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The purpose of this paper is to examine the relationship between digital skills and employment and in this way accentuate importance of policy interventions for improving digital literacy.

Using Eurostat data, this paper demonstrates statistically significant correlation between digital skills and employment rates in EU.

This implies why it is so important for governments and employers to seek, propose and implement new strategies to promote digital inclusion, literacy and the training not only for new ICT professionals but also for the whole workforce.

Digital skills, particularly digital literacy, are an important factor for socio-economic development of the society and employability of the labour force. Without adequate digital literacy, it is not possible to participate in the economy and the digital society, particularly having in mind the digital transformation that the world of work is experiencing in the content and the organisation. Beyond the work environment, it also affects the way people live and communicate.

In this paper, the importance and definition of digital literacy are elaborated, explaining the measurement of digital literacy and skills, as well as the relation between digital literacy and employability.

While some EU countries have successfully reduced unemployment and increased employment, others could only accomplish partial success; therefore, unemployment rates across the EU are still much higher than in the 1970s. There are still large regional differences in terms of unemployment despite considerable region-specific transactions to counter-act such differences. Different employment outcomes are the consequence of many factors – such as the demographic trends, the general economic situation, the structure of the economy, the existing welfare and labour market situation, or the level of employment protection – but it may also be the outcome of the effectiveness of the local labour market measures. Local action is important for effective employment policies. Where national policies and implementation measures are sufficiently flexible and adjustable, local level actors can develop integrated approaches to economic growth, maximizing employment opportunities and helping to lessen inequalities and social exclusion in their communities. Mobilization and activity of local communities in combating unemployment are essential to translate national and regional strategies into action on the ground. Local actors purportedly best understand local conditions, aspirations, and needs. There is no magic button for overcoming obstacles and problems, but there are some positive experiences that can be applied or adjusted. The chapter describes the activities and experiences of EU and local initiatives and the problems of institutional organizations.

Many recent studies have highlighted the importance of quality of governance and institutions for economic performance. According to New Institutional Economics, the quality of governance and institutions is a fundamental precondition for sustained increases in prosperity, well-being, and territorial cohesion. The quality of governance influences people’s health, their access to basic services, social trust, and political legitimacy. Governance encompasses the traditions and institutions by which authority in a country is exercised, and its performance can be measured. In this chapter we use the World Bank’s measure Worldwide Governance Indicators (WGI). The aim of the chapter is to highlight the variation of the quality of government between regions of Scandinavia and South East Europe and to analyse recent changes in South East Europe. Not surprisingly, Scandinavian regions outperform all other EU regions in quality of government, and the situation has been stable over time. In South East Europe, the situation has improved, although at a slow pace. Whereas the rule of law and government efficiency seem to be steadily increasing, the fight against corruption has been less successful.

The socialist approach to housing in Croatia was to give tenants strong, and to some extent rigid, rights. During this paradigm, market renting was also discouraged. The policy privileged tenants and gave them subsidized rent, but it also limited their spatial mobility if they did not want to lose that privileged status. After independence, two vital processes on the housing market were undertaken: the privatization of socially owned housing stock and denationalization. Consequently, the stock of apartments previously owned by the companies and the state was sold to the ‘tenancy right’ holders for just a small part of its market value, resulting in more than 80 per cent of apartment users becoming legal owners. That is a positive outcome from a social policy perspective, but it could endanger the mobility of the Croatian labour force. Price developments and turnover dynamics are still bounded by underdeveloped and outdated cadastre as well as strong regional differences.