.
While originally introduced to help track progress in
meeting the SEE 2020 Strategy, Barometer has out-
grown its role, and with the SEE 2020 Strategy com-
ing to a full stop this year, the Balkan Barometer is
expected to serve a much broader range of purposes
in the future. One of those roles would be to support
crafting a post-2020 agenda that will be more in tune
with the SEE community’s immediate needs and in-

* This designation is without prejudice to positions on status, and is in line with UNSCR 1244 and the ICJ Opinion on the Kosovo*
declaration of independence.

12
MAIN FINDINGS
The Balkan Business Opinion Barometer for 2020 had unresolved trade disputes with Kosovo*. The
brings the highest values of Balkan Business Sen- similar stands for satisfaction with CEFTA, as there
timent Index (BBSI) for the region so far. In 2019 is a clear polarisation between economies that con-
BBSI has reached a historical high of 65 points, con- sider exporting to CEFTA more difficult than export-
tinuing its increasing trajectory that was shortly in- ing to the EU and vice versa.
terrupted in 2018. It is again driven by bright future
Approaching EU prospects in the Republic of North
expectations (71) more than by the present situation
Macedonia and Albania has had a positive effect
(62). All economies have seen their scores increase
on the perception of businesses. The pool of pro-
(Kosovo* considerably so), except Albania that has
EU businesses expanded in Albania and the Republic
suffered a substantial decline.
of North Macedonia by 20 and 15 percentage points,
The Western Balkans are generally satisfied with respectively.
the outcome of 2019. Economic growth in 2019,
Business environment has not seen much of the
although not as strong as in 2018, was primarily
progress. Macroeconomic instability, the rule of law
driven by consumption, which reflected in 45% of
in its broadest sense, including ethics, transparency
businesses reporting an increase in demand for their
and efficiency trouble businesses with an equal or
products. Consequentially, a similar share reported
somewhat higher intensity as in the past. On a more
having a good business year (43%), and having met
positive note, infrastructural projects that are being
the demand, around a third reported an increase in
completed are starting to reflect on businesses’ per-
the number of employees. However, as it has been
ceptions. Also, Regional Roaming Agreement was
the case in the past, business leaders perceive their
welcomed by more than 40% of the executives.
businesses as better performing than their respec-
tive economies in total. Especially the labour market conditions may pose
a serious challenge in the future. More than a quar-
High expectations stemming from satisfactory
ter of the Western Balkans companies have report-
business performance will hardly be met amid the
ed struggling to fill in job vacancies, while the most
outbreak of COVID-19. Lockdown of the economies
commonly cited reason being lack of skill of the
of the region and their trade partners will certainly
applicant. One of the positive consequences is that
have a profound effect on businesses, while govern-
the companies of the region are more open towards
ments’ actions and unity of the region could do a lot
youth.
to mitigate the consequences.
Economies of the region remain concentrated on
Although the region has seen small popularity
the domestic markets. Even though 80% of the busi-
growth in loan applications, internal funds became
nesses claim that their products can match those
even more dominant source of financing. Part of
from the EU, only three out of ten are engaged in
the explanation could be found in the fact that the
exports. Non-exporters usually cite a lack of plans,
majority of the companies reported a good business
interests or capacities to export, while exporters
year, which has probably meant more operating sur-
complain about the need to hardcopy documents,
plus that could be used instead of borrowing.
acquire licenses and slow import-export procedures.
Political turmoil is quick to reflect on perception
Only one in ten companies decide to invest abroad,
and trust towards the governments and regulatory
and an even smaller share of these investments
framework. The political crisis, lack of democratic
ends up in the region. Moreover, there is a trend of
procedures and pronounced uncertainty in Montene-
increasing investments in the EU, rather than in the
gro caused an across the board drop in satisfaction
region. As companies consider and value a lot of dif-
with the government’s conduct, stability, and predict-
ferent factors when making an investment decision,
ability of laws and an increased sense of corruption.
political stability and quality of regulatory environ-
On the other hand, the commitment of the govern-
ment among others, it does not come as a surprise
ment of the Republic of North Macedonia has helped
that the region is not becoming a preferable option
the scores to rebound.
for investing, as not a lot of progress has been done.
Unresolved disputes hamper a sense of regional
Implementation of “Mini Schengen” could change
cooperation. The share of businesses in support of
the state of play. It could encourage more cross-bor-
regional cooperation has shrunk, mainly due to the
der investments across the region and shorten ex-
backward trends in Serbia, but also Bosnia and Her-
port procedures while economies from the region
zegovina and Montenegro, as the former two have
would also benefit from the free movement of labour.

13
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Generally, companies see positively on intra-regional

worker mobility, especially within particular econ-
omy pairs like Bosnia and Herzegovina and Serbia,
and Kosovo* and Albania.
Strong gender preference and prejudice towards
the Roma population persist. Moreover, the trend of
preferring men to women when finding a new candi-
date for the job has become even more pronounced.
This practice in the past has yielded the current gen-
der structure of employment in which only a third
are women. Furthermore, in spite of a slight decline,
still, 15% of the executives believe that employing a
Roma worker would negatively impact the working
environment of their company.
There is little evidence that foreign direct invest-
ments (FDIs) coming to the region are becoming
integrated into domestic economies, as only 6% of
sales of regional companies are made to multina-
tional companies located in their countries.
Western Balkans companies have still used the In-
ternet in traditional fashion, mostly for communi-
cation and advertising. One of the “more modern”
features, e-banking has seen its popularity grow over
the past year, as now around half of companies rely
on this method for executing financial transactions.
In spite of global trends, the number of online sell-
ers has remained relatively unchanged. However,
companies that do sell over the Internet, have in
fact increased the volume of sales.
Innovative dynamism has not seen much of a
change, as businesses continue to rely on their own
strengths, in terms of both capacity and financing.

14
REGIONAL OVERVIEW
The release of the 6th edition of the Balkan Barom-
eter could hardly come at a more uncertain time
for the Western Balkans, and indeed the world. The
coronavirus (COVID-19) outbreak has already led to
a major health crisis across the region and immense
disruptions of the global and regional economies.
The situation is likely to become even more com-
plex in the coming months, and the economic fallout
from the pandemic could represent one of the big-
gest shocks of recent decades.
The loss of output resulting from COVID-19 health
crisis and the related measures to contain the
spread is unprecedented. The uncertainty relating
to the duration of the crisis and the unorthodox po-
sition of the governments, where instead of stimu-
lating the aggregate demand, the governments are
forced to contain the economic activity so as to slow
the spread of the virus, makes the crisis response
extremely difficult. This economic trajectory will
almost certainly pull all of the economies in the re-
gion into a recession, and a much more pronounced
one than experienced during the Great Recession of
2008/2009.
According to the latest forecasts (IMF WEO, April
2020), the Western Balkans economies are expect-
ed to contract on average by -4% during 2020, with
the negative growth in individual economies expect-
ed to range between –9% in Montenegro and -3% in
Serbia. The regional economies are being affected
through several channels including the lower tourism
and transport revenues, cuts in manufacturing out-
puts, lower remittances, decelerating exports growth
and lower FDI and investment overall. The mobility
restrictions in the Western Balkans economies are
putting enormous pressure on the businesses, par-
ticularly in the MSME segment, which accounts for
more than 90% of the region’s economies, cutting
the firms off from buyers, suppliers, and, in some
cases, employees.
To save lives, but also livelihoods, and preserve
gains made over the past years, a rapid and deci-
sive government response is needed. The govern-
ments in the region are already putting forward fiscal
and other measures to alleviate the shocks, partic-
ularly in hardest hit economic sectors and house-
holds. The immediate measures will help maintain
economic relationships throughout the shutdown
and are essential to enable activity to gradually nor-
malise once the pandemic abates and containment
measures are lifted.

Figure 1: Real GDP Growth in the Western Balkans 2008-2021

(Source: WB Central Banks (2008-2019), IMF World Economic Outlook 2020 (2020-21), WB GDP weighted average
growth rate)

8
6.9
6 6.0

4 4.0
3.3 3.5
2.6 2.6 2.7
2 2.1
1.7

0 0.3
-0.3
-1.5
-2

-4 -4.0
forecast

-6
“Double dip” recessions of
2009 and 2012
-8
COVID-19 recession
-10
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020f 2021f

Albania Bosnia and Herzegovina Kosovo* Montenegro Republic of Serbia Western Balkans
North Macedonia

15
 BALKAN BAROMETER 2020
Figure 2: Unemployment rates in the Western Balkans, 2009 - 2019
% of labour force, 2009-2019; LFS
50
40
30
24.6 23.8
23.1
21.2
2020.0
10
2008 2009 2010 2011 2012
Albania Bosnia and Herzegovina Kosovo*
However, economic stimulus will need scaling up
in the following months and most Western Balkans
economies will likely require external support. Al-
bania, Bosnia and Herzegovina, Kosovo* and the
Republic of North Macedonia have already received
IMF financial assistance under the Rapid Financing
Instrument in the amount of €732.13 million. The EU
is also mobilising a package of over €410 million in
reallocated bilateral financial assistance to support
the Western Balkans during the coronavirus emer-
gency.
During 2019, the region has made some import-
ant gains. The unemployment rates were at their
lowest in decades and some of the unemployment
concerns were finally starting to abate, as record-
ed by this iteration of Barometer. In 2019, the aver-
age regional unemployment rate reached 13.4% and
more than 160,000 people found employment.
Foreign direct investment (FDI) inflows were main-
tained at a similar level to 2018. According to esti-
mates, FDI inflows reached close to EUR 6.5 billion
during the year, a new regional high, with Serbia reap-
ing most of the windfall. The FDI inflows displayed a
similar structure to the previous year, with a larger
share of inflows going into tradable sectors, such
as manufacturing (particularly metal processing
and motor vehicles), as well as real estate. A slightly
more diversified structure of FDI originating coun-
tries is emerging in the past several years, with some
less traditional partners growing in prominence, par-
16
BUSINESS OPINION | Analytical report
23.3 22.4
21.2
18.7
16.9
15.7
13.4
2013 2014 2015 2016 2017 2018 2019
Montenegro Republic of Serbia Western Balkans
North Macedonia
ticularly China (including Hong Kong), Russia and
the Gulf states.
The region’s trade with the rest of the world has
also grown in the past year, although at a slower
rate than in the past several years. Trade has ex-
panded by 5.8% in 2019, reaching EUR 88.6 billion, or
roughly 87% of the region’s GDP. Imports have grown
slightly faster (6.3%) than exports (5.1%), reflecting
a combination of subdued demand in the key ex-
port markets, observable during 2018 as well, and
increased domestic consumption which was again
the main driver of GDP growth in 2019.
The political and socio-economic developments
in the region were marked by substantial volatility
and uncertainty during 2019. Albania was struck
with a devastating earthquake that took a large toll
in human life and destroyed thousands of homes
and infrastructure. A total of 51 people were killed in
the earthquake, more than 3,000 were injured, with
damages estimated to exceed EUR 1 billion. In a wel-
come show of solidarity, all of the economies in the
region reacted swiftly to support Albania, sending
aid, search and rescue teams, and support in materi-
al, equipment and supplies. Bosnia and Herzegovina
has succeeded in forming the Council of Ministers in
December 2019, 14 months following the elections,
but the political situation throughout the period has
been one marked by increased polarisation and po-
litical antagonism. After a protracted period of po-
litical negotiations that followed the October 2019
snap elections, Kosovo* has also managed to form Commission on “Enhancing the accession process -
a government, albeit a short-lived one, and Kosovo* A credible EU perspective for the Western Balkans”,
is again facing difficult political negotiations. Monte- which should also be reflected into the existing ne-
negro has seen considerable upheaval surrounding gotiations with Montenegro and Serbia that have
the adoption of its Law on Religious Freedom, with opened 32 and 18 negotiation chapters, respective-
mass protests and increased societal polarisation, ly. Bosnia and Herzegovina and Kosovo* have made
which also reflected on some bilateral relations with- very limited progress during the year in attaining the
in the region. The situation in the Republic of North candidate status.
Macedonia has for the most part remained stable
The region’s outlook will be largely dependent on
during the year, interrupted only by the presidential
the outcome of COVID-19. The ongoing crisis will
elections. In Serbia, the citizens have been taking to
test the resilience of the economies of the region
the streets in anti-government protests against the
and the abilities of governments to respond quickly
alleged monopolistic position of the party in power
and effectively to the situation, protect the health of
and perceived lack of transparency, corruption and
population and mitigate the economic consequenc-
freedom of media.
es. Keeping the economy function to the extent pos-
Important developments have also occurred in the sible throughout the pandemic and in its aftermath
sphere of regional cooperation. During 2019, an- should be one of the governments’ primary con-
other high-level initiative, dubbed “Mini Schengen”, cerns. Thus, other immediate concerns and pending
was launched by the leaders of Albania, Serbia and structural reforms may fall into the background.
the Republic of North Macedonia. With its intended
purpose of lifting barriers on the free movement of
goods, people, services and capital among the West-
ern Balkans economies, the initiative was met with
a mixed reception by other WB6 economies, and it
remains to be seen whether the initiative will receive
the political support by others and be strengthened
with a clear operational framework.
The Regional Roaming Agreement entered into
force in July 2019, substantially bringing down
mobile network charges in the Western Balkans.
By July 2021, the Agreement’s implementation fore-
sees the removal of all tariffs and is the first step
towards introducing ‘roam like at home’ principle –
an EU principle that practically removes all roaming
charges between the member states. Moreover, that
promise continues to hold, as roaming prices de-
creased again on January the 1st 2020.
In a welcome development, Kosovo* abolished im-
port taxes on goods from Bosnia and Herzegovi-
na and Serbia, imposed during 2018, following the
breakdown of Belgrade-Pristina dialogue. While the
dialogue has not re-started in the meantime, the de-
cision by the Kosovo* government to remove import
taxes will hopefully pave the way for closer and more
fruitful engagement during 2020.
The Western Balkans EU integration process has
also seen important developments during the year.
After the initial disappointment in Albania and the
Republic of North Macedonia on the EU’s decision
to postpone opening of negotiations during 2019,
the European Council finally decided to open nego-
tiations with the two economies during March 2020,
and the process is expected to start following the
approval of the EU’s negotiating framework. The ne-
gotiating framework will need to take into account
the recently released policy paper by the European

17
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

BALKAN BUSINESS SENTIMENT INDEX

In order to monitor the present business sentiment
and optimism changes over time, Ipsos conducted
the Balkan Business Sentiment Index (BBSI), which
consists of the following five questions:
1. How has your business situation developed
over the past 12 months? Has it deteriorated,
remained unchanged or improved?
2. How has demand for your company’s products/
services changed over the past 12 months?
Has it deteriorated, remained unchanged or im-
proved?
3. How has the general economic situation in
your place of living changed over the past 12
months? Has it deteriorated, remained un-
changed or improved?
4. How do you expect the demand for your com-
pany’s products/services to change over the
next 12 months? Will it decline, remain mostly
unchanged or increase?
5. How do you expect the general economic situ-
ation in your place of living to develop over the
next 12 months? Will it mostly deteriorate, re-
main unchanged or improved?
BBSI contains questions related to the respondents’
experience of the general economic situation and
the situation in their business with regards to devel-
opment and demand for products or services over
the past 12 months. Simultaneously, the index con-
tains questions related to the respondents’ expecta-
tions for the coming 12 months, again in terms of
anticipated and the general economic situation in
their place of living.
Simultaneously, the index contains questions related
to the respondents’ expectations for the coming 12
months, again in terms of anticipated and the gener-
al economic situation in their place of living.
The index is scored as follows: better – 100 points,
worse – 0 points, no change – 50 points.
After responses are recoded, the average value is
calculated for the whole SEE region as well as for
each economy separately (see Figure 4). The index
values are expressed on a scale of 0 to 100. The in-
dex can be broken down into two sub-indices and
separately monitor prevalent sentiment within the
business community, as well as their expectations
for the future.
a) BBSI – Present Situation Index
b) BBSI – Expectation Index
Businesses in the region are happy with both their
current situation as well as prospects for the fu-
ture. In fact, this year’s survey records the highest
satisfaction ratings since the Barometer’s inception

Figure 3: Figure Balkan Business Sentiment Index (BBSI) – 2019/20

(Scores are on a scale of 0 to 100)
100

90 85 84 86

80 76 76
70 71
68 69
67
70 64 65 65
62
58 59
56 57
60 55
53
51
50

40

30

20

10

0
Albania Bosnia and Kosovo* Montenegro Republic of Serbia Western Balkans
Herzegovina North Macedonia

BPSI - index BPSI - Present situation Index BPSI - Expectation index

18
 Figure 4: Balkan Business Sentiment Index (BBSI)
(Comparison 2014/2015/2016/2017/2018/2019-2020)
100

90

85
79
78
80

75

73
70

69
70

66
65

65
63

63

62

62
61

61
60
59
59

59

59
58

58

58
60

57

57

57
56

56

56

56
55

54
53

53

53
52
51
48

48
50

47
39
40

30

20

10

0
Albania Bosnia and Kosovo* Montenegro Republic of Serbia Western Balkans
Herzegovina North Macedonia

2014 BBSI 2015 BBSI 2016 BBSI

2017 BBSI 2018 BBSI 2019/20 BBSI

Figure 5: Balkan Business Sentiment Index (BBSI) – Present Situation Index

(Comparison 2014/2015/2016/2017/2018/2019-2020)
100

90
84

80
76
75
73

68
68

70
65
63

62
61

60
59

59

58

58
58
57
57

60
56

56
56

54
53

53

52
51

51

51
50
50
50
49

49

49
48

48

50
46

46
42

42

42

40
34

30

20

10

0
Albania Bosnia and Kosovo* Montenegro Republic of Serbia Western Balkans
Herzegovina North Macedonia

2014 BBSI - Present Situation Index 2015 BBSI - Present Situation Index 2016 BBSI - Present Situation Index
2017 BBSI - Present Situation Index 2018 BBS - Present Situation IndexI 2019/20 BBSI - Present Situation Index

(65), with record highs posted for both the Present
Situation Index (62 points), as well as the Future Ex-
pectations Index (71 points).
All Western Balkans economies record scores
above 50 points. For the fifth year in a row, Kosovo*
is the region’s flagbearer (85 points), reporting high
scores for both the current situation (84 points) and
the future prospects (86 points). Montenegro and
Serbia are the other two economies with above-aver-
age scores (70 and 69, respectively), with the former
reporting a slightly better appraisal of its present
situation compared to the latter. Meanwhile, senti-
ment across the remaining three Western Balkans
economies sits below the regional average. Bosnia
and Herzegovina fares better than the other two with

19
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 6: Balkan Business Sentiment Index (BBSI) – Expectation Index

(Comparison 2014/2015/2016/2017/2018/2019-2020)
100

90

82

81
76

76

76
80

72

71
70

70

70

70
69

68
67

67

67
67

67
67
66

66

66
70

65
64
63
62

62

62

62
60
60

60

60
60
59

59
58
57

60

55
47
50

40

30

20

10

0
Albania Bosnia and Kosovo* Montenegro Republic of Serbia Western Balkans
Herzegovina North Macedonia

2014 BBSI - Expectation Index Expectation Index Expectation Index

2017 BBSI - Expectation Index Expectation Index Expectation Index

59 points, while Albania records the lowest region-
al score of 55; businesses from this economy also
tend to be least optimistic about their future (58).
Meanwhile, the Republic of North Macedonia (over-
all score 57) is home to businesses least satisfied
with their present situation (51).
The trend of increase in BBSI scores continues. Af-
ter a short-lived dip in 2018, business sentiment in
the region has rebounded, with BBSI scores on the
rise once more. Significantly, the business leaders’
improved perception is borne out by objective mac-
roeconomic indicators.
Although improvements are evident across near-
ly all Western Balkans economies, they are most
prominent in Kosovo* (+19 points), and Montene-
gro and Serbia (+7 points each). On the flip side,
Albania has suffered a significant decrease (-10
points) in sentiment, being the only such economy in
the region. While the three most improved regional
performers report growth spurred by a combination
of macroeconomic stability, investments in infra-
structure, and a growingly confident business com-
munity, albeit against a backdrop of political insta-
bility, Albania’s economy has faced sluggish growth
compounded by a devastating earthquake.
The past year was one of the most successful on
record for Western Balkans businesses since the
Barometer’s inception. The 2019 Present Situation
Index, gauging business performance in the context
of market demand for their products and the over-
all economic situation in their place of living, shows
that 2019 was the most successful across all survey
instalments (62 points). With a select few excep-
tions, these findings hold true across the individual
economies as well.
There is a general positive trend evident across a
majority of the region’s economies. Between 2014
and 2019, the regional score improved by as much
as 20 points, with progress in Serbia (65% in 2019 vs.
34% in 2014) and Kosovo* (84% in 2019 vs. 51% in
2014) especially evident, if not dramatic. At the same
time, Montenegro has seen a trend of more incre-
mental improvement, same as Albania, although the
latter’s multi-year growth curve has now been inter-
rupted.
While the business sentiment in the Republic of
North Macedonia has been largely stagnant, recent
progress on the political front is likely to translate
into economic gains. Finally, Bosnia and Herzegov-
ina has seen little, if any, change in business senti-
ment over the past four instalments of the Barome-
ter, making it the region’s least mobile economy.
Expectations for the future are on the rise. The BBSI
Expectation Index measures anticipated changes in
the market conditions for businesses surveyed. Pos-
itive performance in the market continues to fuel ex-
pectations, with a record-high score of 71. Kosovo*
leads the region with 86 and Serbia and Montenegro
in close pursuit with 76. Albania is home to the re-
gion’s least optimistic business leaders with 58, hav-
ing recorded a remarkable 12 point drop since last
year.

20
PERCEPTIONS OF THE BUSINESS
ENVIRONMENT AND ECONOMIC
TRENDS
Western Balkans business leaders are general-
ly satisfied with 2019. As has become customary,
business leaders see their companies performing
better than their respective economies (43% notice
an improvement in their business situation vs. 30%
for the economy at large). Even though the respon-
dents’ perception of the general economic situation
is, for the most part, neutral, they do see progress
compared to 2018, a fact reflected in the perception
of their economies as a good place to invest (more
than half recommend investing in the Western Bal-
kans). Furthermore, sentiment about the future is
especially positive, as a majority expect the general
economic situation to improve in the future. Conse-
quently, almost 40% of executives surveyed expect
to increase the number of employees in their busi-
nesses.
Kosovo* is the region’s flagbearer when it comes
to both past performance and future expectations.
A large majority of respondents in Kosovo* report
seeing an improvement in the performance of their
businesses, as well as in their economy. Meanwhile,
as many as 70% describe their businesses as under-
staffed, with no lay-offs expected. Kosovo* is closely
followed by Serbia and Montenegro where the cur-
rent situation and future trends are described as
generally positive. At the other end of the spectrum,
businesses from Bosnia and Herzegovina and the
Republic of North Macedonia are less satisfied with
their present situation although they hold high hopes
for the future. Interestingly, business leaders from
Albania, traditionally the most optimistic survey re-
spondents, alongside their counterparts from Koso-
vo*, are much less satisfied or optimistic compared
to last year. It is noteworthy, however, that they tend
to be more neutral rather than outwardly negative, or
pessimistic.
Regional cooperation, although still important for
more than half of all respondents, has suffered a
considerable loss of support in the past year. The
share of business leaders that support regional co-
operation has shrunk from 67% to 57% in the space
of a year, largely due to a decline in backing by re-
spondents in Serbia (the share of managers who

Figure 7: How has the general economic situation in your economy changed over the past 12
months? Has it deteriorated, remained unchanged or improved?**
(All respondents – N=1215, share of total)

100% 2 1 3 1
20 13 16
37 30
80% 33

67
60% 48 40
53
45
41 46
40%

20% 37 27 42
27 22 24
17
7
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Deteriorated Remaind unchanged Significantly higher than 2018
Significantly lower than 2018
Improved DK/refuse

**The figures might not add to 100% due to rounding.

21
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

consider it unimportant has increased by 20 points
since 2018), and to a lesser extent, Montenegro (+8
points) and Bosnia and Herzegovina (+5 points).
Kosovo* (76%) and Albania (71%) are the region’s
leading advocates of cooperation, with the latter the
only economy to have recorded an increase in sup-
port for Western Balkans cooperation since 2018.
Meanwhile, in Serbia and Bosnia and Herzegovina,
regional cooperation is supported by 50% and 56%
of respondents, respectively.
Some 60% of survey respondents back EU acces-
sion. There is no noticeable change in attitudes
towards EU accession by the region as a whole.
Viewed by individual economy, however, there are
some near-dramatic shifts in Serbia, where the pool
of accession advocates has shrunk by 15 points,
and Albania and the Republic of North Macedonia,
where support for the economy’s integration into the
EU grew by 20 and 15 points, respectively.
The overall perception of the general economic sit-
uation in the region shows major signs of improve-
ment. Although a majority of all surveyed Western
Balkans business leaders perceive the economic sit-
uation as unchanged (45%), respondents who feel it
has improved outnumber those who describe it as
worsened (30% vs. 24%). Compared to last year’s re-
sults, a notably larger number of respondents notice
progress (+7 points), alongside a declining number
of survey participants who report economic decline
(-6 points). This is borne out by a generally positive
macroeconomic situation that is further reflected in
the rebound of economic optimism across the re-
gion. Nevertheless, it should be noted that the overall
result for the region is somewhat skewed by mark-
edly above-average scores from Kosovo*.
Executives from Kosovo* are by far the most satis-
fied in the region. As many as two thirds of Kosovo’s*
corporate leaders notice improvement, a regional
high, while only 7% perceive deterioration, a regional
low. Executives from Serbia and Montenegro exhib-
it above-average rates of satisfaction, with 37% and
33% of managers reporting improvement, while only
17% and 22% reporting deterioration, respectively.
At the same time, the rest of the Western Balkans
economies perceive last year’s developments as sig-
nificantly less favourable. Namely, the proportion of
negative respondents from Albania, Bosnia and Her-
zegovina and the Republic of North Macedonia out-
number their positive counterparts – most notably
in Bosnia and Herzegovina where the ratio is almost
three-to-one (37% vs. 13%). Meanwhile, the Repub-
lic of North Macedonia is the only regional economy
where negative respondents are in the majority (42%
perceive deterioration).
The upturn in perception for the region is primarily
driven by improvements in Kosovo*, Montenegro,
and Serbia. Kosovo* has seen the highest upturn
in the number of satisfied executives compared to
last year (67% from 34% in 2018), while the number
of dissatisfied respondents has shrunk substantial-

Figure 8: How do you expect the general economic situation in your place of living to develop over the
next 12 months? Will it mostly deteriorate, remain unchanged or improve?**
(All respondents – N=1215, share of total)

100% 4 4 2 4 4 5
6

26 28
80%
40 43
50 50
72
60%

43
54
40%
42
40
34
38
20%
25 26
16 14 12 12
0% 1 6
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Deteriorated Remaind unchanged Significantly higher than 2018
Significantly lower than 2018
Improved DK/refuse

**The figures might not add to 100% due to rounding.

22
 Figure 9: How do you expect the number of people employed in your company to change over the
next 12 months?**
(All respondents – N=1215, share of total)
100% 3 1 2 1
17
80% 33
70
60%
68
40% 52
20%
28
11 13
0% 1 5
Albania Bosnia and Kosovo*
Herzegovina
Decrease Remain unchanged
Increase DK/refuse
ly (7% from 25% in 2018). Montenegro and Serbia
have likewise seen a significant spike in the number
of respondents reporting improvement (from 21%
to 33%, and from 28% to 37%, respectively). At the
same time, the number of unhappy respondents has
dropped by 5 points in Montenegro, and 7 points in
Serbia. On the flip side, the share of dissatisfied sur-
vey participants in the Republic of North Macedonia
grew by a significant margin (up to 42% from 33% in
2018), alongside a large drop in the number of happy
respondents in Albania (down to 20% from 32% in
2018).
Kosovo* respondents’ optimistic outlook in 2018
was justified, as 44% rightly predicted an upturn in
economic fortunes. The opposite happened in Alba-
nia, where 41% had originally expected the situation
to improve, against only 20% that eventually report-
ed seeing any progress
Business leaders in the Western Balkans are pos-
itive about the future. The share of optimistic re-
spondents has grown significantly compared to
last year (up to 43% from 35% in 2018). In the same
time period, the share of pessimistic managers has
significantly contracted (down to 12% from 18% in
2018). It is encouraging that considerable satisfac-
tion with the present is accompanied by high expec-
tations for the future.
Respondents from Kosovo* are the region’s run-
away optimists with as many as 72% confident that
**The figures might not add to 100% due to rounding.
5 5 3
23
38
44
52
67
51
46
39
9 8
5
Republic of Montenegro Serbia Western
North Balkans
Macedonia
the general economic situation will improve in 2020;
meanwhile, the share of pessimists has shrunk to a
level below the statistical margin of error. Economies
of Serbia and Montenegro are also expected to grow
– half of the economies’ business leaders expect the
general economic situation to improve, with only 6%
and 12%, respectively, expect the situation to deteri-
orate. Business leaders from Albania and Bosnia and
Herzegovina are less positive but even in those two
economies the optimists outnumber the pessimists;
the majority, however, belongs to the respondents
who expect to see no change in the overall econom-
ic situation.
Positive outlook for the region is driven largely by
respondents from Kosovo*, Serbia and Montene-
gro. With Kosovo* being the region’s fastest grow-
ing economy since 2015, optimism is surging in the
economy (72% from 44% in 2018). Serbia, where
economic growth has also picked up, records a nota-
ble increase in enthusiasm (50% from 35% in 2018),
with Montenegro recording an identical increase in
the share of optimists. Meanwhile, the number of
optimists has shrunk in Albania (down to 26% from
41% in 2018) - somewhat encouragingly, however,
the majority of “converts” have adopted a neutral
rather than a negative outlook.
Employment in the region is expected to grow fur-
ther. Almost identical to last year, 38% of executives
surveyed expect the number of employees in their
companies to grow, while lay-offs are expected in
23
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 10: Do you believe that (ECONOMY) is a good place to invest?**

(All respondents - N=1215, share of total, %, mean)

100% 1 1 1 5
2 3 1
7 11 9
21 14
25
80%
46 4
42
3.7 3.7 44
60% 3.6 49
3.3 52 3.4
33 50 3.2 3
2.8
40% 23
34 28
23 29 2
20% 14 25
21
15 11 13
15 5 8
2 4 6 2 2 5
0% 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia

It is not a good place to invest at all It is mostly good place to invest Mean Significantly higher than 2018
Significantly lower than 2018
It is mostly not a good place to invest It is a great place to invest at all
Neither a good nor bad place to invest DK/refuse

only 8% of companies polled. These findings are a
source of encouragement as unemployment in the
region, although in decline, remains at a relatively
high level compared to new EU member states (15%
against 5%, respectively).
Expectations about employment are in line with
the future outlook. In Kosovo*, where the sentiment
about the future is most optimistic, 70% expect to
see an increase in the number of employees, while
the share of those planning layoffs is statistically
insignificant. Employment is also expected to grow
significantly in Montenegro and Serbia, with 52% and
44% of surveyed executives describing their compa-
nies as understaffed. In Bosnia and Herzegovina, the
Republic of North Macedonia and Albania prospects
for new employment appear positive, as the share of
companies expecting to hire is considerably larger
than the share of those expecting to fire.
Medium and large enterprises are most likely to
be understaffed, with 50% and 60% expecting an
increase in the number of employees, respective-
ly. Foreign-owned companies are also significantly
more likely to bring in new workers than their domes-
tically-owned counterparts (63% vs. 36%, respec-
tively). Lastly, exporters are much more likely to be
understaffed than companies catering to domestic
markets only (50% vs. 32%). Encouragingly, employ-
ment is not expected to decrease to a significant de-
gree across any of the categories surveyed.
An increase in corporate employment is especial-
ly important for the Western Balkans, with some
economies reporting high unemployment rates. In
Kosovo*, almost a quarter are unemployed, with
Bosnia and Herzegovina and Montenegro reporting
unemployment at 15%. Serbia, meanwhile, is ex-
pected to hit a single-digit unemployment rate if the
forecasts for 2020 are borne out. Unemployment,
or employment, rates alone should not be the sole
focus of labour market policies in the region; rather,
an increased emphasis should be placed on creating
decent jobs with the corporate sector, which is ex-
pected to be a major generator of such jobs.
The Western Balkans are a good place to invest,
say more than half of the region’s executives (53%),
while only 18% disagree. This year’s results repre-
sent a long-awaited improvement coming on the
heels of several years of stagnation (up to 3.4% from
3.2% in 2018).
Executives from Montenegro, Kosovo* and Ser-
bia are most confident about their economies as
investment destinations. Kosovo* is once more
the regional leader with 71% of managers confident
about investing in their economy, with only 15% in-
clined otherwise (3.7). The respondents’ views are
near-identical in Montenegro (3.7), and only slightly
less effusive in Serbia (3.6). Although both Albania
and the Republic of North Macedonia boast consid-
erably less confident investment attitudes, nearly
half of all business leaders surveyed consider their

**The figures might not add to 100% due to rounding.

24
 Figure 11: How has your business situation developed over the past 12 months? Has it deteriorated,
remained unchanged or improved?**
(All respondents – N=1215, share of total)
100%
29
80%
46
60% 79
53
40%
38
20%
18
18 16
0% 4
Albania Bosnia and Kosovo*
Herzegovina
Deteriorated Remained unchanged
Improved DK/refuse
economies a favourable place to do business (3.3
and 3.2, respectively). Corporate leaders from Bos-
nia and Herzegovina are by far the least confident, as
only 28% believe that their economy is a good invest-
ment destination, while 38% disagree (2.8).
The Republic of North Macedonia, Kosovo* and
Montenegro have made considerable progress
compared to last year. All three economies have
seen a significant, and positive, shift in attitudes to-
wards investing at home in the course of a single
year, ranging from .3 in Kosovo* to .2 in the Repub-
lic of North Macedonia and Montenegro. Serbia and
Albania have likewise made progress, if at a slight-
ly more modest rate. Meanwhile, Bosnia and Her-
zegovina reports no change in status with another
stagnant year. These outcomes likely reflect actions,
or the lack thereof, undertaken by the region’s gov-
ernments on a path towards creating a more favour-
able business climate.
Foreign-owned companies are, interestingly, much
more likely to support investing in the economies
where they are settled (3.8); the same is true for
large companies (3.8%).
A large majority of Western Balkans businesses ei-
ther prospered or remained stable over the past 12
months. Namely, 45% of executives surveyed report-
ed their business situation as stable, while as many
as 43% reported improvement in corporate perfor-
mance. This represents a significant improvement
on last year, as the share of respondents reporting
**The figures might not add to 100% due to rounding.
30
42 43
59
54
48 45
30
16 12 9 12
Republic of Montenegro Serbia Western
North Balkans
Macedonia
Significantly higher than 2018
Significantly lower than 2018
improved performance expanded by 6 points (43%
from 37% in 2018). Meanwhile, the share of cor-
porate leaders reporting a poor business year has
shrunk (down to 12% from 15% in 2018).
Businesses from Kosovo* have had a particularly
good year. In 2019, close to 80% of Kosovo*’s cor-
porate leaders saw their businesses improve, while
only 4% reported a decline in performance. At the
same time, a majority of surveyed companies from
Montenegro and Bosnia and Herzegovina recorded
growth, with 59% and 46% of their executives de-
scribing themselves satisfied, respectively. In Serbia,
the shares of respondents reporting unchanged and
improved circumstances are relatively similar (48%
vs. 42%).
Meanwhile, the gap between happy and unhappy
business leaders is not as dramatic in Albania and
the Republic of North Macedonia (29% to 18% in the
former, and 30% to 16% in the latter) and is consider-
ably below the regional average (43% to 12%).
Compared to 2018, 2019 has been a much better
business year for businesses from Kosovo* and
Montenegro. The share of satisfied corporate lead-
ers in Kosovo* has increased by a remarkable 44
points in the space of a single year (79% from 35% in
2018), with Montenegro also recording an incredible
26-point hike (59% from 33% in 2018). Meanwhile,
Albania has seen its share of satisfied business lead-
ers shrink by 16 points in 2019.
25
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Business area, export orientation, company size, and
ownership structure were important determinants
of success; namely, large companies, those that are
foreign-owned, cater to export markets, and are do-
ing business in transport, trade, tourism, catering in-
dustry, crafts, banking, public utilities have reported
more successful business years than the rest of the
pack.
The majority of business leaders continue to con-
sider cooperation with neighbouring economies
as useful to their business (57%). However, this
group has shrunk significantly over the past year (-10
points). This development can, at least in part, be
attributed to the still unresolved trade, and political,
dispute over tariffs Kosovo* imposed on goods from
Serbia and Bosnia and Herzegovina in 2018.
Businesses from Kosovo* and Albania are the
biggest cheerleaders of regional cooperation. As
many as 77% of Kosovo* managers describe re-
gional cooperation as important (34% consider it
very important). Albania and Montenegro are also
overwhelmingly supportive of cooperation within the
region, with 71% and 69% of business leaders in fa-
vour of stronger regional ties. At the same time, busi-
nesses from Serbia are significantly less supportive,
with respondents from this economy divided in the
middle between those that favour regional ties and
those that do not. The situation is similar in Bosnia
and Herzegovina and the Republic of North Mace-
donia, where only a slight majority favour regional
cooperation.
The number of businesses that find regional co-
operation unimportant has grown significantly in
Serbia (up to 48% from 29% in 2018) and to a less-
er extent in Bosnia and Herzegovina (up from 38%
in 2018 to 43% in 2018). Meanwhile, in Albania, the
number of respondents who find regional cooper-
ation important has increased substantially (up to
71% from 51% in 2018).
Large and export-oriented companies tend to be in
favour of regional cooperation, with 84% and 79%
supportive corporate leaders, respectively. On the
other hand, non-exporters and micro-companies are
significantly less open, with only 46% and 51% sup-
portive of regional ties.
There is consensus on the EU membership across
all Western Balkans economies. In a finding almost
identical to last year’s, close to two-thirds of all com-
panies surveyed find EU membership to be a good
thing, while only 6% disagree.
Kosovo* and Albania are the most pro-European
economies, with as many as 90% and 88% of busi-
nesses, respectively, describing EU accession as a
good thing. Alongside Montenegro, these two econ-
omies boast the lowest negative respondent rates in
the region when it comes to EU membership (1-2%).
Meanwhile, EU accession has the fewest supporters
within the Serbian business community (50%).
Albania and the Republic of North Macedonia have
seen the greatest rise in pro-EU sentiment, likely
driven by optimism over improved accession pros-

Figure 12: How important is the quality of regional cooperation in SEE to your business? Please use the
scale from 1 to 4, where 1 means - not important at all**
(All respondents – N=1215, share of total)

Western Balkans 18 23 38 19 2

Albania 9 18 48 23 1

Bosnia and Herzegovina 21 22 39 17 1

Kosovo* 6 15 43 34 3

Republic of North Macedonia 21 21 32 22 3

Montenegro 10 18 42 27 3

Serbia 22 26 36 14 1

0 20 40 60 80 100

Not important at all Important DK/refuse Significantly higher than 2018

Significantly lower than 2018
Not very important Very important

**The figures might not add to 100% due to rounding.

26
 Figure 13: Do you think that your economy's EU membership would be a good thing, a bad thing, or
neither good nor bad for your company?**
(All respondents – N=1215, share of total)

100% 3 1 2 3
7 4

80%

61 50
65 63
60% 64
88 90

40%

37
20% 32 28
26
26
9 9
2 6 1 6 2 8 6
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Bad thing Neither good nor bad Significantly higher than 2018
Significantly lower than 2018
Good thing DK/refuse

pects for the two economies (+20 for the former
and +15 for the latter). At the same time, Serbia has
witnessed a significant drop in support for EU inte-
gration by the economy’s business community (-15
points).
The regional business community tends to support
accession for the Western Balkans economies, re-
gardless of economic activity, company size, or own-
ership status. Overall, and across all categories, the
share of supportive businesses is higher than 50%,
reaching 89% and 88% in foreign-owned and large
companies, respectively. As expected, exporters
(75%) consider EU accession good for their econo-
mies to an extent far greater than their non-exporting
counterparts (56%), with the former eager to exploit
easy access to the EU market, while the latter mind-
ful of the potential threat of increased competition.

**The figures might not add to 100% due to rounding.

27
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

BUSINESS TRENDS IN THE WESTERN

BALKANS
Improvements in the general economic situation
have translated into higher demand for a signifi-
cant part of the Western Balkans business com-
munity. Almost half of the region’s companies faced
increased demand for their products in the past year
and an even higher share expect it to accelerate
even further. To meet this growing demand, 32% of
companies increased the number of their staff and
invested 60% of their available capital in property,
plants, and equipment. At the same time, an equal
share (60%) have reported an increase in operating
costs, probably driven by growing wages and other
labour costs.
While 2019 was a good year for all Western Bal-
kans economies, companies from Kosovo* had the
best business year, as around 70% reported increas-
es in demand and workforce.
Western Balkans businesses are working to reduce
their environmental footprint to a greater extent
than in previous years, with almost three quarters
report undertaking some form of mitigation action.
The majority of the Western Balkans business
community have good reason to be satisfied with
surging demand for their products, as only 9% of
corporations surveyed reported their market shrink-
ing. Businesses who reported growing demand and
those that say orders for their products remained
stable are split down the middle with 45% each.
Compared to last year, the situation has largely re-
mained unchanged.
Kosovo* businesses report the greatest increase in
demand, as 74% record positive changes in the mar-
ket, an almost 30-point increase on last year. At the
same time, survey participants from Albania and the
Republic of North Macedonia report the lowest pro-
portion of companies reporting growth in demand
(32% each). With Serbia and Bosnia and Herzegov-
ina at, or around, the regional average, Montenegro
boasts a somewhat higher share of companies re-
porting improved demand.
Large and medium-sized enterprises, exporters
and foreign businesses are most likely to benefit
from growing demand - large and foreign-owned
companies, in particular, have provided positive
feedback in more than 70% of cases. At the same
time, micro- enterprises have much less reason to
be satisfied on average, as only 34% have reported
increased demand.

