FACTBOX-Main challenges for Kosovo's nascent economy

(Reuters) - Kosovo declared independence from Serbia on Sunday, ending a long chapter in the bloody break-up of Yugoslavia. Here is a look at the main economic challenges facing the new state.

UNEMPLOYMENT

Some 50 percent of the workforce is in formal employment, with the rest either long-term unemployed or working unofficially. Some 30,000 young people enter the job market every year, five times the number Kosovo businesses can absorb. The government wants to ensure formalised access to the EU labour market by setting up labour-exchange programmes in specific sectors.

POVERTY

Some 45 percent of the population subsists below the poverty line of 1.5 euros a day. Wages average around 220 euros ($320) a month, and most households receive remittances from at least one family member working abroad.

INFRASTRUCTURE

Kosovo's road and rail network was neglected in Yugoslav times, fell into a total state of disrepair during the 1990s, and was partly destroyed in the 1998-99 conflict. The repair of major arteries around the capital Pristina has been marred by low-quality planning and materials. The government plans international tenders for country-wide highway concessions.

Utilities, especially water and power, are generally unreliable although much improved since the previous decade. A major planned project, the Kosovo C thermal power plant, aims to draw on the territory's lignite deposits to turn Kosovo into a power exporter by 2015. A reliable water supply will require the political agreement of the Serb minority, which dominates the area around the main reservoir in north Kosovo.

EDUCATION