Montenegro’s manufacturers are urging the government to introduce the proposed Euro Model wage reforms gradually and increase financial support for industrial investment, warning that higher labour costs without corresponding productivity gains could undermine domestic production, employment and competitiveness. Representatives of the metallurgy and metal-processing industries, small and medium-sized enterprises, and accounting businesses raised their concerns through the Chamber of Economy of Montenegro. They said administratively driven wage increases could raise production costs, discourage investment, reduce employment and weaken manufacturers’ ability to compete with imported goods.
Export-oriented companies face particular exposure because they often operate in markets where passing additional labour expenses on to customers is difficult.
Manufacturers Call for Expansion of Competitiveness Funding
The Chamber has called for a substantial increase in Montenegro’s existing €3.5 million competitiveness-support programme in 2027. The programme’s expansion has not yet been approved.
Potential priorities include industrial automation, digitalisation, energy efficiency, new equipment and workforce development. Manufacturers argue that investment in these areas could help offset higher payroll expenses by reducing energy consumption, improving production efficiency and increasing the value of output per employee. The proposals link wage growth to measures designed to improve productivity, rather than allowing higher salaries to translate directly into increased production costs.
Industrial Competitiveness Faces Additional Cost Pressures
The concerns introduce an industrial-investment dimension to the debate over the Euro Model, which has also raised questions about the fiscal implications for central government, municipalities, tourism companies and public utilities. Manufacturing accounts for a relatively small share of Montenegro’s economy compared with tourism, real estate and services. Manufacturers warn that if rising labour costs discourage industrial investment, the country could become more dependent on imports and consumption-led economic growth.
The pressures are particularly relevant to metallurgy and other energy-intensive industries, which already face volatile electricity prices, environmental compliance requirements and EU carbon regulation. Companies are also confronting investment needs related to decarbonisation, automation and compliance as labour costs are expected to increase. These competing requirements could affect decisions on equipment purchases, production capacity and future investment.
Investment Support Could Help Finance Industrial Modernisation
A larger competitiveness programme could help manufacturers absorb part of the additional wage costs while supporting the modernisation required to access EU markets.
Banks and development-finance institutions could complement public incentives by providing loans for machinery purchases, digitalisation and energy-efficiency projects. The Chamber’s proposal therefore combines wage-policy concerns with a call for stronger industrial investment support. Manufacturers argue that wage increases need to be accompanied by improvements in output per employee to strengthen the productive capacity of domestic businesses. Without a broader productivity and industrial-investment strategy, manufacturers warn that higher salaries could result in higher prices, weaker employment or reduced investment, rather than sustainable improvements in living standards.