Figure 14: How has the demand for your company's products/services changed over the past 12
months? Has it deteriorated, remained unchanged or improved?**
(All respondents – N=1215, share of total)

100% 1 1 1 1

32 32
80% 45
48 45
53
74
60%

40% 54 51
38 49 45
39
20%
23
14 14 16
3 7 6 9
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Deteriorated Remained unchanged Significantly higher than 2018
Significantly lower than 2018
Improved DK/refuse

**The figures might not add to 100% due to rounding.

28
 Figure 15: How do you expect the demand for your company's products/services to change over the
next 12 months? Will it decline, remain mostly unchanged or increase?**
(All respondents – N=1215, share of total)
100% 2 1
4 4
80% 35
58
73
60%
40%
48
31
20%
25
12 10
2 3
0%
Albania Bosnia and Kosovo*
Herzegovina
Decrease Mostly unchanged
Increase DK/refuse
Building on last year’s surge in demand, more than
half of businesses surveyed expect it to grow even
further. Similar to the results of last year’s survey,
only 5% expect demand to decline, while 36% expect
it to remain stable. As is often the case, expectations
for the future are optimistic to an extent not borne
out by past performance.
Companies in Kosovo* are most optimistic about
future demand, as 73% expect it to increase, while
only 2% expect to see it decline. Meanwhile, Albania
has the lowest share of optimistic managers (35%)
and the highest share of pessimistic ones (12%).
The rest of the Western Balkans economies are at,
or around, the regional average, with Montenegro
slightly ahead, and the Republic of North Macedonia
slightly behind.
Compared to last year, Kosovo* records the great-
est increase in projected demand, with a 22-point
hike in expectations compared to 2018; Montenegro
is close behind with a 16-point increase. Meanwhile,
the projected demand for Albanian businesses has
shrunk by 22 points, with most respondents moving
into the neutral rather than negative category.
Again, large companies, exporters and foreign cor-
porations harbour a more optimistic outlook than
the other types of companies surveyed.
While a third of the region’s companies report an
increase in the number of employees, a large ma-
jority report no change in staffing. Encouragingly,
**The figures might not add to 100% due to rounding.
6 6 4
47
56 54
61
41
36
36
29
7
2 5
Republic of Montenegro Serbia Western
North Balkans
Macedonia
Significantly higher than 2018
Significantly lower than 2018
companies reporting an increase in the number of
employees outnumber those who say they have
downsized by 3-to-1, closely mirroring last year’s re-
sults. Again, survey results are consistent with the
decline in the statistical unemployment rate. Cou-
pled with optimistic expectations about the demand
over the forthcoming period, those changes could
signal greater prosperity and an even better outlook
for next year.
Kosovo* is home to the largest share of companies
to have increased staffing in the region. In line with
changes in demand for their products, close to 70%
of companies in Kosovo* have increased their work-
force, against a near-negligible proportion of those
reporting a drop in employment, with Montenegro
closely following suit. At the same time, in Albania
and the Republic of North Macedonia, fewer than a
fifth of all companies surveyed report an increase in
staffing with the vast majority of employers retaining
previous numbers. Meanwhile, Serbia and Bosnia
and Herzegovina are at, or around, the regional aver-
age with around a third of all companies adding new
employees.
Foreign-owned companies and exporters were
more likely to generate new employment, with 56%
and 40% increasing staffing, respectively. Interest-
ingly, and somewhat predictably, the share of com-
panies generating new jobs increases commensu-
rate to the size of firm.
29
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 16: How has your company's total employment changed over the past 12 months?**
(All respondents – N=1215, share of total)

100% 1
16 18
36 31 32
80% 43

68
60%

73 71
40% 49 59 58
52

20%
29

11 15 11 10 10
3 5
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1North
Herzegovina means completely dissatisfied and 5 strongly Balkans
satisfied, share of total, %, mean) Macedonia
Decrease Mostly unchanged Significantly higher than 2018
Significantly lower than 2018
Increase DK/refuse

Figure 17: Could you please tell me what percentage (%) of your company’s total investment in
2019 went to each of the following?**
(Comparison 2014/2015/2016/2017/2018/2019-2020)

100
Significantly higher than 2018
Significantly lower than 2018
90

80
72

70 65 66

58
60
52 52 53

50

40

27
30
20 20 20
18
20 14 14 15
13 12
10 10 11 10
9 8 9 8
7 7
10 5 5
2 3 3 2
1 1

0
Albania Bosnia and Kosovo* Montenegro Republic of Serbia Western Balkans
Herzegovina North Macedonia

Property, plant and equipment Intangible assets (e.g. research and development, Biological assets
concessions, patents, licences, software etc.)
Long term financial investments Other (i.e. promotion and marketing, research, staff training, etc.)

**The figures might not add to 100% due to rounding.

30
Fixed assets – property, plant, and equipment - still
take up most of the companies’ investment costs.
This year’s results see a 12-point hike in the number
of companies who prioritise investment in fixed as-
sets, up from 46% in 2018 and 42% in 2017. More
companies are also choosing to invest in long-term
financial instruments, as well as intangible assets.
Biological assets are yet again the least popular in-
vestment area for Western Balkans companies, with
only 2%, the same as last year.
Businesses from Bosnia and Herzegovina invest
in fixed assets the most (72%). This finding rep-
resents something of a conundrum as business
leaders from Bosnia and Herzegovina are also the
least likely to recommend their economy as an in-
vestment destination (2.8% vs. the regional score of
3.4%). It is possible that growing demand is forcing
the business leaders’ hand with 60% of companies in
the economy expecting to see positive market devel-
opments. Kosovo* and Albania are also among the
region’s biggest investors in fixed assets (66% and
65%, respectively); the remaining Western Balkans
economies are around, or slightly below, the average.
Long-term financial assets are most popular in the
Republic of North Macedonia, accounting for 27%
of all investment. Financial assets are also more
prevalent in Albania, Serbia, and Montenegro (20%),
while less so in Bosnia and Herzegovina (9%) and
Kosovo* (13%).
Figure 18: How have your labour and other costs (e.g. energy, etc.) changed over the past 12 months?**
(All respondents – N=1215, share of total)
100% 5
80%
49
73 63
60%
40%
48
20%
32
24
0% 3 2 1 3
Albania Bosnia and Kosovo*
Herzegovina
Decrease Mostly unchanged
Increase DK/refuse
**The figures might not add to 100% due to rounding.
Operating costs are on the rise in the region. As
many as 60% of Western Balkans corporate lead-
ers reported an increase in labour, energy, and other
costs in 2019 (on average by 5 points). Meanwhile,
37% has reported no changes in operating cost
structure and only 2% benefited from cost reduction.
Businesses in Bosnia and Herzegovina are the
most likely to face mounting operational costs, as
73% of surveyed managers report increases. Mean-
while, results from Kosovo*, Serbia and Montene-
gro are largely in keeping with regional trends, while
there is no clear consensus among businesses from
Albania whether the operating costs are increasing
or, indeed, decreasing.
Kosovo* and Serbia report ballooning operational
costs with annual increases of 19 and 12 points,
respectively.
Medium (71%) and large (68%) companies are more
likely to report increases in operating costs than their
smaller counterparts. Industry, mining and construc-
tion seem to be more affected by the increase in
costs, as reported by 72% of companies surveyed.
Western Balkans companies are becoming more
environmentally aware. The share of businesses
that have taken mitigation measures has expanded
significantly in the course of a year – from 64% in
2018 to 73% in 2019.
52
59 61 60
45
38 38 37
3 1 2
Republic of Montenegro Serbia Western
North Balkans
Macedonia
Significantly higher than 2018
Significantly lower than 2018
31
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 19: Has your business taken any steps to reduce the environmental impact it makes, such as
reducing energy consumption, waste reduction or switching to recycled/sustainable materials etc.?**
(All respondents – N=1215, share of total)

Western Balkans 21 52 26 1

Albania 12 55 32 1

Bosnia and Herzegovina 30 43 26 2

Kosovo* 19 48 32 2

Republic of North Macedonia 23 40 36 1

Montenegro 16 51 32 1

Serbia 20 60 19 1

0 20 40 60 80 100

Yes - a lot Yes - a little No DK/refuse Significantly higher than 2018

Significantly lower than 2018

Companies from Serbia and Bosnia and Herze-
govina are reportedly making the biggest effort to
reduce their environmental footprint. While Serbia
boasts the highest share of companies that have
taken some steps to reduce their environmental
footprint (80%), Bosnia and Herzegovina is home to
the largest share of corporations who describe their
mitigation measures as “significant” (30%). As for
the rest of the region, on average, two- thirds of com-
panies report taking some action to minimise their
harmful environmental impact.
Kosovo* and Albania have recorded the greatest
increase in environmental awareness by the pri-
vate sector, as a significant number of companies
across both economies report undertaking mitiga-
tion efforts (+13 points since 2018). There is grow-
ing awareness across most of the region as well,
albeit to a lesser degree; Bosnia and Herzegovina is
the only exception with a 3-point drop in the share
of companies that practice environmental respon-
sibility.
The larger the company, the bigger the effort in re-
ducing environmental impact, with as many as 96%
of large company executives report taking steps to
mitigate environmental impact; 50% say they made
some effort, while 45% report undertaking a major
effort towards footprint reduction, as part of their
corporate social and environmental agenda. At the
same time, foreign-owned companies do more in
this regard than their domestic counterparts. None
of the other variables, meanwhile - to include core
business activity or export orientation - seem to play
a role.
Low energy prices provide little incentive to im-
prove energy efficiency. With energy prices 2-3
times lower than in leading EU economies, there
is little incentive for companies (and households)
to use more environmentally friendly technologies.
Practice elsewhere has shown that economic incen-
tives in the form of higher energy prices, or mecha-
nisms like stricter regulations and state aid, may be
needed in the Western Balkans.

**The figures might not add to 100% due to rounding.

32
BUSINESS ENVIRONMENT IN THE
WESTERN BALKANS
By and large, Western Balkans businesses remain 2018, the recent upheaval in Montenegro has seen
lumbered with the same problems as in previous its scores plummet across this section.
years. Concerns over the rule of law and business
Availability of labour represents a serious chal-
ethics, government transparency, accountability, and
lenge across the region. Around 40% of all manag-
conduct, as well as availability of labour, taxation
ers consider the availability of labour a limiting fac-
and licensing procedures, show that doing business
tor to their business’ growth. Moreover, 36% report
in the region is still very much plagued by uncertain-
that the situation in this regard worsened in 2019,
ty. Yet, even against that backdrop, businesses in
with recruiting especially difficult in Bosnia and Her-
the region are reporting growth, with calls for better
zegovina, and companies in Montenegro and Koso-
business-enabling policies growing louder. Western
vo* also struggling.
Balkans governments must then invest additional
effort into clearing the many obstacles, structural The benefits of large infrastructural projects, or the
and otherwise, that prevent the region’s businesses lack thereof, are gradually becoming clearer. Per-
from attaining their full potential; this is a must for ceptions of transportation infrastructure are changing
any economy interested in moving further along on for the better in Kosovo* and Republic of Macedonia,
its path to accession. at least in part due to the opening of a new highway
connecting the two economies. A slight uptake in sat-
Political (in)stability affects all aspects of doing
isfaction is also evident in Serbia, which has undertak-
business, as shown by the contrasting examples of
en several large projects now nearing completion. At
Montenegro and the Republic of North Macedonia.
the same time, a lack of infrastructural investment in
While the Republic of North Macedonia rebounded
Albania and Bosnia and Herzegovina has led to busi-
in 2019, after suffering a political crisis of confidence
ness leaders feeling left behind, a sentiment clearly
that caused a decline in business performance in
expressed through declining satisfaction scores.

Figure 20: Can you tell how problematic are these different factors for the operation and growth of your business?
Can you please rate each?**
(All respondents - N=1215, scores are on a scale of 1 to 4 where 1 means major obstacle, 2 moderate obstacle,
3 minor obstacle and 4 no obstacle, mean)
Unit: %; Base: All respondents - N=1215
Western Balkans

3.5 3.5
3.3
3.1 3.2 3.1
3.0 3.0 3.0
2.9 2.9
2.8 2.9 2.9
2.8
2.7 2.7 2.7 2.7
2.6
2.5
2.5

2.0
Access to land and title or leasing of land

Telecommunications, transportation and electricity

Skills and education of available workers

Customs and trade regulations

Availability of labour

region
Macroeconomic instability

other competitors

leave, kindergartens etc.)

crime

and uncertainty about regulatory policies

functioning of the judiciary

Migration crisis

orientation, or other
Business licensing and permits

Access to financing and cost of financing

Labour regulations

Tax administration and tax rates

Corruption
Social infrastructure which should enable women to

Organised crime, street crime, theft and/or violent

Political or social instability, breakup of law and order

Discrimination based on ethnicity, gender, age, sexual

Informal economy and anti-competitive practices of

accept and develop leading business positions (maternity

Negative image of your economy or the Western Balkans

Contract violations by customers and suppliers and

Significantly higher than 2018

Significantly lower than 2018

**The figures might not add to 100% due to rounding.

33
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Table 1: Can you tell how problematic are these different factors for the operation and growth of your business? Can
you please rate each?
(All respondents - N=1215, scores are on a scale of 1 to 4 where 1 means major obstacle, 2 moderate obstacle, 3
minor obstacle and 4 no obstacle, mean)
Republic of
Western Bosnia and
Albania Kosovo * North Montenegro Serbia
Balkans Herzegovina
Macedonia
Macroeconomic instability 2.6 2.0 2.7 2.8 2.8 2.7 2.7
Access to land and title or leasing of land 3.1 3.0 3.3 3.0 3.3 3.0 3.0
Telecommunications, transportation and electricity 3.0 2.8 3.1 2.8 3.3 2.7 3.0
Customs and trade regulations 2.9 2.8 3.0 2.8 3.1 2.8 3.0
Informal economy and anti-competitive practices of
2.5 2.4 2.3 2.7 2.5 2.5 2.5
other competitors
Availability of labour 2.7 3.0 2.2 2.8 2.7 2.6 2.9
Skills and education of available workers 2.8 2.9 2.3 2.8 3.0 2.6 3.0
Social infrastructure which should enable women to
accept and develop leading business positions 3.2 3.3 3.1 2.9 3.3 3.1 3.2
(maternity leave, kindergartens etc.)
Organised crime, street crime, theft and/or violent 3.0 2.3 3.1 2.8 2.7 3.0 3.2
crime
Political or social instability, breakup of law and 2.7 2.3 2.5 2.8 2.6 2.8 2.9
order and uncertainty about regulatory policies
Business licensing and permits 2.9 3.1 2.8 2.8 3.0 2.7 2.9
Access to financing and cost of financing 2.9 2.5 3.0 2.8 2.9 2.7 2.9
Labour regulations 2.9 3.0 2.8 2.8 3.2 2.6 2.9
Contract violations by customers and suppliers and 2.8 2.7 2.9 2.9 2.9 2.7 2.8
functioning of the judiciary
Tax administration and tax rates 2.7 2.4 2.6 2.8 2.9 2.5 2.8
Corruption 2.7 2.1 2.6 2.5 2.8 2.7 2.9
Migration crisis 3.3 2.5 3.4 2.6 3.6 3.4 3.5
Discrimination based on ethnicity, gender, age, 3.5 3.6 3.5 3.1 3.6 3.5 3.5
sexual orientation, or other
Negative image of your economy or the Western
3.1 3.0 2.9 3.0 2.9 3.2 3.3
Balkans region

major obstacles

The adoption of the Regional Roaming Agreement
was welcomed by the region’s business leaders.
More than 40% believe that reductions in roaming
prices have had a positive impact on their busi-
nesses, especially in Montenegro (54%) and Albania
(53%).
Concerns over the rule of law, macroeconomics in-
stability, taxation, and availability of labour remain
key barriers to growth and a more favourable busi-
ness environment. Last year’s runner up, anticom-
petitive practices and informal economy (2.5), now
tops the rankings, with macroeconomic instability
coming in a close second (2.6). Issues like corrup-
tion, tax administration and tax rates, risk of social
and political instability and availability of labour are
also viewed as considerably problematic (2.7). The
rule of law, in its broadest sense, remains an issue
that Western Balkans economies need to tackle
more decisively on their European path. At the same
time, ethnicity, gender, age and sexual orientation
discrimination is perceived as the least problematic
factor for business growth (3.5); this may be inter-
preted as a positive sign, but is more likely a result of
low interest by the business leaders in the issues of
equality as they pertain to their businesses. Similarly,
the migration crisis (3.3) and social infrastructure for
women (3.2) are not perceived as particularly prob-
lematic. A new addition to the Barometer survey,
negative image of their respective economy or the
Western Balkans region, has not been perceived as
especially challenging (3.1).
By and large, the issues faced by businesses in the
region have remained largely unchanged since last
year. Most year-on-year changes are classed as mi-
nor ( ranging between -0.1 and +0.1), going in both
directions, positive and negative. The most signif-
icant change was recorded with regards to labour
regulations, as perceptions of the issue deteriorated
from 3.1 in 2018 to 2.9 in 2019.
However, significant changes have happened
across individual economies. The Republic of North
Macedonia, previously bottom of the regional rank-
ings (average score was 2.7 in 2018), is now joint top
alongside Serbia, with an overall score of 3.0. The
Republic of North Macedonia has seen a remarkable
level of fluctuation over the past three survey instal-
ments, going from top in 2017 to bottom in 2018 and
then again topping rankings this past year – a clear

34
Figure 21: How do you perceive the following factors related to government conduct, based on your
experience or of other investors that you have heard of?**
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means very negative and 5 very positive,
share of total, %)
Western Balkans
100% 5 3 3 4 5
5 8 3
1 3 4 3 3
4 12
15
21 23 25
80% 26 21 4
36
3.4
60% 2.9 3.0 2.9 3.0 3.0
43
2.7 44 43 3
41 44
44
40%
32
24 2
20% 20
16 19 17 15
10
12 9 8 8 8 7 6 1
0%
Governance, public Transparency of Coordination and Predictability and Predictability in Existence of Digitalization of
integrity, government communication stability of policies, the conduct of effective processes public services
and corruption regulations and between regulatory laws and rules public agencies in place for
decision-making authorities (such as regulatory consultation
authorities) on proposed
laws and regulations
Very negative Positive Mean Significantly higher than 2018
Significantly lower than 2018
Negative Very positive
Neither positive nor negative DK/refuse

indicator of the impact of political circumstances on businesses equally, with the exception of Bosnia and
the economy. Herzegovina where the situation is noticeably more
difficult (score 2.2).
Last year’s leader, Montenegro, is now level with
Bosnia and Herzegovina and Kosovo*, with all three Regional governments must do more if their stated
reporting average scores of 2.8; this comes on the goal of creating a predictable and transparent busi-
heels of a significant drop in scores for Montenegro ness environment is to be achieved. While the share
since 2018 (0.4). Albania is in the last place with a of satisfied respondents (28%) is on average slight-
0.2 drop in average score from 2018. ly higher than that of their unhappy counterparts
(26%), a majority of business leaders remain neutral
Anti-competitive practices of other competitors and
when it comes to government performance in this
informal economy are a shared, and near-equal, con-
area. Moreover, this year’s results show a slight de-
cern of every Western Balkans economy. The Repub-
terioration, mostly in terms of satisfaction with the
lic of North Macedonia is the only economy to have
digitalisation of public services (mean score lower
recorded an improvement in this regard (0.6), while
by 0.2). Governance, public integrity, and corruption
all the other economies saw their scores deteriorate
(2.7) continue to be the most negatively perceived
in this area (most notably in Bosnia and Herzegovi-
aspect of governance performance with only 16%
na, with -0.5). Macroeconomic instability is the most
of content business leaders (respondents are par-
problematic for businesses in Albania (2.0), while all
ticularly unhappy in Bosnia and Herzegovina, Alba-
the other economies report scores slightly above av-
nia and the Republic of North Macedonia, with 2.4).
erage (2.6). Significantly, Serbia and the Republic of
Practices on law preparation, adoption and imple-
North Macedonia have improved considerably with
mentation should be more transparent, coordinated
an increase in scores of 0.4 and 0.5 respectively,
and predictable, as the survey suggests (particularly
while Montenegro deteriorated by 0.3. Corruption
in Bosnia and Herzegovina). Finally, business leaders
and tax administration trouble businesses in Albania
tend to be most satisfied with governments’ efforts
to the greatest extent, with scores of 2.1 and 2.4, re-
in terms of the digitalisation of public services (3.4),
spectively. Also, businesses form Albania are most
regardless of a slight drop in satisfaction compared
concerned about potential social and political insta-
to last year.
bility (score of 2.3 vs. the regional average of 2.7).
Another frequently cited issue, availability of labour, Business leaders from Kosovo* are the most sat-
seems to be affecting most of the Western Balkans isfied, with an overall average score of 3.2. Koso-

**The figures might not add to 100% due to rounding.

35
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

vo* also holds the highest scores across nearly all
individual categories under review, with the sole ex-
ception of digitalisation. Montenegro and Serbia are
in a close second, each scoring 3.1. However, both
their scores have deteriorated compared to last year,
slightly in Serbia (-0.1) and significantly in Montene-
gro (-0.3). Results for Montenegro have dropped
across the board but are especially dramatic for
predictability and stability of policies and rules
(-0.5) and stability and predictability of laws (-0.4).
This outcome is a clear message to Montenegrin
policymakers to invest more effort in designing a
better policy-making system when it comes to legis-
lation affecting businesses. Albania likewise reports
a decline in scores across the board, although to a
lesser extent (from 3.2 in 2018 to 3.0 in 2019). The
Republic of North Macedonia rebounded from last
year’s drop in rankings with a 0.2 increase in aver-
age score (from 2.7 in 2018 to 2.9 in 2019), mostly
thorough improved feedback on digitalisation and
predictability in the conduct of public agencies.
Meanwhile, businesses in Bosnia and Herzegovina
remain the region’s leading critics, with a relatively
low level of satisfaction across all parameters and
an unchanged score of just 2.6.
Interestingly, companies operating with foreign cap-
ital tend to be considerably more satisfied with the
governments’ performance in terms of transparen-

Figure 22: How do you perceive the following factors related to government conduct, based on your
experience or of other investors that you have heard of?**
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means very negative and 5 very positive,
share of total, %)
Governance, public integrity, and corruption
100 0 10 8 5 9 5 5
0 1 4 0 4 4
1 1
7
8
80 22 6 19 20 4

2.7
15
60 40 3
2.4 2.9 2.4 2.9 2.9
2.4
34
35 36 41 50
40 2
43
39
20 22 1
25 43 15 17 24
Figure 22 (continued):
12 How23 do you perceive 8
the following8
factors related
12
to government
8
conduct, 12
0based on your experience or of other investors that you have heard of? 0
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
(All respondents - N=1215, scores are on a scale of 1 to 5North
Herzegovina where 1 means very negative and 5 very positive,
Balkans
share of total, %) Macedonia

Transparency of government regulations

Very negative Positiveand decision-making Mean
0
100% Negative
1 Very6 positive 3 5
3 7 2
7 2 2 3
Neither18positive nor negative
3 8
DK/refuse
9
15 21
80% 12 26
23 4
28
60% 34 44
46 3.2
3.1 46 3.0 2.9 3
2.8 2.8
43 48
40% 2.5 37
18
2
20% 30 26 20
24 19 11 16

5 3 6 8 5 9 1
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Very negative Positive Mean
Negative Very positive
Neither positive nor negative DK/refuse

**The figures might not add to 100% due to rounding.

36
Figure 22 (continued): How do you perceive the following factors related to government conduct,
based on your experience or of other investors that you have heard of?
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means very negative and 5 very positive,
share of total, %)
Coordination and communication between regulatory authorities
0
100% 6 5
3 8 6 8 3 5
8 2 4 4
4 7
26 15 16
80% 26
29 24 33 4

60%
34 40
3.0 3.2 3.1 3.2 3.0 3
2.8
44 41
40% 2.6 37 40
44
17
2
20% 31
21 13 16
22 20 10
5 2 4 8 5 8 1
0%
FigureAlbania
22 (continued):
BosniaHow
and do youKosovo*
perceive theRepublic
following
of factors related to government
Montenegro Serbia conduct,
Western
based on your experience
Herzegovinaor of other investors that you have heard of?
North Balkans
(All respondents - N=1215, scores are on a scale of 1 Macedonia
to 5 where 1 means very negative and 5 very positive,
share ofVery negative
total, %) Positive Mean
Negative Very positive
Coordination and communication between regulatory authorities
0 positive nor negative
Neither DK/refuse
100% 6 5
3 8 6 8 3 5
8 2 4 4
4 7
26 15 16
80% 26
29 24 33 4

60%
34 40
3.0 3.2 3.1 3.2 3.0 3
2.8
44 41
40% 2.6 37 40
44
17
2
20% 31
21 13 16
22 20 10
5 2 4 8 5 8 1
0%
FigureAlbania
22 (continued):
BosniaHow
and do you perceive theRepublic
Kosovo* following
of factors related to government
Montenegro Serbia conduct,
Western
Herzegovina or of other investors that
based on your experience Northyou have heard of? Balkans
Macedonia
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means very negative and 5 very positive,
Very negative Positive Mean
share of total, %)
Negative Very positive
Predictability and stability of policies and rules
Neither
0 positive nor negative DK/refuse
100% 2 4 1 3 5
3 7 2
9 8 4 3
2 7
24 15 27
80% 17 23
28 21 4

60%
41 43
38 35 3.2 3.0 3.1
2.9 2.9 3
2.8 40 49
40% 2.6 43

17 2
20% 28 29
15 19
15 16
19
7 7 10 5 8
0% 3 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Very negative Positive Mean
Negative Very positive
Neither positive nor negative DK/refuse

37
 Figure 22 BAROMETER
BALKAN 2020
(continued): How do BUSINESS
you perceive the following factors related OPINION | Analytical
to government conduct,report
based on your experience or of other investors that you have heard of?
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means very negative and 5 very positive,
share of total, %)
Existence of effective processesin place for consultation of proposed laws and regulations
100% 5 5
4 7 8
4 13 8 12 14
3 4
3 6 7
80% 11
28 23 21
31 16 4
19
60%
37 3.3
3.1 2.9 3.0 3.1 3.0 3
41 36 44
40% 39 40 50
2.6
16 2
20%
17 26 12 15
20 18 12
9
Figure
0% 5
22 (continued): How do you perceive2 the following
3 4
factors related to government conduct,7 1
basedAlbania
on your experience
Bosnia and or of other investors Republic
Kosovo* that youof have Montenegro
heard of? Serbia Western
Herzegovina North Balkans
(All respondents - N=1215, scores are on a scale of 1 Macedonia
to 5 where 1 means very negative and 5 very positive,
share of total, %)
Very negative Positive Mean
Digitalization of public services
Negative Very positive
100% 0.5 1 2 3.2 5
Neither positive nor negative
7.8 DK/refuse
6.5 6.3 7.5
9 19 12.5
28.6 8.7
18
80%
3.9 21.4
4
32.5 31.5 43.3 36.2
3.5 3.4 3.5 3.4
60%
29.8
3.3
40.9 2.9 3

40% 31.1
31.5
32 28.3 32
36.3
12.6 2
20% 20.7
16.5 9.3 10.4
18 14
8.4 8.3 8.5
1 4 2.5 2.5 5.6 1
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Very negative Positive Mean
Negative Very positive
Neither positive nor negative DK/refuse

cy and predictability when compared to their local-
ly-owned counterparts (+0.3). It is unclear whether
this is down to preferential treatment afforded to for-
eign investors or simply greater expectations on the
part of domestically-owned corporations.
Obtaining a business licence remains a barrier
across the Western Balkans. On average, more than
half of business leaders in the region feel that ob-
taining a licence represents an unnecessarily cum-
bersome obstacle to doing business. There is no
indication of improvement either with scores across
all categories surveyed on the decline, especially in
the case of fully digitalised process of application
and approval (-0.3) and the need to rely on personal
connections (-0.2). Unwarranted bureaucracy again
stands out as the most significant obstacle for West-
ern Balkans businesses, as cited by two-thirds of
managers surveyed. Overall, declining scores across
the board have led to a decrease in average scores
from 3.4 in 2018 to 3.3 in 2019.
Obtaining a business license is easiest in Kosovo*
(average score of 3.5). Meanwhile, bribes and exces-
sive discretionary power of government officials (3.6
each) are reportedly least prevalent in this economy
as well, while burdensome procedures and lack of
availability and accessibility of relevant information
are least prominent in second-ranked Albania (3.5
and 3.6, respectively). Bosnia and Herzegovina, the
region’s leading critic (score 3.0), records lowest
scores across nearly all categories surveyed, scoring
especially poorly on procedures, requirements, and
paperwork (2.6).
The Republic of North Macedonia is the only econ-
omy to have seen improvement since 2018, with
Montenegro in severe decline. After a short-lived

38
blip in 2018, the Republic of North Macedonia has and likely brought about a plunge in scores across
rebounded to its 2017 level (3.2). Meanwhile, polit- the board (down to 3.1 from 3.8 in 2018).
ical turmoil in Montenegro has created uncertainty

Figure 23: In the process of obtaining licenses for your business, how much of an obstacle were the
following factors?**
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means very big obstacle and 5 it’s not an obstacle
at all, share of total, %)
Western Balkans
100% 1 1 3 4 3 5
9
10 17
17 21 21
80% 25
24 4
25 23 21
3.4 3.3 3.4
60% 18 26
3.3 3.2
3.0 3

40% 34 32 30 27
23 28

2
20% 19 19
20 19 18 16
11 6 8 8 9 7
0% 1
Burdensome number Lack of Excessive discretionary Explicit or Need to rely Lack of a fully
of procedures, availability and power of government implicit norm on personal / private digitalized process
requirements, accessibility of officials and to give bribes connections for application and
paperwork, and cost relevant information inconsistent application to solve problems approval
of regulations of the licence
Very big obstacle Minor obstacle Mean Significantly higher than 2018
Significantly lower than 2018
Big obstacle It’s not an obstacle at all
Moderate obstacle DK/refuse

Figure 24: In the process of obtaining licenses for your business, how much of an obstacle were the
following factors?**
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means very big obstacle and 5 it’s not an obstacle
at all, share of total, %, mean)
Burdensome number of procedures, requirements, paperwork, and cost
0
100% 1 1 3 1 5
4 3 5
13 13 10
21 13 12
80% 27
17 15 24 4
30 18
27
3.5 3.4
60% 18 30 34
3.0 3.1
2.9 3.0 3
27 43
40% 2.6
31 20 42
26 2
20% 30 19
31 17
19
13 13 11
2 7 7
0% 1 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Very big obstacle Minor obstacle Mean
Big obstacle It’s not an obstacle at all
Moderate obstacle DK/refuse

**The figures might not add to 100% due to rounding.

39
 Figure 24 (continued): In the process of obtaining licenses for your business, how much of an obstacle
BALKAN BAROMETER 2020
were the following factors? BUSINESS OPINION | Analytical report
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means very big obstacle and 5 it’s not an obstacle
at all, share of total, %, mean)
Lack of availability and accessibility of relevant information
100% 0 1 3 3 0 1 5
4
19 18 14 17
22 15 17
80%
24 4
15 16 25
33
60% 3.6 3.5 3.4
3.3 3.3
36 35
3.0 3.1 3
26 35
40% 38 32
23
24 29
25 2
20% 21
20 19 20
16 15
14
2 2 4 8 4 6
0% 1
FigureAlbania
24 (continued): BosniaIn
andthe process of obtaining
Kosovo* licenses
Republic of for your business,Serbia
Montenegro how much ofWestern
an obstacle
were the followingHerzegovina
factors? North Balkans
Macedonia
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means very big obstacle and 5 it’s not an obstacle
Very big obstacle Minor obstacle Mean
at all, share of total, %, mean)
Big obstacle It’s not an obstacle at all
Excessive discretionary power of government officials and inconsistent application of regulations
Moderate obstacle DK/refuse
100% 1 3 1 3 5
3 8 6
15
20 17 17
20 15 18
80%
24 4
17 22 23
3.6 33 20
60% 3.3 28 3.3
3.1 3.2 3.2
21 3.0 23 3
40% 27 35 30
25
15 34
33 2
20% 20 19
18 19
21
10
7 2 5 8 5 8
0% 1

Figure Albania Bosnia

24 (continued): Inand
the Kosovo*
process Republic
of obtaining of
licenses forMontenegro
your business, Serbia
how
much of Western
an obstacle
Herzegovina North Balkans
were the following factors? Macedonia
(All respondents - N=1215, scores are on aMinor
Very big obstacle scale of 1 to 5 where 1 means
obstacle Meanvery big obstacle and 5 it’s not an obstacle
at all, share of total, %, mean)
Big obstacle It’s not an obstacle at all
Explicit or implicit norm to give bribes
Moderate obstacle DK/refuse
100% 4 5
9 9 8 9
13 13
20
80% 21 26 25
26 23 23 4
3.6 3.5
60% 3.4 3.4
21 15 32 3.3
3.4 15 20 18 18
3.1 3
40% 14
22 18 23
20 26
32
17 2
20%
23 25 13 18
16
18 12 11 8
0% 4 2 5 5 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Very big obstacle Minor obstacle Mean
Big obstacle It’s not an obstacle at all
Moderate obstacle DK/refuse

40
Figure 24 (continued): In the process of obtaining licenses for your business, how much of an obstacle
were the following factors?
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means very big obstacle and 5 it’s not an obstacle
at all, share of total, %, mean)
Need to rely on personal/ private connections to solve problems
100% 0 5 4 4 5
5 7 3
14
24 16 21 21
16
80% 28
4
32 18
23 23 21 21
60% 15 3.4 3.3
3.4 3.4
3.1 3.2
3.0 3
16 21
40% 24 24 27
33
36
16
27 2
20% 20 19
24
21 16
13
12 10 9
0% 5 3 5 1
FigureAlbania
24 (continued): BosniaIn
andthe process of obtaining
Kosovo* licenses
Republic of forMontenegro
your business,Serbia
how much of Western
an obstacle
were the followingHerzegovina
factors? North Balkans
Macedonia
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means very big obstacle and 5 it’s not an obstacle
Very big obstacle Minor obstacle Mean
at all, share of total, %, mean)
Lack ofBigaobstacle
fully digitalized process forIt’s not an obstacle at all
application and approval of the license
Moderate obstacle DK/refuse
100% 1 2 1 3 5
4 5 9
21 17 21
31 22 18
80% 25
4
3.8 16 16 27 26
3.6 3.5 3.4
60% 3.4
33 23 3.2
34 3.1 3
23
29
40%
33 28
24
30
17 2
22
20% 20
14 17 16
11 18 13
1 3 8 9 4 7
0% 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Very big obstacle Minor obstacle Mean
Big obstacle It’s not an obstacle at all
Moderate obstacle DK/refuse

Results tend to be largely consistent for groups of
companies of different sizes, market orientation, and
industry membership. The only notable difference is
between foreign- and domestic-owned companies,
as the former tend to express fewer concerns over
obstacles faced in doing business. taining a licence
represents an unnecessarily cumbersome obstacle
to doing business.
The general consensus among Western Balkans
executives is that the business environment has
remained largely unchanged since 2018. Neverthe-
less, any changes, however minor, are considerably
more likely to be positive than negative. This is illus-
trated by the fact that on average 27% of executives
surveyed describe the environment as improving,
compared to 22% that say it has worsened.
Approximately half of all business leaders from the
region have seen no major change in their busi-
ness environment over the past 12 months. A slight
increase in the overall regional score is almost exclu-
sively down to a significant rebound in perceptions
in the Republic of North Macedonia (an increase of
0.4 on average).
Business environments in Serbia and Kosovo* show
the most promise in 2019 (scores 3.3) with some
40% of managers surveyed reporting improvements,
against some 12% who say the environment has de-
teriorated. At the same time, the business environ-
ment in Bosnia and Herzegovina is bottom of the
rankings with an average score of 2.9.

41
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

When it comes to individual factors, companies are Future availability of labour and labour force costs
most likely to be troubled by the shrinking labour are the most frequently cited concerns of the busi-
pool (2.8), as well as growing labour costs (2.8). ness community. By and large, all Western Balkans
Political stability and tax rates also leave much to be economies cite labour-related concerns as having
desired (2.9 each), while improvements have been grown more prominent over the course of 2019.
noted in the availability of government digital ser-
The situation in Bosnia and Herzegovina is espe-
vices, physical infrastructure and innovation capabil-
cially problematic as two-thirds of managers have
ities, and availability of linkages with local firms (3.3
witnessed the shrinking of the labour pool, while
for all).
slightly more than half have reported a rise in labour
costs (scores 2.1 and 2.6, respectively). Even in the
region’s most positive economy, Kosovo*, labour
concerns are most prominent.

