Working out of their head office in Belgrade, they serve clients in western Europe, western Africa, Middle East and central Asia. 3lite focuses on providing highly specialized services for either investors, contractors or consultants for their specific operational or business requirements. Their team of subject matter experts targets only critical areas of a client’s business where they can save time and money. They differentiate themselves by their ability to engage in any phase of the project’s lifecycle, including situations when the project is in distress.

3lite’s core services are based on clearly defined assignments that are delivered within a timeframe of 4-12 weeks. Their services are divided into three core segments: (1) Project Consultancy – focusing on project controls, contract management and supply chain optimization for high-rise and mixed-use projects, (2) Business Consultancy – supporting companies to reach new international markets and develop business relationships with global industry leaders, and (3) Management Development – working with companies to establish their in-house staff and management capabilities for delivering large scale projects.

Чланак 3lite – Smarter Project Delivery се појављује прво на Biznis i Finansije.

What is the business logic behind the idea to venture into the making of the mobile phone which is designed to serve only for talking and sending SMS messages, in the era of smart devices, which are increasingly linking between themselves and are all the more close to unification? It may be surprising, but that logic is obviously making the profit, since the mobile phone model MP 01 of the Swiss company Punkt (Punkt.) – after appearing at the London Design Festival in September 2015. – sparked great interest and, despite a price of 295 euros, is making a constant growth in sales.

This is not a copy of the old, so-called 2G phone, but quite a unique device, says Petter Neby, the founder of the company. In addition to modern design, the phone is based on modern technology, it uses micro card, has a high-quality sound and much more space in the address book than the old phones (3.000), USB cable for communication with PCs, a battery that lasts 290 minutes of conversation, but – no internet.

The first batch is sold out, and not much copies are left from the second, and the placement of the third contingent on the market is already in the plans. Currently, the phone can be purchased in 25 stores around the world, from Paris to Hong Kong, but mostly through the online order form. Cell phone was sold in our region too, including Belgrade, but the biggest turnover is recorded in the Western European and American market. It only couldn’t be used in the countries that do not support the GSM standard – in Japan and South Korea.

Previously, this Swiss company, founded in 2008, has achieved commercial success with its model of analog alarm clock. Although in its work it uses the latest technology and – thanks to the „linked world“ – employs experts in Italy, the UK, Japan and other countries, its business philosophy is that the most important thing is to produce the device which is offering the consumers what they really need, in the competition of those who are trying to add more features to their products.

How to produce an analog device in a digital world?

Neby, who introduced his entrepreneurial approach at the Belgrade Design Week 2012, says that he manufactured the aforementioned phone primarily for himself, and then for the market. „I noticed that, with the advancement of technology, people have more trouble controlling the use of cellphones, and that they spend all day on the internet and social networks, instead to use them for better organization of their time. This is not healthy. I do not think there are many people who have developed a dependency on listening to music, but research confirms that, every second, more and more people are using Facebook or Viber. People are trying to present themselves in the best light, spending time persuading strangers how fantastic they are in this, fake, virtual world, rather than to enjoy with those who really mean something to them in real life.“

His belief that the inability to control technologies – instead of them controlling us – is a source of many personal frustrations, and that belief is confirmed by the demand for the Punkt’s products. But, already with his first venture – the making of the analog alarm clock with the modern design, whose sole purpose is to wake their owners – Neby has run into problems that were not expected, least of all in Switzerland. It turned out, in fact, that in the digital world, it is not easy to find collaborators for this type of production all throughout Europe, therefore he had to turn his eyes to China.

A similar pattern was repeated in the case of MP 01 phone, says Neby. When they started to inquire how much time was needed for its production, they received a surprising answer from the manufacturer: „If you want something like the iPhone, it takes about six months from the idea to the finished product, and a different concept requires more time.“ It turned out that it took four years to realize the idea and to go on sale. „Everybody have adapted to modern technologies to such an extent that anything different is a real challenge,“ comments Neby, who, nevertheless, didn’t want to give up from the idea that he created with the artistic director of the company, Jasper Morrison, the famous British designer.

Asked whether there were comments about the price of the phone on the market, Neby responds that those who believe that it is too expensive for the features it offers, are not their target audience. „The users of this phone understand that this is a long-lasting product, which was not designed to be replaced with a more advanced model next year. Our clients are those who understand that we do not want to engage in overproduction which has no purpose. We are producing electronic devices that people will buy because of the functions they really need, not because of a lot of the other features, for which the question is whether they would ever be used.“

Why do we need artificial intelligence when there are robotised humans?

The founder of Punkt points out that his philosophy does not mean that he is against technological progress. The problem, however, is not the technology, but – he believes – the people. „Smartphones have appeared before the users were culturally ready for them. It’s as if you took a child in a candy store and allowed him to eat as much as he wants. The child will not have a measure, because it doesn’t know that the excessive consumption of sweets may be detrimental to it’s health. This is exactly what happened to us, adults, with modern technologies. All of a sudden, we have got a lot of options without being aware of the possible consequences of their excessive use. Therefore, I always emphasize that I am not against the progress of technology, but am rather for its moderate and practical use. That approach is advocated since the inception of our company“, says Neby.

He adds that the users of smartphones and other networked portable devices often aren’t aware when their privacy is compromised. Specifically, users of 3G and 4G networks can be tapped, and applications which they use every day mainly collect data about them and their habits, usually without their knowledge. With the old phones that was not the case, as it isn’t with the MP 01, which uses the latest version of GSM, before the mobile phones were mass-attached to the internet.

The company, according to the words of its founder, aims to show the people that new technologies may also impose a daily routine if you don’t have self-control and that it can be dangerous precisely because it is not sufficiently recognized. „Very often we talk about artificial intelligence and the risks it brings. But it seems to me that it is more important to address the fact that the people themselves are becoming increasingly robotised, because, among other things, they spend more time in front of the computer in a senseless and anxious way, and so they keep forgetting that they are intellectual and creative creatures, which can move mountains if they really want to.“

Therefore, during his working hours Petter Neby also uses a smart phone, in addition to MP 01, but when he goes to home he diverts calls to his simple personal mobile phone. And e-mails and notifications, he says, can always wait until tomorrow.

Чланак The growth of interest in simple mobile phones: Less could be more се појављује прво на Biznis i Finansije.

Telecommunications are one of the most important and exciting industries nowadays. Important, because the magnitude of investments in this area is significant and spreads over decades. Telenor is still the biggest foreign investor in Serbia, having invested 1.53bn Euros in 2006. In 2014 only, Telenor has invested around 20 mn Euros in expanding its network and is investing 40 mn Euros in building the first mobile bank in the region.

As stated in RATEL’s report for 2013, total revenues from telecom services in 2013 in Serbia amounted to 1.55 bn Euros, out of which mobile has the biggest share of the pie (57%). This means that the overall share of the Telco industry in GDP is around 5%, a figure that is rather stable over time. So far, we were witnesses of steady growth in the Telco sector, especially when it comes to mobile, Internet and pay TV markets. However, starting from this year, we see the first ever decline in total mobile market value in Serbia (approx. -3%), while in some countries in Europe even more severe declines have been visible for several years already. Besides the challenging macro-economic conditions, the main reason for such a development lies in the reduction of interconnection rates, which are regulated.

