Education is defined as an activity of general social interest, which indicates its significance not only for the development of the individual, but also for the progress of society as a whole. Improving the quality of education is essential because it is considered crucial to the economy, it is necessary to provide applicable knowledge and skills, harmonize educational programs and the labor market, particularly in the new sphere of digital business and technological innovations. Education is associated with long-term improvements in economic performance through the transfer of new knowledge and ideas, providing capacity for innovation and improving the overall knowledge and skills of the population. As well as all other essential state segments education policy is facing new challenges in uncertain circumstances. The era of globalization and the high level of international trade require that successful countries have competitive and comparative advantages where education and training are major factors in determining the performance of the national economy. Despite all these facts, unemployment, underemployment, mismatches between people’s actual skills and the needs of the labour market undermine the further sustainable development of European societies. This paper analyzes the current condition and achieved level of education reforms in the Republic of Srpska and points out the challenges of education policies that lie ahead.