Some efforts are being made to build the welfare state in the countries of the Western Balkans. The paper provides an overview of the main indicators of the welfare state and analyzes the challenges that the welfare state faces in the region. Specifically, it focuses on the challenges associated with each of the countries in the Western Balkans and defines some of the main strategies and options for solving these challenges, which should be addressed, discussed and agreed upon. The paper aims to measure, monitor and report social inclusion in the region through a set of consolidated indicators. The need for rigorous analysis stems from the fact that the terms' poverty, inequality and social exclusion are often used to refer to the same phenomenon. However, while poverty and inequality are outcomes, social exclusion is both an outcome and a process. Exclusion can be intersected with poverty which is caused by a set of multiple and interrelated disadvantages, which lead to both economic poverty and social exclusion. The indicators that are analyzed are: Political economic development of the Western Balkans, demographic developments in the region, social policies and challenges, Problems such as poverty, unemployment, the labor market, immigration, education and health as a condition for social protection, government reforms, the legislative framework of the region which needs to be aligned with that of the EU. The paper analyzes data from international reports and also takes into consideration qualitative surveys of social exclusion in the region for the assessment of social inclusion; the institutional examination of the direction of social inclusion and the promotion of dialogue. Basically, the analysis aims to look at the perspective of positive changes in society, addressing the main causes of social problems and improving access to social justice and human rights. Social cohesion in the economies of the Western Balkan countries is in constant danger. The fragile social and welfare framework and the circumstances fraught with economic challenges create a destabilized environment that can compromise and endanger sustainable development in the countries of the Western Balkans. There is a need to initiate a broad debate and dialogue, on an informed basis, on the perspective of the welfare state. If the maintenance of the basic minimum standard is to be considered as the central feature of the welfare state, then it is almost impossible to assess whether the Balkan countries currently have such a welfare state, or whether they are trying to build or reform it, or if they had it and lost it during the reform efforts. From the point of view of the discussion of variants and strategies that we will see in the following, it appears that it is more important (and more direct) to define the specific challenges related to state activities in the social sector in this region.