Despite all challenges, the Telco industry appears to be rather resilient in tough times. Because communication and information is one of the core human needs regardless of the circumstances people are more willing to give up other types of consumption than mobile, Internet or TV. The Telco industry is also very attractive from an employee perspective. It attracts many young talents who look for great possibilities to learn and grow in a modern, international working environment.

When talking about the Serbian mobile market, it is important to say that in terms of penetration and access to most advanced services we are pretty much on par with the more developed markets. With SIM penetration of close to 130% and availability of the full assortment of latest handsets, products and services, Serbian customers are in the same position as their peers from Western Europe and the US, for example. Even the iPhone has finally arrived to Serbia!

Talking about smart phones, their uptake is rising steadily, contributing to an overall growth of mobile Internet usage and accelerating the so called “voice to data transition”. Today, the Smartphone penetration amongst Serbian mobile users is around 35%, and constantly rising. Besides the natural demand from customers, this growth is mainly fuelled by the mobile operators who are subsidizing smart phones and thus making them more affordable in combination with postpaid contracts that offer attractive bundles of voice, data and messaging. This has shifted customers from prepaid to postpaid, which means that the prepaid base is increasingly left to customers who spend less, many of them having to further optimize their mobile spending due to economic constraints. Besides this, mobile operators always explore additional models to enable people having a Smartphone.

One other important trend we face is the significant rise of Internet based communication services such as Skype, Viber and WhatsApp. According to our market surveys conducted during 2014, approx. 80% of mobile Internet users are using at least one of these services, which is around 30% of all mobile customers. The main reasons are significant cost saving potentials as well as enhanced features and ease of use. Mobile operators around the world are still struggling to find the best approach for how to deal with that trend, ranging from one extreme like blocking Voice over IP usage to another such as offering access to these services for free. In my view, it is clear that partnership models have to be found between the Internet services players and the operators, which allow a sustainable business on both sides. Internet players need high quality access to hundreds of millions of customers, and operators need investment security to build this high quality access.

The future of telecommunications will be all about data, where also all voice and messaging services will be IP (Internet protocol) based. In addition to that, literally all people will have the desire to have access to the Internet, similar to having access to TV some 50, 60 years ago. That’s why we in Telenor follow the ambitious goal to provide Internet to all our customers, no matter where they live. On that road, operators in Serbia are facing some regulatory challenges, such as the so called technology neutrality. Technology neutrality means that the operators can chose freely which of their spectrum should be used for which technology, a prerequisite to expanding high speed Internet coverage to broader rural areas in a cost efficient way. This will not only provide benefits primarily end customers living in these areas, but also to operators themselves. On top of that, the spectrum auction for LTE (also called 4G, the latest network technology that can carry enormous quantities of data at very high speeds) is still pending, even though Serbian mobile operators are technically and financially ready for that deployment. With the growing number of mobile Internet users and smart phones, as well as volume and speed hungry services such as YouTube or online games, LTE gains even more in importance.

I’d like to finish with something less technical, at least at first sight. As in most other industries, the players strive for a unique position that meets their target customers’ needs and differentiates them from their competitors. This creates more satisfied customers, more customer loyalty and ultimately better financial results. In telecommunications, offering a state-of-the-art network will continue to be crucial and therefore stay in focus for Telenor. However, what will be increasingly important for a successful differentiation over the next years is the way how you serve your customers across the different touch points. In other words, providing a consistent, highly convenient and even seamless experience will be key when a customer is visiting our web site, using a self-service app like MojMeni, entering one of our shops or calling the customer service. To give one example: When a customer in the future visits his operator’s web site to make a reservation for an upcoming Smartphone model, she can chose to pick it up in the closest shop. Over the next days, she can check the delivery status on her personalized self-care app in real time, and gets a message when the phone has arrived. In the shop, our customer will be welcomed by her name, receive the phone, gets all her contacts installed and also receives a special offer for the latest headphone since she uses the music service Deezer on a regular basis.

I think it becomes clear that this actually requires a lot from technology and IT, providing the same information to and about the customer across all channels, and linking all these channels in real time. In addition, all employees in the whole organization need to have customer centricity in their DNA. The Telco operator who masters this customer experience the best will have the happiest customers and take the leadership position on the market. If you think about yourself as a customer I’m sure you can agree that this will apply to many other industries as well.

Author: Oliver von Gagern

The author is Chief Strategy Officer at Telenor. He spent most of his career in the telecommunications industry, with senior roles in management consulting, strategy, pricing and marketing, in different countries.

Чланак Serbian telecom market: Overview of current status and future trends се појављује прво на Biznis i Finansije.

There are several trends shaping the development of grocery retailing in Serbia and among the most important are certainly convenience and market consolidation. Convenience trend is partly responsible for persistent popularity of traditional grocery retailers in Serbia due to the fact that these retailing outlets, especially very popular independent small grocers, offer superior proximity and extended opening hours to consumers, not to mention the human warmth of doing a daily purchase in a neighboring store where the owner and his family members are usually the only employees and everybody know them very well.

Even though it might seem paradoxical at a first glance, the convenience trend is also driving the growth of modern grocery retailers. Namely, more and more convenience stores are being opened in densely populated urban areas of Serbian cities and their market share within Serbian retailing grew from 4% in 2008 to 5% in 2013. Convenience is also driving the development of smaller supermarkets that are rapidly increasing in number as well. The value share of supermarkets in Serbia went from 9% of total retailing in 2009 to 12% in 2013.

Another important trend within Serbian retailing landscape is market consolidation. We witnessed several major events in this area in last several years. Firstly Delhaize Group took over Delta Maxi doo, then Mercator purchased Familija and Agrokor Group took over Tuš. Finally, long-expected acquisition of Mercator by Agrokor Group has occurred in June 2013 and this rounds up Serbian retailing system as a duopoly.

We expect to see more international chains entering the market in next five years. Just how much the consolidation is reshaping retailing in Serbia and jeopardizing traditional grocery retailers can be seen from the fact that Serbian Traders Association (Udruženje trgovaca Srbije – UTS) was founded in the end of 2010 with the aim to protect and represent small retailers’ interests. However, this is not likely to significantly slow down the modernization of Serbian retailing. On the contrary, Euromonitor International expects to see number and market share of modern grocery retailers, especially large formats such as supermarkets and hypermarkets, growing together with emerging trends among Serbian consumers of doing weekly or even monthly purchases in huge retailing centers.

Milan Cakić, Contributing Analyst at Euromonitor International

Чланак Main Trends in Serbian Grocery Retailing Market се појављује прво на Biznis i Finansije.