Figure 25: How have the following characteristics of the business environment in (economy)
changed over the last 12 months?**
((All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means significantly worsened
and 5 significantly improved, share of total, %)
Western Balkans

100% 1 1 1 2 2 2 1 3 3 5
1 3 1 3 3 5 3 9
3 5 7 7 7 8 2 3 7 13
3 8
18 24 17 6 6
80% 31 26 20 20 23
33 23 25 26 4
32 34 25
26
60% 38 54
39 41 3.3 3.3 3.3 3.3 3.37 3.3 3
3.1 3.2 3.0 3.2 3.1 3.2
2.8 2.8 2.9 2.9 45
40% 46 48 54 48 53
46 46 46 52 46 45
2
24 30
20% 24
15 18 14 19 10
14 11 8 9 14 10 8 7
4 3 12 8 8 3 2 3 9 3 7 4 2 3 4 3 1
0%
Physical infrastructure (e.g.

electricity, water, etc.)

transportation, telecommunications,
Macro-economic stability and favourability
of exchange rate

Availability of labour

Labour force cost

Talent and skill of labour pool

Access to land or real estate

Availability of financial

Technological innovation and capabilities

Tax rates

Availability of financial services tailored by

Market size and potential

Business-friendly legal and regulatory environment

Availability of linkages with local firms (e.g. obtaining

capital in the domestic market

Political stability and security

intermediate inputs from domestic suppliers,

selling output to local firms, etc.)
Availability of Government digital service

industry, i.e. tourism needs special insurance

packages, online international payment.
to complete administrative procedures

Availability of Government support schemes

to employ vulnerable groups

Very big obstacle Big obstacle Moderate obstacle Minor obstacle It’s not an obstacle at all

DK/refuse Mean

**The figures might not add to 100% due to rounding.

42
Figure 26: How have the following characteristics of the business environment in your economy
changed over the last 12 months?**
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means significantly worsened and 5 significantly
improved, share of total, %, mean)
Macro-economic stability and favorability of exchange rate
100% 1 4 6 21 1 3 5
0 5 8 7 5
8 15
10 6
12
80% 26
20 4
32 33 40
3.5
60% 3.4
3.0 3.1 3.2
3.0 63 3
65 48
40% 48
2.4 43 40
44
2
20%
14 15
Figure 24 (continued):
13 In12 17
the process of13obtaining licenses for your business, how6 much of an obstacle
4 2 1 4 1 3
were
0% the following factors? 1

(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means very big obstacle and 5 it’s not an obstacle
at all, share of total, %, mean)
Excessive discretionary
Significantly worsened power of government officials and inconsistent
Somewhat improved Mean application of regulations
100% 1
Somewhat worsened 3
Significantly improved 1 3 5
3 8 6
15
Stayed the same 20
DK/refuse 17 17
20 15 18
80%
24 4
17 22 23
3.6 33 20
60% 3.3 28 3.3
3.1 3.2 3.2
21 3.0 23 3
40% 27 35 30
25
15 34
33 2
20% 20 19
18 19
Figure 26: How have the 21 following characteristics
10 of the business environment
8
in your economy8
7 2 5 5
changed
0% over the last 12 months? 1
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means significantly worsened and 5 significantly
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
improved, share of total, %, mean) Macedonia
MarketVerysize and potential
big obstacle Minor obstacle Mean
0
100% 0
Big obstacle 14 1
It’s 2not an obstacle at all 3 12 13 5
11 8 0
8
Moderate obstacle DK/refuse 24
21
80% 31
34 25 44 4
46
60% 34 3.4
50
3.0 3.1 3.1 3
2.9
50 41 46
40% 2.6
44
45
34 2
20%
17 15 13
14
11 10 7
8 6 2 9 1 4
0% 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Significantly worsened Somewhat improved Mean
Somewhat worsened Significantly improved
Stayed the same DK/refuse

**The figures might not add to 100% due to rounding.

43
 Figure 26 (continued):
BALKAN BAROMETER How have
2020the following characteristicsBUSINESS
of the business environment in your
economy changed over the last 12 months?
OPINION | Analytical report
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means significantly worsened and 5 significantly
improved, share of total, %, mean)
Labor force cost
100% 0 0 13
1 1 4 3 5
9 4 5 2
12
17 18
12 26 19
80% 28
4

43 26
60% 41
44
3.0 2.9 3
2.7 2.9 2.8 2.8
40% 2.6 37 46 46
33
37 30 2
20% 30
25 20 19
19
6 3 6 8 5 8
0% 0 1
FigureAlbania
26 (continued): BosniaHow
and have the following
Kosovo* characteristics
Republic of of the businessSerbia
Montenegro environmentWestern
in your
economy changedHerzegovinaover the last 12 months? North
Macedonia
Balkans

(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means significantly worsened and 5 significantly
Significantly worsened Somewhat improved Mean
improved, share of total, %, mean)
Somewhat worsened Significantly improved
Talent and skill of labour pool
Stayed
0 the same 1 DK/refuse 0 1
100% 3 3 1 3 1 5
3 1 3
9 8 9
17
24 31 24
80%
29 25 4
34
60%
3.2 57
3.1 3.0 46
3.0 45 3.0 3
2.9
37 32 51
40%
2.4 34
2
20% 19
25 18 18
22 10
19
3 13 8
2 6 6 1
0%
FigureAlbania
26 (continued): Bosnia How
and have the following Republic
Kosovo* characteristics
of of the business
Montenegro environmentWestern
Serbia in your
economy changedHerzegovinaover the last 12 months? North Balkans
(All respondents - N=1215, scores are on a scale of 1Macedonia
to 5 where 1 means significantly worsened and 5 significantly
Significantly
improved, share of worsened
total, %, mean) Somewhat improved Mean
Somewhat worsened
Physical infrastructure Significantly improved
Stayed0the same DK/refuse
3 1
100% 4 1 0 1 5
8 12 5 5 7
12
8
31 16
80%
33 4
32 30 30 42

60% 3.4 3.4 3.4

3.3 3.3
3.0 3.0 3
51
40% 49
38 46
42 48
43
2
20%
17
14 13
11 9 7 11
2 7 2 1 5 1 3
0% 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Significantly worsened Somewhat improved Mean
Somewhat worsened Significantly improved
Stayed the same DK/refuse

44
Figure 26 (continued): How have the following characteristics of the business environment in your
economy changed over the last 12 months?
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means significantly worsened and 5 significantly
improved, share of total, %, mean)
Access to land or real estate
100% 5
6 3 9 8 4 5
9 4
8 7 8
18 8 11
80%
27 23 4
24 15 18
15 28

60% 3.3 3.4 3.3 3.3 3.3 3.3

3.2
3

40% 57
52 51 41 52 57 54

2
20%

8 8 14 7 6 7 8
0% 2 4 2 3 5 0 2 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Figure 26 (continued): How
Herzegovina have the following characteristics
North of the business environmentBalkans
in your
economy changed over the last 12 months? Macedonia
(All respondents
Significantly -worsened
N=1215, scores are on Somewhat
a scale ofimproved
1 to 5 where 1 means
Mean significantly worsened and 5 significantly
improved, share of
Somewhat worsened
total, %, mean) Significantly improved
Availability of financial capital in the DK/refuse
Stayed the same
domestic market
100% 1 2 5
5 6 3 6 2 2
14 5 5 7
7 7
16
80%
15 25 24 31 25 4
27

60% 3.3 3.3

3.1 3.2 3.1 3.1
3.0 3
44
56 44 41
40% 43 48
50
2
20%
18 15
21 16 17 14
9
1 8 2 4 7 2 3 1
0%
FigureAlbania
26 (continued): BosniaHow
and have the following characteristics
Kosovo* Republic of of the businessSerbia
Montenegro environment Western
in your
economy changed Herzegovina
over the last 12 months? North Balkans
(All respondents - N=1215, scores are on a scale of 1 to Macedonia
5 where 1 means significantly worsened and 5 significantly
improved, share of total, %, mean)
Significantly worsened Somewhat improved Mean
Political stability
Somewhat and security
worsened Significantly improved
0 the same
Stayed DK/refuse 0
100% 0 3 5 3 1 2 5
6 5 11 9 7
13 13
9
9
80% 20
30 4
42 24 28 15
39
60% 3.3 38
3.2
3.0 2.9 3
41
40% 2.5 37
2.5 43 2.5
40 22 44
2
20% 24
15
22 18
14
11 12 9 4 9
0% 2 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Significantly worsened Somewhat improved Mean
Somewhat worsened Significantly improved
Stayed the same DK/refuse

45
 Figure 26 (continued):
BALKAN BAROMETER How have
2020the following characteristicsBUSINESS
of the business environment
OPINION in yourreport
| Analytical
economy changed over the last 12 months?
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means significantly worsened and 5 significantly
improved, share of total, %, mean)
Technological innovation and capabilities
100% 5 0 2 5
2 4 5 5 8
6 6 5 8 8
15
80% 16
27 22 4
35 43 32
25
3.5
60% 3.4 3.3
3.3 3.3
3.2
3.0 3
50
40% 50
54 41 39 46
44 2
20%
16
10 13 14 11 9
8 4
0 3 2 4 1 3 1
0%
FigureAlbania
26 (continued):
BosniaHow
and have the following characteristics
Kosovo* Republic of of the businessSerbia
Montenegro environmentWestern
in your
Herzegovina North Balkans
economy changed over the last 12 months? Macedonia
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means significantly worsened and 5 significantly
Significantly worsened Somewhat improved Mean
improved, share of total, %, mean)
Somewhat worsened Significantly improved
Tax rates
Stayed0 the same DK/refuse 0 0
100% 1 4 2 0 1 5
2 5
5 4 2
14 15 6
10 20 17
80% 27 16
4
33
60% 52 65 44 54
3.1 3.0
3.0 2.9 3
2.9
2.7 43 60
40% 2.5
36
2
17
20% 17
17 19
15 16
14 15 12
6 4 3 7 1
0%
FigureAlbania
26 (continued): BosniaHow
and have the following characteristics
Kosovo* Republic of of the businessSerbia
Montenegro environmentWestern
in your
economy changedHerzegovinaover the last 12 months? North Balkans
Macedonia
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means significantly worsened and 5 significantly
Significantly worsened
improved, share of total, %, mean) Somewhat improved Mean
Somewhat worsened
Business-friendly legal and regulatory Significantly
environmentimproved
Stayed the same DK/refuse
100% 1 6 4 1 5
5 1 8 3
5 1 3
5 8
14 9
19 12 30 23
80%
14 4
29

60% 3.3 64 3.2

3.1 44 3.1
3.0 2.9 3
53 2.8 53
48
40% 41 56

2
21
20%
21 14
16 16 9 14
13
1 2 2 7 2 4 1
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Significantly worsened Somewhat improved Mean
Somewhat worsened Significantly improved
Stayed the same DK/refuse

46
Figure 26 (continued): How have the following characteristics of the business environment in your
economy changed over the last 12 months?
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means significantly worsened and 5 significantly
improved, share of total, %, mean)
Availability of linkages with local firms
100% 2 7 3 3 5
5 6 2
11 5 5 7
7 8 7
80% 19
27 21 24 28 26 4
33
60% 3.3 3.3 3.3 3.3
3.2 3.1 3.2
3
47 59
40% 49 52
49 40 57
2
20%
14 9
12 13 11 6 10
0 5 1 3 5 0 2 1
0%
FigureAlbania BosniaHow
26 (continued): and Kosovo*
have the Republic of Montenegro
following characteristics of the businessSerbia
environmentWestern
in your
Herzegovina North Balkans
economy changed over the last 12 months? Macedonia
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means significantly worsened and 5 significantly
Significantly worsened Somewhat improved Mean
improved, share of total, %, mean)
Somewhat worsened Significantly improved
Availability of Government digital service to complete administrative procedures
Stayed the same DK/refuse
100% 0 2 2 3 5
5 7 9 3
15 8 7
9 6
10
80%
20 29 40 4
30 34
24
3.6
60% 40 3.3 3.3 3.3 3.4 3.3
3.0 3
39
40%
44 48 43 45
49
37 2
20% 13

13 11 8
6 13 5 8
1 1 2 6 0 3 1
FigureAlbania
26 (continued): BosniaHow
and have the following characteristics
Kosovo* Republic of of the businessSerbia
Montenegro environmentWestern
in your
economy changedHerzegovinaover the last 12 months? North Balkans
Macedonia
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means significantly worsened and 5 significantly
Significantly worsened Somewhat improved Mean
improved, share of total, %, mean)
Somewhat worsened Significantly improved
Availability of Government support schemes to employ vulnerable groups
Stayed the same DK/refuse
100% 1 5
13 12 8 9 9
13 12
5 4 6
5
8 9
80%
25 27 4
17 28 28 25
21
60% 3.4 3.3
3.2 3.2 3.2 3.2
3.0 3
38
40%
49 41 45 44 46
49
2
20%
14
9 13 14 7 10
10 8
3 2 1 6 1 4 1
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Significantly worsened Somewhat improved Mean
Somewhat worsened Significantly improved
Stayed the same DK/refuse

47
 BALKAN BAROMETER
Figure 26 (continued): 2020the following characteristicsBUSINESS
How have of the business environment
OPINION in your
| Analytical report
economy changed over the last 12 months?
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means significantly worsened and 5 significantly
improved, share of total, %, mean)
Availability of financial services tailored by industry
100% 5
10 9
13 12 12 13
6
24 3
12 9 10 6
80%
4 4
24 19 36 18 31 26
3.4 15
60% 3.3 3.3 3.3
3.2 3.2
3.1 3

40% 42 44
45 36 45 45
47
2
20%
9 9
8 11 9 7
8 5
1 4 2 7 1 3 1
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Significantly worsened Somewhat improved Mean
Somewhat worsened Significantly improved
Stayed the same DK/refuse

Figure 27: For your business purposes, how would you rate the combination of availability, quality and
affordability of road, railroad, waterway and air transport in your economy?**
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means very poor and 5 excellent, mean)
4.0

3.7

3.5
3.4
3.3

3.1
3.0 3.0

2.7
2.6
2.5
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western Balkans
Herzegovina North Macedonia

Combination of availability, quality and affordability of electricity, gas and water supply

Western Balkans executives are moderately satis-
fied with the availability, quality, and affordability
of transportation infrastructure. Compared to last
year, there has been a slight increase in satisfaction
(3.1 in 2019 vs. 3.0 in 2018); nevertheless, the im-
provement in regional score is chiefly a consequence
of positive developments in two of the region’s econ-
omies, Kosovo* and the Republic of North Macedo-
nia.
**The figures might not add to 100% due to rounding.
Respondents in Kosovo* seem to be the most sat-
isfied with transportation infrastructure (3.7), while
Bosnia and Herzegovina (2.6) and Albania (2.7) are
at the other end of the spectrum. Serbia (3.4) and
Montenegro (3.3), meanwhile, are assessed as hav-
ing a better-than-average transportation network.
Kosovo* and Albania are the only two economies
to have registered improvements in 2019. Namely,

48
Figure 28: For your business purposes, how would you rate the combination of availability, quality and
affordability of electricity, gas and water supply in your economy?**
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means very poor and 5 excellent, mean)
4.0
3.5
3.4
3.2
3.0
Albania Bosnia and
Herzegovina
Combination of availability, quality and affordability of electricity, gas and water supply
executives’ responses have positioned Kosovo* as
the regional leader in this year’s survey instalment
(3.7). Moreover, in Kosovo*, the score has improved
significantly (+0.4), making it the only economy
apart from the Republic of North Macedonia, with
favourable developments. These positive changes
coincide with the completion and opening of the new
highway (Arben Xhaferi highway) connecting the two
economies – the highway is also expected to inten-
sify trade and other relations between the two.
Large infrastructural projects in Serbia and Monte-
negro are yet to translate into better scores across
the two economies, while a near-total lack of in-
frastructure investment in Bosnia and Herzegovina
and Albania has, as expected, reflected poorly on
their regional ranking. With sections of Corridor X
and XI in Serbia still some way from being put into
operation, and parts of Corridor XI in Montenegro
expected to be completed by the fall of 2020, next
year’s instalment of the Barometer is expected to re-
flect these improvements more clearly. Meanwhile,
an absence of infrastructure investment in Albania
and Bosnia and Herzegovina has contributed to re-
spondents there feeling left out; Bosnia and Herze-
govina also has the region’s highest road accident
mortality rate
Executives in the Western Balkans are largely sat-
isfied with energy infrastructure in their econo-
mies. After last years’ dip (-0.3 from 2017 to 2018),
the average regional score has now rebounded, and
**The figures might not add to 100% due to rounding.
3.9
3.7 3.7
3.5 3.5
Kosovo* Republic of Montenegro Serbia Western Balkans
North Macedonia
Significantly higher than 2018
Significantly lower than 2018
even surpassed the 2017 level, reaching 3.7 in 2019.
This year’s surge has, however, overwhelmingly been
driven by considerable improvements in the Repub-
lic of North Macedonia (+0.5) and Kosovo* (+0.3).
Serbian managers are most satisfied with energy
infrastructure in the region (3.7), while their Al-
banian counterparts occupy the other end of the
spectrum (3.2). Out of the remaining economies, the
Republic of North Macedonia (3.7) comes second,
with Montenegro and Kosovo* in third and fourth, re-
spectively, with 3.5. Bosnia and Herzegovina is sec-
ond-bottom in the rankings, with 3.4.
The score in this category has increased across all
Western Balkans economies, apart from Bosnia and
Herzegovina, where it has remained the same. The
greatest increases in satisfaction have been record-
ed in the Republic of North Macedonia (+0.5), Koso-
vo* (+0.3), Albania and Serbia (+0.2 for both).
Western Balkans executives would welcome ad-
ditional investment in roads. Two-thirds of re-
spondents called for additional investment in road
infrastructure as potentially the most beneficial de-
velopment to their businesses, an 8-point increase
on 2018. In line with an overall solid appraisal of en-
ergy infrastructure, fewer managers call for improve-
ment in gas and electricity infrastructure (-6 points
compared to 2018).
Roads remain the most critical area of investment
for businesses in the Republic of North Macedonia,
while in Kosovo*, although still predominant, they are
49
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 29: In your opinion, which infrastructure upgrades would have the highest positive impact
on your business**
(All respondents - N=1215, share of total, %)

3 6 4 4
100% 3 6 1 2 1 2
2 4
3 10 3 1 1 1
2 1 4 3 1 2
3 3 7 1 3 3
14 2 4 5
80% 10 5 2
14 9 6 8
7 4 9
7 7
7
16
60%
8

40% 77
70 67 68 67
63
47
20%

0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia

DK/refuse Air travel Electricity Significantly higher than 2018

Significantly lower than 2018
Other Gas Telecommunications
Waterway transport Railroads Roads

Figure 30: How did the Regional Roaming Agreement impact your business operations?
It had**
(All respondents - N=1215, share of total, %)

100% 2 2 1 4
11 6
16

80%
44 40
54 52
65 39 49
60%

40%
37
44
32 26 34 33
20% 25

12 15 17
9 8 10 11
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia

DK/refuse Some positive impact

No impact at all A very positive impact

becoming less common. Kosovo* respondents call
for more investment in energy infrastructure at a rate
higher than elsewhere in the region. They, along with
their counterparts in Albania, would also welcome
better railroad infrastructure. Investments in air trav-
el infrastructure would seemingly have a significant
positive effect only on businesses in Kosovo*.
**The figures might not add to 100% due to rounding.
Businesses in the sector of agriculture, hunting, fish-
ing, and forestry express the need for better roads
significantly more than others (86%). It is interesting
that although exporters would rate new roads as
more important than non-exporters, the difference
is not as pronounced as may be expected (69% vs.
63%).

50
Figure 31: How would the complete elimination of roaming charges imact your business operations?
It would have**
(All respondents - N=1215, share of total, %)

100% 3 3 2 4
4 6
19

80% 38 32
41 36 45
53
60% 40

23
24
40% 32
43 31
29 30
20% 40
33
24 20
16 13 14
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia

DK/refuse Some positive impact

No impact at all A very positive impact

Figure 32: Have any of your company‘s owners or senior manager spent time living and owrking
aborad as members of the diaspora?**
(All respondents - N=1215, share of total, %)

100% 2 2 4 2 1 2
6

80%

68
60% 77 77 79
88 76 83

40%

20%
30
20 20 18 16 19
11
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia

No DK/refuse
Yes

The adoption of the Regional Roaming Agreement charges had no impact on their businesses, more
has positively impacted Western Balkans busi- than 40% still find it useful.
nesses. The Regional Roaming Agreement was ad-
The new roaming agreement was welcomed the
opted on the 1st of July 2019, leading to a consid-
most in Montenegro and Albania, while it had
erable drop in prices for roaming charges between
the smallest effect on businesses in Bosnia and
economies in the region. Although a dominant share
Herzegovina. Montenegro and Albania report that
of respondents state that reducing regional roaming
**The figures might not add to 100% due to rounding.

51
 BALKAN BAROMETER 2020
more than half of all managers surveyed state that
reduced charges positively impacted their business-
es. Moreover, 17% of Montenegrin business leaders
have described the agreement’s impact as very pos-
itive. Meanwhile, some two-thirds of respondents in
Bosnia and Herzegovina say that their businesses
have not been impacted at all by the new roaming
regime.
As expected, export-oriented companies benefit
more than their inward facing counterparts (62%
vs. 34%). Also, the bigger the company, the more
it benefits from this agreement, which is expected,
since larger companies are more likely to have part-
ners abroad (39% of micro-company managers to
74% of large-company managers)..
Complete removal of roaming charges is bene-
ficial for just under a half of all Western Balkans
businesses. Now that the fees have been reduced,
the complete removal of roaming charges will nat-
urally not be as beneficial as before – for illustration
purposes, the 2018 survey placed the proportion of
respondents in favour of full removal at 70% against
just 45% in 2019.
52
BUSINESS OPINION | Analytical report
With the exception of Kosovo* and Serbia, the
share of companies that recognize benefits of
complete removal of roaming charges is great-
er than half across all of the region’s economies.
Same as last year, a complete removal would benefit
companies in the Republic of North Macedonia the
most, as suggested by almost two-thirds of all man-
agers surveyed.
The results for the Republic of North Macedonia are
particularly interesting; the discrepancy between the
perceived benefits of reduced roaming charges and
the effects of a total removal is quite high – while
only 41% report potential gains as a result of a par-
tial price reduction, as many as 63% would welcome
complete removal.
On average, one in five business owners, or man-
agers, spent time living and working abroad. Bos-
nia and Herzegovina has the highest share of busi-
ness leaders who returned from the diaspora (30%),
with the Republic of North Macedonia having the
fewest (11%). As expected, the share of business
leaders that have spent time living and working
abroad is higher among larger firms, exporters, and
foreign-owned companies.
LEGAL AND REGULATORY FRAMEWORK

Businesses in the Western Balkans remain unhap-
py with their engagement in policy-making, with
only limited progress evident. Aggregate findings
on satisfaction with public sector performance
broadly follow last year’s pattern: 25% are unhappy,
50% are neutral, and a further quarter are satisfied
with the work of their governments. Again, business-
es from Bosnia and Herzegovina are markedly un-
happy to an extent well above the regional average
(only 6% are satisfied), while Kosovo*’s government
seems to be most accommodating of the needs of
the private sector. A year-on-year comparison show
the greatest deterioration in scores to have hap-
pened in Montenegro.
Similar to last year, some 10% of all revenues, wage
bills and workers remain in the realm of the shad-
ow economy. This is largely the case across all of
the region’s economies save Kosovo*, where almost
40% are invisible to tax and other authorities.
The perception of stability and predictability of
laws has deteriorated. Businesses in Montenegro
and Albania have reported a worrying deterioration
in the perception of the rule of law system; mean-
while, and on a more positive note, businesses in
Bosnia and Herzegovina and the Republic of North
Macedonia report a significant increase in respon-
dent confidence.
Steering clear of public tenders remains a preva-
lent practice with 30% of businesses refusing to
contest public procurement exercises, mainly due
to concerns that requirements have been tailored
to favour individual companies. Those that do take
part in public procurement report moderate satisfac-
tion with the process and its outcomes.
Tax-related requirements remain a key barrier to
business success with 85% of respondents report-
ing their operations obstructed by some form of reg-
ulations, with taxation requirements top of the list
(41%). Minimum wage and employment regulations
have been also cited by 21% of all businesses sur-
veyed.
There is a notable improvement in perceptions for
the Republic of North Macedonia, alongside a de-
terioration in confidence in Montenegro. The Re-
public of North Macedonia has embarked on a path
of recovery from political instability which has, so
far, translated into more trust in government by the
private sector. At the same time, political and other
developments have caused an across-the-board de-
cline in both Montenegro and Albania.
A third of Western Balkans businesses believe that
information on state aid should remain confiden-
tial, while a third want it publicly released. Manag-
ers from Kosovo* and the Republic of North Mace-
donia are the most transparent with more than 40%
advocating better access to state aid information;

Figure 33: How much do you feel the Government of your economy takes into account the concerns of
businesses?**
(All respondents - N=1215, share of total, %)

Western Balkans 25 51 21 12

Albania 29 47 23 1

Bosnia and Herzegovina 49 44 5 11

Kosovo* 30 36 30 4 1

Republic of North Macedonia 27 45 21 2 5

Montenegro 16 58 19 3 5

Serbia 15 57 25 12

0 20 40 60 80 100

Not at all Quite a lot DK/refuse Significantly higher than 2018

Significantly lower than 2018
Somewhat Very much

**The figures might not add to 100% due to rounding.

53
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

meanwhile, only a quarter of their counterparts from
Bosnia and Herzegovina would prefer to keep the in-
formation secret.
Most Western Balkans business leaders feel their
governments pay little to no attention to their con-
cerns. Around three-quarters of all respondents say
their governments take their interests into account
somewhat at most. The share of those satisfied with
how the authorities treat them stands around a fifth
(22%). Nonetheless, governments in the region have
made some progress in reaching out to the business
community, as the share of those who think that
governments do not take their concerns at all is con-
siderably lower in 2019 (down to 25% from 35% in
2018). Viewed by economy, Albania records the sin-
gle biggest decline in this regard (-15 points), indicat-
ing good work by the government there. Meanwhile,
the share of businesses satisfied with the respon-
siveness of their government has shrunk significant-
ly in Montenegro (down to 22% from 37% in 2018).
Business leaders in Bosnia and Herzegovina are by
far the least satisfied with their government, with
Kosovo* and Serbia at the other end of the scale.
Share of largely satisfied companies across the re-
gion is generally similar, the two outliers: Kosovo*,
with 34%, as the most positive economy, and Bosnia
and Herzegovina, with 6%, as the most negative.
Large companies, exporters, and foreign-owned
companies are generally happier with the respon-
siveness of their respective governments (51%).
Meanwhile, only 22% of SMEs consider their govern-
ments to be supportive. Higher satisfaction rates of
large companies, which are also major employers,
may be due to their better negotiating power.

Figure 34: What percentage of total annual sales would you estimate a typical firm in your area of
business reports for tax purposes?**
(All respondents - N=1215, share of total, %)

100 4
15 13 16
19 18

80 38

60
87 23 72 58
73 69
69
40

22
20 8
9
7 5 7 10 6 8
1 6 10 5 2 4
0 1 1 3 5 3 3

Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western Balkans

Herzegovina North Macedonia

Significantly higher than 2018

Up to 25% 26% - 50% 51% - 75% 76% - 100% DK/refuse Significantly lower than 2018

Mean

Western Balkans 88

Albania 93

Bosnia and Herzegovina 90

Kosovo* 64

Republic of North Macedonia 89

Montenegro 82

Serbia 89

0 20 40 60 80 100

**The figures might not add to 100% due to rounding.

54
An average Western Balkans company reports
around 88% of its annual sales for tax purposes.
In other words, around 12% of all revenues are at-
tributed to the grey economy. Fiscal discipline has
improved slightly, as the percentage of reported
revenues has expanded from 85% in 2018 to 88%
in 2019. Viewed by individual economy, however, it
is clear that the improvement in regional scores is
down exclusively to Albania’s remarkable year-on-
year improvement (+15 points) as all the other econ-
omies in the region have regressed, if slightly.
Business leaders from all Western Balkans econo-
mies report similar levels of fiscal discipline, save
Kosovo*. Managers from this economy not only
report the lowest share of sales (64%), but are also
most reluctant to discuss them (38%). At the same
time, their counterparts from Albania report the high-
est share of sales (93%) and are the most open to
discussing this issue freely.
Interestingly, there are no significant variations
between companies across different sizes, market
orientation or ownership.
The percentage of the actual wage bill reported for
tax purposes (87%) is almost the same as the lev-
el of declared sales (88%). Also, the share of the
wage bill reported is the same in 2019 as it was in
2018. It should be noted that undeclared wage bills
include both salaries of unregistered workers as well
as the underreported wages of those workers that
are on the official payroll.
Again, the reported percentage of the wage bill
does not vary too widely across different econo-
mies with Kosovo* once more the outlier. Albanian

Figure 35: What percentage of the actual wage bill would you estimate a typical firm in your area of
business reports for tax purposes?**
(All respondents - N=1215, share of total, %)

100 2
15 12 18 17
20

80 42

60
53
93 67 76
20 67
67
40

18
10
20
6 14 13 5 6
5
2 12 5 4 6
8 6
0 2 1 2 4 3

Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western Balkans

Herzegovina North Macedonia

Significantly higher than 2018

Up to 25% 26% - 50% 51% - 75% 76% - 100% DK/refuse Significantly lower than 2018

Mean

Western Balkans 87

Albania 95

Bosnia and Herzegovina 88

Kosovo* 63

Republic of North Macedonia 91

Montenegro 79

Serbia 87

0 20 40 60 80 100

**The figures might not add to 100% due to rounding.

55
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 36: What percentage of the total number of employees would you estimate a typical firm in your
area of business registers with the relevant authorities?**
(All respondents - N=1215, share of total, %)

100 2
9
18 14 17
20

80 40

60
64
95 21 80
68 72
73
40
16

20
16 7
5 10 3 5
6 2
1 7 9 5
0 5 4 2 2
1 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western Balkans
Herzegovina North Macedonia

Up to 25% 26% - 50% 51% - 75% 76% - 100% DK/refuse

Mean

Western Balkans 90

Albania 96

Bosnia and Herzegovina 89

Kosovo* 62

Republic of North Macedonia 92

Montenegro 85

Serbia 91

0 20 40 60 80 100

enterprises report 95% of actual wage bills for tax
purposes on average (an increase of 11 points),
while, at the other end of the scale, companies from
Kosovo* are both the least transparent (42%) and
report the smallest portion of wage bill (63%). Also,
fiscal discipline in Kosovo* has deteriorated signifi-
cantly and to an extent well above the regional aver-
age (-11 points since 2018).
Again, there is not much variation between compa-
nies of different sizes, market orientation, or owner-
ship.
Every tenth worker in the region’s business sector
is part of the grey economy; in other words, one out
of ten are not covered by social security, or the rights
guaranteed under a valid employment contract.
Albanian businesses are both the most responsi-
ble and the most transparent, in keeping with the
trend for the region, whereas Kosovo* is once more
the regional outlier. As many as 96% of Albanian
corporate workers are covered by an official employ-
ment contract. At the same time, close to 4 out of
10 workers in the corporate sector in Kosovo* do
not have a valid contract. Businesses in Kosovo* are
also by far the most reluctant to provide the request-
ed information (40%).
High numbers of undeclared workers, or revenues
and wage bills, may have an adverse effect on the
sustainable development of Western Balkans busi-
nesses. There are three key ways in which the grey
economy negatively impacts the economy: (1) unfair
competition – legitimate businesses are faced with

**The figures might not add to 100% due to rounding.

56
Figure 37: To what extent do you agree with the following statement - Laws and regulations affecting
my company are clearly written, not contradictory and do not change too frequently?**
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means completely disagree and 5 strongly agree,
share of total, %, mean)

100% 0 1 23 0 1 1 5
8 3 4
9 10
19 11
24
80%
34 4
44 32 49 42
3.5 3.6 3.4 3.4
60% 3.4
39 31
3.1 3.1 3
40% 30 25

22 32 29
29 31
2
20% 15 14
16 12 11 12
15 10
12
4 4 4 4 6 1
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Completely disagree Tend to agree Mean Significantly higher than 2018
Significantly lower than 2018
Tend to disagree Strongly agree
Neither agree nor disagree DK/refuse

a heavy burden of taxation and social insurance pay- and therefore, the amount available for services and
ments, while their competitors avoid these costs and infrastructure is reduced.
constraints; (2) decent employment – employees
Businesses from the region tend to be satisfied
are either not covered with full social security com-
with the laws and regulations in force in their econ-
pensations or are not even registered through valid
omies (3.4), with the score even improving slightly
contracts; (3) public revenues – if the government
compared to 2018. Just over half of all managers
is not collecting all revenues, the tax base is eroded
Figure 38: To what extent do you agree with the following statement - Information on the laws and
regulations affecting my company is easy to obtain from the authorities?**
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means completely disagree and 5 strongly agree,
share of total, %, mean)

100% 0 1 2 0 5
6 4 1 1
14 12 6 10
21 15
80%
4
42 42 40
34 38
3.5 3.6 35
60%
3.3 3.3 34 3.3 3.3 3.3
3

40% 28
30 23 36 32
29 29
2
20%
15 15
16 14
16 12 13
5 9 1 3 8 3 4
0% 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Completely disagree Tend to agree Mean Significantly higher than 2018
Significantly lower than 2018
Tend to disagree Strongly agree
Neither agree nor disagree DK/refuse

**The figures might not add to 100% due to rounding.

57
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

from the region say that the laws are both clear and
relatively stable over time, with only 18% expressing
dissatisfaction.
Judging by the mean score, the clarity and con-
sistency of legislation are best in the Republic
of North Macedonia (3.6), while Albania boasts
the single largest number of satisfied managers
(58%). At the same time, satisfaction with laws and
regulations is lowest in Bosnia and Herzegovina and
Montenegro.
Nonetheless, perceptions of the regulatory frame-
work in Bosnia and Herzegovina have changed for
the better and in a significant way (+0.3), with the
Republic of North Macedonia also recording a sig-
nificant hike in approval (+0.2). Meanwhile, there has
been a notable deterioration in the business’ percep-
tion of relevant legislation in Montenegro (-0.4) and
Albania (-0.2).
Large companies tend to be happier with laws
and regulations than SMEs (3.6 vs. 3.4). Likewise,
heads of firms operating with foreign capital tend to
be more satisfied than domestically-owned corpora-
tions (3.6 vs. 3.4)
Close to half of all respondents found information
on laws and regulations easy to obtain (3.4). The
score has, however, slightly deteriorated compared
to last year (-0.1).
Information on laws is most easily accessible for
companies in the Republic of North Macedonia
(3.6), as attested by 55% of managers polled. Gen-
erally, all Western Balkans economies report similar
satisfaction figures (around a half), while there are
marked differences in the share of negative respon-
dents; Bosnia and Herzegovina (24%), Montenegro
(24%) and Albania (21%) have the largest proportion
of dissatisfied respondents, and consequentially, the
lowest scores (3.3).
Again, 2019 has seen some positive change for
Bosnia and Herzegovina (+0.3) and the Republic of
North Macedonia (+0.2), while Albania (-0.5) and
Montenegro (-0.4) have suffered substantial deteri-
oration in scores.
Notably, businesses working in the sector of agricul-
ture, hunting, fishing or forestry report a lower score
than businesses in other sectors (3.1 vs. 3.4).
Fewer than half of all business leaders are satis-
fied with public administration consistency and
predictability (3.3) – compared to last year, there is
a slight dip in scores (-0.1).
Governments of Kosovo* and the Republic of North
Macedonia are the most consistent when it comes
to the interpretation of laws and regulations (3.5).
At the same time, administrations in Albania and
Bosnia and Herzegovina are less effective, with 25%
and 29% unhappy respondents, respectively.
Albania, Montenegro and Kosovo* have once again
suffered a substantial drop in scores (-0.4, -0.3 and
-0.2, respectively). Meanwhile, public administra-

Figure 39: To what extent do you agree with the following statement - The state administration’s
interpretations of the laws and regulations affecting my company are consistent and predictable?**
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means completely disagree and 5 strongly agree,
share of total, %, mean)

100% 1 1 2 1 5
6 8 5 5 8
13
19 12
80%
33 31 4
43 37
39 31
31
60% 3.5 3.5 3.4
3.2 3.3
3.1 3.1 3
35 31
40%
29 35
36 35 37
2
20% 19
20 12
11 14
11 11
10 11
0% 5 2 4 3 5 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Completely disagree Tend to agree Mean Significantly higher than 2018
Significantly lower than 2018
Tend to disagree Strongly agree
Neither agree nor disagree DK/refuse

**The figures might not add to 100% due to rounding.

58
Figure 40: To what extent do you agree with the following statement - Requests for information held
by a government agency are granted in timely manner?**
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means completely disagree and 5 strongly agree,
share of total, %, mean)

100% 2 1 5
11 8 11 8 8 5 8

14
80%
4
40 35 42 53 46
43 28
60% 3.5 3.4
3.4 3.4 3.4 3.3
3.2 3
40% 24
34 26
24 31 26
25 2
20%
20 16
14 15
17 14 12
7 7 2 3 8 3 5
0% 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Completely disagree Tend to agree Mean Significantly higher than 2018
Significantly lower than 2018
Tend to disagree Strongly agree
Neither agree nor disagree DK/refuse

tions in Bosnia and Herzegovina and the Republic
of North Macedonia have become more consistent
and predictable (+0.2 each).
Again, the results are independent of compa-
ny size, ownership, and market orientation, while
companies that belong to the sector of agriculture,
hunting, fishing or forestry report a lower score than
businesses in other sectors (3.1 vs. 3.3).
More than half of all respondents are satisfied
with their governments’ efficiency in providing re-

Figure 41: To what extent do you agree with the following statement - The information provided is
pertinent and complete?**
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means completely disagree and 5 strongly agree,
share of total, %, mean)

100% 1 2 1 5
7 7
11 9 10 10
15
16
80%
34 4
35 43
39 3.7 31 41
60% 3.4 3.4 3.4 3.4
3.3 51
3.2 3

40% 32
27 35
28 36 32
2
20% 24
16 17
18 14 13
6 11
6 7 1 2 5 2 3 1
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Completely disagree Tend to agree Mean Significantly higher than 2018
Significantly lower than 2018
Tend to disagree Strongly agree
Neither agree nor disagree DK/refuse

**The figures might not add to 100% due to rounding.

59
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 42: To what extent do you agree with the following statement - Requests for information are
granted at a reasonable cost?**
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means completely disagree and 5 strongly agree,
share of total, %, mean)

100% 2 1 1 5
10 5 8 4 8
11 14
15
80%
34 39 4
33 38
47 35
3.5 3.5 26
60%
3.3
3.1 3.2 3.2 3.2
3
40% 25 36
32 31
29
38
28
2
20% 18
19 18 17 16
10
12 12
5 1 5 3 6 6 1
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Completely disagree Tend to agree Mean Significantly higher than 2018
Significantly lower than 2018
Tend to disagree Strongly agree
Neither agree nor disagree DK/refuse

quested information (3.4). Moreover, compared to
last year, there has been a slight upturn in the overall
score (+0.1).
Resolving information requests takes the least
amount of time in Serbia (3.5), while managers
from Albania, Kosovo* and the Republic of North
Macedonia express a similar level of satisfaction
(3.4). Even the two bottom-ranked economies, Bos-
nia and Herzegovina and Montenegro, are not too far
behind (3.2).
In terms of year-on-year changes by economy, both
the Republic of North Macedonia and Bosnia and

Figure 43: In the past three years, has your company decided not to take part in a public tender or a
public procurement procedure even though you could have offered the goods or services solicited?**
(All respondents - N=1215, share of total, %)

100% 4 5 6 6
7 6
8

80%

54
60% 57 70 67
55 67 77

40%

39
20% 38
40
24 25 17 28
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia

No DK/refuse
Yes

**The figures might not add to 100% due to rounding.

60
 Figure 44: If yes, was it for any of the following reasons? - Multiple answers allowed**
(Respondents whose company decided not to take part in a public tender or a public procurement procedure -
N=373, share of total, %)

100

90

80
67

70

60
47
50
37 37 37
34 33
40 32 31
28 29 29
26
30 22
21 20
19 19 19
16 16 17 16
20 15 15 14
13 13
10 11 11 10
8 8 8
10 5 5 5 6 6 5
4 4 4 4 4 4
1
0
Albania Bosnia and Kosovo* Montenegro Republic of Serbia Western Balkans
Herzegovina North Macedonia

The criteria seem to be Unclear selection or The deal seemed to have The deadline for submitting
tailor-made for certain evaluation criteria been sealed before the the bids were too tight and
participants tender was published impossible to meet

The procedure seemed Other None of the above DK/refuse

too bureaucratic or
burdesome

Significantly higher than 2018

Significantly lower than 2018

Herzegovina have improved compared to 2018 (+0.4
and +0.2, respectively), while the approval ratings de-
teriorated further in Montenegro (-0.3).
It seems that large companies take less time to ob-
tain information (3.6 vs. 3.4), with a similar discrep-
ancy noted for exporting and non-exporting compa-
nies (3.5 vs. 3.3).
There is moderate satisfaction with pertinence and
completeness of information provided by regula-
tory authorities (3.4). As in the previous survey in-
stalments, slightly more than half of all respondents
consider the information obtained both relevant and
complete, while dissatisfaction is expressed by 16%
of managers polled.
The relevant regulatory authorities in the Republic
of North Macedonia lead the charts when it comes
to perceived pertinence and completeness of the
information provided (3.7), with two-thirds of happy
respondents. Meanwhile, other regional economies
are at, or around, the average (3.4) with only Bosnia
and Herzegovina slightly below (3.2).
Compared to 2018, the level of information obtained
improved the most in the Republic of North Macedo-
nia (+0.5) and Bosnia and Herzegovina (+0.2); mean-
while, positive responses have gone down across
the other four economies (-0.2).
Once more it is the large companies that more of-
ten praise their relationship with regulatory agencies
than the SMEs (3.8 vs. 3.4). The same is true for for-
eign and domestically owned corporations (3.6 vs.
3.4)
Fewer than half of all respondents consider the cost
of obtaining information from public authorities jus-
tified (3.2). At the same time, almost a quarter con-
sider the costs to be excessive, with a slight dip in
approval recorded compared to 2018 (-0.1).

**The figures might not add to 100% due to rounding.

61
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Satisfaction with the cost of information provided
is reportedly highest in Albania and Kosovo* (3.5),
with only one-in-seven unhappy respondents. Sat-
isfaction is lowest in Bosnia and Herzegovina (3.1),
with as many as 30% of all managers describing the
costs as excessive. The remaining economies in the
region are largely in line with the Western Balkans’
average.
Compared to 2018, there is a steep drop in the num-
ber of satisfied respondents in Montenegro (-0.3)
and, to a lesser degree, Serbia (-0.1). Meanwhile,
there is an increase in support for service costs in
all remaining economies, most notably in Bosnia and
Herzegovina and the Republic of North Macedonia
(+0.3 for both).
Different company sizes, market orientation, owner-
ship or industry membership seemingly do not play
a major role in the appraisal of costs involved with
obtaining information.
Overall, this section shows that regional executives
are moderately happy with their business-to-gov-
ernment relationship. However, not much progress
has been made overall, as negative developments
in Montenegro and Albania have offset notable im-
provements in the Republic of North Macedonia and
Bosnia and Herzegovina.
Close to 30% of all companies in the region decid-
ed against contesting public tenders event though
they could have offered the goods and services
solicited. The number of voluntary withdrawals has

Figure 45: What is the share of the public procurement market in your company's last year overall
turnover?**
(All respondents - N=1215, share of total, %)
0 0 0 0 0 0
100 3 4 1 2 0 2 3
1 3 8 3 9 1 2
3 7 3 14
17 13
80 19
21

60

92
86 82 82
40 79
72
66

20

0
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western Balkans
Herzegovina North Macedonia

Up to 25% 26% - 50% 51% - 75% 76% - 100% DK/refuse

Mean

Western Balkans 12

Albania 7

Bosnia and Herzegovina 12

Kosovo* 17

Republic of North Macedonia 12

Montenegro 22

Serbia 12

0 5 10 15 20 25

**The figures might not add to 100% due to rounding.

62
 Figure 46: Have you been contacted for any reason by some public procuring entities
over the previous 3 years?**
(Respondents whose company has earned any revenue from public procurement - N=526, %)

100%

80%
42 48 65 53
60 49
60% 83

40%
58 52
51 47
20% 40 35

17
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia

No
DK/refuse
Yes

actually risen since the last survey instalment (up to
28% from 24% in 2018).
Companies from Bosnia and Herzegovina (40%),
Albania (39%), and the Republic on North Macedo-
nia (38%) are most likely to decide against contest-
ing a public procurement while only 17% of busi-
nesses from Serbia do so regularly. Montenegro and
Kosovo*, meanwhile, are at, or around, the regional
average.
The share of companies not taking part in public
tenders has increased dramatically in Albania (+22
points), and to a lesser extent in the Republic of
North Macedonia and Montenegro, while shrinking
in Serbia.
Large companies are much less likely to avoid
contesting tenders than small and medium-size
enterprises (7% vs. around 30%). Also, the practice
of avoiding public tenders is more common with do-

Figure 47: Over the past three years, how often have public procuring entities been in contact to consult
you on the following?**
(Respondents who have been contacted by some public procuring entities over the previous 3 years - N=210, %)

100 6
7 7 7
8 5 6 8
80
33
46
60 47
55

40 29
19
22
20 22
24 25
15
8
0
Technical specifications for The drafts of tender The drafts of Cost estimates
goods, works or services documents they prepare procurement contracts for goods, services
they intend to purchase they prepare or works

Never Once A few times Often DK/refuse Significantly higher than 2018
Significantly lower than 2018

**The figures might not add to 100% due to rounding.

63
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

mestic companies than foreign-owned ones (28% decline but still very prominent (down to 22% from
vs. 20%). 28% in 2018). It is worth noting that the procedures
seem to have become much less cumbersome (16%
Lack of confidence in governments acting with in-
in 2019 vs. 26% in 2018) and are now cited as prob-
tegrity is largely to blame for companies not tak-
lematic only as frequently as tight deadlines, which
ing part in public procurement. Although in gradual
is a major positive development.
decline, the belief that criteria for prospective bid-
ders were tailored to fit a certain vendor is still the Close to half of all respondents from Bosnia and
chief reason why companies decide not to take part Herzegovina feel that the tender has been “fixed”
in public tenders (33%). Feeling that the deal was to benefit a third party (47%). Likewise, 37% believe
sealed before the call was published is likewise in that the contract has been awarded even before the
Figure 48: Over the past three years, how often have public procuring entities been in contact to consult
you on the following?**
(All respondents - N=210, share of total, %)
Technical specifications for goods, works or services they intend to purchase
0
100 0 0 0 0
4 7
11
14
12 24 4 8
33
80

64
60 47
59 39 59 55

39
40

17
24 25
20 22
24 20
28
20
12 12 8
0 3 7
0
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western Balkans
Herzegovina North Macedonia

N 25* 51 18* 29* 41 46 210

Never Once A few times Often DK/refuse *Small base for valid conclusions

The drafts of tender documents they prepare

0
100 0 4 0 0 0
8 7 7
2 11
20 5
22 2
80
32 31
41
32 46
60 54
39

24 8
40 45 22
19

20 45 17
36 39
27 24
17 15
0
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western Balkans
Herzegovina North Macedonia

N 25* 51 18* 29* 41 46 210

Never Once A few times Often DK/refuse *Small base for valid conclusions
**The figures might not add to 100% due to rounding.

