Failure to Provide Better Conditions Causes Workers to Depart

TThe Serbian economy isn’t currently in a very rosy situation, because we are increasingly feeling the consequences of high inflation, rising interest rates on bank loans and credits, and the undervaluing of the euro compared to the dinar. Further aggravating the situation is the drop in demand on the domestic market, which occurred as a result of inflation and more expensive retail borrowing. The number of export-oriented companies recording operational losses due to the aforementioned four factors has doubled since the beginning of this year. A fifth factor also exists, and that is that state-owned and public companies have increased delays in paying their debts to the private sector for goods and services since autumn last year. This is particularly prevalent among large state-owned enterprises and the biggest public enterprises in the City of Belgrade.

Considering everything mentioned, the government would have to introduce rigorous savings measures and direct funds collected from taxes and other fiscal revenues towards capital investments, and to conduct the efficient implementation of those investments, put a halt to all unfavourable credits raised from foreign banks and countries that have high interest rates and try – through efficient organisation and the formulating of capital infrastructure, energy, environmental and other projects – to secure the financing of those projects from international financial institutions that enable the most favourable conditions.

It is likewise necessary for the state to create the conditions and speed up preparations to further reduce the overall burden on employees’ earnings, because high demand for workers from more economically developed European countries means that domestic companies aren’t in a position to retain the workforce that they’ve trained and that is relocating to those countries. There they are offered significantly higher earnings and often better working conditions, especially in EU countries, where there is greater respect for the rights of employees.

It is urgent that we reduce our wage burden to the level of Bulgaria, because higher taxes and contributions mean that our employers are unable to raise the salaries of employees sufficiently under conditions of very high inflation while simultaneously remaining competitive on the European market

A lot of factors could be added to this, but bear in mind that apart from digitalisation, which is being discussed on all fronts, Serbia lacks the de-bureaucratisation of institutions, an independent, professional and effective judiciary and a higher level of protection for private property, as well as further reform of the education system and an increase in the volume of professional internships for students at colleges and secondary schools.

Nebojša Savić Ph.D., FEFA University