• Serbia ranked 93rd out of 189 countries in the World Bank’s Ease of Doing Business 2014 report (Doing Business 2014), slipping from 87th out of 185 countries in the previous year, owing to lack of reforms and limited progress in its privatisation programme;
• In the World Economic Forum’s (WEF) Global Competitiveness Index (GCI) 2013, Serbia ranked 101st out of 148 economies, the lowest ranking in Eastern Europe;
• Attracting foreign direct investment (FDI) is a government priority, as illustrated by its FDI intensity averaging 5.4% of total GDP in the 2008-2012 period;
• The corporate tax rate was raised from 10.0% in 2012 to 15.0% in 2013 to tackle the stubbornly high general government budget deficit (6.8% of total GDP in 2012);
• In 2012, 12.3% of the total Serbian population aged 15+ attained higher education, which was somewhat below 14.6% for the Eastern European average;
• Despite competitive wages in manufacturing of RSD284 per hour (US$3.2) in 2012, productivity (defined as GDP per person employed) was very low at US$14,354 in 2012.

Operating environment

In Doing Business 2014 report, Serbia ranked 93rd out of 189 countries, slipping six positions from the previous year. Its lower ranking was due to lack of improvements in its overall business environment, following reforms noted in Doing Business 2013, and limited privatisation of its state-owned monopolies. Serbia ranked higher than Bosnia & Herzegovina (131st) but considerably worse than Montenegro (44th) in Doing Business 2014.

“Getting Credit” and “Registering Property” were Serbia’s best performing categories in Doing Business 2014 ranking 42nd and 44th, respectively, out of 189 countries. The former was due to “Strength of legal rights” and “Depth of credit information” being on par with the OECD average, as well as 100% “Private bureau coverage” (where a private bureau lists information on borrowing history in the past five years for individuals and companies) that compared favourably with the OECD average of 66.7%. The time and costs involved in “Registering a Property” at 11.0 days and 2.8% of property value respectively compared favourably with the OECD average at 24.1 days and 4.4% respectively.

Serbia ranked particularly badly for “Dealing with Construction Permits” at 182nd out of 189 countries in Doing Business 2014, as the time taken to build a warehouse at 269 days and costs of 1,434% of income per capita were considerably higher than the OECD average of 147 days and 84.1% respectively. The most significant movement came in “Enforcing Contracts” where Serbia slipped 16 positions from the previous year to rank at 116th, owing to an increase in legal costs from 31.3% of the claim in 2013 to 34.0% in 2014 and the large amount of time, at 635 days, that it takes to resolve a dispute versus 441 days for the Europe and Central Asia average.

Following considerable upheaval, as a result of the Balkan War of the 1990s in the former Yugoslavia, and after the ousting of Slobodan Milosevic, Serbia’s newly elected government began a path of reforms in 2000 aimed at full democratisation and the establishment of a free market economy, resulting in solid economic growth that averaged 5.1% yearly in real terms between 2000 and 2007. The ensuing global financial crisis of 2008-2009 negatively affected annual real GDP growth, which slowed to 3.5% in 2008 and contracted by 3.5% in 2009. Whilst the economy achieved positive but subdued annual real GDP growth in 2010 and 2011, real annual GDP contracted by 1.7% in 2012 because of anaemic consumer expenditure and weak exports (owing to fragile external conditions), despite a push in government spending prior to the 2012 general election. Nevertheless, greater demand for automotive exports saw real annual GDP grow by 1.8% in 2013 with 2.0% expected in 2014.

Inflation was high at 7.3% in 2012, owing to an increase in food prices, and with a 10.0% hike in domestic energy tariffs in August 2013, inflation remained elevated at 7.9% in 2013. Government finances were stretched with a general government budget deficit of 6.8% and public debt of 62.5% in 2012, partly owing to an increase in government spending in the run-up to the 2012 general election. Nonperforming loans were large increasing from 8.4% of total gross loans in 2007 to 19.2% in 2012, as most of the loans are denominated in foreign currencies and are subject to exchange rates fluctuations. However, lax bank corporate lending has also been a contributing factor to the growth of nonperforming loans. Challenges in the business environment and elusive economic growth prospects have dented business confidence.

Serbia’s ranking in the World Bank’s Political Stability and Absence of Violence Index continued to improve dramatically from 173rd out of 188 countries in 2000 to 123rd out of 203 countries in 2012, as a result of greater political stability following the Balkan War but was nevertheless still low because of episodes of violence following Kosovo’s independence in 2008 and at the 2010 Pride Parade. Its ranking was better than Bosnia-Herzegovina (143rd) but worse than Montenegro (70th) in 2012. The index measures the perceptions of the likelihood that the government will be destabilised or overthrown by unconstitutional or violent means.

In the World Bank’s Regulatory Quality Index, Serbia ranked 100th out of 202 countries in 2012 versus 121st out of 201 countries in 2007. The improvement in ranking was due to strides made in the business environment after the Balkan War but the low position can be attributed to the lack of progress in privatisation of state-owned enterprises. Its 2012 ranking compared favourably with Moldova (104th) but was below Bosnia-Herzegovina (99th) and Montenegro (95th) in 2012. This index measures the perceptions of the ability of the government to formulate and implement sound policies that permit and promote private sector development.

Serbia ranked 101st out of 148 economies in the GCI 2013 versus 95th out of 144 economies in the GCI 2012. Its ranking in the GCI 2013 was the lowest in Eastern Europe versus Bosnia-Herzegovina (87th), Croatia (75th) and Montenegro (67th), owing to the lack of business sophistication, as well as weak institutions and an ineffective legal framework for challenging regulations and dispute settlement. Indeed, whilst its best performing category was “Technological Readiness” (60th), “Business sophistication” achieved the lowest ranking at 137th.

Corruption is a major issue in Serbia, ranking 72nd out of 177 countries in Transparency International’s Corruption Perception Index 2013, although its ranking improved from 80th out of 176 countries in 2012. It equalled Bosnia-Herzegovina’s ranking but was out-ranked by Montenegro at 67th in the 2013 index. 61.0% of the populace believe that the government is unsuccessful in dealing with corruption. As well as being party to several anti-corruption conventions created by Europe and the United Nations in the 2000s, Serbia formed the Anti-Corruption Agency in 2010 to tackle this pervasive problem. The 2012 general election was fought by the Serbian Progressive Party on an anti-corruption mandate and in 2014 the state prosecutor brought charges against 63 people for corruption linked to privatisations.

Euromonitor International

Чланак Business environment: Serbia се појављује прво на Biznis i Finansije.

All of us in Serbia work, to a certain extent, for the profit of big players in the agribusiness, either as farmers or as consumers. In a situation when there is not a sufficient amount of serious international competition, and especially no adequate quality inspection, and while primary agricultural production is largely disintegrated and inefficient, the big are in a position arbitrarily to rank the quality of both raw material and final products, and to dictate the prices of the purchase and sale. They are, at the same time, the biggest advocates of linear subsidies for agriculture, so as to be able to continue cheaply to buy raw material, at the same time transferring part of their costs, including their irrationality in their business operations, onto the backs of the tax payers, says Radmilo Pešić, professor of the Faculty of Agriculture in Belgrade.