64
The drafts of procurement contracts they prepare

100 0 0 0
4 6 6 10 11 7
14 2 8
32
80
44 44
48
60 35
57 47
27

40 20 17
24
21 22
22
20 22
32 33
22 21 20
15
9
0 0
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western Balkans
Herzegovina North Macedonia

N 25* 51 18* 29* 41 46 210

Cost estimates for goods, services or works
Never Once A few times Often DK/refuse *Small base for valid conclusions
100 0 0 0
4 6 6 10 11 7
14 2 8
32
80
44 44
48
60 35
57 47
27

40 20 17
24
21 22
22
20 22
32 33
22 21 20
15
9
0 0
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western Balkans
Herzegovina North Macedonia

N 25* 51 18* 29* 41 46 210

Never Once A few times Often DK/refuse *Small base for valid conclusions

tender was published. Executives from this econo-
my are also most likely to cite excessive bureaucracy
as a barrier to competing (28%). Meanwhile, Serbian
managers most frequently cite tight deadlines as a
deterrent (37%), while more than two-thirds of man-
agers who avoid public tenders in Albania fail to pro-
vide the reasoning why.
Similar to last year, Western Balkans companies
source 12% of their revenues from public pro-
curements. Montenegrin companies are most de-
pendant on public funds (22%), while their Albanian
counterparts make only 7% of their sales to the gov-
ernment. It is also noteworthy that almost one in ten
companies from Montenegro depend on public pro-
curements for the vast majority of their sales (76%-
100%).
Slightly fewer than half of all businesses in the re-
gion have been contacted by public procurement
entities over the past three years. Moreover, the
practice has become more common in 2019 (up to
47% from 42% in 2018, and especially widespread in
Albania (58%). Meanwhile, only 17% of all respon-
dents in Kosovo* report being contacted by public
procurement authorities.
Public entities most frequently contact business-
es to inquire about technical specifications (63%)
and cost estimates (55%), although to a lesser ex-
tent than last year. Soliciting aid for drafting tender
documents is the third most common reason cited
for public procurement authorities to get in touch
with regional businesses. Communication between
public authorities and the private sector is vital in

65
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 49: Have you used guidelines or manuals produced by the national procurement authority
in the past three years?**
(Respondents whose company has earned any revenue from public procurement – N=526, %)

100%

80%
42
44 48 63 50 52

60% 81

40%
58 50
56 48
20% 37
52
19
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia

No DK/refuse higher than 2018

Significantly
Physical infrastructure Significantly lower than 2018
Yes

Figure 50: In general, how useful were the guidelines and manuals you used for solving your
practical problems?**
(Respondents who have used guidelines or manuals produced by the national procurement authority in the past three
years - N=226, scores are on a scale of 1 to 5 where 1 means not useful and 5 very useful, share of total,%, mean)
N 24* 51 20* 42 44 45 226

100% 5 2 1 5
14 11 14
21 20 21
80% 30
18
4
3.8 25 38 32
3.7
3.5 3.6 3.5
60% 26
50 3.2
3.2 3
45
40% 52
40
46
50 49 2
20%
21
18
15 9 6
0% 8 6 2 5 2 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Not useful Slightly useful Mean Significantly higher than 2018
Fairly useful Useful Significantly lower than 2018
Very useful DK/refuse
*Small base for valid conclusions

building a relationship of trust between the two and

increasing the business sector’s confidence in the
integrity, as well as efficiency, of the procurement
process.

**The figures might not add to 100% due to rounding.

66
 Figure 51: When participating in public procurements, have you used the standard forms or models
provided by the national procurement authority in the past three years?**
(Respondents whose company has earned any revenue from public procurement – N=526, %)

100%

30
80%
37
37 48 38 40
69
60%

40%
70
62 62
63 60
20% 52
31

0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia

No
Yes

The practice of relying on official procurement
guidelines for information on the tendering pro-
cess is gaining traction across the region. In 2019,
48% of the Western Balkans managers reported
using guidelines provided by national procurement
authorities, compared to 41% in 2018. The practice
Physical infrastructure
has become most prevalent with businesses from
the Republic of North Macedonia (58% from 29% in
2018) and Albania (56% from 29% in 2018). Mean-
while, Kosovo* businesses are the least likely to use
the guidelines (19%).
Using guidelines and manuals for procurement
troubleshooting is moderately helpful for busi-

Figure 52: How would you rate the usefulness of the standard forms or models?**
(Respondents who have used the standard forms or models provided by the national procurement authority
in the past three years - N=290, scores are on a scale of 1 to 5 where 1 means not useful and 5 very useful,
share of total, %, mean)
N 27 69 32 45 61 56 290

100% 3 2 4 5
4 4
13 13 10 17
11
37
80%
4.2 26 4
25 38 41
3.6 3.6 3.6
60% 3.4 3.4 3.4
53 39
3
40%
52 48 56
48 33 2
22 44
20%

9 9
7 12 3 2
0% 4 3 2 3 2 2 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Not useful Slightly useful Mean Significantly higher than 2018
Fairly useful Useful Significantly lower than 2018
Very useful DK/refuse
*Small base for valid conclusions

**The figures might not add to 100% due to rounding.

67
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

nesses in Western Balkans, as 46% of managers
described them as useful or very useful. Moreover,
satisfaction with the guidelines has increased since
the previous instalment (up to 3.5 from 3.3 in 2018).
Business leaders from the Republic of North Mace-
donia are more likely to find the guidelines helpful
than their counterparts elsewhere in the region (3.7).
This is in line with expectations as they also tend to
utilise the manuals and guidelines to a greater extent
than anyone else. Respondents from Serbia are in
a close second (3.6), with Bosnia and Herzegovina
and Montenegro holding up the other end (3.2 both).
Due to insufficient sample size, no conclusions can
be drawn for Albania and Kosovo*.
Reliance on standardised forms provided by the
national procurement authority is becoming in-
creasingly commonplace, as 60% of businesses
reported using them in 2019, up from 55% in 2018.
Companies from Bosnia and Herzegovina rely on
standardised forms the most (70%), with Albania
(63%) and the Republic of North Macedonia and
Serbia (62% each) above the regional average. At
the other end, fewer than a third of companies from
Kosovo* employ standardised forms issued by the
procurement authority (31%).
The most significant rise in the usage of forms was
reported by companies from the Republic of North
Macedonia (up to 62% from 42% in 2018), with Al-
banian businesses increasingly relying on templates
provided by the procurement authorities (up to 63%
from 45% in 2018). At the same time, Montenegrin
businesses are less likely to use forms than in the
previous survey instalments.
Medium-sized enterprises (68%) are more likely
to use any of the standardised models than small
and micro-companies (53% and 64%, respectively).
However, when it comes to evaluating their useful-
ness, there is no variation between small and me-
dium-sized companies, while micro-enterprises find
them less useful on average.
Moreover, the year-on-year analysis shows that sat-
isfaction with the forms has improved since 2018
(up to 3.5 from 3.3). Much of the increase can be
attributed to higher satisfaction as expressed by
managers from the Republic of North Macedonia,
Kosovo* and Bosnia and Herzegovina; changes in
Serbia and Montenegro, meanwhile, were negative.
Companies from Kosovo* and the Republic of North
Macedonia have expressed the greatest satisfaction
with form utility (3.6), with the other economies not
far behind (3.4).
According to the survey results, only one in ten
businesses had employees attending a training on
public procurement in the past three years, down
from 23% in 2018 and 28% in 2017.
While the number of companies participating in the
trainings is similar across all the economies in the
region, business leaders in Kosovo* and Bosnia
and Herzegovina tend to rely on them to a some-

Figure 53: Have you or somebody else from your company attended any training on public
procurement in the past three years?**
(All respondents - N=1215, share of total, %)

100%

80%

60%
85 90 92 90 90
86
95
40%

20%

14 15 11 8 10 10
0% 5

Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western

Herzegovina North Balkans
Macedonia

No
Yes

**The figures might not add to 100% due to rounding.

68
Figure 54: How would you rate the usefulness of the training in general?**
(Respondents who have attended training on public procurement in the past three years - N=126, scores are on a
scale of 1 to 5 where 1 means not useful and 5 very useful, share of total, %, mean)

N 10* 28* 30 21* 17* 20* 126

100% 5
7 6
17 19 20 17
30
80%
32 4
3.9 3.9 3.8 38
3.7
38 3.6 3.6
60% 3.3 59
30 35
63 3
40%
50
35 37 2
20% 40 43
10 35
7 3
10 10 5
0% 4 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Not useful Slightly useful Mean Significantly higher than 2018
Fairly useful Useful Significantly lower than 2018
Very useful DK/refuse
*Small base for valid conclusions

Figure 55: Have you contacted the national procurement authority for advice or other support in
the past three years?**
(All respondents - N=1215, share of total, %)

100%

80%

60%
85 85 80 87 85
89 82

40%

20%

16 20
11 18 15 13 15
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia

No
Yes

what greater extent than their counterparts, while
the opposite is true for Albania.
Large and medium companies take part in these
trainings more often than their smaller counterparts
(around 20% vs. 8%).
**The figures might not add to 100% due to rounding.
A regional score of 3.6 indicates that trainings on
public procurement are moderately helpful, as 55%
consider them generally useful, while only 8% con-
sider them generally not useful. Compared to last
year, there is a notable decrease in trainee satisfac-
tion (0.2 from 2018). The sample size is insufficient
for an assessment of the individual economies.

69
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 56: Were the answers provided generaly helpful?**

(Respondents who have contacted national procurement autorithy in the past three years - N=189,%)

100
5

35
80 47 29
48 53
64
67
60

40 49 57
50
42
20 31
36 52
16
3 10 5
0
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western Balkans
Herzegovina North Macedonia

N 22* 37 31 30 42 27* 189

No Somewhat Yes DK/refuse *Small base for valid conclusions

Figure 57: Could you please tell me how satisfied are you with each of the following in your place
of living - Public services for businesses?**
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means completely dissatisfied and 5 strongly
satisfied, share of total, %, mean)

100% 1 2 2 3 14 5
3 6 2
5 4

25
80%
42 42 41 4
44 37
47
60% 3.4 3.4
39 3.3
3.2 3.2 3.2 3
2.9
40% 32
35 36 35
34
34 2
20% 22
18 17 14
15
13 8
10 6
0% 3 2 4 3 5 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Completely dissatisfied Tend to be dissatisfied Mean Significantly higher than 2018
Neither satisfied nor dissatisfied Tend to be satisfied Significantly lower than 2018
Strongly satisfied DK/refuse

Businesses seldom reach out to national procure- prevalent (20%), and Albania, where it is relatively
ment authorities. Only 15% of managers surveyed less common (11%).
initiated consultations with national procurement
Medium-sized companies are on average more like-
bodies over the past three years. Again, there is not
ly to contact national procurement agencies than all
much variation across the economies with two ex-
other types of corporations (30% vs. 15%)
ceptions: Montenegro, where the practice is more

**The figures might not add to 100% due to rounding.

70
 Figure 58: Could you please tell me how satisfied are you with each of the following in your place of
living - Digital services currently provided by the public administration for businesses?**
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means completely dissatisfied and 5 strongly
satisfied, share of total, %, mean)

100% 1 4 2 3 23 2 5
6 7
8 8 7
21
80% 31
4
44 40 49 43
3.7 44
60% 3.5 3.4 3.4 3.4
38
3.3
3.0 31 3
40%
29
26 31
27 34 33
17 2
20%
14 17 12
11 15 9 10
0% 2 3 5 4 2 5 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Completely dissatisfied Tend to be dissatisfied Mean Significantly higher than 2018
Neither satisfied nor dissatisfied Tend to be satisfied Significantly lower than 2018
Strongly satisfied DK/refuse

Out of those that reach out to national procurement
authorities, more than half find the information ex-
tracted to be useful. In addition, 42% describe the
contact as at least partially helpful, with only 5% un-
happy with the outcome. These numbers should en-
courage companies to get in touch with the relevant
authorities more often, as the contact is overwhelm-
ingly likely to be positive.
Western Balkans executives are fairly satisfied
with public services for businesses. After a decline

Figure 59: To what extent are you satisfied with how the government consults and involves private
sector when developing new laws and regulations relevant for doing business?**
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means completely dissatisfied and 5 strongly
satisfied, share of total, %, mean)

100% 1 4 4 1 2 5
1 3 2 6
11 4 1 1
15 17
25 23
80% 24 31
4
28

60% 39 31
38 36 36
2.9 3.0 3
26 2.9
40% 40 2.7
2.6 2.5
27 30
2.2 24 2
20% 18
32 28
20
16 18 13
12
0% 4 5 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Not satisfied at all Not satisfied Mean Significantly higher than 2018
Neither satisfied nor dissatisfied Satisfied Significantly lower than 2018
Fully satisfied DK/refuse

**The figures might not add to 100% due to rounding.

71
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

in satisfaction recorded in 2018, this year’s instal-
ment sees the regional score rebound to 3.3. This in-
cludes 45% of satisfied respondents and fewer than
a fifth who are unhappy with the services rendered.
The positive changes were largely driven by improve-
ments reported by businesses from the Republic of
North Macedonia (+0.5), Bosnia and Herzegovina
(+0.3), and, to a lesser extent, Serbia (+0.1). Mean-
while, satisfaction with public services declined, as
reported by businesses from Montenegro (-0.2).
Business satisfaction with public services is at its
highest level in Kosovo* and Serbia (3.4 for both)
with around half of positive responses. Bosnia and
Herzegovina, meanwhile, is the only economy where
the number of dissatisfied managers outnumbers
the happy ones (32% vs. 28%).
Satisfaction with public services for businesses
grows commensurate to the size of firm, from 3.2
for small companies to 3.5 for the large ones. A sim-
ilar relationship is evident with exporters and non-ex-
porters (3.4 vs. 3.2), as well as domestically- and for-
eign-owned companies (3.4 vs. 3.2).
Digital services provided by public administrations
are deemed satisfactory by half of the business-
es surveyed. Compared to the previous instalment,
the rating has declined slightly, to 3.4 from 3.5 in
2019. The rise in negative responses is especially
evident for Serbia and Montenegro (-0.3 each), and,
to a lesser extent, Albania and Kosovo* (-0.1 each).
At the same time, reports indicate that the quality of
digital services provided by public administrations
improved in the Republic of North Macedonia (+0.3)
and Bosnia and Herzegovina (+0.1).
Albania, meanwhile, leads the region in the quality

Figure 60: Which regulations do you consider to be an obstacle to the success of a business?
(All respondents - N=1215, two answers allowed, share of total, %)

100 1 1 3 2 2 2
6
10 11 8
13 15 13

80 32

60

88 87 90
40 85 84 85

62

20

0
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western Balkans
Herzegovina North Macedonia

Have obstacles Do not have obstacles DK/refuse

Western Balkans Obstacles, multiple answers

Tax-related 41
Minimum wage regulations 21
Employment regulations 21
Trading standards 15
Health and safety regulations 11
Environmental regulations 11
Planning/building/development 9
Republic of North Mac
Providing information/record-keeping 6
Pensions 6
Working time 3
No specific regulations/all regulations 13

0 10 20 30 40 50

**The figures might not add to 100% due to rounding.

72
Table 2: Which regulations do you consider to be an obstacle to the success of a business?**
(N=1030, only respondents who have obstacles)

Republic
Western Bosnia and
Albania Kosovo* of North Montenegro Serbia
Balkans Herzegovina
Macedonia
Tax-related 40.8 58.6 44.7 30.5 18.0 41.0 41.3
Minimum wage
20.8 24.1 21.4 23.5 20.0 21.0 19.4
regulations
Employment
20.6 18.2 25.7 16.5 14.0 31.7 20.4
regulations
Tranding
14.6 12.8 9.2 16.0 14.5 17.1 16.9
standards
Health
and safety 11.2 10.3 5.3 29.5 7.0 7.8 12.4
regulations
Environmental
11.1 10.8 4.4 10.0 3.5 5.9 16.4
regulations
Planning/
building/ 9.4 14.3 8.7 16.0 9.5 16.6 6.5
development
Providing
information/ 6.3 9.9 6.3 9.5 3.5 6.3 5.5
record-keeping
Pensions 5.7 3.0 8.7 7.0 2.2 11.7 5.5
Working time 3.2 0.5 2.4 7.5 5.0 4.9 3.0
No specific
regulations/all 12.6 3.9. 15.5 4.5 13.5 4.9 15.9
regulations

of digital services (3.7), with nearly 60% of satisfied
respondents. While a majority of the other regional
economies are at, or around, the average, Bosnia and
Herzegovina occupies the other end of the spectrum
(3.0).
Interestingly, satisfaction with digital services de-
clines as company size increases – from 3.4 for mi-
cro-companies to 3.1 for large. Likewise, domestic
companies tend to be happier than foreign-owned
ones (3.4 vs. 3.1).
Executives in the region feel detached from the
policy making process. More than a third of busi-
ness leaders in the region are unhappy with the in-
volvement of their businesses in shaping laws and
policies that are relevant to their industries, while
only a quarter are satisfied. There is some improve-
ment, however, as the regional score increased from
2.5 in 2018 to 2.7 in 2019. Businesses from Serbia
and the Republic of North Macedonia, in particular,
recorded notably higher levels of satisfaction com-
pared to last year (+0.2 each), with slight improve-
ments also reported in Albania and Kosovo*. Encour-
agingly, there was no regression recorded anywhere
in the region.
Nonetheless, in Bosnia and Herzegovina, managers
who feel excluded from the policy-making process
outnumber their satisfied counterparts five-to-one.
The situation is considerably better in the other five
economies, but still far from ideal. The only econo-
my where positive respondents outnumber negative
ones is Serbia (32% vs. 25%).
There is a notable and concerning discrepancy be-
tween large companies and SMEs with managers
of the latter feeling excluded to a significantly higher
degree when compared to their counterparts from
large enterprises (2.7 vs. 3.4). Also, executives of for-
eign-owned companies are much happier than their
domestic counterparts (3.2 vs. 2.7). The relationship
between size and origin, and influence on policy and
public decision making is worth investigating further
to establish whether SMEs are being disadvantaged
in a systemic fashion.

**The figures might not add to 100% due to rounding.

73
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

A significant majority of Western Balkans busi-
nesses report regulatory obstacles as standing
in the way of their success. Moreover, there are
no major indications of a concerted push to create
a more business-friendly environment, as the num-
ber of companies reporting regulatory obstacles in-
creased from 81% in 2018 to 85% in 2019. Since the
last instalment of the Barometer, the situation dete-
riorated the most in Kosovo* (from 71% of surveyed
businesses reporting obstacles in 2018 to 88% in
2019) and Montenegro (from 78% in 2018 to 87% in
2019). At the same time, positive developments are
evident in the Republic of North Macedonia, as the
share of businesses reporting regulatory obstacles
contracted from 88% to 62% in the space of a year.
The share of concerned businesses is relatively sim-
ilar across all Western Balkans economies, with the
Republic of North Macedonia the outlier as it boasts
a regional low of 62% unhappy executives.
In terms of issues most commonly cited, tax reg-
ulations are the most burdensome to businesses
surveyed, although to a lesser extent than pre-
viously (down to 41% from 48% in 2018). Mini-
mum-wage and employment regulations are the
next most common issues reported (21%), with
few, if any, changes since 2018. Environmental
regulations are cited as restrictive by only 11% of
surveyed executives; this may be down to either
lax enforcement or relatively undemanding legal
requirements.
Tax-regulations are seen as a dominant regulatory
issue across all Western Balkans economies, with
the Republic of North Macedonia the sole excep-
tion. As in previous survey instalments, tax reg-
ulation is most frequently cited as problematic in
Albania, with nearly 60% of respondents flagging it.
Minimum wage and employment regulations are
neck and neck. Minimum wage regulations almost
uniformly burden around a fifth of businesses in all
economies of the region, while employment regu-
lations are especially cumbersome for businesses
in Montenegro (32%) and Bosnia and Herzegovina
(26%).
Health and safety regulations are particularly chal-
lenging for businesses in Kosovo* (30%), a regional
high.
In terms of year-on-year changes, executives in the
Republic of North Macedonia cite taxation much
less frequently in 2019 (down to 18% from 57%).
Meanwhile, in Albania, minimum wage consider-
ations are less cited in this survey instalment com-
pared to 2018 (down to 24% from 39%).
The practice of resolving disputes through arbi-
tration courts is diminishing. Namely, just 15%
of Western Balkans’ corporate leaders reported
appearing before arbitration courts in the last 36
months, compared to 17% in 2018 and 20% in 2017.

Figure 61: Has your firm had any cases in arbitration courts in the last 36 months?**
(All respondents - N=1215, share of total, %)

100% 1 2 5 4 2 2

80%
83
65
60%
89 92 93 82 85
40%

20%
33
10 14 13 15
4 7
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia

No DK/refuse
Yes

**The figures might not add to 100% due to rounding.

74
 Figure 62: How many cases in civil or commercial arbitration courts have involved your company either
as a plaintiff or defendant in the last 36 months?**
(Respondents who had cases in arbitration courts - N=165, %)
0 0
0 0 0
100 0 4 4
7 4
14 14 4
6 0 24 6
9 0
80
7
3
60

100
93
40 86 86 86
78
66

20

0
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western Balkans
Herzegovina North Macedonia

N 21* 67 7* 14* 29* 27* 165

*Small base for valid conclusions
1 - 3 cases 4 - 6 cases 7 - 10 cases Over 11 cases
Significantly higher than 2018
Significantly lower than 2018

Figure 63: Do you agree with the following statement about state aid - Citizens and companies have full
access to information related to state aid policies and grants awarded to companies by the
public authorities?**
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means completely disagree and 5 strongly agree,
share of total, %, mean)
100% 3 6 5
3 5 9 4 5
5 3 4 3 3
5
21 13
80% 27
27 20
37 33 4

32
60%
41 3.2 28
32 3.1 3
2.9 2.9
2.8 2.8
40% 35 35
2.5 37
21
20 2
20% 26 32 21
26 18
16 15
8 2 4 5 9
0% 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Completely disagree Tend to agree Mean
Tend to disagree Strongly agree
Neither agree nor disagree DK/refuse

Businesses from Bosnia and Herzegovina are most public of North Macedonia (7%) especially unlikely
likely to resolve a dispute in arbitration court, with to engage in the practice.
a third seeking resolution through arbitration. The
Interestingly, medium-sized companies are much
practice is much less prevalent elsewhere in the re-
more likely to take their disputes to arbitration
gion, with businesses in Kosovo* (4%) and the Re-
court (26%), compared to large (16%) and small
**The figures might not add to 100% due to rounding.

75
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

(15%) corporations. Also, domestically owned com- publicly available (30%). Meanwhile, a third feel
panies more frequently seek dispute resolution in that this information is insufficient, while another
the arbitration court than foreign-owned ones (16% third are undecided.
vs. 8%).
44% of managers from Kosovo* feel there is suf-
The overwhelming majority of companies sur- ficient information on state aid already publicly
veyed were involved in 1-3 court cases over the available. Bosnia and Herzegovina is at the oppo-
past three years (86%), 6% were party to 4 – 6 cas- site end of the spectrum with the same proportion
es, and the share of those who have been involved of respondents (44%) who believe the available
in 7 cases or more stands at 8%. information to be insufficient. The respondents in
other economies surveyed are roughly at or around
Fewer than a third of all businesses in the West-
the regional average when it comes to their views
ern Balkans feel that state aid policies are relative-
on the publicly available information on state aid.
ly transparent (2.9). Meanwhile, the same number
disagrees while 35% are undecided. There is no clear consensus among the Western
Balkans business community whether the infor-
Kosovo* is reportedly the economy with the most
mation on state aid should remain confidential
transparent state aid system in the region (score
or be made publicly available. Namely, a third of
3.2), with two-fifths of managers surveyed sup-
businesses surveyed support the idea that this
porting the claim. At the other end of the spectrum,
information should remain private, while another
most managers from Bosnia and Herzegovina con-
third believe that this information should be publicly
sider the system in their economy to be non-trans-
available.
parent (2.5).
Businesses from Kosovo* (score 3.4) believe that
Foreign-owned companies, also the most frequent
state aid information should remain confidential
recipients of state aid, feel that the information
to an extent greater than elsewhere in the region.
provided is sufficient to a higher degree than their
Managers from Bosnia and Herzegovina, on the
domestically-owned counterparts (3.3 vs. 2.9).
other hand, believe that this information should be
This holds true for micro (2.8) and small (2.9) com-
made more publicly available (2.6). Interestingly,
panies vis-à-vis medium (3.1) and large (3.4) ones.
managers from Bosnia and Herzegovina and Koso-
Fewer than a third of all executives believe that
vo* are both unhappy for diametrically opposed rea-
there is sufficient information on state aid already

Figure 64: Do you agree with the following statement about state aid - Sufficient information on the
state aid given to companies by the public authorities is already publicly available?**
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means completely disagree and 5 strongly agree,
share of total, %, mean)

100% 31 4 5 4 5 5
2 9 6 6 4 5
4 6
27 18
80% 24 25
30 24 4
35

60% 32
32 3.3 3.1 35 3.0 2.9 34 3
2.8 2.9 35
40% 33
2.5 36
20
2
20% 29 22 22
20
24 24
15
8 3 10 9 11
0% 2 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Completely disagree Tend to agree Mean
Tend to disagree Strongly agree
Neither agree nor disagree DK/refuse

**The figures might not add to 100% due to rounding.

76
Figure 65: Do you agree with the following statement about state aid - Information about state aid
received by companies should remain confidential between public authorities and companies?**
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means completely disagree and 5 strongly agree,
share of total, %, mean)

100% 4 5 5
6 7 5 5
5 8 6
7 4 7
8
19 16
80%
19 26 25 4
36 24

60% 25
30 3.4
26 34
3.0 3.1 2.9 3
40 2.9 2.9
40% 19 32
2.6
16 36

15 20 16 2
20% 17 16
27
14 16 14 13 15
10
0% 2 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Completely disagree Tend to agree Mean
Tend to disagree Strongly agree
Neither agree nor disagree DK/refuse

sons – the former because the information on state

aid is not publicly available, and the latter because
the information on state aid is publicly available,
raising privacy concerns. The remaining regional
economies are at, or close, to the regional average.
Around 60% of managers of large companies be-
lieve that the information on state aid should be
publicly available, against only 30% of SME execu-
tives.

**The figures might not add to 100% due to rounding.

77
 BALKAN BAROMETER 2020
ACCESSIBILITY OF LOANS
Western Balkans businesses continue to finance
their operations from internal funds and retained
earnings, with the former playing an even more im-
portant role as a source of financing than in 2018
(70% vs. 58% of investments were financed from
this source, respectively), likely a result of solid
earnings in the previous year. That said, external
sources of financing remain largely underutilised.
Financing through commercial banks remains
much more popular among large and medium-sized
companies, while micro and small businesses re-
sort to more traditional sources of funding. There
is some evidence that financial markets and equity
financing are gaining popularity.
There is a slight increase in the number of loan ap-
plications as 29% of companies surveyed applied to
take out a credit (up from 27% in 2018). Some 7% of
loan applications were rejected, while on average it
took 16 days for the loan to be approved. SMEs and
large companies applied for loans in almost equal
shares (29%), yet findings presented in this section
suggest that SMEs use loans to finance business
operations rather than capital investments, oppo-
site to what large companies employ loans for.
While sources of financing are generally used to a
similar degree across all Western Balkans econo-
mies, commercial banks tend to be more popular in
Figure 66: What proportion of your company’s working capital and new fixed investment has
been financed from each of the following sources, over the past 12 months?**
(All respondents – N=1215, share of total)
100%
8 7
1 16
9 10
2 2
80%
13
29
60%
40% 82
69
53
20%
0%
Albania Bosnia and Kosovo*
Herzegovina
Internal funds/retained earnings Borrowing from banking sector
Loans from family/friends Other
**The figures might not add to 100% due to rounding.
78
BUSINESS OPINION | Analytical report
Bosna and Herzegovina, and less so in Albania and
the Republic of North Macedonia. At the same time,
companies from Kosovo* and Montenegro rely on
loans from family and friends more than their coun-
terparts from the rest of the region.
Western Balkans businesses mostly finance their
operations from internal funds and retained earn-
ings, with the former by far the most dominant
source of financing (up to 70% from 58% in 2018).
Reliance on the commercial banking sector re-
mains low, as only 13% of business operations are
financed from loans. The importance of loans from
family and friends is marginal at the regional level,
except in Kosovo* and Montenegro. Category other
comprises equity, state-owned institutions, credit
cards, trade credits (etc.), and while none of the in-
dividual categories have a significant share on their
own, as a group, they source some 14% of all invest-
ments.
Internal funds are a dominant source of financing
for every Western Balkans economy. In Albania
and the Republic of North Macedonia businesses
rely on own financing the most, with 82% and 76%
of their operations funded from this source, re-
spectively. The share of operations financed from
internal funds has grown significantly for both the
economies, with a 22-point surge in Albania and an
11 13
17 14
2
3
11 11
8 13
17
76 73
70
59
Republic of Montenegro Serbia Western
North Balkans
Macedonia
Significantly higher than 2018
Significantly lower than 2018
Figure 67: Which of the following sources of finance has your company used over the past five years?**
(All respondents - N=1215, share of total, %) (Multiple answers allowed)

98
100

88
90
84
81 82
80
69
70 66

60

50 46
40
38 38
40
33 33
31
30 26

20 17
14
1213 12 11
10 9 9
7 7 8 7 8 88 8 8
10 5 5 6 6 5
33 4 34 3
2 1 2
0
Albania Bosnia and Kosovo* Montenegro Republic of Serbia Western Balkans
Herzegovina North Macedonia

Internal funds/retained Trade credit from Borrowing from local Borrowing from
earnings suppliers banking sector state-owned banks,
including developmen
banks

Loans from Equity DK/refuse

family/friends

Significantly higher than 2018

Significantly lower than 2018

even more remarkable 44 point hike in the Repub- As expected, internal sources continue to be the
lic of North Macedonia. The share of investments most dominant financing stream across all West-
financed from retained earnings has not changed ern Balkans economies, with 82% of respondents
significantly for the other four Western Balkans using it over the past five years. The second most
economies since last year. commonly utilised source of funding is borrowing
from the local banking sector (33%). Loans from
Businesses in Bosnia and Herzegovina rely on
family and friends are less popular across the re-
commercial loans to a significantly greater degree
gion as a whole (11%), but are much more preva-
than elsewhere in the region (29% of investments).
lent in Kosovo* (40%) in particular, and Montenegro
Likewise, loans from family and friends are more
to a lesser extent (17%). The share of companies
popular in Kosovo* and Montenegro (10% and 11%,
using trade credit from suppliers has remained sta-
respectively), while largely negligible across the
ble and in keeping with the 2018 survey instalment
other four economies.
(9%). It is noteworthy that the share of companies
On average, SMEs finance some 70% of their oper- using equity as a source of financing is steadily ris-
ations through a combination of retained earnings ing, reaching 8% in 2019, and potentially heralding a
and loans from family and friends (vs. 45% for large new development in the financial markets.
companies). As expected, the opposite is true for
Aside from the general prevalence of internal
borrowing from the banking sector, which is much
funds and retained earnings as sources of financ-
more common for large companies (19%), and me-
ing across the region, individual economies exhibit
dium-sized ones (17%).
some near-unique features. Kosovo*, for instance,
**The figures might not add to 100% due to rounding.

79
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

has a significantly higher share of businesses that
have taken on loans from family and friends than
any other economy (40%). Likewise, businesses
from Bosnia and Herzegovina borrow from local
banks more than their counterparts elsewhere in
the region (46%). Meanwhile, equity financing is
much more popular among Serbian businesses
(14%) while state-owned and development banks
are more prevalent as sources of funding in the Re-
public of North Macedonia (12%), Bosnia and Her-
zegovina (10%) and Serbia (8%).
As may be expected, firms operating with foreign
capital are more likely to reach out to foreign banks
than their domestically-owned counterparts (28%
vs. 11%), while they both use local banks with sim-
ilar frequency. In general, reliance on the banking
sector over the past five years has grown commen-
surate to the size of the company (from 26% for mi-
cro-companies to 56% in large).
Fewer than a third of all Western Balkans compa-
nies have applied for a bank loan in the past year.
Compared to last year’s survey results, there is a
slight increase in the frequency with which region-
al companies apply for bank loans (up to 29% from
27% in 2018).
Businesses in Bosnia and Herzegovina are the most
likely to apply for a loan (50%), with a slight uptick in
applications since last year. At the other end of the
scale, bank loans are still used by a relatively small
number of companies in Albania and the Republic
of North Macedonia (18%). Meanwhile, the share
of companies from Montenegro applying for a loan
has dropped ten points in the course of a single year
(down to 27% from 37% in 2018) while Kosovo* has
witnessed an identical surge in interest (up to 29%
from 19% in 2018).
Both SMEs and large companies applied for loans
with equal frequency over the past 12 months (29%),
while an industry-level review shows higher loan in-
terest among companies doing business in agricul-
ture, hunting, fishing and forestry (41%).
The loan approval process takes an average of
16 days. Compared to the last year, the processing
period has been extended by a single day. Just un-
der a half of all companies surveyed manage to go
through the review process in under two weeks.
The Republic of North Macedonia is home to the
most efficient banking sector in the region with just
nine days needed to approve or reject a loan appli-
cation. Significantly, in 2018, this procedure took 25
days, with an impressive level of improvement in
the efficiency of banking institutions evident in just
one year. At the same time, in Albania, the applica-
tion review process takes 25 days and represents a
significant decline in the performance of the banking
sector there as eight days have been added to the
timeline since the 2018 survey. In Serbia, the loan
application review process has been extended by a
single day since 2018, while Bosnia and Herzegovina
and Montenegro saw the timeline extended by five
days in that same period.

Figure 68: Has your company applied for a loan from a bank in the past 12 months?**
(All respondents – N=1215, share of total)

100% 1 1 8 2 2
5

80%
49

64 71 69
60% 81 82 67

40%

50
20%
29 27 27 29
18 18
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Yes DK/refuse Significantly higher than 2018
Significantly lower than 2018
No

**The figures might not add to 100% due to rounding.

80
Figure 69: How many days did it take to agree the loan with the bank from the date of application?**
(All respondents - N=1215, share of total, %)

100 3 3
3 5 5
13 11
4 9 19
19
4 7
80 7
27 6 9
9 18 17
53 6
7 17
60
14 19 19
18 6

40
19 30 26 19
63
33 50
20
26 27
21 22
3
0 6

Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western Balkans

Herzegovina North Macedonia

Up to 7 days 15 - 21 days The loan was not approved Significantly higher than 2018
Significantly lower than 2018
8 - 14 days Over 21 days DK/refuse

Average number of days needed to agree a loan

Western Balkans 16

Albania 25

Bosnia and Herzegovina 21

Kosovo* 17

Republic of North Macedonia 13

Montenegro 10

Serbia 9

0 5 10 15 20 25

The share of rejected loan applications remains

stable at 7%. Applications by companies from the
Republic of North Macedonia are the most likely to
be rejected (19%), while their Albanian counterparts
usually see their requests approved, although after
having to wait a record high number of days.

**The figures might not add to 100% due to rounding.

81
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 70: You said that you company's loan application was rejected, what was the main reason for
this?**
(Respondents whose loan was not approved - N=24*, %)

100 3
20 14
25 22
80 14 40

20

60
35
100 100
40 40
71 13
60
20
75 27
20
0
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western Balkans
Herzegovina North Macedonia

Perceived lack of profitability of the firm Incompleteness of the loan application Significantly higher than 2018
Significantly lower than 2018
Lack of acceptable collateral Other
Inadequate credit history of the firm DK/refuse

No. of the respondents whose loan was rejected

Western Balkans 24*

Albania 1

Bosnia and Herzegovina 4

Kosovo* 5

Republic of North Macedonia 7

Montenegro 2

Serbia 5

0 5 10 15 20 25

**The figures might not add to 100% due to rounding.

82
CORRUPTION
There has been little overall progress in tackling tions in Serbia, while Kosovo*, Montenegro and bot-
corruption in the region, with only half of all execu- tom-ranked Bosnia and Herzegovina exhibit largely
tives surveyed claiming unofficial payments are not negative tendencies.
necessary when dealing with public officials. More-
Half of all survey respondents report that no addi-
over, it seems that business leaders have become
tional payments are necessary “to get things done”
increasingly reluctant to talk about corruption, a find-
in their respective economies. However, close to
ing reflected in a significant non-response rate, even
a fifth of all respondents surveyed disagree. Mean-
relative to 2018.
while, there has been no change in the overall re-
Fewer than half of all respondents believe that the gional score since 2018 (2.3).
best way to stop misconduct is to report it to the
Although perceptions of corruption may appear
relevant public officials. Instead, almost 20% would
similar across all of the region’s economies, there
rather reach out to the general public, either through
are some notable differences. For instance, in Al-
reporting it to journalists or sharing the information
bania (score 1.9), only 7% of executives find bribery
on social media. Moreover, it is particularly concern-
to be necessary to facilitate doing business, in con-
ing that almost 30% of all respondents feel power-
trast to nearly a third of all respondents surveyed in
less and believe that wrongdoing cannot be stopped
Bosnia and Herzegovina and Kosovo*. Out of the
by any means. More than 80%, however, feel that dig-
remaining three economies, Serbia and Montenegro
italisation of public services represents an opportu-
are doing somewhat better than the regional aver-
nity to curb corruption through greater transparency
age, with 15%, while the Republic of North Macedo-
and accountability.
nia stands slightly above the regional average, with
A breakdown of data by economy, however, sug- 20% of executives confirming that some level of cor-
gests there is some room for optimism, with Alba- rupt practices are needed to get the job done.
nia making headway in its battle against corruption.
The perception of corruption has changed in most
Likewise, there is growing confidence in the work of
of the economies surveyed. There are marked im-
public officials in the Republic of North Macedonia.
provements in the Republic of North Macedonia
Meanwhile, there is no change in corruption percep-
(-0.4) and Albania (-0.2). Meanwhile, Kosovo* has
Figure 71: Thinking about officials, to what extent would you agree with the following statements?**
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means completely disagree and 5 strongly agree,
share of total, %, mean)
It is common for companies in my line of business to have to pay some irregular
“additional payments/gift” to “get things done”
100% 2 5
7 12 10
12 14 15 12
7 2 4
10 1
80% 3
23 14
18 12 15 4
24
21
60% 15 20 19
21 29
15 18 3
2.5
12 17
40% 2.6 19
2.6 22
13 20 2.3 2.3
47
2.2 2
20% 1.9
30 31 35 31
22 27

0% 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Completely disagree Tend to agree Mean
Tend to disagree Strongly agree
Neither agree nor disagree DK/refuse

**The figures might not add to 100% due to rounding.

83
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 72: Thinking about officials, to what extent would you agree with the following statements?**
(All respondents - N=1215, scores are on a scale of 1 to 5 where 1 means completely disagree and 5 strongly agree,
share of total, %, mean)
Companies in my line of business usually know in advance how much this ‘additional payment/gifts’
will cost
100% 5
7 14 12 16 16
8 18 19
10 7 6 4
80% 1 2
24 13 12 13 4
15 21 13

60% 17 17 19
22 19 19 29
3
40% 15
2.6 2.6 2.6 21 18
39 12 13 2.3 2.3
2.1 19
2
20% 2.0
31 35 30
28 27
19
0% 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Completely disagree Tend to agree Mean
Tend to disagree Strongly agree
Neither agree nor disagree DK/refuse

seen its score deteriorate rather dramatically (+0.4 in There is an evident gulf in the perception of cor-
the score), with Bosnia and Herzegovina (+0.1) and ruption between large companies and SMEs – the
Montenegro (+0.1) also slipping. Importantly, the former feel corruption much more acutely than the
non-response rate was significantly higher in Bosnia latter (3.2 vs. 2.3). The discrepancy is also there for
and Herzegovina in 2019 (12%) than it was in 2018 foreign-owned and domestic enterprises, although
(2%). to a significantly lesser extent (2.5 vs. 2.3).

Figure 73: Thinking now of unofficial payments/gifts that companies like yours would make in a given
year, could you please tell me how often would they make payments/gifts for the following purposes?**
(Exporters only - N=333, scores are on a scale of 1 to 4 where 1 means never and 4 always, %)
Western Balkans
100%
17 17 18 18 18 18 19 20 22 22
23
80% 1 2 2 2 2 2
8 4 2 4 2 1
11 11 12 12 9 12 8
15 12 10 9
60% 18 17 14 16 16 16
15 17 15 14

40%
59
52 50 53 50 53 53 51 50 51 53
20%

0%
To get connected to and
maintain public services

To obtain business
licenses and permits

contracts

health and safety inspections

To obtain government

To deal with occupational

To deal with
labour inspections

building inspections
To deal with fire and

To deal with
environmental inspections

To deal with taxes and

tax collection

To deal with customs/imports

To deal with courts

To influence the content of new

legislation, rules, decrees, etc.

