The Future of Work in Transition Economies: Integrating AI, Digital Skills, and Employability in Higher Education

Abstract This study examines the incorporation of soft skills, digital competencies, and artificial intelligence (AI) tools in higher education to improve student employability in Bosnia and Herzegovina, with broader relevance for the South East Europe region, where similar transition economies face parallel challenges in aligning education with the demands of digitally transformed labor markets. The research utilizes a mixed-methods approach, integrating quantitative survey data from University of Sarajevo students with qualitative insights from industry professionals. Research indicates that the concurrent enhancement of soft skills (such as communication and critical thinking) and digital competencies, in conjunction with the utilization of AI tools, markedly enhances students’ preparedness for the contemporary labor market. The study emphasizes the essential role of autonomy in converting AI tool utilization into academic achievement and provides practical recommendations for educators, policymakers, and employers to address the skills gap in the digital economy.