Is Serbia, despite the obvious consequences of the climatic changes and the major disturbances on the world food market, predestined to be self-sufficient in providing food and to have surpluses from which profitable exports can be ensured? When the myth about the bread basket of Europe and domestic food as Serbian oil is reduced to facts, they, according to Belgrade Agriculture Faculty professor Radmilo Pešić, point to the following: Serbia now undoubtedly has quality natural resources – and that’s the end of the good news.
Instead of profitable agriculture, as would be expected in view of the natural potentials, primary production is the most vulnerable link in the chain from the field to the dining table. It is disintegrated, broken up, outdated, inefficient and structurally non-harmonized with the food industry, starting from the ownership structure which, approximately, hardly exceeds three hectares, to the average age structure of agricultural producers, 45% of whom are above the age of 50. “I am afraid that the upcoming population census will show that the situation is even worse than during the previous census in 2002 – that the average size of a farm has been somewhat enlarged, but that the demographic indicators are even more alarming”.
Contrary to the atomization of agriculture, the food industry is highly concentrated, highly centralized, still quite protected from international competition, and it is also the source of profitable jobs. Asked whether, in the race with high profit, food production and processing is a logical choice of domestic tycoons and why, Pešić says that it is not only the situation on the domestic market that is playing into their hands, but on the world market as well. “This is a global trend. Along with the pharmaceutical, IT and chemical industries, bio-technology and food production are also highly profitable everywhere in the world today.
We are witnessing a major growth of the prices of food on the global market, which is primarily the result of the climatic changes, the fact that, for the first time in the history of mankind, a larger number of people live in cities than in rural areas and quite certainly the growing demand for quality food in developing countries, such as China and India, whose population no longer satisfies itself with a handful of rice per day. For this reason it comes as no surprise that, over the past five or six years, the world’s food reserves, especially of grains, have been very small and that they are constantly on the decline, especially since an increasingly large part of them, 70 to 80 percent goes into further production, primarily for meat production. All this led to serious changes in the world’s agrarian sector, and since the demand is striving to surpass the supply, the food industry, despite the growth of the prices of raw material, i.e. its own expenditures, can dictate the prices of its own products, thus drawing high profits”.

Both Farmers and Consumers Blackmailed

An additional generator of the high profits in the domestic agribusiness is the concentration of the supply of food products. The domestic food industry is in the position to dictate the prices of the purchase of raw material, but also considerably to act in a monopolistic manner in the sale of finished products on the market. “The loudest protests against the liberalization of the food market can be heard precisely from representatives of this industry, but not from farmers. The protagonists of big agribusiness are hiding their interests behind the concern that foreign competition will additionally aggravate the already bad situation in villages. However, the lack of competition guarantees profits primarily to them, and not to primary producers, who, being small and disunited, are not in the position to dictate prices. Quite indicative is the trend according to which large food producers are now endeavoring also to engage in the primarily production of agricultural raw material, in order to ensure greater stability, which is logical and in accordance with what is happening in the world”.
However, the interviewee underlined, obvious in domestic production is a lack of international players and real competition, which is additionally undermining the position of small agricultural producers. There are two solutions for this problem: either to concentrate primary production, or to centralize it. Centralization implies merging. However, that process in Serbia is proceeding very slowly and uncertainly, since, generally speaking, we are not inclined towards self-organizing. On the other hand, the concentration of production requires the appearance of new big primary product producers. In that context the state could play an important role in order to stimulate the enlargement of agricultural estates, especially those owned by young households, which should find themselves in the focus of a stimulating agrarian and rural policy.
“I am a big opponent of linear subsidies, the thing the rich like the most. Big agribusiness in Serbia often points out that the European Union subsidizes agricultural production. Why do they insist on that argument? In order to be able to continue to buy cheap raw material. Large players hope that, with linear subsidies, the state will make it possible for small farmers, as primary producers, to receive just enough to be able to survive on the market, with the big and strong becoming even more profitable. On the other hand, it has transpired that the joint EU agrarian policy is the weakest link of the European policy. Even its key creators are aware of this, and one can also hear increasingly often the opinions that, in the current crisis, the European economy would be in a much better position if the research and development of new technologies had been invested in to the extent to which investments were made in agriculture over the past few decades, due to which changes in the agrarian policy are inevitable”.
Unfortunately, today in Serbia, the claims that the state is not allocating enough for agriculture are largely motivated by the interest to protect the food lobby, which is not only insufficiently exposed to the pressure of foreign competition, but it is not under the pressure of the state as regards serious quality inspection either. This is compelling consumers to eat food that is not of good quality, but is expensive, and, at the same time, it is seriously jeopardizing our export prospects.
Due to the insufficiently organized system, the lack of relevant and independent quality control institutions, such as national laboratories, the domestic food industry is in the position, on the one hand, arbitrarily to rank the quality of raw material and, thus, to fare cheaper, while using holes in the system to trick consumers. For this reason the assessments about exceptional prospects for domestic food on the EU market are largely a deception, as this requires primarily good and stable production. Only as such can it be competitive on the EU market. And this is what we still lack, said our interlocutor resolutely. Furthermore, he added, “the subsidizing of large players in the agribusiness means transferring part of their expenditures onto tax payers. With the introduction of linear subsidies domestic consumers would be damaged twice: not only because of the spending of an increasingly large part of the family budget on food which is not always of guaranteed quality, but also because of the covering of irrationalities in business operations and the losses of those who make profit on them with their speculative activities”.
Price risks

As regards Serbia’s self-sufficiency in conditions of the increasingly radical consequences of climatic changes, despite the very bad forecasts for this part of Europe, the present resources could satisfy the population’s needs provided that the state does more to improve the agricultural infrastructure. “The fact is that this costs a lot and that, in the current economic situation, this money cannot be provided from the budget, but the existing funds could be used much more rationally, at least for preserving what we already have. I believe it is much better to invest in the maintenance of the irrigation systems, where they already exist, than to offer incentives to foreign investors. Another potential problem which our agricultural resources will be faced with is the general deterioration of the quality of the environment, present in non-urban environments as well. In the long run, this can, unfortunately, undermine our potentially good resource basis for quality production and for self-sufficiency”.
For this reason, the same general precondition applies to the improvement of domestic agriculture and agribusiness as to other industries – the development of production based on the implementation of scientific achievements and modern technologies. At the same time, the state much conduct a far more active policy of the purchase of agricultural products, which would open more constructive possibilities for conducting the agricultural policy, including the alleviation of price differences. “I believe the state should cover the price difference with an active policy of forming market reserves, and not of so-called emergency reserves for the event of natural disasters or major social instabilities. It would be good for the state, instead of subsidizing production, to conduct a long-term policy of guaranteeing the buy-up, as this would protect the primary producers who have produced something, and not subsidize everyone, including those engaged in agriculture out of speculative motives. An active policy of managing market reserves can reduce the risks coming from the world market. It is realistic to expect the prices of food to grow on the world market in the next five to 10 years. To all intents and purposes, what is happening to food today are not fluctuations caused by speculative activities on the stock exchange, but rather at issue is a long-term trend, behind which lies a combination of realistic causes. Our agrarian policy must adapt to such conditions as soon as possible”.

