During the last 15 years the entire Western Balkan region has undergone dramatic changes. With the fall of the Berlin wall and the disintegration of the former Yugoslavia, new states were formed and transition started, although in some countries it was quite delayed. Simultaneously, during the nineties, much of the region experienced wars and destruction, waves of refugees, internal displacement of population, devastation of the economy, demolition of institutions and impoverishment of citizens. Absolute poverty, determined through the estimation of household consumption at which families, after paying for essential non-food expenditures just attain minimal nutritional needs, in almost all of the Western Balkans is still relatively high, and is not showing significant tendencies of decreasing. A large concentration of the population and households just above the poverty line additionally demonstrates the challenges faced by the entire region while undergoing the transition process. In some countries extreme poverty, meaning that not even basic food needs can be met, has been registered. On the other hand, relative poverty, defined as the share of those who are excluded from the minimum acceptable way of life in states in which they live, is not particularly high. Due to the relatively high standard of living in the past and high expectations of the population that living standards would increase in a relatively short period of time, the subjective perception of poverty in the entire region is very much present. Groups that stand out as especially vulnerable and excluded are the unemployed, dependents and the less educated. At the level of the household, in some countries households with many children and elderly households are particularly vulnerable. The poorest often live in the rural areas and in the underdeveloped regions. In addition, especially vulnerable groups, who cannot even be completely covered by standard surveys, but are poor and socially excluded by many indices are the Roma, refugees and IDPs and persons with disabilities. Concurrently undergoing transition, post conflict reconciliation and reconstruction and striving to pursue their European Union future, the Western Balkan countries face many challenges. One of the greatest challenges is to focus on programs and activities that will lead to equitable and sustained economic growth that will also benefit the vulnerable groups. Almost all Western Balkan countries, through their national plans and programs, have marked employment growth and job creation as the most important single mechanism for exiting poverty. The second priority may be an increase of education coverage and improving the quality of education, although reduction of poverty and social exclusion presupposes improvement in the areas of developing appropriate social safety nets, health care systems, securing adequate housing, participation in decision making and protection of human rights. Bearing in mind the commitment of the Western Balkan countries to meet the globally agreed goals ...

The aim of the article is to assess the challenges facing Western Balkan welfare states and the available strategic options for enhancing social protection and human development in the region. The analyses of challenges encompassed the relevant EU and national statistics. For each challenge, channels were analysed, through which the impact on the welfare state was reflected. Both challenges and options were assessed against the experience of more advanced societies, especially EU countries. The analysis has shown that most of the challenges identified in advanced societies are also present in Western Balkan countries. These challenges are intensified by these countries' relatively low gross domestic product, unfavourable social situations, inadequate education, and poor health outcomes, including a number of microefficiency issues in the context of low investment in the social sector. High emigration, long-term unemployment, and the widespread grey economy are identified as particularly important challenges. Among the strategic options, the small welfare state, universal social investment, and preventive welfare state were analysed. The conclusions emphasise the importance of efficiency as a complementary strategic option, as well as the need to prioritise and focus given the weak and limited administrative, institutional, and expert capacities in the region. KEY WORDS welfare state | social protection | Western Balkan countries | challenges | options An earlier version of this paper was presented as the position paper for the Future of the Welfare State in the Western Balkans initiative and conference (Belgrade, May 2018). The initiative has been supported by the Swiss Agency for Development and Cooperation.

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Serbia is one of the rare eastern European countries that decisively dismissed the controversial pension privatisation agenda whereby mandatory private pension funds would be introduced to (partially) replace existing public pay-as-you-go (PAYG) benefits. Instead, Serbia opted for a more traditional western European approach, combining PAYG cost-containment parametric reforms with the introduction of tax-preferred supplementary private pensions. We explain that the desire for equitable intergenerational burden-sharing was one of the key factors behind the decision-making process that made Serbia diverge from regional trends and World Bank orthodoxy. Nonetheless, problems that have plagued mandatory private funds in neighbouring countries, such as excessive operating costs and undiversified portfolios, have also been prevalent in the Serbian voluntary private pension fund industry, which failed to achieve tangible labour market coverage and whose survival has been due mostly to exclusive tax privileges.

In Serbia, the long-term care as a system does not actually exist. One part of the system is regulated through cash benefits, one part through institutional social care and community-based social services, and one part is just being established under the health care system. The linkages among these segments are not strong and there is insufficient awareness of the need to regard the different parts of the system as being interdependent and interconnected. According to the different surveys, home care is needed for the daily functioning of more than 80,000 elderly people, especially for around 27,000 of those who are completely immobile. More than 300 thousand elderly persons have indicated that they are in need of some type of self-care support. By tradition, elderly people in Serbia rely primarily on family support. Some are getting the state support as well. Research shows that 62 thousand elderly persons (5 percent) receive attendance allowance; 9,000 elderly are accommodated in institutions (0.7 percent), while 11.7 thousand (1 percent) persons received some type of support through home care community based services. In addition, in Belgrade there are also 2,000 elderly who are beneficiaries of medical and palliative care at home. The government expenditures for these purposes can be very roughly estimated at 0.55 percent of GDP, largely for cash benefits (0.37 percent). Considered over a medium and longer term, the government expenditures on longterm care in Serbia will inevitably increase significantly, primarily due to an increase in the number and share of elderly people and the increase in additional life years spent in ill health or in need of assistance. An increase in the expenditures will also be influenced by a change in the family models and the increasing number of elderly that will be living alone, as well as the diminishing possibilities for reliance on the closest family members, especially due to emigration flows both at local and national levels. Finally, it is important not to neglect the effect of emulating more developed countries, as well as the EU’s pressure to adequately respond to the needs of the elderly. Therefore, the state and society must promptly prepare a systematic, comprehensive, timely and fiscally responsible response. This response must recognize the capacities of all stakeholders, from family to state and non-state and match the capacities with the appropriate roles in the system of long-term care provision