Never Seldom Frequently Significantly higher than 2018

Always DK/refuse Significantly lower than 2018

**The figures might not add to 100% due to rounding.

84
 Figure 74: Thinking now of unofficial payments/gifts that companies like yours would make in a given
year, could you please tell me how often they would make payments/gifts for the following purposes?
(results by economies)**
(All respondents – N=1215, share of total)
To get connected to and maintain public
1
100% 2 7
2 1
14 22
16
80%
1 2
6 12
60% 19
40% 81
65
51
20%
0%
Albania Bosnia and Kosovo*
Herzegovina
Never Seldom Frequently
Always DK/refuse
The cost of a bribe is known by some 17% of West-
ern Balkans businesses. There is a slight if signif-
icant improvement from the last year (down to 2.3
from 2.4 in 2018), which could indicate that corrup-
tion is less prevalent and, therefore, its price is less
well known. This assumption is backed up by a high
correlation in scores between the acknowledgment
of corruption in the previous response and familiarity
with the cost of a bribe in this one (19% and 17%,
respectively).
Scores and rankings are in line with the reported
presence of corruption in each of the individual
economies. Businesses from Albania are, therefore,
the least likely to know the price of bribery (only 8%)
while for Bosnia and Herzegovina and Kosovo* those
numbers are significantly higher (25% and 28%,
respectively). As for the remaining regional econo-
mies, business representatives from Montenegro
are more likely to know the cost of bribes (18%) than
their counterparts from the Republic of North Mace-
donia (14%) and Serbia (15%).
The Republic of North Macedonia (-0.5) and Albania
(-0.4) have shown the greatest improvement in tack-
ling corruption compared to 2018, while for Kosovo*
(+0.3) and Montenegro (+0.3) the information on the
cost of bribes has become more readily available.
Executives from large companies are significantly
more likely to know the exact sum that they have
to pay (3.2), compared to their counterparts from
smaller business organisations (2.3).
**The figures might not add to 100% due to rounding.
17
22 19
26
1
8
10
2 8
11 15
15
23
60 56 59
44
Republic of Montenegro Serbia Western
North Balkans
Macedonia
Significantly higher than 2018
Significantly lower than 2018
Just over half of all respondents surveyed feel
that additional payments are unnecessary when
obtaining services from public authorities. There
is a notable eight-point decrease in this category
since 2018 with an accompanying four-point hike in
the ranks of the non-respondents. While the data is
relatively inconclusive, it is not hugely speculative to
suggest a worsening of the situation in the region
when it comes to popular perceptions of corruption.
Viewed by purpose of payment, there is little varia-
tion across the categories surveyed. In addition to
around half of all respondents who feel bribes are
unnecessary, around 16% say these payments are
needed only seldom, while 13% consider them a nec-
essary precondition to doing business. Seemingly,
informal payments are most commonly needed to
secure government contracts, with 16% of respon-
dents conveying this impression.
Businesses in Albania have become increasing-
ly more open to discussing corruption, since their
non-response rate dropped from 15% to just 4% in
2019. A similar, if less pronounced, development
has been noted in Kosovo* (8% DK/refuse in 2019
vs. 10% in 2018). At the same time, the ranks of the
reluctant respondents have swelled in the Republic
of North Macedonia (28% in 2019 vs. 8% in 2018)
and Bosnia and Herzegovina (23% in 2019 vs. 7% in
2018).
Out of all the Western Balkans economies, informal
payments are least important to doing business in
Albania, according to three-quarters of executives
85
 (All respondents – N=1215, share of total)

BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

To obtain business licenses and permits

100% 1
0.5 8
11 3 17
22 24 21 19
12 16 2
80% 1
5 3 10 11
11
11 16 21
60% 20 18
16
17
15
40%
75
59
49 49 52
20% 45
39
(All respondents – N=1215, share of total)
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Never Seldom Frequently Significantly higher than 2018
Significantly lower than 2018
To obtain government
Always contracts
DK/refuse

100%
5 9
3 2 18
21 20 19
10 29
14
80% 4 4
10 8 5
13 2 13 12
13 11 17
60% 15
9 18
15
20
40%
71
63
50 45 50
20% 43
(All respondents – N=1215, share of total) 37

0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Never Seldom health and Frequently Significantly higher than 2018
To deal with occupational safety Significantly lower than 2018
Always DK/refuse
100% 0.5
2 8
6 2 18
21 21 20
14 15 29
80% 1 2
3 3 11
9 12
12 15 5
60% 12 17
17 19
24

40% 77
62
55 53
47 48
20% 42

0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Never Seldom Frequently Significantly higher than 2018
Significantly lower than 2018
Always DK/refuse

86
 (All respondents – N=1215, share of total)

To deal with labour inspections

100% 0.5
1 8
5 2 17
22 23 18
16 16 26 1
80% 2
4 3 12
1 22
13 15 7 13
60% 17
15
17 20 20
40% 77
61
50 50
20% 43 41 41
(All respondents – N=1215, share of total)
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Never Seldom Frequently Significantly higher than 2018
Significantly lower than 2018
To deal Always
with fire and building
DK/refuse
inspections
1
100% 1 7
4 2
10 22 23 21 18
17 28
80% 1 2
4 5
3 12
14 12 10 15
11
60% 14
12 18 17

40% 83
63 58
48 53
20% 45 45

0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Never Seldom Frequently Significantly higher than 2018
Significantly lower than 2018
Always DK/refuse

surveyed, with only 10% finding bribes necessary.
Kosovo* also boasts a high share of executives who
think bribes are not needed (62%), but this econo-
my also has a considerable percentage of those
who consider informal payments necessary (17%).
Montenegro seems to struggle most with unoffi-
cial payments as only 42% of all respondents think
that bribes are not common, while 16% characterise
them as frequent.
Again, large companies exhibit a higher perception
of corruption relative to the others.
The costliest bribes are the ones directed towards
securing government contracts (EUR 2,507 EUR),
while obtaining business licences and permits undu-
ly costs some EUR 1,705 on average. Dealing with
environmental inspection (EUR 1,264) is next and is
followed by paying off the judiciary (EUR 1,247) and
bribing the fire and building inspectors (EUR 976).
The survey found that occupational health and safe-
ty inspectors were the least expensive public service
to bribe (EUR 739).
Tariffs seem to have changed significantly over the
past year. The biggest reduction in cost is noted in
regards to getting connected and maintaining public
services (down to EUR 744 from EUR 2,675 in 2018).
Dealing with environmental inspections seems to be
increasingly costly (up to EUR 1,264 from EUR 182
in 2018), while there is a significant hike in the cost
of obtaining business licences and permits and a
decrease in the amount needed to obtain lucrative
government contracts or a favourable ruling from
the courts.

87
 (All respondents – N=1215, share of total)

BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

To deal with environmental inspections

100% 3
2 8
4 23 2 19
27 24 22
13 16
80% 2
3 3 2
3 9
9 11 10 11
13 16
60% 16
18 18

40% 77
64
57 53
50 45 46
20%
(All respondents – N=1215, share of total)

0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Never Seldom Significantly higher than 2018
To deal with taxes and tax collectionFrequently Significantly lower than 2018
Always DK/refuse
100% 4
2 8
1 20
13 23 21 22
15 29
80% 2
14 4 5 1
12
13 15 6 12 12
60% 12 16
15 17
20

40%
67 62
54 51
20% 46 42 47
(All respondents – N=1215, share of total)

0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Never Seldom Frequently Significantly higher than 2018
To deal with customs/imports Significantly lower than 2018
Always DK/refuse
100%
7 11
10 25 2 23 22
24
32
80% 6 17
4 4
8 4 2
8 10
12 10 3 13
60% 8
19 15
14 11 21
40%
69
61
46 46 46 50
20% 39

0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Never Seldom Frequently Significantly higher than 2018
Significantly lower than 2018
Always DK/refuse

88
 (All respondents – N=1215, share of total)

To deal with courts

100% 8
8
1
8 25 23 27 23
14 30
80% 6
11 1 3 2
13 1 1 9
10 6 11 9
60% 14
16 11
19 15

40%
67 65
47 52 47 51
20% 43

0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
(All respondentsHerzegovina
– N=1215, share of total) North Balkans
Macedonia
Never Seldom Frequently Significantly higher than 2018
Significantly lower than 2018
Always DK/refuse

To influence the content of new legislation, rules, decrees, etc.

100%
9 10
4 27 2 25 24 22
9 15 30
80%
1
1 4 8 8
9 10 3 10
60% 9 16
15 21
(All respondents – N=1215, share of total)

To influence the content of new legislation, rules, decrees, etc.

100%
9 10
4 27 2 25 24 22
9 15 30
80%
1
1 4 8 8
9 10 3 10
60% 9 16
15 21
19

40% 77
64

19
57 53
49 47
20% 42

0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Never Seldom Frequently Significantly higher than 2018
Significantly lower than 2018
Always DK/refuse

40% 77
64
57 53
49 47
20% 42

0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Never Seldom Frequently Significantly higher than 2018
Significantly lower than 2018
Always DK/refuse

The results here should be used with caution due to North Macedonia largely place their faith in formal
the presence of outliers that may well have skewed structures and the relevant public authorities (54%
the sample. and 52%, respectively). At the other end of the spec-
trum, managers from Bosnia and Herzegovina have
A significant proportion of executives from the re-
the least amount of confidence in public officials,
gion believe that the best way to stop wrongdoing
which is hardly surprising considering the perceived
is to report it to the authorities (44%). At the same
prevalence of corruption in this economy.
time, close to 30% feel powerless to stop corruption,
a deeply worrying statistic. Releasing the informa- Since 2018, public authorities in Montenegro and
tion to the general public, either through media or Kosovo* have lost much of the business commu-
directly, is the preferred method to stop corruption nity’s hard-earned trust. The share of businesses
as expressed by close to a fifth of all respondents. that would report wrongdoing to the relevant public
authorities in Montenegro has shrunk by 14 points
In line with general perceptions of corruption, cor-
(down to 41% from 55% in 2018), accompanied by
porate leaders from Albania and the Republic of

89
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

a near-commensurate rise in the number of respon-
dents favouring releasing the information to the gen-
eral public (up to 31% from 17% in 2018). In Kosovo*,
likewise, only 39% of all respondents would report
wrongdoing through the relevant official channels,
down from 55% in 2018.
At the same time, public officials in tthe Republic of
North Macedonia have regained some of the trust
of their business community with 52% of business
leaders polled favouring official channels, up from
41% in 2018.
Worryingly, the largest share of business leaders
in Bosnia and Herzegovina feel that wrongdoing
by public officials cannot be curbed by any means
(37%). Their Albanian and Montenegrin counter-
parts, meanwhile, are much more optimistic (16%
and 17% respectively).
Some 41% of executives polled believe that the
digitalisation of public services represents an op-
portunity to reduce corruption greatly, while an
additional 42% believe that it would at least have
a marginally positive effect. Still, 17% of business
leaders in the region think that the process would
have no impact on preventing corruption.
At least half or more managers in Albania, the Re-
public of North Macedonia and Montenegro place
much of their faith in digitalisation as a tool for pre-
venting corruptive practices. Meanwhile, their coun-
terparts in Bosnia and Herzegovina and Kosovo* are
not as convinced.

Figure 75: Please estimate what is the approximate amount (in EUR) of unofficial payments/gifts that
companies like yours would make in a given year for the following purposes
(Respondents who consider that unofficial payments/gifts are made at least seldom and did not mark DK/refuse, Mean)*

Average amount of *Different base (No. of

Western Balkans 2019/20 unofficial payments/ respondents) for each
gifts (EUR) purpose

To get connected to and maintain public services 744 294

To obtain business licenses and permits 1705 386
To obtain government contracts 2507 380
To deal with occupational health and safety inspections 739 346
To deal with labour inspections 964 371
To deal with fire and building inspections 976 316
To deal with environmental inspections 1264 313
To deal with taxes and tax collection 892 357
To deal with customs/imports 881 350
To deal with courts 1247 318
To influence the content of new legislation, rules, decrees, etc. 898 282

90
Figure 76: In different societies, there are different views on the most effective ways to stop wrongdo-
ing. Which one of these do you think is the most effective way in your economy society?**
(All respondents - N=1215, share of total, %)

Western Balkans 44 14 5 1 28 8

Albania 54 20 7 16 3

Bosnia and Herzegovina 30 14 5 4 37 9

Kosovo* 39 20 5 1 23 13

Republic of North Macedonia 52 13 3 30 2

Montenegro 41 21 10 1 17 9

Serbia 45 11 5 29 10

0 20 40 60 80 100
Significantly higher than 2018
By reporting the serious wrongdoing to people in authority, via official channels Significantly lower than 2018
By reporting the serious wrongdoing to journalists or news organisations
By reporting the serious wrongdoing directly to the general public, via the internet, Twitter, Facebook or on online blogs
Some other way
None, in my society there is no effective way to get action to stop serious wrongdoing
DK/refuse

Figure 77: To what extent do you believe the digitalisation of public services would have a positive
impact on preventing corruptive practices?**
(All respondents – N=1215, share of total)

100%
6
18 14 17 19 17
18
80%
36
31
34
60% 43 42
52 49

40%

58 55 50
20% 41
33 38
29

0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
To a great extent To a marginal extent It will have no impact Significantly higher than 2018
Significantly lower than 2018

**The figures might not add to 100% due to rounding.

91
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

TRADE AND INVESTMENT

Aggregate findings for this section illustrate why environment; worryingly, these are the areas where
more decisive action is needed to bring the region only limited progress has been made, if any.
together. However, in order to foster trade, as well as
There is little evidence that FDIs coming to the re-
provide for the free movement of capital and labour
gion are becoming more integrated into domestic
throughout the region, Western Balkans govern-
economies. Namely, only 6% of sales of regional
ments need to ensure that these economic process-
companies are made to multinational corporations
es are taking place against a backdrop of continued
located in their home economies. The situation is no
political stability.
different in Serbia, touted as the region’s FDI champi-
Foreign direct investment by Western Balkans cor- on in recent years.
porations remains sporadic. When companies from
Companies in the region are focused on domestic
the region do decide to invest across the border, they
markets. Even though more than 80% of managers
are still primarily driven by the need to access new
surveyed claim their products can match those from
markets or integrate their company better into an ex-
the EU, and the rest of the region, only a third are
isting value chain. They tend to either invest within
exporters. Non-exporters usually cite a lack of plans,
the Western Balkan region, or the European Union, an
interests or capacities to export, while exporters
increasingly popular investment destination. Yet, the
complain of few improvements in export procedures,
scope of these investments tends to be rather lim-
including the continued insistence on hardcopy doc-
ited. For illustration purposes, out of 1000 Western
uments, stringent licensing and inefficient customs
Balkans companies, 100 have invested internation-
procedures. As a result, some 84% of the compa-
ally, of which 57 have done so within the confines of
nies’ revenues are generated in domestic markets.
the region. There is, however, an increase in the ranks
Likewise, the vast majority of managers surveyed
of international investors, albeit a very incremental
feel their governments should prioritise giving busi-
one. The reasons why Western Balkan companies
ness to resident companies.
rarely invest in the region, and are increasingly start-
ing to choose the EU as an investment destination, More than 50% of companies in the region claim
are multifaceted, and include considerations of po- to have benefited from the CEFTA Agreement, yet
litical stability as well as the quality of the regulatory there is no regional consensus whether it is easier

Figure 78: Has your company invested abroad, or plans to do so in the next 12 months?**
(All respondents – N=1215, share of total)

100%

80%

60%
86 92 89 89 90
98 97

40%

20%

14 9 11 11 10
0% 2 3
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Yes No Significantly higher than 2018
Significantly lower than 2018

**The figures might not add to 100% due to rounding.

92
 Figure 79: Where did you invest or plan to do so?**
(Respondents whose company invested abroad, or plans to do so in the next 12 months - N=110, share of total, %)

N 5* 29* 17* 6* 23* 23* 103

100

90
83
80
80
71
70 65
62
60 57 57 57 59

50 48

40
40 35
33 35

30

20
12 13
10 4 4

0
Albania Bosnia and Kosovo* Montenegro Republic of Serbia Western Balkans
Herzegovina North Macedonia

In the SEE region In the EU Elsewhere

Significantly higher than 2018

Significantly lower than 2018

*Small base for valid conclusions

to export to the CEFTA region or the EU. However,
some economies like the Republic of North Macedo-
nia and Kosovo* clearly favour CEFTA, while Serbia
and Bosnia and Herzegovina favour the EU market.
This is likely, at least in part, due to unresolved is-
sues between the individual economies, including
Kosovo*’s 100% tariffs on merchandise from the
two economies. For illustration purposes, Serbian
and Bosnian companies exported EUR 440 and EUR
79 million worth of goods, respectively, to Kosovo*
in 2017; in 2019 those numbers were EUR 23 mil-
lion and EUR 2 million, respectively. Resolving these
disputes quickly may restore some of the faith in the
CEFTA arrangement, reducing uncertainty in the re-
gion.
Similar to the previous survey instalments, only
one in ten Western Balkans businesses has in-
vested abroad or plans to do so. Companies from
Bosnia and Herzegovina show the greatest level of
ambition (14% invested or plans to do so) and are
closely followed by their counterparts from Monte-
negro and Serbia (11% each); moreover, expanding
business operations abroad has become increasing-
ly more popular in all three of these economies since
**The figures might not add to 100% due to rounding.
2018 (+5 points across all). At the same time, the
Republic of North Macedonia and Albania are much
less ambitious, with investment abroad shrinking
dramatically in the latter (down to 2% from 17% in
2018).
As expected, large (59%) and medium-sized (19%)
companies are much more likely to invest across
borders than smaller ones (6% for small and 3% for
micro-companies). This is likewise true for exporters
(24%) and non-exporters (2%), as well as foreign-
(33%) and domestically-owned companies (8%).
Western Balkans companies usually do not differ-
entiate between the EU and the region when they
make investment decisions, although the EU is in-
creasingly becoming a popular investment destina-
tion (up to 59% from 42% in 2018). Also, companies
tend to concentrate investment resources closer to
home, as the share of those reporting to have busi-
ness operations outside of the EU and the Western
Balkans region has shrunk to just 4% from 13% in
2018.
Meanwhile, the interpretation of results by economy
is ill-advised due to the unrepresentative sample siz-

93
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

es (samples at the economy level consist of fewer
than 30 companies).
Access to new markets continues to be the most
important reason for Western Balkans companies
to operate outside of their economies, according
to 60% of managers investing abroad (mean rank
1.9). Markets of individual Western Balkans econ-
omies are relatively small and are further shrinking
due to the aging population and emigration. Exports
are not always a viable solution as transportation
and customs clearance may induce significant costs
and take a considerable amount of time. Therefore,
companies that want to grow and possibly attain an
economy of scale by selling larger quantities of their
product may have to invest in order to conquer new
markets. However, that situation is likely to change
should “Mini Schengen” be introduced, and even
more once the Western Balkans become part of the
greater Schengen Area.
Better integration into a value chain is another key
reason for investing abroad (mean rank 2.7). Inte-
gration of the company into a value chain is usually
cited as second (41%) or third (40%) reason for in-
vesting across the border, exemplifying the need for
regional companies to become part of (or rather cre-
ate) larger value chains.
Lowering production costs is ranked third (3.1). It
is interesting that this reason for investing abroad
is relatively evenly dispersed – each rank has been
voted for in around 20% of the cases. This is prob-
ably due to the fact that companies of different pro-
files, sizes and industries have different needs. For
instance, for companies that have energy-intensive
production, it makes little sense to invest outside of
the Western Balkans to reduce production costs, giv-
en the currently favourable level of energy prices in
the region. At the same time, some companies may
decide to invest abroad as wage growth in their re-
spective economies become unsustainable for their
business model.
Accessing natural resources and raw materials, as
well as acquiring new technologies are clearly not
as important, given that the former is usually ranked
fourth, while the latter is usually ranked last. In the
case of the former, it may be that regional compa-
nies are gradually shifting towards services not de-
pendant on these kinds of resources. In the case of
the latter, regional companies are probably not com-
petitive enough to buy-out and overtake technologi-
cally more sophisticated competitors.
As in the previous survey instalments, there is lit-
tle to separate the factors guiding investment de-
cisions. The difference between the most and least
important factors has shrunk even further in 2019
and the range is now from 4.3 for the most important
consideration, (Market size and potential), to 3.9 for
the least important (Access to land or real estate).
Compared to last year, the composition and im-
portance of factors considered remain relatively
unchanged. Even the factors assessed as relative-

Figure 80: Which of the following reasons best describes your company’s motivation to invest abroad?**
(Respondents whose company invested abroad, or plans to do so in the next 12 months - N=103, ranks are on a
scale of 1 to 5 where 1 means most important and 5 least important, share of total, %, mean)

Western Balkans

100% 5
7 6
10 7 12
22
80% 8
3.9 4
52
17 40
60% 15
3.4
3.1 50
3
22 2.7
40%
59 15
14
1.9 24 41 2
20% 16
13
7
15 11
6 9
0% 1
To access new To lower production To better integrate To access natural To acquire or
markets costs your company’s resources and raw complement new
value chain materials technologies or brand

Rank 1 (most important) Rank 2 Mean Significantly higher than 2018

Significantly lower than 2018
Rank 3 Rank 4
Rank 5 (least important)

**The figures might not add to 100% due to rounding.

94
Figure 81: Which of the following reasons best describes your company’s motivation to invest abroad?**
(Respondents whose company invested abroad, or plans to do so in the next 12 months - N=103, ranks are on a scale
of 1 to 5 where 1 means most important and 5 least important, share of total, %, mean)
To access new markets

100% 6 5
13 7
20 17 6 17 17
6 10
80% 4 9
10 12 17 8
4
20 13 17
7 15
60% 10
17
3
40% 60 55 71 67 61 59
2.3
2.2 2.2
48 1.9 2
20% 1.8 1.7
1.6

Figure
0% 81(continued): Which of the following reasons best describes your company’s motivation to 1
invest abroad?
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North
(Respondents whose company invested abroad, or plans to do so in the next 12 months - N=103, ranksBalkans
Macedonia
are on a scale
of 1 to 5 where 1 means most important and 5 least important, share of total, %, mean)
Rank 1 (most important) Rank 4 Mean
To lower production costs
Rank 2 Rank 5 (least important)
100% 5
Rank 3 12 9
17 22 22
28 13
12
80% 40
9 4
17 17
3.6 17 24 33
60%
3.3 3.3
3.0 3.1 3
14 48
26 22
40% 40 2.6 17
2.4
35 13 24 2
20% 38
30
20 18 22 22
15
3
0% 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Rank 1 (most important) Rank 4 Mean
Rank 2 Rank 5 (least important)
Rank 3

ly less important than others in 2018, like Tax rates companies in the region sell their goods and services
or Availability of linkages with local firms, have seen solely on the domestic market. Yet, the focus on the
their scores rise in 2019 and are now broadly aligned domestic market becomes even more pronounced
with the rest. when its share in total sales is considered with 84%
of revenue coming from within the home economy.
This is likely a manifestation of extreme diligence
As at the same time, a third of companies from the
by Western Balkan companies when making their
region are exporters, while 16% of total sales in the
investment decisions considering scarce resourc-
Western Balkans are made outside the region. Com-
es and infrequency with which such decisions are
panies mostly export to the EU (9%), while the share
made. Conversely, it is hard to tell whether any (and
of sales made by exporting to another economy in
which) of these factors could be labelled as a poten-
the region has declined from 9% in 2018 to 6% in
tial deal-breaker, since all have relatively high scores.
2019.
When it comes to selling their products, the focus
of Western Balkans companies lies almost square-
ly on the domestic market. As many as two-thirds of
**The figures might not add to 100% due to rounding.

95
 Figure 81(continued): Which of the following reasons best describes your company’s motivation to
BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report
invest abroad?
(Respondents whose company invested abroad, or plans to do so in the next 12 months - N=103, ranks are on a scale
of 1 to 5 where 1 means most important and 5 least important, share of total, %, mean)
To better integrate your company’s value chain
100% 5
7 6 9 4 6
20 17 7
14
80% 24 17
17 39 4
40
60% 52 33
29 39
60 3.0 2.9 3.0 3
2.8 2.7
40% 2.5
52
2.2 17 17 41 2
20% 41
24
20 17 17
4 6
0%
Figure 81(continued): Which of the following reasons best describes your company’s motivation to 1
Albania
invest abroad? Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
(Respondents whose company invested abroad, or plans to do so in the next 12 months - N=103, ranks are on a scale
Macedonia
of 1 to 5 where 1 means most important and 5 least important, share of total, %, mean)
Rank 1 (most important) Rank 4 Mean
To access natural resources and raw materials
Rank 2 Rank 5 (least important)
100% 6 5
Rank 3 7 13 12
22
80%
34 4.2 50 4
80
59 50
60% 3.6 3.7 3.5
3.4 3.4
3.0 52 57
3
24 17
40%
14
17 18 9 2
20% 9
6 33 4 13 13
20 17 12 13 9 11
0% 1
FigureAlbania
81(continued): BosniaWhich
and of the following reasons
Kosovo* Republic ofbest describes
Montenegro your company’s
Serbia motivation
Western to
invest abroad? Herzegovina North Balkans
Macedonia
(Respondents whose company invested abroad, or plans to do so in the next 12 months - N=103, ranks are on a scale
of 1 to Rank
5 where 1 means
1 (most most important Rank
important) and 54 least important, shareMeanof total, %, mean)
To acquire or complement new technologies or brand
Rank 2 Rank 5 (least important)

100% Rank 3
5

4.4 33 43
80% 40 41 4.2
3.9 3.9 4
61
71 52
60% 3.6
3.4 17
13 3
24
40% 40 2.7 15
3 33 13
10 30
16 2
20% 24 17
20 21 7
17 13 4
6 9
0% 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Rank 1 (most important) Rank 4 Mean
Rank 2 Rank 5 (least important)
Rank 3

96
 Figure 82: In the process of choosing where to invest abroad, how important were the
following factors?
(Respondents whose companies invested abroad, or plans to do so in the next 12 months - N=103, scores are on a
scale of 1 to 5 where 1 means not important at all and 5 very important, share of total, %, mean)

1 2 1 2 1 2 3 2 2 2 1 3
100% 5
4.3 25 36 27 35 33 38
28 29
80% 4.2 4.2 4.2
43 4.1 4.1 4.1 36 4.1 4.1 4
36 4.0 4.0 42
60% 3.9
3
47 54 47
40% 50 47 50 51 38
47 44 42 45
2
20% 6 15 10 14
8 21 10 11 19
2 16 6 12 3 2 18
3 5 3 2
1 1 3 3 1 3 5 1 1 1 1 1 1
0%
Macro-economic stability and
favourability of exchange rate

Labour force cost

Talent and skill of labour pool

Physical infrastructure

Access to land or real estate

Market size and potential

Availability of financial

Political stability and security

Technological innovation and capabilities

Tax rates

Business-friendly legal and

regulatory environment

Availability of linkages with local firms

capital in the domestic market

Not important at all Not important Neither important Significantly higher than 2018
nor not important
Significantly lower than 2018
Important Very important DK/refuse

Mean

Figure 83: Has your company exported goods or services over the past 12 months?
(All respondents – N=1215, share of total)

100%

80%
55 57
66
60% 75
81 87 81

40%

20% 45 43
34
25
19 14 19
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Exporters Non-exporters Significantly higher than 2018
Significantly lower than 2018

**The figures might not add to 100% due to rounding.

97
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 84: What percentage of your company’s sales are made domestically, exported to the Western
Balkans region, to the EU or to the third countries?**
(All respondents – N=1215, share of total)
1 1 1
100% 1 2 3 2
7 5 3
3 3 8 10 9
3 17
6
7
80% 6

60%

90 95 91 88 84
40% 80
76

20%

0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Significantly higher than 2018
Sold domesticaly Exported to the Western Balkans Significantly lower than 2018
Exported to the EU Exported to third countries

Figure 85: Why doesn’t your company export?**

(Respondents who do not export - N=882, %)

60
57

51
50
45

40 40 39
36 36
33 33
31 30
30
25 24 25
23
20 19
16
15
12 12 12
10 8 9 9 8
6 5 5
44 3 4 45
2 2 1 1 1 2 1
3
1 2 3 3 2 3
0
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western Balkans
Herzegovina North Macedonia

We don't have any plans/interest to export Complicated administrative procedures

We don't have capacities to export Linguistic barrier
We don't know how to export Other
Our goods/services aren’t suitable for export DK/refuse
We don't know how to find foreign partner
Significantly higher than 2018
There is no competent authority in your place Significantly lower than 2018
of living that could provide relevant information
on export procedure

**The figures might not add to 100% due to rounding.

98
 Figure 86: Has your company imported goods or services over the past 12 months?**
(All respondents – N=1215, share of total)
100%
80%
48 47
60
60%
40%
52 53
20% 40
0%
Albania Bosnia and Kosovo*
Herzegovina
Importers Non-importers
Businesses from Bosnia and Herzegovina and Ser-
bia seem to be the most export-oriented. In Bosnia
and Herzegovina, 45% of all companies are seeking
out markets abroad, while 24% of total sales are com-
ing from outside their economy. This is closely mir-
rored by Serbia where 43% of all companies export
and 20% of total businesses’ sales originate abroad.
Both economies are more focused on the EU, rather
than regional markets. Businesses in Kosovo*, the
Republic of North Macedonia and Albania are much
less likely to offer their products abroad and have a
significantly lower proportion of revenues coming
from outside their economy.
Export-oriented companies make almost half of
their sales in foreign markets (48%). Also, market
orientation is highly correlated to company size, as
larger firms source almost 60% of their sales outside
of the domestic market, while medium-sized and
small companies source less than 30%. Ownership
plays an important role too, since foreign companies
make 55% of their sales outside their economy of
residence.
Companies that do not export usually state that
they either do not have plans to export or that their
products are simply not suitable for export. These
two categories of companies account for more than
two-thirds of non-exporters. The confidence of the
businesses in their products vis-à-vis foreign com-
petition has declined as in 2018, 21% evaluated them
as not suitable vs. 33% in 2019, possibly a source of
some concern.
**The figures might not add to 100% due to rounding.
43
59 56
62
57
41 44
38
Republic of Montenegro Serbia Western
North Balkans
Macedonia
Significantly higher than 2018
Significantly lower than 2018
Companies from the Republic of North Macedonia
are least interested in export (57% say they have no
interest), while businesses from Albania are most
concerned about the competitiveness of their prod-
ucts abroad (40%). Also, 19% of companies sur-
veyed would presumably export, but they are limited
in their capacities. This scenario is most widespread
among non-exporters from Bosnia and Herzegovina
and Serbia.
It is interesting that almost none of the non-exporters
stated lack of information as a barrier for exporting
their goods. Also, excessive administrative proce-
dures seem to be a significantly limiting factor only
for non-exporters from Bosnia and Herzegovina.
Western Balkans companies primarily source their
inputs on the domestic markets. When it comes to
sourcing their inputs, fewer than half of companies
(44%) reach out to foreign markets when buying their
inputs. Again, the percentage of those purchases in
total input purchases is considerably lower (24%).
Imports from the EU make up most of the raw ma-
terials, intermediate goods or services sourced from
abroad.
Montenegro and Albania depend on imports the
most in the region, as more than half of their com-
panies reported importing goods or services over
the past 12 months. Bosnia and Herzegovina also
saw more than half of its companies importing
goods or services, but the share of imported inputs
in total inputs is considerably higher for the two for-
mer economies (a third vs. a quarter for Bosnia and
99
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Herzegovina). Serbia seems to be the most self-suf-
ficient when it comes to sourcing inputs, as only 38%
of its companies import while only 18% of its total
inputs are sourced on the foreign markets.
Further integration of the region through initiatives
like “Mini Schengen” would allow Western Balkans
economies to attain a higher level of specialisation
and economies of scale (efficiency), by making im-
porting and exporting easier and cheaper. Econ-
omies of the region (or their companies) generally
tend to be self-sufficient, as much as possible, yet,
they would likely welcome an opportunity to reliably
source inputs at lower prices.

Figure 87: What percentage of your company’s inputs and supplies are…?**
(All respondents - N=1215, share of total, mean)

100% 2 3 3
6 6 7 4 3
7 4 6
7 7
19 11
16 11 12 14
80% 26
11

60%

40% 82
74 75 75 76
67 66

20%

0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Significantly higher than 2018
Purchased from domestic sources Imported from the EU Significantly lower than 2018
Imported from the Wester Balkans region Imported from third countries

Figure 88: What percentage of your domestic sales are made to?**
(All respondents - N=1215, share of total, mean)
100% 3
15 9 8 10
17 17

80%
48

46 54 56 53
60% 48
55
8
40% 2
8 2
1 12
13 3 15 15
20% 10 5
28 5 27 2 7 6 6
6 6 6 7
8 8 4 12
5 3 6 2 5 8 2
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Government or government agencies Your company’s parent company or Other
affiliated subsidiaries
Multinationals located in your economy State owned or controled enterprises
Significantly higher than 2018
Significantly lower than 2018
Large private domestic companies (with Small companies and individuals
more than 250 employees, not including
your parent company

**The figures might not add to 100% due to rounding.

100
 Figure 89: If you have imported goods in the past 12 months, what is the average number of
days to clear imports through customs?**
(All respondents - N=1215, share of total, %)
100% 1 2 2 3
11 4 4

80% 38 39
51
62 54
55 62
60%
6
8
5 14
40% 6
16 23
10 7 5
16
12
20% 40 14 18
27 26
17 19
12 10
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Up to 2 days 3-5 days Significantly higher than 2018
Significantly lower than 2018

Over 5 days Do not have imported goods

DK/refuse

Domestic companies tend to rely on domestic mar-
kets much more than foreign-owned ones (80% of
inputs vs. 34% of inputs). The same stands true for
non-exporter and exporter companies (84% of inputs
vs. 62% of inputs). Furthermore, reliance on foreign
markets rises as the size of the company increases
(small source 79% of inputs domestically vs. 45% for
large).
Small firms and individuals remain the main buyers
for Western Balkans companies. This is applicable

Figure 90: If you have exported goods in the past 12 months, what is the average number of
days to clear exports through customs?**
(All respondents - N=1215, share of total, %)
100% 1 4 2 4 5 4
9

80%

52
59 65
60% 79 71
74 82

40% 1
6
5
4
1 3 19 11
20% 36 7
4 5 4
15 6 3 15 16
7 8 12
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Up to 2 days 3-5 days Significantly higher than 2018
Significantly lower than 2018

Over 5 days Do not have exported goods

DK/refuse

**The figures might not add to 100% due to rounding.

101
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 91: If your company exports to the Western Balkans region, what are the main obstacles to your
exports?**
(All respondents - N=1215, share of total, %)

100

80

61
70 71 69 69
60 82 84

40

20 39
31 30 31 31
18 17
0
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western Balkans
Herzegovina North Macedonia

Export to the WB region Do not export to the WB region Significantly higher than 2018
Significantly lower than 2018

Western Balkans Exporters to the Western Balkans region, N=332

Need to hardcopy documents or certificates 41

Need for licenses or permits 33

Slow import-export procedures 21

Unnecessary physical examinations or inspections 19

VAT 14
Obscure or inconsistent rules of origin 11
Custom delays 8
Wide variability in clearance time 6
Risks of unclear compliance rules 6
Classification uncertainty 4
0 10 20 30 40

to all economies in the region, and to a slightly great-
er degree to Serbia, the Republic of North Macedonia
and Montenegro than for the rest of the pack.
Large private companies and parent companies
are also significant buyers, as they account for 12%
of sales each. Large private companies are especial-
ly important in Montenegro and Serbia (15%), while
parent companies are particularly popular in Albania
(28%) and Kosovo* (27%). Same as last year, public
sector[ Public sector is here defined as both the gov-
ernment and state-owned enterprises.] purchases
create demand for 7% of total sales with the practice
more prevalent in Albania (13%) and Montenegro
(12%) than elsewhere in the region.
Same as last year, multinational companies create
demand for only 6% of total sales. This figure may
act as a proxy for measuring the integration of for-
eign companies within the domestic economy – the
higher the share is, the more integrated the company.
Given that this share is rather limited, the level of in-
tegration of multinational companies within Western
Balkans economies can be considered generally low.
Even in the case of Serbia, the region’s FDI champion
over the past several years, this share stands at 7%.
Slightly fewer than 45% of all importers report
clearing customs within two days or less on aver-
age, while an additional 36% state that it usually
takes 3-5 days. Share of companies that have wait-
ed for more than five days on average has dropped
from 19% in 2018 to 13% in 2019. At the same time,
however, the share of companies reporting customs
clearance within two days has also decreased.

**The figures might not add to 100% due to rounding.

102
Clearing through customs takes the least time in
Bosnia and Herzegovina, as two-thirds of Bosnian
companies reported customs clearance within
two days. Albanian customs are relatively efficient
as well, since slightly more than half of all compa-
nies reported clearing customs within two days or
less. According to the survey results, importers from
Kosovo* face the longest wait – only 25% clear cus-
toms within two days, while 21% have to wait at least
five days, and 24% do not know the answer.
Moreover, 2019 has brought significant improve-
ment in the Republic of North Macedonia and Bos-
nia and Herzegovina, while Kosovo* experienced
some regression. Namely, the share of compa-
nies reporting to have cleared customs within two
days increased from 55% in 2018 to 65% in 2019 in
Bosnia and Herzegovina and from 27% in 2018 to
46% in 2019 in the Republic of North Macedonia. In
Kosovo*, the share of companies reporting customs
clearance in two days or less shrunk from 41% in
2018 to 25% in 2019, mostly in favour of the 3-5 day
cluster.
Exporters, large enterprises and companies operat-
ing with foreign capital usually take less time to clear
customs than their counterparts.
Around 45% of exporters reported clearing cus-
toms within two days or less on average, while an
additional 32% stated that it usually took 3-5 days.
Meanwhile, 13% of exporters took more than five
days to clear customs.
Customs administration seems to be the most ef-
ficient in Bosnia and Herzegovina and Albania, as
76% and 70% of exporters, respectively manage
to clear customs within two days or less. Kosovo*
reports the lowest share of exporters clearing thor-
ough this quick (25%), while the Republic of North
Macedonia reports the highest number of those
that have to wait at least five days. As with imports,
Montenegro is the economy positioned around the
regional average.
Similar to clearing through customs with imports,
large and foreign companies, as well as exporters,
spent less time on average dealing with customs
while exporting.
Just under a third of all Western Balkans compa-
nies export to their regional peers. Most regional
exporters are still found in Serbia, although their
share has declined from 45% in 2018 to 39% in 2019.
Companies from Bosnia and Herzegovina, Monte-
negro, and Kosovo* are at, or around, the regional
average when it comes to exporting in the region,
yet with divergent trends. Namely the share of re-
gional exporters shrunk in Bosnia and Herzegovina
(from 42% in 2018 to 31% in 2019), while expanding
in Montenegro (from 21% in 2018 to 31% in 2019);
meanwhile, there was no change in Kosovo* (30%).
In Albania and the Republic of North Macedonia few-
er than one in five companies export to the region.