March 24, 2011

Чланак Is the Agrarian Sector Serbia’s Oil? се појављује прво на Biznis i Finansije.

There was an anecdote going around in the former Soviet Union saying
that the platitude “comrades, communism is on the horizon” actually
meant that the closer you come to it the further away it is. The
exact same feeling is shared by most of the citizens of Serbia at the
very mention of a better life and of entering the EU, show the latest
public opinion polls and reactions in the media, especially in a
situation when, after a decade of poor reforms, it is only now that
the political leadership has reached the conclusion that life in
Serbia is hard. Why such a rough landing precisely at this moment,
this is a question that is easy to answer: the elections are
approaching, and the indicators of the deterioration of the citizens’
economic situation are such that they can no longer be ignored.

The real question, however, is why this issue was talked about
earlier on less than it deserved, considers Mladen Lazić, professor
at the Sociology Department at the Belgrade Faculty of Philosophy and
the author of the recently published book “Waiting for Capitalism”.
The reason for this, according to him, lies in the fact that after
the October 5th changes issues concerning the status of the state
were in the political focus, while the citizens, thanks to support
for the reforms from the outside, felt an improvement in their
standard of living relatively fast. “That was enough, especially for
the middle layers of the population, to start believing that things
were going well. It is only when the growth of the living standard
started slowing down, and then deteriorating even, that the question
that arose among the public as to why the reforms had not been
completed.

Individual scandals concerning the manner in which wealth had been
acquired in Serbia were increasingly replaced by debates on how the
structural reforms in our country were proceeding, i.e. whether or
not the system was truly being restructured”.

The information collected for the needs of the mentioned study
indicated that the reasons for the slow reforms were much more
complex than the usual perception that it was the regime that was to
be blamed for everything. One of the reasons is the fact that there
is no pressure from above for their acceleration, while pressure is
evident from the bottom for them to slow down to the benefit of
strong interest groups, so that they would be able to control them.

Unlike other countries, where this process proceeded faster, because,
at the end of the 1980s and the beginning of the 1990s there were no
internal lobbies that could manage it, while the strong pressure from
the outside led to it proceeding according to a relatively similar
pattern, the situation was quite the opposite in Serbia: the country
was isolated, with a very strong internal political and economic
group that controlled the reforms. “When the external influence
started being exerted following the change of the regime, we already
had a new, very strong economic elite, formed mostly out of old
cadre, and which started directing the further reforms towards its
own interests”, explains Lazić.

Serbian Patent: Democracy without a Market

There was no pressure also because it was not clear to the citizens
themselves what they actually wanted. Namely, according to indicators
on value orientations, practically all layers of the society, and
especially the upper and middle classes are politically liberally
oriented, but they do not share such a stand in regard to economic
liberalization. On the contrary, “people belonging to all layers of
the society, and even managers and owners of larger private companies
expect the state to continue to be the main economic protagonist”.
The mentioned controversies result from the fact that, throughout its
modern history, Serbia was a state-centric society where big jobs
were ensured through a struggle to enter the state apparatus, and
that such an “economic” tradition has survived in the present-day
system of values as well. The second key reason is the difficulties
produced by the current economic crisis. “We are witnessing the fact
that now even in countries of a traditionally liberal orientation the
state is expected to resolve problems. Therefore, precisely when a
liberal orientation started becoming more wide-spread in our country,
and not only in politics, but in economics as well, new economic
difficulties occurred having directed all the social layers towards
the state to resolve their problems: to stimulate exports, to limit
imports, to protect employees, to enable additional investments”…

The dissatisfaction is all the greater because it is now fully
visible that, when the new crisis broke out, Serbia had an enormous
baggage full of unsolved problems way back from the 1990s, i.e. that
the political elite was unable to find, in the previous decade, a way
to make up for what had been lost. “Our political elite is of poor
quality because it was formed in extremely bad conditions, in which
every political rival is equalized with a national enemy and with
corruption. When the regime changed, the political culture did not,
nor did the participants in the political game change to any
significant extent. There is no confidence here is politics being
able to service the public benefit. Priority is given to one’s
loyalty to one’s party and not to his abilities, so that our
political elite mostly consists of people of low professional and
problematic moral qualities”.

However, Lazić underlined, one must not lose sight of the fact that
the electorate in Serbia does not punish politicians for working
against its interests. “This is how it was during Milošević’s era,
and even today people vote by inertia – most people choose the lesser
evil. When you take a look at all the parties you do not have to be
an analyst to see that a reasonable person has no one to vote for. I
admit I do not see forces that would establish a relationship between
the political elite and the electorate in which the voters would
clean the political elite of the parasites who are oriented
exclusively towards their personal interests, and not towards the
public benefit“.

What prevails in Serbia is lethargy and hopelessness, but not
readiness for a social rebellion, Lazić is convinced. The situation
is very difficult, but not fateful. Furthermore, the historical
experience shows that major social upheaval takes place in
circumstances when good suddenly takes a turn for the worse. In our
case the improvement was short-lived, after which progress slowed
down and stagnated. Even though the standard of living is
deteriorating in general, the consequences are not the same for all
social groups. On the contrary, not only the richest, but also a
considerable part of the middle layer which provides for a living in
foreign companies, in the telecommunications, financial,
pharmaceutical or some other profitable branches still has a better
living standard than before.

The situation, of course, is not the same in Belgrade and in the rest
of Serbia, “but large social movements are rarely formed in the
country’s interior”, just as they are not led by the most vulnerable
either. In Serbia these are primarily old-age households in villages,
part of the employed persons, especially outside Belgrade, and
certain groups of people employed in companies that do not pay out
salaries. “These are big numbers, but a social rebellion is not
created at the bottom. You cannot expect it to be organized by the
most vulnerable as they are, at the same time, the most helpless in
every way”.

Banishment of Morality

Those whose influence is far more relevant – the middle class, are
not only disunited as regards their interests, but they are also
largely the most responsible accomplices in the failure of the
reforms. When one observes the changes in the financial position of
the three main groups of the middle class – experts, junior managers
and small entrepreneurs, unlike in the 1990s when it was experts who
fared the worse and entrepreneurs the best, the situation is now the
opposite. In this regard, the largest number of experts have found
jobs in state institutions which, by the nature of things, live off
money from the private sector and the gap has been additionally
widened due to the illogicality that the salaries in the public
sector are approximately larger than in the case of private
entrepreneurs.

However, the problem does not lie in the difference of interests,
“but rather in the fact that there is no elementary feeling of
responsibility towards the public interest. This was also very clear
during the recent strike of teachers, whose trade union leaders made
it clear that they do not care how the state will provide money and
how others live, but rather they are only concerned with having the
salaries of teachers raised.

