LABOUR MARKET TRANSFORMATIONS AND DUALITY IN CENTRAL AND SOUTHEASTERN EUROPE: A COMPARATIVE FACTOR ANALYSIS

This study offers a comparative analysis of labour market transformations in twelve Central and Southeastern European countries: Albania, Bosnia and Herzegovina, Serbia, North Macedonia, Bulgaria, Romania, Croatia, Slovenia, Slovakia, Poland, Hungary and the Czech Republic, covering the period 1993 to 2024. It examines the major structural shifts associated with the transition from centrally planned to market economies, marked by significant output declines, enterprise closures and substantial job losses that contributed to persistent and often long-term unemployment. Using the theoretical framework of labour market duality, the study explores segmentation between primary and secondary labour market segments, the prevalence of vulnerable and informal employment and the impact of institutional legacies such as rigid labour regulations, high employment protection and skill mismatches. Methodologically, the analysis combines descriptive indicators with factor analysis to reduce a wide set of seventy nine labour market variables into composite labour market dimensions obtained through dimensionality reduction., allowing for the identification of shared regional patterns and country specific disparities.
Sectoral differences remain particularly evident in agriculture, which continues to employ a considerable share of the workforce in parts of Southeastern Europe despite low productivity and limited technological modernisation. The largest labour market gaps appear between Western Balkan economies and more advanced EU member states, most visibly in employment rates, labour force participation, youth unemployment and long-term unemployment. These persistent disparities reflect deep structural constraints and institutional weaknesses that continue to hinder labour market convergence across the region.