Table 3: If your company exports to the Western Balkans region, what are the main obstacles to your ex-
ports?**
(Respondents whose companies are exporters to the WB region, N=332, %)

Unnec-
Need to
Slow im- essary Obsecure Risks of
hardcopy Need for Wide vari- Classi-
port-ex- physical or inco- unclear
docu- licens- Custom ability in fication
2019 port examina- VAT sistent com-
ments or es or delays clerance uncer-
proce- tions or rules of pliance
certifi- permits rules tainty
dures inspec- origin rules
cates
N tions
332 Western
41 33 21 19 14 11 8 6 6 4
Balkans
36 Albania 47 36 22 31 6 3 19 6 3 3
62 Bosnia and
45 31 23 18 3 21 5 6 8 2
Herzegovina
59 Kosovo* 53 31 14 10 29 8 5 5 7 0
33 Republic
of North 21 36 27 27 12 15 6 9 9 3
Macedonia
64 Montenegro 36 30 16 25 17 8 5 6 5 9
78 Serbia 40 35 26 13 14 10 10 6 4 5

103
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 92: To what extent do you agree that your company is threatened by global competition?
Please use scale from 1 to 4, where 1 means totally disagree, 2 – disagree, 3 – agree and
4 means totally agree.**
(All respondents - N=1215, share of total, %)

100% 4 8 5
7 7 10 3 4
6 2 6
13 7
80% 15 24
21 27 4
27 42
44 23
60% 2.4
26 38 3
42 25 34
40% 2.5 23
2.4 2.3
30 2.0 2.1
1.9 2
20% 40
21 32 28
27
14 14
6 1
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Totally disagree Totally agree Mean Significantly higher than 2018
Significantly lower than 2018
Disagree DK/refuse
Agree

Figure 93: To what extent do you agree that your company is threatened by competition from the
Western Balkans region? Please use scale from 1 to 4, where 1 means totally disagree, 2 – disagree,
3 – agree and 4 means totally agree.**
(All respondents - N=1215, share of total, %)

100% 4 4 5
8 4 8 3 4
9 1 4 6 2 4
17 9 14
20
80% 21
24 4
41 27
26
60% 44
38
38 3
42 25
40% 28
2.2 51 2.3 2.2
2.0 1.9 2
20% 1.8
1.7
30 31 36 35
21 20
0% 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Totally disagree Totally agree Mean Significantly higher than 2018
Significantly lower than 2018
Disagree DK/refuse
Agree

Crucial obstacles to exporting in the region remain
largely unchanged, while some are even more pro-
nounced. Again, the need to hardcopy documents
and certificates is brought up as burdensome by
41% of exporters. This is followed by the insistence
on different licences and permits, which is problem-
atic for a third of the exporters. Slow import-export
procedures and unnecessary physical examinations,
or inspections, are cited by a fifth of the exporters.
Interestingly, uncertainty regarding customs (cus-

**The figures might not add to 100% due to rounding.

104
 Figure 94: To what extent do you agree with the following statements - My company’s products, goods
and services can compete well with products, goods and services from the Western Balkans?**
(All respondents - N=1215, share of total, %)

100% 3 4 2 5
5 5 5 5

80% 34
36 35 4
67 51
49 49
60% 3.6
3.4
3.3 3.3 3.3
3.2 3.0 3
40% 34
40 54
30
35 34
2
20% 23 14
8
14 9 9
4 9 9 11
3 3 1 1 3 1
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Totally disagree Totally agree Mean Significantly higher than 2018
Significantly lower than 2018
Disagree DK/refuse
Agree

Figure 95: To what extent do you agree with the following statements - My company’s products, goods
and services can compete well with products, goods and services from other EU countries?**
(All respondents - N=1215, share of total, %)

100% 4 5
8 5 4 6 8 7

80% 27 30
36 36 4
42
57 44
60% 3.4 3.3
3.2
3.0 3.1 3.0 3
2.9
44 46 28 34
40%
35
35
25 2
20% 18
15
16 17 12
9 10
13 9
5 5 2 2 5 1
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Totally disagree Totally agree Mean Significantly higher than 2018
Significantly lower than 2018
Disagree DK/refuse
Agree

**The figures might not add to 100% due to rounding.

105
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 96: To what extent do you agree with the following statements - “My company has benefited
from the regional free trade agreement (CEFTA 2006)”?**
(All respondents - N=1215, share of total, %)

100% 5
12 6
14
18 21
5 25 12
30
80% 11
13 6 4
8 16
40
60%
26 52 41
38
2.9 3
33
40% 2.7
2.6 42 2.6
2.4 2.4 2.4
30 22 17 2
22
20% 21
24
21 11
14 17 13
5 6 9
0% 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Totally disagree Totally agree Mean
Disagree DK/refuse
Agree

tom delays, inconsistent rules, risk of incompliance,
variability in clearance time) does not pose too big of
a problem, according to respondents.
Concerningly, almost no progress has been made
over the course of 2019. Namely, there has been an
increase in the number of managers reporting insis-
tence on different licences and permits (from 21%
in 2018 to 33% in 2019) and complaining of delays
in import procedures (from 18% in 2018 to 21% in
2019). On the other hand, obscure or inconsistent
rules of origin are less frequently cited (from 18% in
2018 to 11% in 2019).
The need to hardcopy documents or certificates is
the main obstacle cited across most economies.
This issue is especially pronounced in Kosovo* (53%)
and Albania (47%), while the Republic of North Mace-
donia is at the other end of the scale (21%). Licences
and permits are equally burdensome across almost

Figure 97: If your company is an exporter, can you tell us whether it is easier to export to the CEFTA
region, or to the EU?**
(Respondents who export – N=333, %)

Western Balkans 20 22 45 12

Albania 31 26 36 8

Bosnia and Herzegovina 16 25 42 16

Kosovo* 48 11 15 26

Republic of North Macedonia 42 11 24 24

Montenegro 20 14 37 29

Serbia 16 23 52 8

0 20 40 60 80 100

It is easier to export to the CEFTA region It is the same Significantly higher than 2018
Significantly lower than 2018
It is easier to export to the EU DK/refuse

**The figures might not add to 100% due to rounding.

106
 Figure 98: In your opinion, when procuring products and services, should the governments in the
region give priority to local suppliers or should they be treated the same as all other suppliers
(provided price and quality is equal)?**
(All respondents - N=1215, share of total, %)

100% 2 4 1 4 4 4
4
12 17
20 20
35 23
80% 42

60%

83
79
40% 76 76
79
56 73
20%

0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Significantly higher than 2018
Local suppliers should be Local suppliers should be threated Significantly lower than 2018
given priority the same as foreign suppliers

DK/refuse

all economies. Slow import-export procedures are a regional high score of 1.9, with Serbia in a close
most problematic for businesses from the Republic second with 2.0. While less confident on average, the
of North Macedonia (27%) and Serbia (26%), while other four economies also boast a significant pro-
they are least problematic in Kosovo*, which other- portion of managers who do not feel threatened by
wise has the least efficient custom procedures. Un- global competition.
necessary physical examinations or inspections are
Some significant changes in the perception of own
the second most cited barrier in Albania and in the
business competitiveness are evident across the
Republic of North Macedonia. The VAT case is a curi-
region. For example, Montenegro, last year’s flag-
ous one as the tax hardly warrants a mention in Bos-
bearer, has seen its confidence deteriorate from 1.8
nia and Herzegovina (3%) and Albania (6%), while it
to 2.3 in 2019 with a similar development noted in
is considered a major obstacle in Montenegro (17%),
Albania (2.4 from 1.9 in 2018). On a positive note,
and a huge one in Kosovo* (29%).
confidence in Bosnia and Herzegovina and Serbia
Compared to 2018, the requirement to provide hard- improved by 0.2 and 0.1, respectively.
copies of certificates was eased drastically in Mon-
While confidence is not affected by company size,
tenegro (-26 points) and in the Republic of North
it does depend on market orientation. Namely, ex-
Macedonia (-19 points), while the situation appears
porters are much more cautious and report lower
to have deteriorated in Albania (+20 points) and
confidence than non-exporters (2.3 vs. 2.0). This can
Kosovo* (+13 points). Enforcement of licencing and
probably be attributed to the fact that they actual-
permits requirements improved in one economy
ly come into contact with foreign competitors, both
only, the Republic of North Macedonia (-24 points),
at home and across the border. It is interesting that
while it deteriorated significantly across all other
domestic and foreign firms exhibit the same level of
economies, save Montenegro.
confidence.
Close to two-thirds of Western Balkans executives
As in the previous survey instalments, Western
exhibit a high degree of confidence when coming
Balkans executives are even less concerned about
against foreign competition. The regional score has
regional competition than they are about global,
remained unchanged for the third year in a row now,
with close to three- quarters of executives describing
standing at 2.1.
themselves as confident (1.9). Some 80% of man-
While generally pessimistic in outlook, companies agers from Bosnia and Herzegovina and Serbia are
from Bosnia and Herzegovina exhibit the highest confident in their competitiveness within a regional
degree of confidence in their products, boasting context, with scores of 1.7 and 1.8, respectively. At

**The figures might not add to 100% due to rounding.

107
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 99: In your opinion, when procuring products and services, should the governments in the
region give preferential treatment to suppliers which are social businesses, or should they be treated
the same as all other suppliers (provided price and quality is equal)?**
(All respondents - N=1215, share of total, %)

100% 4 5
12 8 7 10
21

80%
33
32
50
63 54 50
60% 39

40%

56 59
20% 40 44 41
33 38

0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Significantly higher than 2018
Social businesses suppliers Social businesses suppliers DK/refuse Significantly lower than 2018
should be given preferential should be treated the same as
treatment all other suppliers

the same time, managers from Kosovo* exhibit a
significantly lower level of confidence (fewer than
50% of confident managers and a score of 2.3).
Companies from Bosnia and Herzegovina and Ser-
bia have seen an increase in the share of confident
managers in 2019, improving their scores by 0.4 and
0.1, respectively. On the flip side, managers in Alba-
nia, Montenegro, and Kosovo* have grown less con-
fident in the course of last year.
A large majority of Western Balkans managers
consider their products to be competitive in a re-
gional setting. Moreover, the level of confidence has
rebounded to its 2017 levels following last year’s
short-lived dip (up to 3.3 from 3.1 in 2018).
In line with other findings presented in this section,
managers from Bosnia and Herzegovina tend to be
most confident in the quality of their goods and ser-
vices (90% of confident managers), with Serbia as
second ranked, with 84%. Again, Montenegro and
Albania tend to exhibit significantly lower levels of
confidence, with Kosovo* and the Republic of North
Macedonia at, or around, the regional average.
Reported gains in confidence are in keeping with the
findings across the section, with Albania as the sole
exception; namely, Albanian executives report an up-
swing in confidence in their merchandise, while at
the same time registering a lower level of confidence
in their ability to face up to the regional and global
competition.
Similar to last year’s results, close to four-fifths of
executives surveyed believe that the quality of their
products is on par with those coming from the EU.
Moreover, the regional score improved slightly in this
regard, from 3.1 in 2018 to 3.2 in 2019.
Firms from Bosnia and Herzegovina and Serbia
easily top the rankings when it comes to product
confidence, with average scores of 3.4 and 3.3, re-
spectively. the Republic of North Macedonia is at the
opposite end of the scale (score 2.9), with close to a
third of managers unconvinced in the ability of their
products to compete against their EU equivalents.
Exporters are much more confident in their mer-
chandise than non-exporters (score 3.5 vs. 3.0) and
the same is true for foreign and domestic compa-
nies (score 3.6 vs. 3.2).
Slightly more than half of all surveyed manag-
ers have reaped at least some benefit from the
CEFTA free trade agreement, with a slight increase
evident from the 2018 survey (+.1). The increase at
the regional level has come about largely as a con-
sequence of an increase in figures in Albania (from
1.9 in 2018 to 2.4 in 2019) and the Republic of North
Macedonia (from 2.2 in 2018 to 2.4 in 2019); mean-
while, no regression was recorded across any of the
other economies.
Montenegrin businesses seem to have benefited
the most, as they boast the highest regional score
as well as the lowest share of businesses that did
not experience any benefits (17%). In Serbia, al-

**The figures might not add to 100% due to rounding.

108
Figure 100: According to your opinion, which market in the Western Balkans region is the most open
one? Please give us your opinion no matter whether you/your company had direct experience with it (1 -
most open, 6 - least open)**
(Respondents who can rank, N=446, mean)

4.1 4.2
4
3.6
3.4
3.1
3
2.6

1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia
Herzegovina North Macedonia

Albania Republic of North Macedonia Western Balkans

Bosnia and Herzegovina Montenegro
Kosovo* Serbia

Republic
Bosnia and Western
2019 Albania Kosovo* of North Montenegro Serbia
Herzegovina Balkans
Macedonia
Albania 2.6 4.7 2.6 3.7 4.1 5.2 4.1
Bosnia and
3.9 2.1 3.9 4 3.5 2.7 3.1
Herzegovina
Kosovo* 3 4.8 2.6 3.1 3.8 5.3 4.2
Market
Republic of North
2.9 3.9 3.4 2.9 4 3.5 3.4
Macedonia
Montenegro 4.1 3.2 4.2 4.8 2.7 3 3.6
Serbia 4.4 2.4 4.3 2.4 2.9 1.3 2.6

most two-thirds of businesses have benefited from
CEFTA, while there is also a sizable share of those
who did not (30%), resulting in a cumulative score
of 2.7. While Kosovo* stands at the regional average
score-wise, the rest of the region’s economies sit
slightly below the line.
As expected, exporters tend to benefit more than
non-exporters (2.7 vs. 2.3). Generally, it seems that
benefits are also more tangible for larger companies.
Although there is no regional-level consensus on
whether it is easier to export to the CEFTA region
or the EU, there is a clear preference at economy
level. In addition to 45% undecided managers, 22%
are of the opinion that the EU market is less demand-
ing, while 20% feel that way about the CEFTA region.
Moreover, the overall sentiment regarding the EU
market has improved significantly since 2018, with
a seven-point increase in respondents who prefer
working with this market.

**The figures might not add to 100% due to rounding.

109
 BALKAN BAROMETER 2020
Kosovo* and the Republic of North Macedonia
clearly favour the CEFTA market. In Kosovo*, al-
most half of all exporters feel they have an easier
time working with the CEFTA market, rather than
the EU; the Republic of North Macedonia is in second
place here, with 42% of managers who favour selling
their goods and services on the CEFTA market.
Bosnia and Herzegovina and Serbia, meanwhile,
favour the EU market. While a majority of managers
in the two economies do not have a stated prefer-
ence for either of the two markets, those that do, are
clearly selling to the EU.
Preferences are also changing over time among
the Western Balkans economies. There has been
an obvious shift in opinion among companies from
Serbia between 2018 and 2019, with a remarkable
drop of 27 points within the ranks of those that have
a preference for the CEFTA market. A similar yet
markedly less pronounced development has also
been recorded in Bosnia and Herzegovina (-6 points).
This is likely, and at least in large part, due to the con-
tinued enforcement of trade tariffs against the two
economies by Kosovo*’s government. At the same
time, companies in the Republic of North Macedonia
are starting to view CEFTA as the main go-to market,
with an incredible 31 point hike in preferences since
2018. Similar, if less pronounced, developments are
evident in Kosovo* (48% in 2019 vs. 33% in 2018)
and Albania (31% in 2019 vs. only 14% in 2018).
Foreign companies either consider the EU market
easier to export to (45%) or express no preference
between the two (45%)
There is consensus among Western Balkans exec-
utives that governments should give priority to lo-
cal companies taking part in public procurements.
Same as last year, close to three-quarters of respon-
dents feel that governments should afford some de-
gree of protectionism to domestic companies.
Executives from Bosnia and Herzegovina and Mon-
tenegro are mostly in favour of preferential treat-
ment for local companies (83% and 79%, respective-
ly). Meanwhile, Serbia and Kosovo* are at, or around,
the regional average, with managers from Albania
most likely to support free and fair competition for
all companies in the region.
There is consensus that governments should not
give preferential treatment to social businesses,
albeit a fragile one. 41% of businesses support the
idea that decisions on public procurement should
encompass social considerations, while 50% dis-
agree. Sentiments differ across the individual econ-
omies, however.
110
BUSINESS OPINION | Analytical report
The idea of affording preferential treatment to
not-for-profit companies that aim to address so-
cial problems is endorsed by a majority of busi-
nesses in Montenegro (59%) and Kosovo* (56%).
At the same time, their counterparts from Albania
and Serbia are much less likely to support this type
of socially-driven affirmative action (33% and 38%,
respectively). While the Republic of North Macedo-
nia is closer to the latter group than the former one,
respondents from Bosnia and Herzegovina are split
almost evenly down the middle.
Smaller companies tend to support the idea of giv-
ing preferential treatment to social businesses more
than large ones (45% of micro- and 38% of small
ones vs. 28% of large ones).
The market in Serbia continues to be perceived as
the most open in the region, recording a further, if
slight, improvement in perceptions since 2018. In
fact, the Serbian market is perceived as the most
open by three out of five remaining Western Balkan
economies. Meanwhile, the market in Bosnia and
Herzegovina is perceived as the second most open
with the Republic of North Macedonia now moving
into third after recording a slight increase in the rat-
ings since the 2018 instalment.
Montenegro, meanwhile, has dropped into fourth,
following a decline in ratings since 2018 with mar-
kets in Kosovo* and Albania seemingly the least
open with average ranks of 4.2 and 4.1, respectively.
While Albania’s score deteriorated in the course of
last year, Kosovo* recorded a substantial improve-
ment in perceptions.
Interestingly, there is a clear polarisation between
Serbia and Bosnia and Herzegovina, on one side, and
Albania and Kosovo* on the other. These two blocks
consider each other’s markets as generally very insu-
lar. Certainly, one of the underlying reasons for this
lies with the tariffs Kosovo* imposed on goods from
Bosnia and Herzegovina and Serbia. In the case of
Albania, meanwhile, logistics likely play a major role,
since the Albanian market is not easily reachable by
companies from Serbia and Bosnia and Herzegov-
ina.
.
INNOVATION AND TECHNOLOGY

Western Balkans companies still use the Internet
in a largely traditional fashion, mostly for commu-
nication and advertising. One of the more “modern”
features, e-banking, has seen an upswing in interest
over the past year, as now around half of all compa-
nies surveyed rely on this method to execute finan-
cial transactions. However, half of all companies still
do not have a functional website.
In spite of global trends, the number of online
sellers has remained relatively unchanged. Com-
panies that do sell over the Internet, have, however,
increased their volume of sales, in some instances
significantly.
There is little new to report in terms of innovation
since last year. Fewer than three out of ten compa-
Figure 101: Does your company use Internet for…? **
(All respondents - N=1215, share of total, %)
nies report introducing a new product or process
over the past three years. Moreover, three-quarters
of these innovations were new only to their respec-
tive enterprise. Out of 1000 Western Balkans com-
panies, 290 have introduced an innovation and out
of these, 75 have introduced market-level innova-
tions, of which 12 were at the EU level, and 9 were
innovations on a global scale. It is worth noting that
the highest share of companies that reported inno-
vations in the Western Balkans come from Bosnia
and Herzegovina and Montenegro, while Kosovo*
reports the highest share of European and global in-
novations.
Innovative activity could be fostered through en-
couraging cooperation and targeted financial sup-
port. Namely, Western Balkans businesses tend to

100
92
88 86 85
80 80 79

67
62
60
55 56 55 53
50 49
46 47 47
44
41 41
40 37 38 39 38
37 36
33 33 34
32 30 29
28 27 28 29
26 25 26
24 22
21 22
20
16 15 16

2
0
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western Balkans
Herzegovina North Macedonia

Significantly higher than 2018

Communication (email, skype, etc.) Significantly lower than 2018

Advertising on Facebook, YouTube, GoogleAds, etc.

Selling your goods or services over the Internet Online trainings

Purchasing goods or services for your company over the Internet Searching the Internet for innovative ideas, new trends,
partners etc.
Executing banking or financial transactions online
Data storage (i.e. the cloud), web-based applications or
Presenting your company through company website other internal operational needs
Communication through social networks We don't use Internet

Provision of customer services or support online DK/refuse

**The figures might not add to 100% due to rounding.

111
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 102: What percentage of your total sales is currently generated through online sales?**
(All respondents who sell their goods or services over the Internet - N=312, share of total, %)

N 40 67 49 24 78 54 312
100% 8 1 4 7
8 14 9
16
15 18 8
21
80% 26
19
19
20 29
60% 40 30
36 33
40%
63
57 54
20% 38 42
31 31

0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Significantly higher than 2018
Less than 5% Between 5-20% Significantly lower than 2018

Between 20-50% More than 50%

rely almost solely on their own strengths when it remaining economies, while less digitally savvy, still
comes to R&D activities. They rarely cooperate with use the Internet extensively, with the listed features
universities (only one in 10) or among each other used by close to a third of all companies on average.
(only two in 10). Also, financial support for innova-
As expected, Internet use is more widespread among
tion, either from governments or international do-
large companies and exporters than the rest. Large
nors, gets to only 1 in 10 companies on average. It
companies tend to use the internet to search for in-
is worth noting that special attention needs to be
novative ideas and trends considerably more than
placed on supporting SMEs in this regard as large
the smaller ones (70% of large companies, 50% of
companies receive support from the governments to
medium-sized ones and less than 30% of small and
a much greater extent (42% vs. 9% for SMEs).
micro ones). Also, employees of large corporations
Almost all Western Balkans companies use the In- benefit from online trainings more than those em-
ternet and its use is becoming more diverse and ployed in smaller companies.
widespread. Still, the Internet is prevailingly used for
Traditional ways of selling are still the largest
communication via Skype, email and other channels
source of revenue even among the companies that
(85% of the companies). E-banking has significantly
sell their goods and services online; online sales
gained in popularity, as more than half of companies
are on the rise, however. Although the number of
execute transfers online in 2019 (vs. 40% in 2018).
businesses selling online remained unchanged, al-
Also, almost half of all companies have a website
most 30% of executives from the region noted that
(vs. 42% in 2018). It seems that advertising on social
online selling accounted for a significant source of
media, Google and YouTube has lost some of its ear-
income in 2019, compared to 20% in 2018. Most of
lier popularity (39% in 2019 vs. 46% in 2018). Same
this increase can be attributed to the growing signifi-
as last year, just over a quarter of companies sell
cance of revenues from online sales in Kosovo* and
their goods and/or purchase inputs online. Despite
Albania, and, to a lesser extent, the Republic of North
the global trend of online learning, only 8% of com-
Macedonia and Montenegro.
panies reported using the Internet for this purpose.
Online sales remain the most popular in Serbia and
Businesses from Bosnia and Herzegovina seem to
Montenegro with a third of the businesses reporting
be the most digitalised, as they most extensively use
to have generated more than 20% of their revenue
all the listed features (used by 45% of companies on
over the Internet. In spite of the growing significance
average). Usage of the Internet is also widespread
of online sales in the rest of the region, around 80%
in Serbia and Montenegro, as close to 40% of the
of the companies still generate at least 80% of their
companies use the listed features on average. The
revenues the traditional way.
**The figures might not add to 100% due to rounding.

112
Figure 103: In the last six months, have you experienced any of the following Internet security prob-
lems?**
(Respondents whose companies are using the Internet - N=1168, %)

100
92

83
80 79 80
77
72 79

60

40

21 22
20 18
16
13
9
4 5 4 6 6 4 6 6 6 5
2 2 1 1 1 33 1 2 22 2 21
1 1 1 1
0
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western Balkans
Herzegovina North Macedonia

Significantly higher than 2018

Viruses ID misrepresentation/theft Significantly lower than 2018

Illegal access Other

Attacks on your network No, we have not experienced any Internet security problems

Smaller companies usually rely on the Internet more Herzegovina described their Internet connection as
than large ones when selling their products. Online satisfactory.
sales are especially important for businesses in the
Reliability and stability of the connection, together
sector of education, science, culture, information,
with bandwidth, are the key features of good Inter-
with 60% of businesses in this sector generating at
net access, say a majority of the Western Balkans
least 20% of their revenues over the Internet.
business community. These two characteristics are
Companies from the region rarely experience the most important for 81% of businesses, while
problems with Internet security. The vast majority price and coverage are deemed to be not as criti-
noted they had no security problems over the past cal. This is largely in line with expectations since the
six months (80%). Meanwhile, 13% reported issues price of Internet access is generally affordable.
with computer viruses, while illegal access was ex-
Western Balkans economies exhibit different pref-
perienced by only 2% of businesses surveyed. While
erences when evaluating the importance of Inter-
there is broad consensus on the issues faced across
net features. For instance, managers from Serbia
the region, Internet security appears to be the least
and the Republic of North Macedonia value the reli-
problematic in the Republic of North Macedonia.
ability of connection the most, while their colleagues
Also, viruses are somewhat more problematic in
from Albania, Montenegro and Bosnia and Herze-
Montenegro, Bosnia and Herzegovina and Albania
govina appreciate bandwidth. Prices are perceived
(around one in five companies reported facing this
as important by managers from Kosovo* and Alba-
issue).
nia to an extent above the regional average.
The vast majority of businesses are satisfied with
Large companies prefer speed, while smaller
their Internet connection. More than nine out of
mostly favour stability of the connection. Also,
ten managers experience no issues with their Inter-
large companies seem to be more affected by the
net connection. It seems that the Republic of North
price (13%) than smaller ones (4-8%).
Macedonia is also home to the best Internet connec-
tion with 98% of satisfied respondents. At the same Most companies work on research and develop-
time, only 75% of their counterparts in Bosnia and ment on their own. Almost identical to last year, only

**The figures might not add to 100% due to rounding.

113
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 104: Are you satisfied with your Internet connection?**

(Respondents whose companies are using the Internet - N=1168, %)

Western Balkans 91 9

Albania 94 6

Bosnia and Herzegovina 75 25

Kosovo* 88 13

Republic of North Macedonia 98 2

Montenegro 90 10

Serbia 95 5

0 20 40 60 80 100

Yes No

Figure 105: Which feature is the most important aspect for you regarding your internet access?**
(Respondents whose companies are using the Internet - N=1168, %)

100% 1 1
10 11 9 12
17 13
22
80% 27
33
37 29 54 45
60% 62

40% 53
34 44
40 36
20% 31
25
11 15
6 9 6 7
0% 2
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Significantly
Significantly higher than
than 2018
higherthan 2018
Speed/bandwidth Relaibility / stability of connection Significantly
Price level Significantly lower
lower than 2018
2018
Good coverage Other

9% of Western Balkans businesses have cooperated
with universities on R&D. Cooperation of business-
es and universities is at an above-average level in
Bosnia and Herzegovina, Kosovo* and Montenegro,
while Albania and the Republic of North Macedonia
are lagging behind.
Large companies (44%), foreign-owned companies
(21%) and companies doing business in agriculture,
forestry and fishing (18%) are more likely to codevel-
op new projects with universities than the rest.
Three out of ten Western Balkans companies have
introduced new, or significantly improved, prod-
ucts or services, in the past 12 months. Compa-
nies from Bosnia and Herzegovina and Montenegro
seem to be the most innovative, as just over 40%
have introduced new or significantly improved prod-
ucts and/or services over the past year. The number
of new or improved products is half that for Albania,
Kosovo* and the Republic of North Macedonia, while
Serbia is at the regional average.

**The figures might not add to 100% due to rounding.

114
Large and medium enterprises are more innovative
than small and micro ones (around 40% vs. around
25%). Similar is true for exporters and non-exporters
(42% vs. 22%); and foreign and domestic companies
(42% vs. 28%).
A large majority of companies rely on their own
strengths and capacities when working on an inno-
vation. Close to 80% of the businesses in the region
develop innovations on their own, while 18% code-
velop them with another enterprise. Customising
products or services developed by other enterprises
is practiced by 9% of companies in the region. The
practice of trusting the development of an innova-
tion solely to another enterprise is present only in
Montenegro with some statistical significance.
Companies from Bosnia and Herzegovina and Ser-
bia tend to develop innovations by themselves, while
their counterparts from Kosovo* and the Republic of
North Macedonia are more open to collaboration.
Although a majority of managers innovate only at
the enterprise level, a quarter has managed to in-
troduce a product that was completely new to their
market. Almost 70% of the companies in the region
introduced an innovation that was new only to their
enterprise, while 26% introduced an innovation that
was, to their knowledge, first in their respective mar-
kets.
Markets in Kosovo* and Albania have seen the high-
est number of new products introduced by domes-
tic companies over the past year (40% of surveyed

Figure 106: In the past 3 years, did you cooperate with any of the universities on research and develop-
ment (R&D) or technology development projects to help develop new products or services?**
(All respondents - N=1215, share of total, %)

Western Balkans 9 89 2

Albania 5 92 3

Bosnia and Herzegovina 14 84 2

Kosovo* 13 85 2

Republic of North Macedonia 6 93 1

Montenegro 12 85 3

Serbia 9 90 1

0 20 40 60 80 100

Figure 107 Have you introduced new or significantly

Yes Noimproved products and/or services in the past 12
DK/refuse
months?**
(All respondents - N=1215, share of total, %)

Western Balkans 29 70 2

Albania 18 79 2

Bosnia and Herzegovina 42 57 1

Kosovo* 22 76 3

Republic of North Macedonia 21 78 0

Montenegro 43 52 5

Serbia 28 71 1

0 20 40 60 80 100

Yes No DK/refuse

**The figures might not add to 100% due to rounding.

115
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 108: Who developed these product innovations?**

(Respondents who introduced new or significantly improved products and/or services - N=354, %)

100

85
82
80 77 79
73
70

60
60

40
30 28 26
20 17 19 19 18
16
13
11 9
7 8
5 5
1 2 1
0 0 0 0

Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western Balkans

Herzegovina North Macedonia

Your enterprise by itself

Your enterprise together with other enterprises or organizations
Your enterprise by adapting or modifying goods or services originally developed by other enterprises or organisations
Other enterprises or organisations

Figure 109: Were any of your product innovations (goods or services)...?**

(Respondents who introduced new or significantly improved products and/or services - N=354, %)

100

80 79 77
69
65
60 57
53 53

43 44
40
31
28 26
21
20 18 18
12
12 9 9
5
2
0
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western Balkans
Herzegovina North Macedonia

New to your market (Your enterprise introduced a new or significantly improved product onto your economy
market before your competitors (it may have been available in other markets))
Only new to your enterprise (Your enterprise introduced a new or significantly improved product that was
already available from your competitors in your economy market)
DK/refuse

**The figures might not add to 100% due to rounding.

116
Figure 110: To the best of your knowledge, were any of your product innovations during the three years
2017 to 2019...?**
(Respondents who introduced new or significantly improved products and/or services - N=354, %)
A first in your economy

Western Balkans 26 64 10

Albania 41 54 5

Bosnia and Herzegovina 36 58 6

Kosovo* 56 40 5

Republic of North Macedonia 14 84 2

Montenegro 35 58 7

Serbia 14 70 16

0 20 40 60 80 100

Yes No DK/refuse
A first in Europe

Western Balkans 4 83 13

Albania 3 86 11

Bosnia and Herzegovina 7 90 3

Kosovo* 5 74 21

Republic of North Macedonia 5 93 2

Montenegro 5 88 8

Serbia 2 77 21

0 20 40 60 80 100

A world first Yes No DK/refuse Significantly higher than 2018

Significantly lower than 2018

Western Balkans 3 83 14

Albania 84 16

Bosnia and Herzegovina 5 91 5

Kosovo* 7 74 19

Republic of North Macedonia 2 95 2

Montenegro 3 88 9

Serbia 2 77 21

0 20 40 60 80 100

Yes No DK/refuse Significantly higher than 2018

Significantly lower than 2018

**The figures might not add to 100% due to rounding.

117
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 111: Have you introduced new or significantly improved production and/or service delivery
processes in the last three years (2017-19)?**
(All respondents - N=1215, share of total, %)

Western Balkans 28 70 2

Albania 24 75 0

Bosnia and Herzegovina 38 59 2

Kosovo* 17 78 6

Republic of North Macedonia 18 81 1

Montenegro 37 57 6

Serbia 28 70 2

0 20 40 60 80 100

Yes No DK/refuse

enterprises). At the same time, companies from the Most of the new products and services that West-
Republic of North Macedonia and Serbia more often ern Balkans businesses have managed to intro-
innovate only at the enterprise level. duce over the past three years were new only to
their respective markets. Similar to last year, around
Interestingly, the level of innovation is largely indepen-
a quarter of companies in the region that reported
dent of industry membership. Foreign-owned com-
innovations, noted that the product, or service, can
panies, however, are much more likely to deliver mar-
only be considered an innovation in their respective
ket-level innovation than domestic ones (43% vs. 24%).
economies. Meanwhile, innovations at the European
Figure 112: Who developed these process innovations?**
(Respondents who introduced new or significantly improved production and/or service delivery processes - N=331, %)

100
91
89
82
80
76
73 73
68

60

40

24 23 24 22
20 18 16 16
12
6 6 5 7 8 5
8
2 3 3 3 2
0 0

Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western Balkans

Herzegovina North Macedonia

Your enterprise by itself Significantly higher than 2018

Significantly lower than 2018
Your enterprise together with other enterprises or organizations
Your enterprise by adapting or modifying goods or services originally developed
by other enterprises or organisations
Other enterprises or organisations
**The figures might not add to 100% due to rounding.

118
Figure 113: Were any of your process innovations introduced during the three years 2017 to 2019 new to
your market?**
(Respondents who introduced new or significantly improved production and/or service delivery processes - N=331, %)

Western Balkans 31 60 9

Albania 67 33 0

Bosnia and Herzegovina 32 63 5

Kosovo* 36 45 18

Republic of North Macedonia 38 51 11

Montenegro 39 58 3

Serbia 18 68 14

0 20 40 60 80 100

Yes No DK/refuse Significantly higher than 2018

Significantly lower than 2018

and global levels, although still exceptionally uncom-
mon, have grown from 2% to 4% and from 1% to 3%,
respectively, since 2018.
Managers from Kosovo* claim the highest level of
innovative dynamism as 56% of their innovations
were new to their market, while as many as 7% re-
ported introducing an innovation on the globalscale.
Meanwhile, executives in Bosnia and Herzegovina
are reporting an above-average level of innovative
activity across all markets relative to the region, with
their Albanian counterparts largely restricting their
innovative work to their economy (41%) with only 3%
of innovations at the European level and none rele-
vant globally.
Innovations at all levels are much more common
among foreign than domestically-owned compa-
nies. Likewise, 34% of innovations by foreign-owned
companies were new only to their respective mar-

Figure 114: During the past three years (2017 to 2019), did your enterprise receive any public and/or
donor’s financial support for innovation activities from the following levels of government? Include
financial support via tax credits or deductions, grants, subsidized loans, and loan guarantees. Exclude
R&D and other innovation activities conducted entirely for the public sector under contract.**
(All respondents - N=1215, share of total, %)
Local or regional

Western Balkans 6 92 2

Albania 3 97 0

Bosnia and Herzegovina 12 85 2

Kosovo* 6 92 3

Republic of North Macedonia 4 96 0

Montenegro 9 86 5

Serbia 4 92 3

0 20 40 60 80 100

Yes No DK/refuse Significantly higher than 2018

Significantly lower than 2018

**The figures might not add to 100% due to rounding.

119
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Central government (including central government agencies or ministries)

Western Balkans 4 94 2

Albania 5 95 0

Bosnia and Herzegovina 8 90 2

Kosovo* 2 95 3

Republic of North Macedonia 3 96 0

Montenegro 8 86 6

Serbia 2 95 3

0 20 40 60 80 100

Yes No DK/refuse Significantly higher than 2018

Significantly lower than 2018
The European Union (EU) or other donors

Western Balkans 2 95 3

Albania 2 97 1

Bosnia and Herzegovina 4 93 3

Kosovo* 3 94 4

Republic of North Macedonia 0.5 99.5 0

Montenegro 8 87 5

Serbia 1 95 4

0 20 40 60 80 100

Yes No DK/refuse

kets (vs. 25% of domestic), 14% were innovations at
the European level (vs. 3% of domestic) and 11% at
the global level (vs. 2% of domestic).
Western Balkans companies are not particularly
engaged in developing new production and deliv-
ery processes, with an almost unchanged level of in-
novative dynamism in this regard. Closely mirroring
last year’s results, only three out of ten companies
have introduced process innovations over the past
3 years.
Responses here tend to closely follow patterns es-
tablished under innovative practices as again Bosnia
and Herzegovina and Montenegro boast the highest
share of companies reporting process innovations
(38% and 37%, respectively). While Serbia sits at the
regional average, the slowdown in innovative activi-
ties across the rest of the economies, and especially
in Kosovo* (from 32% in 2018 to 17% in 2019) and
Albania (from 38% in 2018 to 24% in 2019), has re-
sulted in below-average scores.
As expected, exporters, foreign and large companies
are working on process innovations more than the
rest.
Similar to product development, companies usual-
ly work on process innovation on their own (82%
of the companies). In addition, 16% are cooperating
with other enterprises, while 8% are adapting and
modifying other enterprises’ products. Albania and
Bosnia and Herzegovina favour cooperation in this
area, as opposed to Montenegrin companies that
favour developing new processes on their own. Busi-
nesses that adapt and modify processes already in-
troduced by other companies are most prevalent in
Kosovo* and the Republic of North Macedonia.

120
Again, large companies are the ones that usually co-
operate, while small enterprises tend to rely on their
own resources.
As with innovative products and services, the majori-
ty of process innovations introduced by Western Bal-
kans businesses over the past three years already
existed on the market. On average, only around 30%
of business innovations in the Western Balkans are
new to the market, while 60% already existed.
Businesses in Albania tend to claim market-level in-
novations most frequently in the region (67%), while
their Serbian counterparts are at the opposite end
(18%). All remaining economies claim market-level
process innovations with an above-average frequen-
cy.
Somewhat surprisingly, market-level process inno-
vations are more common among micro-compa-
nies than among medium-sized ones (37% vs. 29%),
while the sample is insufficiently large to derive a reli-
able conclusion about large companies. Market-level
process innovations are more often claimed by busi-
nesses in agriculture, hunting, forestry and fishing
than in other industrial sectors.
The majority of Western Balkans companies finance
research and development on their own; however,
there are some early indications of increasing sup-
port from their respective governments. Around 90%
of businesses in the region rely on their own resourc-
es to finance R&D undertakings. Overall, companies
in the region rarely receive support in the form of EU
funds or assistance from other donors, except in
Montenegro (8%). Support from the government, ei-
ther through central- or local-level institutions, plays
a potentially pivotal role, especially in some econo-
mies. Namely, 20% of businesses from Bosnia and
Herzegovina received some support from the state
over the past three years (up from 8% in 2018). Sim-
ilar is true for Montenegro, with 17% of businesses
receiving financial support from the government (up
from 10% in 2018). In the rest of the region, only 7-8%
of businesses received government support albeit at
an increased rate compared to the previous years.
Large companies receive support from the govern-
ments much more often than their smaller coun-
terparts (42% vs. 9% of SMEs). Also, foreign-owned
companies are more likely to be granted state aid
than domestic ones (16% vs. 10%).
121
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

SKILL NEEDS

Finding an applicant with the required set of skills ready; the share of the workforce with a university
is a considerable challenge for employers in the degree has shrunk from 31% in 2014 to 24% in 2019.
Western Balkans. Namely, more than a quarter of
Companies in the region are becoming increasingly
companies in the region have reported struggling to
open towards youth. Since the executives say they
fill vacancies, with the most commonly cited reason
are reasonably satisfied with the education systems,
being the lack of necessary skills by prospective ap-
they are generally willing to give a chance to educat-
plicants. With this issue likely to become increasing-
ed young people. Even though only a quarter of the
ly important in the near future, policy makers must
executives surveyed reported to have (or intends to
invest considerable effort in increasing the size of
have) an internship programme in their companies,
the labour pool through activation, training, and ed-
80% say they would employ inexperienced but edu-
ucation of both the inactive and the unemployed.
cated applicants. However, companies rarely orga-
With women more frequently inactive due to various
nise additional trainings to improve their workers’
reasons, special tailored programmes should be de-
skills.
signed and deployed to ensure their inclusion into
the labour pool. This may include making childcare Identical to last year, Western Balkans companies
more accessible, ensuring equal pay for equal work, mostly employ workers that hold a secondary de-
and introducing flexible work arrangements in or- gree (54%). The share of employees with a university
der to help women strike the right balance between degree or higher is also substantial at 24%, while
household and professional responsibilities. 18% have a vocational school diploma. Year-on-year
changes, slight as they may seem, are still cause for
The average education level for employees in the
concern. Namely, a comparison of the results across
Western Balkans has remained largely unchanged,
the six instalments of the Balkan Barometer reveals
with the dominant share of the workforce holding a
that the share of workers with a university diploma is
secondary education diploma. The effect of brain-
constantly shrinking over time – from 31% in 2014
drain due to migration and policies promoting la-
to 24% in 2019. Still, this does not necessarily mean
bour-intensive FDIs are clearly having an effect al-
that the number of workers with university degrees

Figure 115: What percentage of your company’s workforce has the following education levels?**
(Respondents who did not mark DK/refuse - N=1185, %)

100%
17 24 22 24
30 33 32
80%

60%
34
64 52 58 54
41
49
40%

20% 29
19
14 21 15 18
6 6 16 4
1 4 1 3 2 4 0.4
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
WIthout or unfinished Primary school Vocational qualification Significantly
Significantly higher than
than 2018
higherthan 2018
primary school Significantly
Significantly lower
lower than 2018
2018
Secondary school University education
qualification or higher

**The figures might not add to 100% due to rounding.

122
declines in absolute terms, but recent surges in em-
ployment across the region have tended to target
the less educated workforce due to the nature of the
work involved.
Businesses in Kosovo*, Montenegro and Albania
employ the workforce with the highest proportion
of university-educated employees (around 30%).
Meanwhile, in Serbia (22%) and Bosnia and Herze-
govina (17%), university graduates are less prevalent
among the employed. Workers holding vocational
education diploma are most popular with Albanian
companies (29%) and much less so in Serbia, Mon-
tenegro and Bosnia and Herzegovina (around 15%).
Reliance on employees with secondary school diplo-
mas is most common in Bosnia and Herzegovina
(64%). Workers with only a primary-level education
are present only in Albania and Kosovo* with some
statistical significance.
Employees with higher education tend to be more
numerous in companies operating with foreign cap-
ital (36%) than domestic one (23%), while market
orientation makes almost no difference. As expect-
ed, a larger share of highly educated employees can
be also found in companies in sectors of education,
science, culture, information, health and social pro-
tection (37%).
Western Balkans managers are growing more sat-
isfied with education systems in their economies
(mean score 3.6). Almost two-thirds of managers
find that skills taught throughout the education sys-
tem meet the needs of their businesses, while fewer
than 20% disagree. After a dip in 2018, this year has
brought about considerable improvement in this re-
gard (average score in 2019 is 3.6 vs. 3.3 in 2018).
This improvement has primarily been driven by pos-
itive changes in the Republic of North Macedonia
(+0.5 mean score) and Albania (+0.4 mean score),
while developments in Kosovo* and Montenegro
(-0.3 mean score) have had the opposite effect.
Applicability of skills taught in education is the
highest in Serbia (3.9) and Albania (3.8). In these
two economies, around three quarters find the ed-
ucation system satisfactory, while the share of dis-
satisfied respondents is relatively small, especially in
Serbia (8%). Bosnia and Herzegovina occupies the
other end of the spectrum with 44% unhappy man-
agers and only 33% of respondents satisfied with the
level of education provided in their economy (score
2.7). Satisfied managers outnumber their unhappy
counterparts across all the other economies in the
region at a two-to-one ratio.
While satisfaction with knowledge and skills ac-
quired through education remains the same irre-
spective of firm size, market orientation and industry,
foreign-owned companies seem to be significantly
more satisfied than domestic ones (3.8 vs.3.5).
Western Balkans managers are generally eager to
employ qualified, yet inexperienced young people
(mean score 4.1). 80% of managers are willing to
employ individuals without work experience, with the

Figure 116: Would you agree that the skills taught in educational system of your economy meet
the needs of your company?**
(All respondents - N=1215, %)

100% 6 1 1 1 5
5 6
10 18 17
24 21
80% 28
3.9 4
3.8 34 44
3.6 3.6
60% 44 46
23 3.3 3.2
48 54 3
40% 2.7
29 24
20
20 19 2
20% 15 14 15
24 19 11
11 11
10 6
1 4 5 2 7 1
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Totally disagree Agree Mean Significantly higher than 2018
Significantly lower than 2018
Disagree Totally agree
Neither agree nor disagree DK/refuse

**The figures might not add to 100% due to rounding.

123
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 117: How likely would you hire young person whose educational profile completely meets the
needs of your business, but without work experience?**
(All respondents - N=1215, %)
100% 4 2 1 5

25 22 36 34 35
80% 4.2 4.2 4.2 4.2 4.1 4
46 37
3.7
3.6
60%
35 36
3

40% 52 45
48 50
36
23 2
28
20%
10 14
14 9 10
5 8 13 4
3 1 3 3 3 1 1
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Totally disagree Agree Mean Significantly higher than 2018
Significantly lower than 2018
Disagree Totally agree
Neither agree nor disagree DK/refuse

number growing on a year-by-year basis up to (4.1
from 3.9 in 2018). An increase in the regional score
is a direct consequence of improvements in the Re-
public of North Macedonia (+0.4) and Montenegro
(+0.2).
Most Western Balkans economies are very sup-
portive of hiring inexperienced young people. Nine
out of ten companies in Serbia, Montenegro, the Re-
public of North Macedonia and Bosnia and Herze-
govina would hire educated but inexperienced youth
(score 4.2). The situation in Bosnia and Herzegovina
is interesting; although managers claim to be un-
happy with the economy’s education system, they
remain extremely motivated to provide employment
opportunities to young people educated in the said
system without requiring prior work experience. The
situation in Albania and Kosovo* is not as favourable
towards youth, as only 6 out of 10 companies are
willing to offer them jobs without prior experience.
Results remain fairly similar across different indus-
tries, yet larger companies are somewhat more likely
to provide opportunities for youth than smaller ones.
The same goes for exporters and non-exporters, and
for foreign and domestically-owned companies.
Close to two-thirds of Western Balkans companies
are either willing to establish, or already have an
internship or apprenticeship program.
Companies in the Republic of North Macedonia are
most in favour of internship schemes, while their
counterparts in Bosnia and Herzegovina and Monte-
negro are the least likely to pursue this idea.
As expected, internships are much more common
in large companies (63%) than in medium-sized and
smaller ones (28% on average).
Western Balkans companies widely recognise the
importance of digital skills. Close to 80% of man-
agers in the region stress that digital skills are im-
portant to conducting their businesses. This is large-
ly the case in all Western Balkans economies, with
the exceptions of Kosovo* and the Republic of North
Macedonia, where this trend is expected to acceler-
ate in the future.
The importance of digital skills increases with a
commensurate increase in company size (from 73%
in micro-companies to 92% in large companies), and
it is also high among foreign-owned firms (89%) and,
predictably, in export-oriented ones (87%).
A majority of Western Balkans companies under-
take measures to improve the digital skills of their
employees. Companies in the region recognise the
importance of digital skills for their competitiveness,
as illustrated above. This is further reflected in the
fact that 55% of companies surveyed provide some
form of training to upgrade their workers’ skills[ The
graph might capture multiple responses from one
respondent.]. Usually, training is organised through
on-the-job events or internal learning (44%) while
workshops, seminars, and online courses are less
common.
Individual economies generally follow the region-
al pattern when it comes to types of training and
share of companies that organise them. Monte-

**The figures might not add to 100% due to rounding.

124
 Figure 118: Did you already have, or plan to introduce in your company, an internship
or apprenticeship program?**
(All respondents - N=1215, %)

100% 2 4 2 5
10 9
15

80%
52 52
71
60% 67 79 63
61

40%

20% 44 43
27 24 24 28
18
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Yes No Significantly
Significantly higher than 2018
Significantly higher
Significantly lower
than2018
lower than
than 2018
2018
DK/refuse

Figure 119: How important are digital skills for your company?**
(All respondents - N=1215, %)

100% 6 1 1
17 14 14
21 22
80% 36
36
38 41
60% 51
50
58
39
40% 42

48 44
20%
32 28
24 20
17
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Very important Somewhat important Significantly higher
Significantly higher than
than 2018
2018
Significantly
Significantly lower
lower than
than 2018
2018
Not important DK/refuse to answer

negro and the Republic of North Macedonia can be
regarded as exceptions as in the former companies
organise trainings more often than the average (70%
of the companies organise trainings), while the prac-
tice is much less common in the latter (42% of the
companies organise trainings).
Some 28% of Western Balkans managers report-
ed hard-to-fill vacancies over the past 12 months.
Nonetheless, hard-to-fill vacancies appear to be less
of a problem in 2019 than was the case with the pre-
vious instalment of the Barometer (down from 38%
in 2018).