That is catastrophic, that is that naked egoism which is increasingly
recognizable in our society, but which is very dangerous. The request
should have been for the state to find a way to improve the business
conditions for the private sector in order to improve the overall
economic situation and, thus, also the living standard of those
living off the budget. If the teachers’ trade unions are so
indifferent towards the public interest, it is hard to expect others
to be more responsible in this regard. If the most educated people
are not interested in the general benefit, then there is no one else
to be”.

From all this one can conclude that Serbia is in a stale-mate
position. On the one hand we have a state apparatus which, ever since
it has existed in Serbia, has been formed according to the principle
of loyalty, arbitrariness, family and regional ties, instead of one’s
expertise and professionalism. In this sense, different today is only
the rhetoric, standing behind which is the same psychology, totally
opposite of what is being declared and what the state should be doing
– protecting the public interest from individual aspirations that can
endanger it.

“In such a managerial structure the minister can be the most capable
person, but he will not be able to do anything of major importance”,
says the interviewee. On the other hand, the electorate which still
fails to understand that democracy is impossible without relying on a
market economy, including the middle class “which has totally failed
in this respect”, so the ultimate result is the fact that both the
authorities and the citizens – even though the individual
consequences are different, are accomplices in the same job: to halt
changes in Serbia and for the state the continue with a policy in
which “the market serves only as an auxiliary instrument”.

What is the solution then? For Serbia, Lazić considers, extremely
important is the fact that it is included in international
institutions, “which are not ideal, but are far better regulated than
ours and the more included in them we are the rules that are
established will be relatively firmer and will regulate a majority of
the processes in the society. I believe that for us, being as we are,
it is truly very important to enter the EU, because it imposes rules
and creates a framework which is also necessary for shaping the
conduct of people. It is only in such a situation that our creativity
can produce results, instead of turning into destruction”.

Zorica Žarković

May 5, 2011

Чланак Waiting for Capitalism се појављује прво на Biznis i Finansije.

Although progress was registered in the past six years in the
development of domestic statistics, serious weaknesses are still
obvious. How does one explain, for instance, the fact that it is not
possible to obtain an overview until a specific date regarding the
exact amount of the stocks of steel in Serbia? “In the state we have
one big producer and several wholesalers for this important raw
material. We have records on imports and exports of steel. We have a
serious demand for steel, to mention only the automobile industry.

Why is it then so difficult to obtain an overview of the state of the
stocks?”, says Belgrade Economics Faculty Professor Slobodan
Aćimović, speaking about the state of the domestic statistics. The
mentioned example becomes even more absurd if one bears in mind the
fact that there is a multitude of institutions in Serbia offering
statistical data: the Republic Office of Statistics, the National
Bank, ministries and their administrations, chambers of commerce,
business associations, local bodies of self-government and individual
companies. The information is so diversified that the collection,
sorting and crossing of data is literally a painstaking job,
describes the interviewee. “We had a lot of problems while working on
the project of the City Green Market to obtain data on how much fruit
and vegetables is produced, imported and exported from Serbia. When
we tried to cross the data from so many different sources, we had to
abandon the idea and to apply the methodology of anticipation
according to the consumer basket. We gave up because, on the basis of
the collected data, we obtained a calculation which is strange, to
say the least. For example, that an average citizen of Serbia eats
daily two kilograms of string beans!?”

The manager for relations with state bodies at Japan Tobacco
International, Vuk Pribić, believes that one can, nevertheless, rely
on certain information. “If we are speaking about data referring to
the growth of consumer prices at the end of a period – for example at
the end of 2010, it is noticeable that the data of the Office of
Statistics, the Finance Ministry and the National Bank of Serbia
coincide. This is also the case when you analyze the growth of the
GDP in the previous year, so that the mentioned sources are assessed
at our company as being competent for drawing up and planning
business activities”, says Pribić.

Companies expect data on foreign trade, the unemployment rate, the
structure of the labor force, on average wages and so on to be
equally reliable. However, a deeper analysis of the available data
points to weaknesses, for which Pribić gives the following example:
“The data on the growth of consumer prices for the previous month are
published in the first two weeks of the current month, which is
alright, while, for example, the data on the consumer basket for
January of the current year have still not been published even though
we are in April”.

What Do We Not Know

It is obvious that Serbia has a problem with the updating of
information, agrees Violeta Jovanović, executive director of the
National Alliance for Local Economic Development (NALED) and proposes
that institutions additionally charge their processing, but, in
return, to do the job up to date, precisely and to ensure the
availability of information. “What is missing from the information,
but which is very important for companies are detail market analyses,
including the trends of salaries, public revenues and public
spending, the level of investments, operative costs, the index of the
economy’s local burdens… These reports are mostly prepared by
business associations at the request of their members from their own
or from donors’ funds, depending on the topic. Of importance for the
economy and for new investors is concrete information on how far have
things gone, what is being planned in regard to the realization of
infrastructure projects and in which period”, says Jovanović.

The owner of the Petite Geneve Petrović company, Sava Petrović,
speaks the least favorable of all the interviewees about the quality
of domestic statistics. “It seems to me that sometimes totally flat
data and estimates are used, for which I sometimes ask whether they
have anything to do with reality?” The interviewee added that he
would be very interested in knowing the share of the state debt
towards the economy and the citizens in the total claims, but the
state, which does not even have complete records of its own assets,
treats this issue as an image in the mirror – how big the claims
against the citizens and the economy are.

At a time of transition, all sorts of things are being presented as
world standards, without even the elementary ones being fulfilled,
says Professor Aćimović, giving as an example the fact that “until
several years ago certain automobile importers did not have precise
data about the number of imported vehicles”. On the other hand,
certain new legal solutions are contributing to statistical
confusion, such as the new rules of the Law on the Protection of
Competition, where one commercial company must not reveal to another
how many pieces of a certain commodity had it obtained from a third
company. “We can understand that the price or discount can be treated
as a secret, but why can’t the information about amount be public?
This is statistically important information. Domestic companies do
not publish a lot of the information which their colleagues abroad
are glad to share with the public, from the volume of production, to
the income and number of employees”, stated Aćimović.

Trap for Investors

The lack of reliable statistical data is discouraging investors, our
interviewees agreed. “The most serious problem is the lack of
adequate statistical projections for the period of three to five
years, except the memorandum on the budget and certain NBS
projections. Most important of all for every foreign investor is the
predictability of the economic environment, so that precise
projections of macroeconomic indicators are crucial for a successful
and competitive economy”, emphasizes Vuk Pribić of JTI.

However, the diversification of the sources is also a major problem,
assessed Professor Aćimović, describing such a situation as a
veritable trap for investors. “When interested investors realize how
difficult it is to obtain reliable information the regular way, they
are often compelled to address structures of power. This is, of
course, something all the authorities like because, if the investment
is realized, the political benefit will go to the one who had
“hosted” the investor at his institution, and provided him with
information which clerks collect, more or less successfully, ex
officio”. Information is power, and the situation in Serbia is such
that every important piece of information is perceived as an
opportunity for holding a monopoly on information, even within the
same institutions or companies. For this reason, Aćimović concluded,
it will be possible to judge a business environment and society also
on the extent to which our statistical data are regulated, reliable
and available.

