While on the rise, the employment rate in Montenegro remains low: at 46 per cent, 1 in every 2 people over 15 years of age has no job. To reach the European Union average employment rate – 65 per cent – Montenegro would need to create another 40,000 jobs. Since 2011, about 6,000 new jobs have been created annually, meaning that it would require 8-9 years for Montenegro to reach the number of jobs required.[i]

How digitalization can lead to inclusive economic transformation and quality jobs will be a key concern as Montenegro responds to the structure of its labour market and addresses the consequences of the COVID-19 pandemic. Digitalization will continue to disrupt various sectors—serving as a driving force in the move from informal to formal work as well as the shift from agriculture to industry and services, the largest jobs sector. Indeed, despite being prioritized as a development priority in Montenegro, agriculture is among the most at-risk to automation.

Around the world, automation created by digital transformation will increase average output per worker by 30 per cent by 2030. However, by the mid-2030s, 30 per cent of jobs and 44 per cent of workers with low skills and education level are at risk of being replaced by automation. In Montenegro, Accommodation and Food Services for tourism can see as much as 50 per cent of jobs replaced by technology.

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[i]WB, 2018a

Managing the economic fallout

Automation will bring new opportunities and costs.

• Automation will widen income inequalities. Automation in Montenegro will reshape incomes—widening income inequalities for low-income, low-skilled and uneducated workers. Workers in mid- to low-skill roles who rely on physical labour or skills are also more vulnerable to automation and to losing their jobs.
  
  
• New risks and opportunities for vulnerable groups. Coupled with already unequal salaries, increasing digitalization may exacerbate the digital divide along lines of gender. The inequality in access to technology affects professional and personal development for women because they may not have the same opportunities or resources that are provided for men.

Adoption of new technologies and undertaking the shift to a digital economy stands as a key factor to build resilience to automation: countries investing in digital technologies are better protected.

Automatability will be lower for job roles with higher educational requirements, which require cooperation with other employees or where people spend more time influencing others. By contrast, low-skilled individuals face the highest risk of automation.

Accelerating the digital start-up ecosystem

But there are signs of hope. The digital economy has enabled many women to access work that lets them apply their creativity and potential. Many women have moved to e-trading as entrepreneurs or are employed through crowdworking or e-services.

And start-ups hold significant potential to accelerate digital transformation. Indeed, among the largest opportunities to orient digital companies towards foreign markets rests in supporting Montenegro’s start-up ecosystems. But a supportive business environment must be built.