**The figures might not add to 100% due to rounding.

125
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 120:Do you take concrete measures to improve the digital skills of your employees?**
(Respondents who marked digital skills as very important and somewhat important - N=922, multiple answers, %)

100% 1 1

30
80% 44 45 44 45
45
58
11
60% 11
12 9
17 12
9 10
10 7
7 4
40% 11
7
58
20% 45 48 45 44
41
31

0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Yes, throught the job training Yes, through online Yes, through workshops, Significantly
Significantly higher than 2018
or internal training courses and webinars seminars or conferences Significantly higher
Significantly lower
than2018
lower than
than 2018
2018

No Other

This indicator is expected to greatly vary in the fu-
ture depending on migration trends and fluctuating
unemployment rates.
It seems that the qualification and availability of
Albanian workforce match employers’ needs to an
extent greater than anywhere else in Western Bal-
kans, with only 14% of hard-to-fill vacancies. The sit-
uation is similar in Serbia (20%), while in Bosnia and
Herzegovina a majority of companies struggle to fill
select vacancies.
The availability of adequate workforce seems to
have improved significantly in Albania, the Repub-
lic of North Macedonia, and Kosovo*, by around
20 points on average. Meanwhile, the labour pool
seems to be shrinking dramatically in Bosnia and
Herzegovina, as a share of companies reporting this
issue expanded by 10 points since 2018.
The larger the company, the harder it is to recruit –
only 30% of small companies cite this issue in com-
parison to 49% of large corporations.
Close to two-thirds of Western Balkans managers
attribute their inability to fill vacancies to the ap-
plicants’ poor qualifications, while only 13% cite
uncompetitive salaries and compensation. These
results are largely in keeping with the previous sur-
vey instalments.
Managers from Montenegro cite the lack of skills
more often than executives from other economies
(85%), while respondents from Serbia and the Re-
public of North Macedonia most commonly recog-
**The figures might not add to 100% due to rounding.
nise inadequate compensation as the reason for
hard-to-fill vacancies (20% and 18%, respectively).
Only one in four companies has provided addition-
al training for their employees. The number of com-
panies providing training for their staff has declined
year-on-year from the first edition of the Barometer
with no discernible reason.
The practice of providing supplementary develop-
ment opportunities to employees follows a general
regional pattern with the exception of Bosnia and
Herzegovina, and to a lesser extent, Montenegro.
Half of all companies in Bosnia and Herzegovina
paid for, or organised, training for their staff, with
roughly a third following suit in Montenegro. As far
as the remaining economies are concerned, on av-
erage, only one in five companies reported providing
supplementary training.
As companies provide trainings for employees rel-
atively sporadically, they also rarely review their
skills. Slightly more than half of all Western Balkans
companies review the skills of their employees, out
of which half do so only partially. The share of com-
panies reviewing their employees’ skills is also in a
gradual decline.
As expected, reviewing skills and providing train-
ings follow the same pattern. Even though the
share of companies that at least partially review
employees’ skills is almost identical across most
economies, business leaders from Bosnia and Her-
zegovina and Montenegro tend to take this process
more seriously.

126
 Figure 121: Did you have vacancies over the past 12 months that have proved hard to fill?**
(All respondents - N=1215, share of total, %)

100% 2 1 1

80% 42

64
70 75 71
60% 86 79

40%

58
20% 36
28 25 28
20
14
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Yes No Significantly
Significantly higher than
than 2018
higherthan 2018
Significantly
Significantly lower
lower than 2018
2018
DK/refuse

Companies that review employees’ skills more often
include large firms and those operating with foreign
capital (68% and 53%, respectively).
Just over half of Western Balkans executives assess
their employees as interested in acquiring new skills.
Meanwhile, close to a third consider their employees
as largely indifferent, and 12% assess employee in-
terest as unsatisfactory. At the regional level, year-
on-year changes were for the most part subtle and
mutually offsetting in terms of general improvement
and deterioration. However, at economy level, many
of the changes recorded were significant. Namely,
executives’ perception of their employees’ ambition
has declined slightly across all Western Balkans
economies, except for Bosnia and Herzegovina and
Montenegro, where it has improved.

Figure 122: Why do you think this is the case?**

(Respondents who had difficulty in filling vacancies - N=368, %)

N 28* 119 56 51 73 41 368

100% 4 5 4 4 7
4 4 6
16
14 18 7
23 17 17
80%
16
8 18 13
9 20
60%

85
40% 79
64 59 61 63
56
20%

0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
DK/refuse
Significantly higher than
Applicants lack skills Salary and compensation Other Significantly
Significantly than 2018
higherthan 2018
offered by the company is Significantly lower
lower than 2018
2018
not competitive

*Small base for valid conclusions

**The figures might not add to 100% due to rounding.

127
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 123: Over the past 12 months, has your business funded or arranged any training and
development for staff in the organisation, including any informal on-the-job training, except
training required by the law?**
(All respondents - N=1215, share of total, %)

100% 1 2 2 1 2 2

80%
49
63
76 78 77 72
60% 82

40%

49
20% 36
22 22 21 26
17
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Yes No Significantly
Significantly higher than
than 2018
higherthan 2018
Significantly
Significantly lower
lower than 2018
2018
DK/refuse

Employees from Montenegro, assessed as most vo* stand out as the most uninterested in the region,
apathetic in 2018, are now considered most asser- according to their employers (18%).
tive and ambitious. Montenegro boasts the regional
Large and foreign-owned companies assess the
high of 62% when it comes to companies assess-
interest of their employees in professional develop-
ing their employees as motivated to learn, while the
ment considerably higher than the rest (81% and
remaining economies are largely positioned at, or
84%, respectively).
around, the regional average. Employees from Koso-

Figure 124: Thinking about skills requirements, does your company regularly review the skill and
training needs of individual employees?**
(All respondents - N=1215, share of total, %)

100% 2 2 3 1 1

26 24 28 29 27 27
31
80%

60% 30
33
50 48 45
51 55
40%

20% 44
38
22 24 27
16 16
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Yes No Significantly
Significantly higher than
than 2018
higherthan 2018
Significantly
Significantly lower
lower than 2018
2018
Partly DK/refuse

**The figures might not add to 100% due to rounding.

128
 Figure 125: How would you assess the readiness of employees in your company to acquire additional
qualifications in order to advance and get promoted?**
(All respondents - N=1215, %)

100% 3 1 3 5 5
13 5
9 12 13 5 8
9
12
80%

39 40 49 45
45
60% 35 49

40%
33 24 31
30 31
26 33
20%
10 7
10 11 5 9
2 4 8 7 4 8 3
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
They are not interested in They are not interested Neither interested nor
acquiring additional in acquiring additional disinterested
qualifications at all qualifications
They are interested in They are very interested Other Significantly higher than
Significantly
Significantly than 2018
higherthan 2018
acquiring additional in acquiring additional Significantly lower
lower than 2018
2018
qualifications at all qualifications

Western Balkans executives prioritise striking the professional realms is crucial for bringing more
right balance between household responsibilities women into the workplace (54%). Meanwhile, exec-
and their professional obligations as a critical pre- utives from the Republic of North Macedonia prior-
condition for increasing the number of women in itize more accessible childcare (52%) while largely
the workforce (48%). The second most cited mea- dismissing concerns over the gender pay gap as a
sure for helping women into the labour market is barrier to women entering the labour market; at 23%,
making childcare more accessible (42%), while equal respondents from this economy were the least like-
pay for equal work, and increasing flexible work ar- ly to associate disparities in pay with the exclusion
rangements would also be helpful (38% and 37%, of women from the labour force. At the same time,
respectively). business leaders from Albania and Kosovo* were
most likely to focus on the pay gap as a critical ob-
At the same time, changing taxation rules to favour
stacle to women in the workplace (51% and 57%, re-
women is deemed important by only one in six ex-
spectively).
ecutives. Measures like making employers aware of
the benefits of employing and promoting women, or
improving access for women to traditionally “male
jobs” are reckoned effective by an even smaller
group of managers – only one in ten consider them
effective.
In an encouraging development from last year, ex-
ecutives are now more interested in improving the
position of women, as reflected in the higher overall
response rate (93% in 2019 vs. 87% in 2018). Man-
agers in the Western Balkans were overwhelmingly
open to discussing all the measures proposed, with
the notable exception of respondents from Bosnia
and Herzegovina who were the least likely to engage
with the question (only 83%).
Managers from Montenegro and Serbia feel that
striking the right balance between the private and

**The figures might not add to 100% due to rounding.

129
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 126: In your opinion, what are the most effective ways to increase the number of women in the
labour market?**
(All respondents - N=1215, %)

100

80

57
60 52 54 52
51 50
48
44 46 44
40 42 40 42
39
40 36 37 36 37 38
33 34 34
31 31 32 31
30
27
18 23 23 22
17 17 19 16
20 17
14 15
12 11
6 8 7
5 45 4
2
0
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western Balkans
Herzegovina North Macedonia
Significantly higher than 2018
Making sure women earn the same as men for the same work Significantly lower than 2018
Making child care more accessible (e.g. without waiting list in kindergartens, increasing the number of nurseries and kindergartens)
Increasing flexible work arrangement (e.g. part-time work, working from home)
Making it easier for women to combine a job with household and care responsibilities
Making sure that recruitment procedures do not discriminate against women
Improving access for women to better quality jobs
Making sure it is beneficial financially to work for women (by changing rules on taxes and social benefits)
Improving access for women to traditionally “male jobs”
Making employers aware of the benefits of employing and promoting women
DK/refuse

**The figures might not add to 100% due to rounding.

130
EMPLOYMENT PRACTICES
Close to three-quarters of all Western Balkans
companies would prefer to maintain their current
staffing levels. Out of the remainder, only a small
fraction is intent on downsizing, while another 16%
are interested in hiring additional employees. As
has become customary, new hires are most likely
to come by the way of personal contacts or adver-
tisements, while poaching staff from a competitor is
also becoming increasingly popular.
Strong gender preferences as well as discrimina-
tion against the Roma community persist. The trend
of preferring male to female candidates when hiring
has become even more pronounced since 2018,
with the practice now responsible for the severely
imbalanced gender structure where only a third of all
employees are women. Meanwhile, discrimination
against the Roma persists with 15% of all managers
stating that hiring a Roma would adversely impact
the working environment in their respective firms.
While the region as a whole continues to underper-
form in matters of inclusion and equality, Kosovo* is
a particularly stark example with men accounting for
three-quarters of all employees and anti-Roma sen-
timent widespread.
The Western Balkans would benefit from greater
freedom of movement, i.e. “Mini Schengen“. Man-
agers in the region tend to be open-minded when
employing workers from abroad, and even more so
when hiring from the economies in the region. Great-
er regional mobility would enable individual econo-
mies to exchange workers, especially in instances
where there is a strong mutual preference, such as
between workers and companies from Bosnia and
Herzegovina and Serbia, and also between Kosovo*
and Albania.
A personal recommendation remains the preferred
method for identifying new hires in the Western
Balkans (93% of companies rely on it). Publishing
a job vacancy in the newspapers and online has
increased in prominence and comes in second, as
72% of executives rely on this method. Looking for
new candidates through registered employment
agencies is still used by more than half of all manag-
ers, while “poaching” employees from competitors
has gained traction recently, reaching 27% in 2019.
Contacts with educational institutions and private
agencies are favoured by 25-30% of companies.

Figure 127: How often do you use the following when hiring new employees?
Please mark each of the following methods with 1 often, 2 sometimes or 3 never**.
(All respondents - N=1215, share of total, %)

100% 1 2 2 4 4 5
6

27
80% 40
34

67 70 68
60%
45
40% 35

59
20% 19
20 21
27 23
10 6 6
0%
Through personal Through placing With intermediation By cooperating With intermediation “Poaching”
contact advertisements in of the official directly with of private employment employees from
the papers and/or employment education agencies and/or competitors
online agency institutions “head hunters”

Sometimes Significantly higher than

Often Significantly
Significantly than 2018
higherthan 2018
Significantly lower
lower than 2018
2018
Never DK/refuse

**The figures might not add to 100% due to rounding.

131
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 128: How often do you use the following when hiring new employees? (By economies)
Please mark each of the following methods with 1 often, 2 sometimes or 3 never.**
(All respondents - N=1215, share of total, %)
Through personal contact (following recommendations of friends and colleagues)
1 1 1 1
100% 9 2 6 3 4 6
20 9
19
80% 34
33 29 39 34

35
60%

40% 75
59 63 59 59
56
20% 45

0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia

Often Sometimes Never DK/refuse

Through placing advertisements in the papers and/or online

100% 1 1 1 3 2
18 17
27 27
41 35 40
80%

36
60%
46 56 45
35 30
40% 38

45
20%
29 27 29 24 27
21

0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
(All respondents -Herzegovina
N=1215, share of total, %) North Balkans
Macedonia

Often Sometimes Never DK/refuse

With the intermediation of the official employment agency

100% 2 2 2 2 2

80% 38 32
43 42 40
49
56

60%

36
34
40% 32 35
33 40
25

20%
27 29
18 23 23
17 15
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia

Often Sometimes

Never DK/refuse

**The figures might not add to 100% due to rounding.

132
(All respondents - N=1215, share of total, %)

By cooperating directly with education institutions

100% 1 3 2 1 3 4
6

80%
51 48
64
68 67
60% 66
92

40%
29
35
23
20% 18 17 19

5 20
12 11 13 10 10
0% 2
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
(All respondents - N=1215, share of total, %) Macedonia

Often Sometimes

Never DK/refuse

With the intermediation of private employment agencies and/or “head hunters”

100% 2 3 2 1 4
4 6

80%
47

60% 70 66 66 70
77 87

40%
30

20% 21
20 23 20
14 22
8
7 5 4 8 4 6
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
(All respondents - N=1215, share of total, %) Macedonia

Often Sometimes

Never DK/refuse

“Poaching” employes from the competitors

100% 5 2 1 5 5
7 7

80%
53

60% 63 63 68
79 78
79

40%
33
20% 20
24 21
12 15 11
10 13
4 4 6 5 6
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia

Often Sometimes

Never DK/refuse

133
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 129: If you could change the number of full-time workers your company currently employs
without any restrictions, what would be your optimal level of employment as a percent of your existing
workforce? Would you decrease, increase or retain the same level of employees?**
(All respondents - N=1215, %)

100% 6 8
8 9 11 6 7

80%

64 63
60% 72 66 60
72
81

40%

20% 12
27 28
19 23 16
16 10
4 2 2 1 2 4
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Significantly
Significantly higher than
than 2018
higherthan 2018
Decrease Increase Significantly
Significantly lower
lower than 2018
2018
Retain the DK/refuse
same level

Recruitment through personal contacts, adver- more than their counterparts from the rest of the re-
tisements and official agencies are all utilised by gion.
companies across the region to a relatively similar
While small companies frequently rely on personal
extent. Cooperation with education institutors and
contacts, large ones are much more likely to reach
the private sector is most prominent in Montenegro
out to education institutions, official and private
and Kosovo*, as almost half of the managers in the
agencies or “poach” an employee from a competitor.
two economies use this channel when searching for
new employees. Also, managers from Kosovo* co-
operate with private agencies and rely on “poaching”

Figure 130: Out of the total number, how many of your employees are men and how many women?**
(All respondents - N=1215, share of total, %)

100%

30 25
34 35
80% 42 40 41

60%

40% 75
70 66 65
58 60 59
20%

0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Significantly
Significantly higher than
than 2018
higherthan 2018
Man Woman Significantly
Significantly lower
lower than 2018
2018

**The figures might not add to 100% due to rounding.

134
 Figure 131: How likely would you hire a Roma person whose educational profile and experience
completely meet the needs of your business?**
(All respondents - N=1215, %)

100% 1 3 4 5 5
8 5 5

26 17 24 27
80% 38 33 23
3.9 3.9 4
3.8 3.8 3.8
3.7
60% 3.4
31 40
47 40 39 3
33 34
40%
29
2
20% 13 20 21
14 15 26
6 7
7 7 8 2 5
4 7 9 4 4 2 4 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Not likely at all Likely Mean Significantly higher than 2018
Significantly lower than 2018
Not likely Very likely
Neither likely nor unlikely DK/refuse

Figure 132: In your opinion, do companies like yours have a gender preference in terms of hiring?**
(All respondents - N=1215, share of total, %)

100% 2 2 2 3 3 3
11

80%
51
61 48 63 57 58
65
60%

40%
33
35 21 34 32
20% 32 23

15 13
5 7 9 5 7
0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Yes, they would Yes, they would Significantly
Significantly higher than
than 2018
higherthan 2018
Significantly
Significantly lower
lower than 2018
2018
rather hire women rather hire men
They have no DK/refuse
preference

Close to three-quarters of executives from the
Western Balkans want to retain their current staff-
ing levels. Compared to last year, the percentage of
businesses that are happy with their number of em-
ployees has grown to 72% from 64% in 2018, poten-
tially signalling that businesses are plateauing and
are unable to take the next step in their development.
Only 16%, meanwhile, are interested in growing their
workforce, while a mere 4% would lay-off employees
if they could.

**The figures might not add to 100% due to rounding.

135
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

More than a quarter of managers from Montenegro
and Bosnia and Herzegovina would consider grow-
ing their workforce, while 16% of their counterparts
in Albania would downsize, a regional high. Mean-
while, a fifth of executives in Kosovo* and the Repub-
lic of North Macedonia say they would be happy to
hire more staff, with their counterparts from Serbia
seemingly satisfied with their number of employees.
While there is no link between the optimal number
of employees and company size or ownership struc-
ture, more exporters appear to be happy to grow
their staff than their non-exporting counterparts
(20% vs. 15%). Also, a higher percentage of firms
doing business in education, science, culture, infor-
mation, health, and social protection feel overstaffed
compared to the rest of the economy (8% vs. 4%).
With a slight decline in the share of women in cor-
porate employment (from 38% in 2018 to 35% in
2019), the workplace gender gap grows more pro-
nounced across the region. With the share of men
in employment expanding in every economy except
for Serbia, men account for 65% of the region’s work-
force, with Kosovo* (75%) and Bosnia and Herze-
govina (70%) especially emblematic of the region’s
problem with gender in the workplace.
Even though three-quarters of respondents would
likely employ a Roma person whose qualifica-
tions meet the job requirements, there is still 9%
who would not. The share of hiring managers who
would discriminate based on ethnicity, however, is
declining at the regional level; in 2017, 16% of ex-
ecutives admitted they would not hire an otherwise
qualified individual because of their ethnicity. Yet,
not all economies are progressing at the same rate,
or at all; Kosovo* and Bosnia and Herzegovina have
actually regressed nine and five points, respective-
ly, since 2018. Meanwhile, Serbian and Republic of
North Macedonian managers tend to be more open
towards the Roma population when compared to
their regional counterparts.
As was the case in the previous survey instalments,
larger firms, exporters and foreign-owned compa-
nies are more open to Roma hires.
The number of executives who would rather hire a
man than a woman is growing, according to their
colleagues in the regional business community.

Figure 133: Do you have somebody from the below mentioned vulnerable groups working in your
company?**
(All respondents - N=1215, multiple answers, %)

100

80
68
65

60
60 58 55 55

43
40 34
3132
24
19 202020 20
20 14 14 17 17 17 161617
11 11 10
9 5 8 6 7 6
2 3 2 2 1 2 3
1
0
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western Balkans
Herzegovina North Macedonia

Persons with disabilities (including persons with special needs) Significantly higher than 2018
Significantly lower than 2018
Displaced persons or refugees

Roma

Other ethnic minorities

No, there are no members of the listed groups working in my company

DK/refuse to answer

**The figures might not add to 100% due to rounding.

136
 Figure 134: How likely would you employ workers from abroad in your company?**
(All respondents - N=1215, %)

100% 2 4 6 3 5
1 9 6
8 11
27 18 11
18
80% 9 22
4
40
3.6 27 18 42 3.6 32
60%
34 3.3 3.3
3.2 3.2
34 3

40% 24 23
56
18
17 24
18 2
20% 12 15 12
12 1.8
9
11
14 10 14 11 14
0% 5 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Not likely at all Likely Mean Significantly higher than 2018
Significantly lower than 2018
Not likely Very likely
Neither likely nor unlikely DK/refuse

Even though close to 60% of all managers believe
that their counterparts do not have a gender pref-
erence when hiring, the share of those who claim a
gender bias towards men has increased to 32% from
24% in 2018. Four out of six economies show almost
uniform increases in gender bias towards men in
the workplace with Montenegro and the Republic of
North Macedonia the only two exceptions.
The bias towards male hires is most evident in Ser-
bia, Bosnia and Herzegovina, and Kosovo*, where
male-to-female preference ratios are seven-to-one,
six-to-one and five-to-one, respectively. In the re-
maining economies, although companies still prefer
men to women, the ratio is closer to two-to-one.
As may be expected, companies doing business in
traditionally “male” sectors such as industry, min-
ing, and construction are much more likely to hire
a man than a woman (44% vs. 5%). Gender prefer-
ences are also more pronounced in domestic than in
foreign firms.
Businesses in the region are becoming increas-
ingly more open towards workers from socially ex-
cluded and vulnerable backgrounds. The share of
companies employing a member of an excluded or
vulnerable group has increased from 28% in 2018 to
37% in 2019, an encouraging indicator of the compa-
nies’ growing social responsibility.
Companies from Bosna and Herzegovina are es-
pecially likely to recruit staff with vulnerable back-
**The figures might not add to 100% due to rounding.
grounds (54% of the companies), followed by their
counterparts in Serbia and Montenegro (42% for
both economies). At the same time, reportedly only
one in five companies in Kosovo* reported having
employees from socially excluded groups on the
payroll.
Executives in Bosna and Herzegovina are also the
most likely to recruit individuals with disabilities,
as well as displaced persons or refugees, with a
third of companies reporting employees from these
two groups. Meanwhile, the employment rate for
the displaced and the disabled is worryingly low in
Kosovo* and the Republic of North Macedonia. The
percentage of companies in the region that employ
Roma is the highest in Serbia (20%), Albania (19%)
and the Republic of North Macedonia (17%).
Further analysis shows that large, exporter and for-
eign-owned companies are more open towards hir-
ing individuals from vulnerable groups than the rest.
One in four businesses would not consider employ-
ing workers from abroad. After a minor dip in 2018,
the level of trust in foreign labour force is recovering
(up to 3.3 from 3.1 in 2018).
As in the previous survey instalments, the Republic
of North Macedonia stands out as the only economy
where foreign workers would not be welcomed by a
majority of respondents as 56% of respondents de-
scribe themselves as not likely at all to hire foreign
arrivals. In turn, the number of executives who would

137
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 135: How likely would you employ workers from the region WB in your company?**
(All respondents - N=1215, %)

100% 1 1 5 6 3 5
8 5
10 4
28 19 11 19
20
80% 24
12 4
38 3.7 3.7
3.6 25
60% 18 3.4
3.2 33 3.2 44
33 3
38
40% 23 25

17 18
2.0 50 2
20% 14 14 24 16
11 11

13 14 7 9 12
10 3
0% 4 1
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Not likely at all Likely Mean Significantly higher than 2018
Significantly lower than 2018
Not likely Very likely
Neither likely nor unlikely DK/refuse

Figure 136: You said that you would employ workers from the WB region in your company, from which
economy/economies exactly?**
(Respondents who would likely employ workers from the region, N=594, %)

100
90 90
82
80
80
73
69 68
67 65
62
60 58 5656
53 53 5150
46 47
45 44
40 39 39 39 37 38 39
35 34
30 28
23 22 23
20 18
14

0
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western Balkans
(companies) Herzegovina (companies) North Macedonia (companies) (companies) (companies)
(companies) (companies)

Albania (workers) Republic of North Macedonia (workers) Significantly higher than 2018
Significantly lower than 2018
Bosnia and Herzegovina (workers) Montenegro (workers)
Kosovo* (workers) Serbia (workers)

**The figures might not add to 100% due to rounding.

138
 Figure 137: Do you think that employing Roma persons would affect company sales or the working
environment in a positive or a negative way?**
(All respondents - N=1215, share of total, %)
Western Balkans 6 9
Albania 7 10
Bosnia and Herzegovina 6 12
Kosovo* 11 13
Republic of North Macedonia 1 8 79
Montenegro 10 13
Serbia 6 6
0 20
Positive
Negative
hire workers from abroad accounts for more than
half of the respondent population across all of the
other five economies.
As expected, more than 80% of large and for-
eign-owned companies would employ workers from
abroad.
Managers in the Western Balkans only slightly fa-
vour workers from the region to foreign workers
in general. More than half of surveyed managers
would employ a worker from another Western Bal-
kans economy, while almost a quarter would not.
This indicates only a slim preference for regional ar-
rivals over foreign ones in general (3.4 for regional
arrivals vs. 3.3 for foreign arrivals in general).
Montenegro and Serbia are the only two econo-
mies more likely to take on a worker from the re-
gion than elsewhere in the world (3.7). In Monte-
negro in particular, 63% of companies would employ
from the Western Balkans, while only 53% would hire
from abroad in general.
Meanwhile, the Republic of North Macedonia occu-
pies a position at the other end of the spectrum with
a mean of 2.0 – in this economy, a full half of all re-
spondents would not consider hiring from within the
region.
More than half of Western Balkans managers sur-
veyed would employ workers from Montenegro,
the Republic of North Macedonia, Bosnia and Her-
zegovina and Kosovo*; meanwhile, workers from
Serbia and Albania are less popular as recruit-
ment targets. Similar to the perceptions of market
openness, these results are very economy-specific.
**The figures might not add to 100% due to rounding.
74 11
73 10
69 13
62 14
12
67 10
77 11
40 60 80 100
Would have no effect Significantly higher than 2018
Significantly lower than 2018
DK/refuse
Namely, managers from Montenegro, Bosnia and
Herzegovina and the Republic of North Macedonia
clearly favour workers from Serbia. At the same time,
managers in Albania and Kosovo* consider Serbi-
an workers the least popular. Meanwhile, Albanian
companies express a strong preference for workers
from Kosovo*, and vice versa. As in the past, a large
majority of managers from Bosnia and Herzegovina
and Serbia would be very happy to exchange work-
ers – 82% of Bosnian managers would hire Serbian
workers, while 80% of Serbian managers would hire
from Bosnia and Herzegovina.
Largely in keeping with last year’s results, just
under three-quarters of Western Balkans compa-
nies feel that hiring Roma would have no effect on
company sales or the working environment. Wor-
ryingly, however, close to one in ten companies in
the region feel that employing a Roma person would
negatively affect their business. Prejudice about the
Roma community is less prevalent in Serbia and the
Republic of North Macedonia than elsewhere in the
Western Balkans.
Awareness of the Regional Cooperation Coun-
cil (RCC) is much greater than in previous years.
Namely, close to 70% of regional corporate leaders
are aware of its existence, compared to 52% in 2018.
Serbian businesses are the most likely to be in-
formed about the RCC’s work out of all the six
regional economies, and as reported by 80% of
executives there. Meanwhile, Kosovo* exhibits the
lowest level of awareness in the region (39%).
139
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 138: Have you heard of the Regional Cooperation Council?

(All respondents - N=1215, share of total, %)

100%
20
26 31
80% 39 41 46
61

60%

40% 80
74 69
61 59 54
20% 39

0%
Albania Bosnia and Kosovo* Republic of Montenegro Serbia Western
Herzegovina North Balkans
Macedonia
Yes No Significantly
Significantly higher than
than 2018
higherthan 2018
Significantly
Significantly lower
lower than 2018
2018

The RCC has recorded a significant hike in aware- pled in Albania and doubled in the Republic of North
ness across both Albania and the Republic of North Macedonia.
Macedonia, likely due to the recent developments on
their path to EU accession. Since last year, the share
of managers to have heard of the RCC nearly tri-

140
FOCUS ON LARGE COMPANIES
For the purposes of this report, any enterprise that
employs more than 250 people is referred to as a
large enterprise.
Large companies employ a significant chunk of
an economy’s workforce and account for a sizable
share of its economic activity. When well-integrated
into their economies of residence, large companies
help their smaller counterparts connect and grow,
acting as catalysts of development across the board.
Large companies usually emerge as a consequence
of the economy of scale, or reduction in unit costs
through an increase in output. To fully harness the
economy of scale, they usually specialise in the pro-
duction of less customised (more standardised)
products. Needless to say, greater production ca-
pacity, apart from the workforce, comes from great-
er capital.
Because of their size, large companies have several
advantages, especially cheaper and easier financing,
capacity for research and development and export
capacities. Nevertheless, they are much less flexi-
ble than smaller companies, and sometimes find it
harder to fill vacancies, especially in economies with
depleting workforce basins.
Perception of the General Business Environment
and Economic Trends
Over the past three years, large companies’ per-
ception of the situation in their economy has im-
proved significantly. The share of executives re-
porting improvements in the economy has grown by
close to 20 points since last year (from 36% to 55%
in 2019). At the same time, a quarter of respondents
described the situation as deteriorating over the
past 12 months. Compared to their SME peers, large
companies’ executives are much more satisfied with
the general economic situation.
Satisfaction with the business situation increas-
es with company size. An overwhelming majority
of large companies have had a good business year,
as 71% reported an improved business situation,
against only 33% for micro-companies. Compared
to 2018, there is an increase of 20 points in the share
of large companies reporting improved business re-
sults. Meanwhile, medium enterprises remain at the
same level as in the previous year, while there is a
slight decrease in the share of small and micro-com-
panies reporting an improved business situation.
An overwhelming majority of Western Balkans com-
panies expect the general economic situation to ei-
ther improve or remain unchanged over the next 12

Figure 139: How has the general economic situation in [ECONOMY] changed over the past 12
months? Has it deteriorated, remained unchanged or improved?**
(All respondents - N=1215, share of total, %)

100% 6 1 1

27 23 30
80% 36
55

60%
45
55 45
31
40%
21

20%
27 30
24 24
18
0%
Large 2017 Large 2018 Large 2019 Western Balkans Western Balkans
2018 2019

Deteriorated Remained unchanged Improved DK/refuse

**The figures might not add to 100% due to rounding.

141
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 140: How has your business situation developed over the past 12 months? Has it deteriorated,
remained unchanged or improved?**
(All respondents - N=1215, share of total, %)

100% 1 2

33
80% 44
54

60% 71

40% 50
46
37
20%
22
17
9 9 4
0%
Micro Small Medium Large

Deteriorated Remained unchanged Improved DK/refuse

Figure 141: How do you expect the general economic situation in [ECONOMY] to develop over the
next 12 months? Will it mostly deteriorate, remain unchanged or improve? **
(All respondents - N=1215, share of total, %)

100% 4 5

80% 37
43

60%

40%
52 40

20%

8 12
0%
Western Balkans Western Balkans
2018 2019

Deteriorate Remain unchanged Improve DK/refuse

months. Meanwhile, more than half of medium- and The quality of regional cooperation is perceived as
large-sized companies fully anticipate the situation important or very important by 84% of large com-
to improve. panies’ leaders in the Western Balkans (vs. 62% for
SMEs). EU membership is believed to be a good
Driven by a good business year, 60% of large com-
thing by 88% of large companies, while smaller busi-
panies expect to increase their number of em-
nesses also largely perceive it as positive, but to a
ployees. The situation is similar with medium-sized
lesser extent (69% of SMEs).
enterprises, as 50% of them expect to employ more
workers. Meanwhile, micro- and small businesses
will largely keep what they have.

**The figures might not add to 100% due to rounding.

142
Business trends in the Western Balkans employment for most large companies in the West-
ern Balkans.
Probably due to increased demand for their prod-
ucts and services, as reported by 71% of large
companies, an overwhelming majority of business
leaders believe that demand will further improve in
the following year (83%). Meanwhile, prospects of in-
creased demand are fuelling expectations of a rise in

Figure 142: How do you expect the number of people employed in your company to change over
the next 12 months?**
(All respondents - N=1215, share of total, %)

100% 4 4 1 3

80% 30
37 38
50
60
60%

40%
58
53 51
39 23
20%

16
8 6 10 8
0%
Micro Small Medium Large Western
Balkans

Decrease Remain unchanged Increase DK/refuse

Figure 143: (left) How has the demand for
your company’s products/services changed
over the past 12 months? Has it deteriorated,
remained unchanged or improved?**
(All respondents - N=1215, share of total, %)
(right) How do you expect the demand for
your company’s products/services to change
over the next 12 months? Will it decrease, remain
mostly unchanged or increase?
(All respondents - N=1215, share of total, %)

100% 2 1 2 4

80% 45
54
60% 71
83

40%
45
36
20%
22
15
4 9 5
0%
Large Western Large Western
Balkans Balkans

Decrease Mostly unchanged Increase DK/refuse

**The figures might not add to 100% due to rounding.

143
 BALKAN BAROMETER 2020
Figure 144: Can you tell how problematic are these different factors for the operation and growth of your
business? Can you please rate each?
(All respondents - N=1215, scores are on a scale of 1 to 4 where 1 means major obstacle, 2 moderate obstacle, 3
minor obstacle and 4 no obstacle, mean)
3.0 2.93 2.97 2.90
2.79
2.61
2.5
2.0
1.5
1.0
0.5
0.0
Labour regulations
Micro Small
In terms of their investment, large companies tend
to focus most on property, plant and equipment, al-
though to a slightly lesser extent than in the previous
instalment (52% from 60% in 2018). Some 20% of
annual investment by large companies is directed to
long-term financial investments.
Encouragingly, 95% of large-sized companies have
made at least some attempt to reduce their environ-
mental footprint, with medium-sized companies not
far behind, with 85%. Meanwhile, only 62% and 75%
of micro- and small companies, respectively, report
having taken measures to mitigate their environ-
mental impact.
Business Environment in SEE
Large companies mostly share the concerns with
their SME peers. Macro-economic instability, and
customs and trade regulations are much more of an
obstacle for large companies than for smaller enter-
prises.
The labour market is not particularly favourable
to companies of any size, although large corpora-
tions tend to fare better than others. Labour regu-
lations are a major or moderate obstacle for 52% of
large companies (vs. 32% for SMEs) in the region.
Skills and education of available workforce often fail
to meet the needs of large companies, according to
52% of managers surveyed (vs. 33% for the SMEs).
The availability of labour is becoming a serious con-
**The figures might not add to 100% due to rounding.
144
BUSINESS OPINION | Analytical report
2.91 2.86
2.80 2.84 2.78 2.79
2.68 2.73
2.24
1.98
Skills and educcation of Availabillity of labour
available workforce
Medium Large Western Balkans
straint for businesses in the region, but especially for
large companies, as their needs tend to be greater
due to their size. Accordingly, close to three- quar-
ters of large companies surveyed flag availability of
labour as a barrier (vs. roughly a third of SMEs).
Executives of large-sized companies rated gover-
nance, transparency, predictability, stability and ef-
fectiveness of public authorities either equal to or
less positively than SMEs.
The combination of availability, quality and afford-
ability of road, railroad, waterway and air transport is
rated almost identically by companies of all sizes, if
only slightly worse by large-sized enterprises.
Legal and Regulatory Framework
Executives of large companies are much more con-
tent with their concerns being taken into account
by the government than their peers from small-
er-sized companies. Only 20% of smaller business-
es feel their concerns are taken seriously compared
to 44% for large companies. When it comes to be-
ing involved in policymaking, large companies (60%)
feel significantly more satisfied than their SME peers
(30% or less). Meanwhile, satisfaction with laws and
regulations is similar among companies of all sizes,
while in the previous survey instalment large com-
panies’ executives expressed more dissatisfaction
than the rest. Large enterprises tend to be happier
with public services, with the exception of the costs
involved with getting information from the govern-
ment.
Only 7% of large-sized companies decided not to
take part in a public tender or procurement proce-
dure even though they could have offered the goods
or services solicited. Meanwhile, the practice of skip-
ping public procurements is much more common
among SMEs (30% on average decide not to take
part).
While bureaucracy is an obstacle for all corpora-
tions, large companies display some variation. Tax-
ation-related regulations are cited most frequently
by large companies (59% vs. 40% of the SMEs), with
a similar discrepancy in attitude with regards to em-
ployment regulations (42% of large companies vs.
20% of SMEs). At the same time, health and safety
regulations are an issue for 12% of SMEs and only
3% of their large counterparts. Also, minimum wage
regulations are more of a barrier to companies em-
ploying fewer than 250 workers (21% vs. 15% for
large companies).
Court appearances are becoming significantly less
common for large companies, as only 16% report-
ed having cases in arbitration courts over the past
three years, compared to 41% in the last survey in-
stalment.
Accessibility of Loans
The dominant share of business operations is fi-
nanced from internal funds and retained earnings
in companies of all sizes, but again to a lesser
extent for large ones. In large- sized companies, it
finances 45% of investment on average, while this
share is significantly higher for their SME peers.
Commercial bank loans finance 19% of business
operations in large companies on average, while
medium-sized companies are just behind, with 17%.
However, the share of operations financed from
bank loans in large companies has decreased since
last year (33% in 2018).
Large companies (28%) have applied for a loan less
frequently over the last three years than small (32%)
and medium-sized companies (33%). However, the
outcomes of the loan approval process cannot be
scrutinised with reliability due to insufficient sample
size.