Milica Milovanović

April 7, 2011

Чланак What Purpose Does Domestic Statistics Serve? се појављује прво на Biznis i Finansije.

The fact that the revision is being carried out in a situation when, after 2008, Serbia once again needs the “economic supervision” of the International Monetary Fund in the form of an arrangement out of precaution, and not a stand-by arrangement, makes this revision somewhat different that usual.

“This time, the arrangement with the IMF also includes this year’s revision, as well as the budget for next year. The elements of the revision are a precondition for an agreement. In practice this means that, in December, the IMF will be assessing how we have been executing this revision”, explains Pavle Petrović, chairman of the Fiscal Council and one of the participants in the talks with the IMF.

Even if this precondition did not exist, a “redistribution” of money in the state coffer would be an inevitability. It was announced already during the reshuffle of the Serbian government, and it is also necessary in view of the poor planning of the size of the inflation, but also because of the shortfall in the revenues, the increase in the planned expenditures, as well as the new law on the financing of local self-government.

The budget has been projected in accordance with the estimate that the growth of the gross domestic product (GDP) in 2011 will be three percent, and that inflation will remain within the frameworks of 4.5 percent, with a deviation of plus or minus 1.5 percent. Already now, and it has been only half a year, serious cracks are appearing in that projection.
“Many economists have been warning about possible problems already when such a budget was being adopted. The present situation with the poor filling of the state coffer and the increasingly large expenditures comes as no surprise. To criticize the government now for working poorly does not mean much, this will not bring more money, and everything that is happening is to be expected, assessed Danijel Cvjetičanin.

Since 2001, at least once a year the Serbian government “retailored” the state finances. “Since the crisis broke out, one could say that budget revisions have been “political agreements”. For the three revisions in 2009 one could say that they were justified to a certain extent. One could not foresee how sharp the crisis would be, or how smaller the revenues would be than planned”, stated Pavle Petrović, the Fiscal Council chairman. “The biggest danger for this year’s budget revision will be the possible pressure on the expenditure side, for example an increase in subsidies or net budget loans”, said this interviewee of BIF.
“Serbia has to show that it has credibility, that it is heading towards a reduction of the budget deficit and that fiscal rules are being respected, because the deficit in 2011 is four billion euros, and the plan is for it to be one billion euros next year. This means that a good answer to the crisis would be to save around 800 million euros in 2012, explains Petrović.
A revision of this year’s budget, and the budget for 2012 will be only a “dead letter” according Milica Bisić, professor of the Faculty of Economics, Finances and the Administration. There is not even a theoretic chance, she says, for the Law on the Budget Deficit to be “respected”. The cure, Milica Bisić believes, lies in a change of the Law on the Budget System. Even though that would be a bad signal to investors, and the IMF would not view this benevolently either, Bisić says it is, nevertheless, “better even to change it than to break it”.
“In conditions as ours, an end to frequent budget revisions could come only with a reform of the pension and health care insurance, as well as the reorganization and reduction of the number of persons employed in public institutions. Only this is a remedy, but it is not effective on a short-term basis”, explains Milica Bisić.
At the IMF office in Serbia they say it would be best if the authorities themselves would propose credible solutions that would help Serbia keep the deficit and the public debt under control.
“Saving in 2011 and 2012 could be achieved through several steps. They include a reduction of the net budget loans, a strict control of discretionary expenditures for goods and services, as well as a reduction of subsidies. However, the exact combination and timing of the measures are yet to be discussed, especially because the fiscal gap will quite likely be bigger because of the law on decentralization”, says Bogdan Lissovolik, resident representative of the International Monetary Fund in Belgrade.
The president of the United Regions of Serbia (URS), Mlađan Dinkić, claims that the proposal of the URS provides for the saving of around 60 billion dinars. The new budget revision and the proposal of the budget for next year will show how correct his calculations are.
The key problems which are the causes of the budget revision will continue to exist. “Very little has been done on the transformation of the public sector, and there is no clear plan for transforming into state ownership companies such as Magnohrom and the like. These companies spend a lot of money from the budget because they cannot survive on their own and this is why we have larger expenditures, an increasing number of credit obligations and a semblance of social peace. In election year, the state is buying time”, says Saša Đogović, of the Marketing Research Institute.

Many economists believe that the transition and reforms have stopped halfway and that they are, actually, the essential reason of all our macroeconomic problems. A big problem also lies in the fact that there is no production and no industry.
“We were the first to launch the transition, but compared to our region we are towards the bottom. We need to strengthen exports, the energy sector, agriculture and to develop the infrastructure. The state should reduce public spending, reorient from current to capital expenditures, we need a reform of the public sector and a renewal of the industry. Then there will be no problem with the filling of the budget, says Nikola Pavičić, a businessman and, since recently, the advisor to the Serbian deputy prime minister.

This also means a reform on the revenue side of the budget. “Within the economic policy measures that are to stimulate a transition to a sustainable model of economic growth, it is quite certainly justified to reexamine the structure of the tax system and the stimuli it creates. Thus, the transfer of the tax burden from earnings to spending, i.e. an increase in the VAT rate by several percentage points in order to enable a considerable reduction of taxes and contributions on salaries, would stimulate employment and production, i.e. it would stimulate the partial substitution of spending with investments and exports. Among part of the public present is the unjustified expectation that a reduction of taxes and contributions on wages could actually increase the total budget revenues, because the total number of registered employees would increase. This mathematics, unfortunately, is not correct and all the countries which opted for such experiments over the past 30 years – did not fare well. For this reason a considerable reduction of taxes and contributions on wages is possible only with a parallel increase in other tax rates, primarily the VAT, says Nikola Altiparmakov, member of the Fiscal Council.

Apart from the budget revision, a serious test for the government’s “good economic intentions” could also be the formation of a development bank. In order for this to happen it is necessary, first of all, to close down all the present agencies, from the Development Fund to other similar bodies, and to concentrate all the money for a development policy within a development bank. Practically everything is finished regarding the concept for a development bank, but it is almost certain that nothing will come of this idea before the elections, because the closing down of a large number of agencies does not suit certain ministries and political parties.

Aleksandra Galic

August 26, 2011

Чланак Budget Revision: Scissors and Pins се појављује прво на Biznis i Finansije.

The wave of layoffs which has been splashing Serbia ever since the
year 2008, under the guise of the world economic crisis, has led to
the unemployment rate in our country, which is already extremely high
compared to the countries in the region, and especially in the EU –
further growing. In 2010, it reached the level of 22 percent, but what
especially worries macroeconomic experts is the reduced share of the
active population – people older than 15, of the working age, who are
seeking employment and wish to work.
In the shadow of massive unemployment and the growing fear for one’s
job, over the past few years certain structural changes occurred on
the labor market from the aspect of gender (un)equality, which pose in
a new way the question – who is bearing the biggest burden of the
transition: women or men?
Since 2008, the number of employed women has dropped by 68 thousand,
i.e. by 7.8 percent, while the number of men who are working has been
reduced by 135 thousand, by a full 12 percent, (all the data of before
the latest statement of the Republic Office of Statistics (RZS)), says
Miroslav Zdravković, editor of the portal Makroekonomija.org. This is
the result of the sector structure of employment by gender, since the
biggest drop in employment was registered precisely in the
construction industry, the processing industry and the entrepreneurial
sector, branches in which male workers are dominant. On the other
hand, women are more numerous in the state administration, health care
and education, where the total number of the employed has even
slightly increased.
However, the unemployment rate for women, according to the latest data
for April 2011 (22.5 percent) is still higher compared to the general
rate (22.2 percent), and especially relative to men (22 percent). This
difference is even more visible if one takes a look at the employment
rate which ranges around 29.8 percent in the case of women, and as
much as 43.2 percent for men. The reason for this is the fact that,
over the previous years, an increasing number of women has been moving
from the category of those seeking a job to – the inactive part of the
population, i.e. giving up on the intention to work.
More than the employment rate, extremely important is the activity
rate, which, in the period between 2001 and 2009, dropped in our
country among both genders. However, it was much more drastic in the
case of women, and it now ranges around 41.4 percent, compared to 57.7

percent of active men, says Miroslav Zdravković and adds that such a big difference, apart from

Serbia is present also only in Islamic countries, Macedonia, Bosnia-
Herzegovina and Montenegro. One of the goals of the EU is for the
activity rate to reach 75 percent, which is for now the case only in a
few Baltic countries.
We are, obviously, still extremely far from this goal. Why were women,
over the previous years, more ready to abandon their carrier and a
search for a job, as well as all the rights stemming from this – it is
more a social than an economic issue, but a survey has shown that the
number of newly born children in Novi Sad and in central Belgrade
municipalities kept growing where the number of employed women grew.
This, in a way, refutes the assumption that women have abandoned their
intention to work because they opted to give birth and to take care of
the children. This is especially so since numerous other analyses and
data indicate that there is an increasing number of single mothers who
have practically become the main and often the only source of the
family budget.
The latest trends on the labor market – i.e. the larger number of the
layoffs of men over the past years – confirm that the economy of a
family increasingly depends on the woman. And women, even though they
have managed to preserve their jobs, especially in health care,
education, social welfare institutions or state institutions, are less
paid. This, however, is not our Serbian, or even a Balkan specificity,
and, according to this type of discrimination, we do not deviate much
from the European average.
With a 7.5 percent difference in average wages, we are a little worse
than the Slovenians and Italians, concluded Zdravković (the Eurostat
Table). A similar opinion is also shared by economist Mihail
Arandarenko, professor of the Belgrade Faculty of Economics, the
chairman of the FREN editorial council and chairman of the management
board of the National Employment Service, who says that, if compared
to the EU countries, this difference ranges between the middle and
lower level of discrimination.
“The field of the gender discrimination of wages in Serbia is covered
very well by empirical research, whose results are unequivocal”,
considers Arandarenko. The gap in the wages between men and women was
low in the second half of the 1990s and at the beginning of
transition, and according to certain analysts, at the beginning of
this century, it additionally dropped from 15 percent in 2001 to 6
percent in 2005. Even all the newer studies dealing with this issue
have found that the values of the “raw” gender gap are low and they
vary between 4.5 and 12.4 percent, depending on the period and source
of data, as well as the very model according to which the comparison
is made. One of the latest studies is especially interesting because
it compares the gender gap in Serbia with that in five former
socialist countries, where the author (Blunch) unequivocally concludes
that Serbia has the smallest gender gap in income compared to all the
other observed countries, from Macedonia to Kazakhstan. The author
concludes that this gap is most probably also the lowest compared to
all the other countries in transition, and among the lowest in
general.
Nevertheless, when making such conclusions one should be very careful,
because it is always possible that there are dimensions of gender
discrimination in our country which cannot be fully “caught” by
standard econometric methods.
BIF’s interviewee, Mihail Arandarenko, notices that the transition in
Serbia is largely blind to gender differences, because the very
unemployment rate has dropped approximately in the same proportion.
The differences between men and women have been moderate for decades,
which is also part of the socialist legacy, and even small compared to
the world, while they have been additionally reduced since the
outbreak of the crisis.
“This is not the result of a deliberate intention of the creators of
the anti-discriminatory legislation, the economic policy or some
special action, but rather an “unplanned” consequence of the
privileged position of the public sector in Serbia compared to the
private sector, especially since 2008”, considers Arandarenko. Since
women are present to a greater extent in activities of the public
sector (health care, education, the administration), and men in the
private sector, the relative position of women on the labor market has
additionally improved.
The privileged position of people employed in the public sector
(regardless of the gender) can also be seen on the basis of the fact
that the average wage of women employed in this sector was 50 percent
higher in 2008 than the wage of women in the private sector!
Arandarenko also underlined that, for men, the main negative status
transition was from employment to unemployment, and for women from
unemployment to inactivity.
The mentioned data mostly cover the official structure of employment,
not including the so-called informal economy, i.e. illegal work, which
an increasing number of men and women opt for, around 400,000 of them
according to unofficial estimates. They also include those from the
category of the unemployed, but of the employed as well (afternoon
work), the inactive… If their professional status, the difference
between the real and the formal salary (on the basis of which
contributions and taxes are paid), the working hours, level of
education and a series of other details were to be included in this
story – the picture would, quite certainly, be somewhat different.
Women are More in Search of Jobs, and Men of Subsidies
The National Employment Service (NSZ), ending with 2010, had 384,396
women and 345,124 men registered, so that the share of women in total
unemployment is larger – 52.69 percent, but it is, nevertheless,
reduced by 2.84 percent compared to 2009. If one takes a look at the
age structure, the share of men in total unemployment is larger in the
category of those between 15 and 19 years of age and older than 55.
The average age of an unemployed man is 40, and of a woman 38.
Last year, more women than men found employment – 75,541 of them,
which accounts for 53.75 percent of the total number of the newly
employed. On the other hand, out of the total number of employed
persons who were fired last year, 53.34 percent are men.
In the annual NSZ Report one can see the share of people who have
applied for various programs which this service organizes for the
purpose of greater employability. For example, there is a larger
number of women among participants in job fairs (55.17%), as well as
among those actively seeking a job (59.1%). There is an even larger
percentage of women in the “Job Club” (72.75%), as well as the “Self-
efficiency training” workshops (77.5%). When speaking about the use of
funds, i.e. subsidies for self-employment, women are still in the
minority with a share of 40.49 percent.

Sanja Lazarević

July 29, 2011

Чланак Transition and Gender Discrimination in Serbia се појављује прво на Biznis i Finansije.