Figure 145: What proportion of your firm’s working capital and new fixed investment has been financed
from each of the following sources, over the past 12 months?
(All respondents - N=1215, share of total, %)

80
73 72
70 67

60

50
45

40

30

20 19
17
14
10 9

0
Micro Small Medium Large

Internal funds/retained earning Borrowing from local prive commercial banks

**The figures might not add to 100% due to rounding.

145
 BALKAN BAROMETER 2020
Corruption
The topic is a sensitive one for all Western Balkans
corporate leaders, though, executives of larger com-
panies are more open to discussing it than execu-
tives of their smaller counterparts (5% non-response
rate for large vs. 12% for the SMEs).
The perception of corruption is much higher among
managers of large companies; as many as 55% of
large companies’ leaders feel that additional pay-
ments are necessary “to get things done”, in com-
parison to fewer than 20% of managers of smaller
companies. Accordingly, business leaders of large
companies claim to know the cost of bribes before-
hand in 50% of the cases.
However, a much greater proportion of large compa-
nies’ executives would report wrongdoing to the au-
thorities than their SME counterparts (63% vs. 43%).
At the same time, only 7% of large companies’ ex-
ecutives believe that wrongdoing cannot be stopped
effectively (vs. 29% of the SMEs executives).
Executives from large-sized companies are also
much more likely to believe that digitalisation of pub-
lic services is an effective deterrent to corruption
than their SME peers (71% vs. 40%).
Trade and investment
Large companies are much more likely to invest
abroad. Almost 60% of large companies from the
Western Balkans have either invested abroad or plan
to do so in the next 12 months, compared to fewer
than 10% of SMEs.
Figure 146: What percentage of your company’s sales are made domestically, exported to the
SEE region, to the EU or to the third countries?**
(All respondents - N=1215, share of total, %)
1
100% 3 1
4 8
4 19
80%
60%
93
87
40%
20%
0%
Micro Small
Sold domestically Exported to the Western
Balkans region
**The figures might not add to 100% due to rounding.
146
BUSINESS OPINION | Analytical report
Large companies generate a majority of their sales
through export, unlike their smaller counterparts
(58% vs. 31% for medium-sized, 13% for small and
only 7% for micro- companies). The EU remains the
dominant market for all Western Balkans exporters.
Nevertheless, large companies also import more,
as they source only 45% of their inputs from the do-
mestic market (compared to SME’s 75% ).
Close to two-thirds of large companies’ executives
exhibit a high level of confidence when facing global
competition. Tellingly, they are even more confident
when asked how their companies measure up to re-
gional competitors (80%). Generally, companies of
all sizes express a similar level of confidence.
Large companies in the Western Balkans are very
confident in the quality of their products and ser-
vices, as a vast majority believe that they can com-
pete effectively with competitors from both the EU
and the Western Balkans. After a slight dip across
both markets in 2018, large companies’ confidence
in their products rebounded fully in 2019.
As expected, managers of large companies feel
they have benefited more from the CEFTA Agree-
ment, as they tend to both export and import more
than their smaller counterparts. Two-thirds of large
companies report benefiting from CEFTA, but to a
lesser extent than in the previous survey instalment.
Managers of micro-companies are also more likely
to experience the benefits of regional free trade, even
though they source and sell most of the products do-
mestically.
3
7
32
8
19
69
42
Medium Large
Exported to the EU Exported to third
countries
 Figure 147: (left)To what extent do you agree (right) To what extent do you agree that your
that your company is threatened by global company is threatened by competition from the
competition? ** Western Balkans region?
(All respondents - N=1215, share of total, %) (All respondents - N=1215, share of total, %)

100% 3
10 2
4 14
80%
26

60% 44

27
40%

20% 36
33

0%
Global competition

Totally disagree Disagree Agree Totally Western

agree Balkans DK/refuse
competition

Figure 148: To what extent do you agree with the following statements - My company’s products,
goods and services can compete well with products, goods and services from the Western Balkans?**
(Large companies - N=37, share of total, %)

100% 2 4 3

80%

77 68 75
60%

40%

20% 20
21 19
5 3
1 4 1
0%
2017 2018 2019/20

Totally disagree Disagree Agree Totally agree DK/refuse

**The figures might not add to 100% due to rounding.

147
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 149: To what extent do you agree with the following statements - My company’s products,
goods and services can compete well with products, goods and services from other EU countries?**
(Large companies - N=37, share of total, %)

100% 2

80% 1 3

70

60% 55
71

40%
22
24
20%
25 10 21
4
4 10 2
0%
2017 2018 2019/20

Totally disagree Disagree Agree Totally agree DK/refuse

Figure 150: To what extent do you agree with the following statements - “My company has benefited
from the regional free trade agreement (CEFTA 2006)”?**
(All respondents - N=1215, share of total, %)

100%
13 10 8
20
5 15
80%
9 33

60% 42
36 48

40% 33

21 26
20% 10
21
15 14 16
0% 7
Micro Small Medium Large

Totally disagree Disagree Agree Totally agree DK/refuse

Innovation and Technology line support. In addition, website presentation is an-

other common form of Internet use, although more
Less than 3% of all Western Balkans companies sur-
medium-sized companies use web portals for busi-
veyed do not use the Internet and almost all of them
ness purposes. Online banking services are gaining
are micro or small in size. Meanwhile, all large com-
popularity among all types and sizes of enterprises.
panies employ it, and as expected, as companies
There is no significant difference among the size
grow in size so does the usage of the Internet.
categories when it comes to selling and purchasing
Other than communication, which is the main form goods online, except maybe for micro businesses,
of Internet use for companies of all sizes, a majority which are the least likely to sell their products online.
of large companies use it to research for new trends
Large companies experience more Internet securi-
and ideas, and to provide customer services and on-
ty problems than smaller enterprises, with attacks
**The figures might not add to 100% due to rounding.

148
Figure 151: Does your company use the Internet for…?**
(All respondents - N=1215, share of total, %)

100 97
94

85
80 78
73
70
67
60 59
57
54 51
50
45 47 49 48
40 41
40 37 38
34 33 32
31 29
27 28 29
25 27
24
22
20 20

4 2
1
0
Micro Small Medium Large

Communication (email, skype, etc.)

Searching the Internet for innovative ideas, new trends, partners etc.
Provision of customer services or support online
Presenting your company through company website
Executing banking or financial transactions online
Selling your goods or services over the Internet
Advertising on Facebook, YouTube, GoogleAds, etc.
Purchasing goods or services for your company over the Internet
Online trainings – internal (organized by your company) or external ones
Data storage (i.e. the cloud), web-based applications or other internal operational needs
Communication with customers/clients/partners through social networks (Facebook, Twitter, LinkedIn, etc.)
We dont use Internet
DK/refuse

Figure 152: Have you introduced new or significantly improved products and/or services in the past 12
months?**
(All respondents - N=1215, share of total, %)

Large 40 58 2

Bosnia and Herzegovina

Medium 42 58

Small 28 70 3

Micro 21 77 1

0 20 40 60 80 100

Yes No DK/refuse
**The figures might not add to 100% due to rounding.
149
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

on their networks and computer viruses especially Employment practice

prevalent. With speed and bandwidth the two most
important features, 90% of large companies are sat-
isfied with their Internet connection.
nnovations are most likely in medium- and large-
sized companies. Even though companies of all
sizes mostly develop new services or products by
themselves, larger enterprises more frequently co-
operate with other entities than their SME counter-
parts.
Skills needs
The larger the company, the harder it is for it to meet
its workforce needs, with 49% struggling with hard-
to-fill posts versus “only” 30% for smaller companies.
Consequently, large companies tend to provide more
internship opportunities for youth compared to small
and medium-sized companies (63% vs. 28% for the
latter).
Given the high importance of the Internet and digi-
tal skills for large companies, it does not come as a
surprise that they devote more resources to improve
digital skills of their employees. Namely, around 9
out of 10 large companies consider the digital skills
as important and organise trainings. These trainings
are most often organised as on-the-job trainings.
Placing advertisements in newspapers or online
is the most trusted way of identifying new hires
among large companies, with recruitment through
employment agencies the second most commonly
employed; both are used less often by smaller sized
companies. Also, recruitment straight from educa-
tional institutions is a lot more common for large
companies.
A large majority of companies of all sizes would
likely retain their current staffing levels, even if all la-
bour-related restrictions were removed. Meanwhile,
13% of large companies would reduce their number
of staff, if given the opportunity.
Hiring Roma, provided they have the relevant ed-
ucational profile and requisite experience, would
not be an issue for 75% of medium-sized and large
companies. An overwhelming majority also feel that
Roma hires would have no impact on their working
environment. Gender biases are also not as preva-
lent in large companies, as 75% of their executives
have reported that they have no preference for male
or female employees, although 24% would still rather
hire a man. For comparison, some 60% of executives
from the SME sector stated no preference against
some 30% who would rather hire male employees.

Figure 153: How often do you use the following when hiring new employees? Please mark each
of the following methods with 1 often, 2 sometimes or 3 never.**
(Large companies- N=37, %)
Large companies

100% 1 1 1 1 1 3
7 4
24 28 30
80%
39 42
51
60% 24
36

52
40%

56 51
48
20% 39 42

18
4
0%
Through personal Through placing With intermediation By cooperating With intermediation “Poaching”
contact advertisements in of the official directly with of private employment employees from
the papers and/or employment education agencies and/or competitors
online agency institutions “head hunters”

Often Sometimes

Never DK/refuse

**The figures might not add to 100% due to rounding.

150
 Figure 154: If you could change the number of full-time workers your company currently employs
without any restrictions, what would be your optimal level of employment as a percent of your
existing workforce? Would you decrease, increase or retain the same level of employees?**
(All respondents - N=1215, %)

100% 8 4 7
9

80%

60% 70 74 69
73

40%

20% 11
15 18 17
13
3 4 4
0%
Micro Small Medium Large

Significantly
Significantly higher than
than 2018
higherthan 2018
Decrease Increase Significantly
Significantly lower
lower than 2018
2018
Retain the DK/refuse
same level to answer

Figure 155: Do you have somebody from below mentioned vulnerable groups working in your
company?**

80 76

70

60
54
50
45

40 38 37 38 38 37
36
32
30 27 27

20 18
14 15
12
10 9
6
4 5 3 4
1 2
0
Micro Small Medium Large

Persons with disabilities Other ethnic minorities

(including persons with special needs)
No, there are no members of the listed
Displaced persons or refugees groups working in my company
Roma DK/refuse

**The figures might not add to 100% due to rounding.

151
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

According to the survey results, medium- and Meanwhile, close to 70% of all business leaders in
large-sizedcompanies are the most likely employers the Western Balkans are aware of the Regional Co-
for individuals from vulnerable backgrounds. Just operation Council. As may have been expected, rep-
under a half of large companies report having so- resentatives of large companies are better informed,
cially excluded individuals on the payroll. Meanwhile, with close to 90% having heard of the RCC, against
medium sized companies are the most likely to hire just 56% of micro-companies.
displaced persons or refugees . Micro- and small
enterprises employ a significantly smaller share of
vulnerable individuals.
The survey findings suggest that employees in large
companies are more likely to readily take on new
skills and abilities than their SME peers.

Figure 156: How would you assess the readiness of employees in your company to acquire additional
qualifications in order to advance and get promoted?**
(All respondents - N=1215, share of total, %)

100% 4 5 6 9
7 9 8

80%
36
43
60% 56
72

40%
37
31
20% 25
10 10 16
5 3 5 3
0%
Micro Small Medium Large

They are not interested in acquiring They are not interested in acquiring Significantly
Neither interested higher
Significantly than
than 2018
nor disinterested
higher 2018
Significantly
Significantly lower
lower than
than 2018
2018
additional qualifications at all additional qualifications
They are interested in acquiring They are very interested in acquiring DK/refuse
additional qualifications additional qualifications

**The figures might not add to 100% due to rounding.

152
FOCUS ON EXPORTERS
Export-oriented companies offer their goods and
services on foreign markets and are important not
only as a source of sales revenue but also as a driv-
er of competitiveness and innovation in the face of
international competition. In addition, exporters usu-
ally tend to place more on regional cooperation and
relevant trade agreements.
Perception of the General Business Environment
and Economic Trends
Over the past 12 months, the general economic sit-
uation has largely been assessed as unchanged by
both exporters and non-exporters (45% for both).
More managers from exporting companies, howev-
er, have noted improvements in the economic situa-
tion compared to domestic-facing enterprises (35%
vs. 27%). Meanwhile, non-exporters are more likely
to report a deterioration in the economic situation
than exporters (27% vs. 19%).
Export-oriented companies are also far more opti-
mistic about the future, as 51% feel that the situa-
tion will improve in the next 12 months, compared to
just 9% for non-exporters.
Last year was especially good for export-orient-
ed businesses. Slightly more than half (51%) have
noted that the situation has improved year-on-year,
Figure 157: [Left] How has the general economic
situation in [ECONOMY] changed over the past
12 months? Has it deteriorated, remained
unchanged or improved?**
(All respondents - N=1215, share of total, %)
100% 1 1
27
35
80%
60%
45
40% 45
20%
27
19
0%
Exporters Non-exporters
Deteriorated Remained unchanged
**The figures might not add to 100% due to rounding.
against just 39% for non-exporters. Compared to the
last instalment of the survey, both categories have
noted improvements.
Regional cooperation is significantly more important
to exporters, as close to 80% of them have described
it as either important or very important, compared
to just 46% for non-exporters. EU membership is
clearly seen as a good opportunity by exporters to
develop or consolidate shares in new markets, as
75% support accession, compared to just 56% for
non-exporters.
Business trends in the Western Balkans
Exporters have seen demand for their goods and
services improve to a greater extent than non-ex-
porters. While a majority of surveyed exporter com-
panies reported an increase in demand (56%), this
was the case for only 39% of non-exporters. Few
respondents across either of the groups reported a
decline in demand, with exporters doing better in this
category as well (6% vs. 11%).
The outlook for the future is more optimistic
among the exporter community; two-thirds believe
that demand for their products will improve over the
coming 12 months, compared to just under a half of
non-exporters.
[Right] How do you expect the general economic
situation in [ECONOMY] to develop over the next
12 months? Will it mostly deteriorate, remain
unchanged or improve?
(All respondents - N=1215, share of total, %)
5
51 4
9
44
33
10 13
Exporters Non-exporters
Improved DK/refuse
153
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 158: How has your business situation developed over the past 12 months? Has it deteriorated,
remained unchanged or improved?**
(All respondents - N=1215, share of total, %)

100%

80% 39

60%

51
40% 47

20%
9
9 14
0%
Exporters Non/exporters

Deteriorate Remain unchanged Improve DK/refuse

Figure 159: [Left] How has the demand for your
company’s products/services changed over the
past 12 months? Has it deteriorated, remained
unchanged or improved?**
(All respondents - N=1215, share of total, %)
[Right] How do you expect the demand for your
company’s products/services to change over the
next 12 months? Will it decrease, remain mostly
unchanged or increase?
(All respondents - N=1215, share of total, %)

100% 1 5
3

80% 39
56 48
66
60%

40%
50
41
37
20%
27

6 11 7
0% 3
Exporters Non-exporters Exporters Non-exporters

Deteriorated Remained unchanged Improved DK/refuse

Four out of ten export-oriented companies have
increased the number of employees over the past
year, while fewer than three out of ten non-export-
ers have followed suit. At the same time, 12% of ex-
porters reported a decrease in the number of staff,
against 9% for non-exporters. This indicates that
while they tend to fare better, exporter companies
are also somewhat more unstable and more prone
to fluctuations as a result of changes outside the
home economy.
Spurred on by a good year, 50% of export-oriented
companies expect to expand their number of em-
ployees over the next year. Meanwhile, in line with
their business situation and expectations for the

**The figures might not add to 100% due to rounding.

154
 Figure 160: How has your company’s total employment changed over the past 12 months?**
(All respondents - N=1215, share of total, %)

100%

28
80% 40

60%

40% 63
48

20%

12 9
0%
Exporters Non/exporters

Decrease Mostly unchanged Increase DK/refuse

Figure 161: How do you expect the number of people employed in your company to change over
the next 12 months?**
(All respondents - N=1215, share of total, %)

100% 4 3

32
80% 50

60%

40% 58
37

20%

9 7
0%
Exporters Non/exporters

Decrease Remain unchainged Increase DK/refuse

future, 32% of non-exporters plan to increase their
workforce, as a majority of 58% plan to keep what
they have. At the same time, lay-offs are projected by
9% of exporters and 7% of non-exporters.
Both exporters and non-exporters put the highest
share of their total annual investment into fixed as-
sets (55% and 60%, respectively). Meanwhile, export-
ers report making more of an effort to reduce their
environmental footprint compared to non-exporters
(82% vs. 69%).

**The figures might not add to 100% due to rounding.

155
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Business environment in the Western Balkans
There are no significant differences in the percep-
tion of the business environment between exporters
and non-exporters. Both categories are mainly con-
cerned about the informal economy, anti-compet-
itive practices of their competition and macro-eco-
nomic instability. Political and social instabilities, as
well as corruption and tax administration, are also
flagged as barriers to business growth across both
categories. As expected, exporters find customs
and trade regulations much more problematic than
non-exporters.
Changes in the business environment are almost
identically perceived by the two categories of enter-
prises. Exporters, in particular, praise the changes in
market size and potential, macro-economic stability,
and availability of financial capital in the domestic
markets more than non-exporters.
When it comes to the transport network, both ex-
porters and non-exporters are moderately satis-
fied. A slightly higher share of exporters is largely
satisfied with the availability, quality and affordability
of different transportation modes than non-export-
ers (38% vs. 35%). Most of the managers from both
categories are neutral on the issue, however.
When it comes to availability, quality and afford-
ability of electricity, gas and water supply, export-
ers tend to be more satisfied (68%) than non-ex-
porters (58%). The share of respondents who rate
these services as poor or very poor is 10% among
non-exporters and only 5% among exporters.
Exporter companies also tend to benefit more than
non-exporters from the adoption of the Regional
Roaming Agreement (62% vs. 34%).

Figure 162: [Left] For your business purposes, how would you rate the combination of availability, quality
and affordability of road, railroad, waterway and air transport in [ECONOMY]?
[Right] For your business purposes, how would you rate the combination of availability, quality and
affordability of electricity, gas and water supply in [ECONOMY]?**
(All respondents - N=1215, share of total, %)
0 1
100 2 2 0 5
4
12
15

80 36 31
46 4

3.8
60 3.6
53
3.1 3.1
3
43
40 43

31 2
20
25
11 17

7 4 9
0 6 1
1 1
Exporters Non-exporters Exporters Non-exporters

Very poor Very good Mean

Poor Excellent
Neither poor nor good DK/refuse

**The figures might not add to 100% due to rounding.

156
Legal and regulatory framework A slightly higher proportion of exporters use
guidelines and manuals produced by national pro-
Although a smaller number of exporters feel ignored
curement authorities than non-exporters (53% vs.
by their respective governments than non-exporters
44%), while their utility was rated the same by both
(71% vs. 79%), there is not much difference in satis-
categories (score 3.5). Exporters also tend to be
faction with public authorities’ conduct between the
more in touch with public procurement entities than
two groups, with around 50% of companies at least
non-exporters (52% vs. 43%).
moderately satisfied with the relevant legal and reg-
ulatory framework. When it comes to regulatory obstacles, both export-
ers and non-exporters, for the most part, share key
The practice of avoiding tenders is present across
concerns, including tax-regulations, as well as min-
both categories to a similar degree. A slightly great-
imum wage and employment legislation. Exporters,
er share of non-exporters (29%) than exporters (24%)
however, are more concerned with environmental
choose not to take part in public tenders or procure-
regulations than non-exporters (15% vs. 9%).
ments even though they could offer the goods and
services solicited.

Figure 163: In the past three years, has your company decided not to take part in a public tender or a
public procurement procedure even though you could have offered the goods or services solicited?**
(All respondents - N=1215, share of total, %)

100% 7 5

80%

60% 65
69

40%

20%
24 29

0%
Exporters Non/exporters

Yes No DK/refuse

Accessibility of loans More than a third of exporters and around a quarter

of non-exporters have applied for a loan in the past
When it comes to the structure of financing for their
year, similar to the previous edition of the survey, al-
investments and everyday operations, market orien-
beit with a slightly higher share of loan applications
tation does not play an overly significant role. Inter-
among non-exporters. In terms of outcomes, loan
nal funds remain the most commonly used source
applications were rejected for 4% of exporters and
of financing, while reliance on the commercial bank-
10% of non-exporters.
ing sector is only slightly more prevalent among ex-
porters.

**The figures might not add to 100% due to rounding.

157
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Corruption Exporters are somewhat more optimistic when it

comes to the effectiveness of anti-corruption ef-
Exporters need to rely on bribes more often than
forts. More exporters would report wrongdoing
non-exporters “to get things done” (24% vs. 16%).
through official channels than their non-exporter
It is interesting that bribes given to clear customs
counterparts (46% vs. 42%). Moreover, fewer export-
explain only a portion of the difference between the
ers feel that there is no effective way to curb corrup-
two categories.
tion in their economy, compared to non-exporters
Around half of all exporters on average never make (22% vs. 31%).
unofficial payments for any of the purposes listed.
Compared to 2018, however, there is a 10-point de-
crease in the number of companies who report nev-
er making informal payments, an indicator of wors-
ening corruption perceptions in the region.

Figure 164: Thinking now of unofficial payments/gifts that companies like yours would make in a given
year, could you please tell me how often would they make payments/gifts for the following purposes?**
(Exporters only - N=333, scores are on a scale of 1 to 4 where 1 means never and 4 always, %)

100%
14 13 14 14 15 15 15 16 17 17 17
1 3 6 2 5
80% 3 5 3 5 3
9 15 14 9
12 13 14 11 15 11 11
60% 20 18 23
22 20 18 19 17 18 21 21

40%
57 48 48 51 49 50 51 48 48 51
46
20%

0%
To get connected to and
maintain public services

To obtain business
licenses and permits

contracts

health and safety inspections

To obtain government

To deal with occupational

To deal with
labour inspections

building inspections
To deal with fire and

To deal with
environmental inspections

To deal with taxes and

tax collection

To deal with customs/imports

To deal with courts

To influence the content of new

legislation, rules, decrees, etc.

Never Seldom Frequently Always DK/refuse

Figure 165: In different societies, there are different views on the most effective way to get action to
stop serious wrongdoing. Which one of these do you think is the most effective way in your society?**
(All respondents - N=1215, share of total, %)

Exporters 46 14 4 1 22 13

Non-exporters 42 14 6 1 31 6

By reporting the serious wrongdoing to people in authority, via official channels

By reporting the serious wrongdoing to journalists or news organisations
By reporting the serious wrongdoing directly to the general public, via the internet,
Twitter, Facebook or on online blogs
Some other way
None, in my society there is no effective way to get action to stop serious wrongdoing
DK/refuse

**The figures might not add to 100% due to rounding.

158
Trade and Investment coming in from the region and the rest from third
countries.
As may be expected, exporters are more willing to
invest abroad than their non-exporting counterparts. Exporters are more likely to import than non-ex-
The share of exporters that invested outside their porters, as they source 34% of their inputs from ei-
home economy has increased significantly in the ther the EU or other economies in the region, while
space of a single year (from 12% in 2018 to 24% in non-exporters mostly rely on domestic markets, with
2019). However, this practice is still not widespread the imported supply share of only 13%.
in the Western Balkans, as only 10% of all compa-
It usually takes up to 2 days to clear goods through
nies from the region invested abroad in the past 12
customs for both imported materials and exported
months.
products; nevertheless, exporters would highly ben-
Exporters usually invest in the Western Balkans efit from free movement of goods and services (ini-
(57%) and the EU (62%). The main reason for in- tially through “Mini Schengen” and ultimately through
vesting abroad is to secure access to a new market, EU membership).
while the integration of the company’s value chain
A slightly greater share of export-oriented compa-
comes in second. When investing, exporters pay
nies noted that it is easier to export to the EU (22%)
the most attention to the market size and potential
than to the CEFTA region (20%), while for 45% there
(score 4.4), macro-economic stability and favour-
is no difference. The share of exporters that have
ability of the exchange rate (4.3), and technological
seen at least some benefits from the regional free
innovation and capabilities (4.3). Physical infrastruc-
trade agreement is 60% (vs. 37% of non-exporters),
ture (4.2) and talent and skill of labour force pool
an increase on last year.
(4.1) are also deemed highly important.
In terms of public procurement, 77% of non-export-
Exports account for 48% of the Western Balkans
ers and 66% of exporters believe that local suppliers
exporters’ total sales. Compared to last year (22%),
should be given priority.
this year’s share is significantly higher. Most of the
export turnover comes from the EU (56%), with 33%

Figure 166: What percentage of your company’s sales are made domestically, exported to the Western
Balkans, to the EU or to the third countries?**
(Exporters only- N=333, share of total, %)

27
Sold domestically
Exported to the SEE region
52 Exported to the EU
Exported to third countries

16

**The figures might not add to 100% due to rounding.

159
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Innovation and technology In terms of the Internet connection, 90% of exporters

Exporters utilise the Internet more than their
non-exporting peers. The vast majority of business-
es from both categories use it for communication,
with banking services and website presentation the
next most commonly employed forms of Internet
use. The difference between the categories is nota-
ble in the share of companies that use the Internet
for research, as 50% of exporters use it to search for
innovative ideas, new trends, partners, etc. against
only 26% for non-exporters. Also, more exporters
store data and provide customer services and online
support (39% and 34%) than non-exporters (23% and
16%).
are quite satisfied with the quality and few have ex-
perienced Internet security issues, with those largely
related to computer viruses.
Exporters are more likely to innovate than non-ex-
porters. The share of exporters that have introduced
new, or significantly improved existing, products
and/or services in the past 12 months is 42%, while
for non-exporters the share is 22%. Both export and
non-export companies innovate mostly on their
own. It is, however, more common for non-exporters
(24%) than exporters (12%) to cooperate with other
enterprises or organisations in the innovation pro-
cess. Innovations by 27% of export-oriented compa-

Figure 167: Does your company use the Internet for…?**

(All respondents - N=1215, share of total, %)

100
91

82
80

62
60 58
50
48
42 45
40 39
40 37 38
34 33 31
26
23 22 23
20
16
12
6
1 1 3
0
Exporters Non-exporters

Communication (email, skype, etc.)

Executing banking or financial transactions online
Presenting your company through company website
Searching the Internet for innovative ideas, new trends, partners etc.
Advertising on Facebook, YouTube, GoogleAds, etc.
Communication with customers/clients/partners through social networks (Facebook, Twitter, LinkedIn, etc.)
Data storage (i.e. the cloud), web-based applications or other internal operational needs
Provision of customer services or support online
Purchasing goods or services for your company over the Internet
Selling your goods or services over the Internet
Online trainings – internal (organized by your company) or external ones
DK/refuse
We dont use Internet

**The figures might not add to 100% due to rounding.

160
Figure 168: Have you introduced new or significantly improved products and/or services in the past 12
months?**
(All respondents - N=1215, share of total, %)

Exporters 42 57 1

Non-exporters 22 76 2

Yes No DK/refuse

nies and 24% of domestic-facing companies were Employment practices

first-to-market only in their own economy. More ex-
When it comes to hiring, exporters tend to rely
porters (42%) have introduced innovative production
mostly on personal contacts. Vacancy announce-
or service delivery processes than companies that
ments in newspapers or online are also commonly
do not export (21%).
utilised while “poaching” employees from competi-
Skills needs tors is the least popular method of hiring new staff
(although 27% of companies do it sometimes). Co-
As 87% of exporters find digital skills at least some-
operation with education institutions and private em-
what important, it is no surprise that 70% have tak-
ployment agencies, as well as “head-hunters”, are on
en concrete measures to improve their employees’
the rise although all are still used relatively sparingly.
competencies in the relevant subject areas through
on-the-job trainings, online courses or conferences. Most exporter and non-exporter companies would
retain the same number of employees even if all la-
Due to higher demand for labour, 34% of exporters
bour restrictions were to be lifted, while 20% of ex-
reported having vacancies that are hard to fill (vs.
porters and 12% of non-exporters would increase
25% of non-exporters), mostly due to a lack of skills
the size of their staffs.
by applicants.

Figure 169: How often do you use the following when hiring new employees? Please mark each of the
following methods with 1 often, 2 sometimes or 3 never. **
(Exporters Only- N=333, %)
Exporters only

100% 1 1 2 4 4 6
5
19
31
80%
40
57 61 60
60%
48
39
40%

53 23
20% 27 27
31 28
16
8 6
0%
Through personal Through placing With intermediation By cooperating With intermediation “Poaching”
contact advertisements in of the official directly with of private employment employees from
the papers and/or employment education agencies and/or competitors
online agency institutions “head hunters”

Often Sometimes

Never DK/refuse

**The figures might not add to 100% due to rounding.

161
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Figure 170: (left) How likely would you employ workers from abroad in your company?
(right) How likely would you employ workers from the region in your company?**
(Exporters only - N=333, %)

100 4 3

80 Not likely at all

33 33
Not likely
60
Neither likely nor unlikely

32 34 Likely
40
Very likely
15 15
20 DK/refuse to answer
9 8
8 7
0
From From the
abroad Western Balkans
region

Figure 171: Over the past 12 months, has your business funded or arranged any training and develop-
ment for staff in the organisation, including any informal on-the-job training, except training required by
the law? **
(All respondents - N=1215, %)

100 2 2

80 Yes

60 No
60 78
DK/refuse

40

20 37
21

0
Exporters Non-exporters

**The figures might not add to 100% due to rounding.

162
Figure 172: In your opinion, what are the most effective ways to increase the number of women in the
labour market?**
(Exporters only- N=333, share of total, %)

Increasing flexible work arrangement (e.g. part-time work,

working from home)

Making it easier for women to combine a job with household

and care responsibilities
Making child care more accessible (e.g. without waiting
list in kindergartens, increasing the number of nurseries
and kindergartens etc)
Making sure women earn the same as men for
the same work

Improving access for women to better quality jobs

Making sure that recruitment procedures do not

discriminate against women

Making sure it is beneficial financially to work for women

(by changing rules on taxes and social benefits)
Making employers aware of the benefits of
employing and promoting women (e.g. their openness and
accessibility in commun

Improving access for women to traditionally “male jobs”

0 10 20 30 40 50

When it comes to hiring workers from vulnerable
groups, exporters are likely to be more inclusive as
73% would have no problem with hiring Roma with
the requisite education profile and skills needed for
the post (vs. 62% for non-exporters). Persons with
disabilities and refugees are also more likely to be
employed by export-oriented companies, with the
present share of companies employing either 28%,
against some 10% for non-exporters.
Gender biases exist across both categories, as 32%
of exporters and 31% of non-exporters would rather
hire men, while this share is significantly lower for
women – 7% and 8%, respectively.  more accessible. Removing the gender pay
Exporter companies have no discernible preference
between workers from abroad and those coming
from the region, with a near-identical breakdown in
preferences. More than half of export-oriented com-
panies would not have a problem with hiring a per-
son from either the Western Balkans or elsewhere
in the world. There are still some 17% of executives
who resist hiring outside of their economy, however.
Exporters have provided more training and devel-
opment opportunities for their staff than non-ex-
porters in the past year, likely owing to the highly
competitive nature of international sales. In fact,
exporters are twice as likely to offer staff training
than non-exporters. There is no significant change in
this regard to the last year.
In order to enhance participation of women in the la-
bour market, most exporters believe that it is neces-
sary to introduce more flexible work arrangements,
make it easier for women to combine their jobs with
household responsibilities, and make child care
gap is an effective way to boost women’s partic-
ipation in the workplace, according to just over a
third of exporters; interestingly, this was last year’s
top=ranked inclusion strategy for executives in this
category of enterprises.

**The figures might not add to 100% due to rounding.

163
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

CONCLUSIONS AND
RECOMMENDATIONS
This years’ Balkan Business Opinion Barometer In spite of the relatively high perception of corrup-
draws a reassuring conclusion that the business- tion and limitations of the business environment,
es have managed to continue growing, while gov- businesses have managed to grow both in terms
ernments have not generally made much progress. of the number of employees and sales, although
The region desperately needs higher economic primarily on the domestic markets. Thus, it is not un-
growth rates in order to catch up with the rest of Eu- reasonable to assume that the performance would
rope. For this to occur, settling both the regional and be much improved if those negative factors were
internal differences through setting common goals alleviated.
and initiatives seems to be the only viable option.
Businesses should be encouraged and incentiv-
This is both the precondition and the tool for building
ised to behave less insulated - to invest and export
a democratic society.
more than they do at the time. Cross-border invest-
The sentiment of businesses towards their respec- ing in the region requires mutual confidence and
tive governments for the most part goes between partnership between the governments and enter-
moderate dissatisfaction and moderate satisfac- prises. Underlying factors why companies do not ex-
tion. When being asked about their governments’ port their products even though they consider them
conduct, ethics, transparency, accountability or will- competitive enough requires deeper understanding
ingness to include them into decision-making pro- as well.
cess, they tend to express dissatisfaction. On the
Potential for incentivising innovative activities of
other hand, the businesses do recognise efforts on
SMEs should be explored. Only one in ten compa-
digitalisation of public services, technological and
nies on average gets financial support for innovative
innovation capabilities and improvements in phys-
activities, however, these more often target large
ical infrastructure. Perception of corruption is still
companies than SMEs (42% vs. 9%).
high, and confidence in official channels much lower
(44%) than in digitalisation of processes (83%). As labour force availability becomes more con-
straining, economies should put in more effort in
The crisis caused by COVID-19 is a unique oppor-
active labour market policies, as there are still al-
tunity for the governments to demonstrate genuine
most a million unemployed with low activity rates in
concern and care for the private sector by taking
the region, while companies usually cite that appli-
charge and putting down measures that will pro-
cants lack appropriate sets of skills.
mote risk-sharing between the public and private
sectors. It is a balancing act between ambition and
prudence. Without an appropriately sized and well-
thought-through set of measures, there is a high
risk of long-term economic downturn and social and
economic crisis. On the other hand, if governments
unleash spending that is far beyond their fiscal ca-
pacity, the spiralling public debt could eventually
have a devastating effect.

164
NOTE ON METHODOLOGY
Methodology used for Business Opinion Survey was
quantitative research and data collection method Interviewers
was CAPI (Computer-Assisted Personal Interview- The survey was conducted by experienced inter-
ing). The survey was conducted via personal house- viewers in all economies. All interviewers were given
hold interviews carried out by trained interviewers written instructions containing general description
from Indago between December 2019 and January of the questionnaire, of the method of selecting a
2020 in Albania, Bosnia and Herzegovina, Kosovo*, companies and of the respondent selection method.
Montenegro, the Republic of North Macedonia and In addition to the written instructions, all interviewers
Serbia. were trained to understand research goals, interview-
As part of project set-up phase, some preparations ing method and eligible respondent selection (a a
and adjustments were undertaken as necessary for member of a company’s management board/team).
the successful implementation of the survey: In addition , project coordinators reviewed the entire
digital questionnaire jointly with the interviewers and
Questionnaire emphasised some important elements (especially
the need to read individual answers where one or
The survey questionnaire was provided by the RCC. more answers were possible, etc.).
The Business Opinion Survey questionnaire was
composed of 95 questions, including those on busi-
ness demographics.
The questionnaire was originally written in English
and subsequently translated into related local lan-
guages. In Kosovo*, both Albanian and Serbian
versions of the questionnaire were used, and in the
Republic of North Macedonia, the questionnaire was
translated and used in Macedonian and Albanian.
RCC reviewed and approved all the translations of
the questionnaires.
Since the CAPI methodology was used in the re-
search, all questionnaires were converted to a digital
form and installed on interviewers’ laptops/tablets.
The programmed questionnaires were reviewed by a
responsible person in each economy.

165
 BALKAN BAROMETER 2020
Sample
The Business Opinion Survey was conducted among
minimum N=200 respondents – business owners,
managers and senior executives, in each economy,
with a total of 1,215 respondents for the entire West-
ern Balkans region. Companies in majority state
ownership were not included in the sample.
The survey encompassed:
|| companies of various sizes – micro (4 – 9
employees), small (10 - 49 employees), medi-
um-sized (50 - 249 employees) and large (more
than 250 employees),
|| various business areas (21 business fields ac-
cording to the NACE classification),
|| companies which are not majority publicly
owned or by government,
|| companies established prior to 2017.
Before the main part of the fieldwork, i.e. interviews
with business respondents, Indago conducted two
preparatory phases: Company selection and Tele-
phone recruitment.
a) Company selection
The selection of the companies was performed ran-
domly across various regions, sectors, sizes and
ownerships structures. Official data provided by na-
tional statistical offices of six economies were used
as data source. The selection was completed before
the first phase of fieldwork, enabling interviewers
to receive lists of companies to be contacted. The
lists contained the company’s name, address and
telephone number and, in some cases, the name
166
BUSINESS OPINION | Analytical report
of a contact person. The lists of companies in each
economy, i.e. sampling frames were provided to
RCC prior the fieldwork.
b) Telephone recruitment
The target groups in the Business Opinion Survey
were members of the companies’ managing boards/
teams. Considering the fact that persons in leader-
ship positions have a lot of responsibilities and are
probably very busy, telephone recruitment was orga-
nized. This was the first step of the fieldwork, which
increased the response rate and therefore led to a
successful implementation of the interviewing pro-
cess. During the telephone conversations, the inter-
viewer presented the idea and the objectives of the
survey to the respondent and then attempted to ar-
range a face-to-face interview. The interviewer need-
ed to be very familiar with the project, but also to
be eloquent, persuasive, polite and persistent. Every
telephone interviewer was obliged to contact a po-
tential respondent at least three times and arrange
an appointment (except in cases when a person
categorically refused to participate in the survey).
They needed to note down the scheduled date and
time clearly. Thus, the contact lists contained only
relevant information; they were filtered and ready for
face-to-face interviews
.
 Table 4: Sample structure by size of settlement

Economy Size of settlement %

Up to 2,000 17.6
2,001 – 10,000 24.8
Albania 10,001 – 50,000 16.5
50,001 – 100,000 9.7
Over 100,001 31.4
Up to 5,000 57.5
5,000 – 19,999 18.6
Bosnia and Herzegovina 20,000 – 49,999 7.5
50,000 – 99,999 5.8
Over 100,000 10.5
Up to 2,000 23.5
2,001 – 5,000 24.3
Kosovo*
5,001 – 10,000 15.8
Over 10,001 36.4
Up to 2,000 24.6
2,001 – 5,000 17.2
Republic of North Macedonia
5,000 – 10,000 14.3
Over 10,001 43.9
Up to 5,000 38.1
5,001 – 10,000 19.1
10,001 – 20,000 14.5
20,001 – 30,000 5.9
Montenegro
30,001 – 50,000 4.7
50.001 – 70,000 0.8
70,001 – 100,000 2.9
Over 100,000 14.0
Up to 5.000 28.4
5.001 - 10.000 4.2
10.001 - 20.000 7.9
20.001 - 50.000 10.5
Serbia
50.001 - 100.000 16.8
100.001 - 150.000 7.0
150.001 - 250.000 5.2
Over 250.000 20.1

167
 BALKAN BAROMETER 2020 BUSINESS OPINION | Analytical report

Sample Structure

Figure 173: Sample structure by respondent’s position

Western Balkans 5 21 29 3 16 4 28 12

Albania 9 2 33 1 10 4 40

Bosnia and Herzegovina 9 2 23 1 29 3 19 13

Kosovo* 11 3 4 43 10 5 19 7 1

Republic of North Macedonia 4 38 3 12 3 38 1

Montenegro 24 1 23 4 10 1 34 2

Serbia 11 27 3 19 1 39 8

0 20 40 60 80 100

Chief Executive Owner/proprietor General Manager

President Partner Manager
Vice president Director Finance Officer

Figure 174: Sample structure by number of employees

Western Balkans 36 39 21 4

Albania 35 46 17 1

Bosnia and Herzegovina 27 38 30 5

Kosovo* 39 60 11

Republic of North Macedonia 57 33 7 2

Montenegro 44 37 16 3

Serbia 34 35 25 5

0 20 40 60 80 100

4-9 10 - 49 50-249 250+

168
Figure 175: Sample structure by largest shareholder

Western Balkans 49 20 24 5 11

Albania 16 19 56 8 1

Bosnia and Herzegovina 56 25 13 5

Kosovo* 21 49 28 1121

Republic of North Macedonia 14 19 65 1

Montenegro 51 33 7 4 12

Serbia 70 12 9 6 2

0 20 40 60 80 100

Individual Domestic company Investment fund

Family Foreign company Managers of the firm
General public Bank Employees of the firm

Figure 176: Sample structure by business area

Western Balkans 3 35 53 8

Albania 2 19 70 8

Bosnia and Herzegovina 4 44 44 8

Kosovo* 1 17 79 4

Republic of North Macedonia 5 18 69 8

Montenegro 2 20 70 7

Serbia 3 45 43 8

0 20 40 60 80 100

Agriculture, hunting, fishing and forestry Transport, trade, tourism, catering industry, crafts, banking, public utilities
Industry, mining, construction Education, science, culture, information, health and social protection

Figure 177: Sample structure by ownership

Western Balkans 93 7

Albania 91 9

Bosnia and Herzegovina 93 7

Kosovo* 98 2

Republic of North Macedonia 98 2

Montenegro 94 6

Serbia 91 9

0 20 40 60 80 100

Private domestic individual(s)/ company(s)/organization(s) Private foreign individual(s)/ company(s)/organization(s)

169
Regional Cooperation Council Secretariat
Trg Bosne I Hercegovine 1/V
71000 Sarajevo, Bosnia and Herzegovina
T: + 387 33 561 700
www.rcc.int/balkanbarometer