Although the Serbian Government has first subsidised solvency credits, economy and local goods purchasing, and left criteria for obtaining loans to banks, it has not managed to achieve the desired goal. Subsequently it has suggested so-called "solidary tax" but gave it up after the public pressure.
The indecisiveness of the local authorities in coping with the crisis has culminated with the statement saying 90 percent of an extensive package had been based on numerous government staff savings and the rest on the petrol and oil accise, mobile telephony impulses taxes and luxury tax.
A day later several ministers have publicly stated the additional taxes would destroy vital economy branches while the local self-government representatives have objected to layoffs since they concern only local employees.
Finally, the very ministers who have proudly suggested the measures have started proposing certain changes. Finance Minister Diana Dragutinovic has openly doubted the possibility of the plan to be carried out. Still, there is no sign this third effort will be dropped out.
Although being members of the ruling parties, some local representatives object since 8,000 mainly local employees should be fired by the end of the year. In addition, municipalities will get 15 billion dinars less based on transfer that makes the biggest part of the budget in at least fifty most endangered Serbian municipalities. All wages, in both state and local administration, higher than 40,000 dinars and not bigger than 100,000 will be cut by 10 percent; salaries bigger than 100,000 dinars will be reduced by even 15 percent.
Ministries, also, will have to give up 26 percent of planned expenses and out of this some 40 billion dinars are expected. The highest wage in the public sector will not exceed the six average ones, i.e., 170,000 dinars and therefore the reduction of expenses in public companies will secure additional 5 billion dinars. The budget users with their own incomes will provide 12 billion dinars. The RZZO expenses will be reduced by 4 billion and wage and pension freeze in public sector with 13 billion dinars. This reduction will apply to 80,000 government employees and not those working in education, health care, military, police, and jurisdiction.
A ban on new placements in public sector and stimulant severance pays have also been introduced but this historic wages decrease, as presented in the Government and most media, will save just 1-2 billion dinars. However, significant amount is expected from the public enterprises revenues that will flow into the budget.
Minister of Economy and Regional Development Mladjan Dinkic has said with certainty and special pride that the whole region will "follow our suit" forgetting at the same time that the neighbouring public sector has long been reformed and ministries` expenses reduced at the beginning of the year.
Only a couple of days ago did the Slovenian Government limit the public enterprises directors` wages to 12,500 euros and those bigger taxed with 90 percent while the salaries of Slovenian MPs, ministers and employees have been lower for several months, and bonuses, daily allowances and expenses such as those for phones have been recalled.
In order to take over the Serbian Government saving measures countries in the region should have 25 ministries. Regarding this number, Serbia is closest to Bulgaria that has 22 ministries, Romania and Macedonia with 20 each, Slovenia with 19, Spain, Greece and Croatia with 18 each, Hungary and Bosnia with 16 each and Montenegro with 14 ministries. On the other hand, Germany has 15, Sweden 13 and Finland 12 ministries. However, for the time being reduction of the Serbian Government members is out of question since political consensus is impossible for the moment.
This is also the biggest economists` objection to the latest Serbian Government decision. Ivan Nikolic, one of the editors of the Internet site ekonomija.org thinks that the Serbian Government, carried by populism, has lost the contact with reality.
"Ministries expenses reduction of 40 billion is possible only by the current expenditure reduction - equipment and material - which will probably lead to their work blockade. Capital expenditure reduction can be carried out but this means we will be left without Corridor 10. The crisis will not last forever and when it ends we will have nothing," says Nikolic convinced one more bad judgment would not make the forthcoming budget rebalance the last one in the months to come.
Although during this February and March 10,000 people lost their jobs, Nikolic thinks that state administration should be reduced by 8,000 employees more. However, these measures do not include advisers, assistants, contract engagements, and those who have come to administration after the "party key" system and whose wages are a lot higher that those of local employees. According to Nikolic, all the public sector salaries should be reduced even more for savings to be achieved.
"The real savings could be achieved if all contract engagements were cancelled, and all those having two years to retirement should go to employment bureau and after that get their pensions, like their colleagues in private sector. There should be also those already retired but having contract engagement. All of them are absolutely invisible and are even not included into that state administration bulky number," says Nikolic adding that pensions should have not been exempted as an item breaching economic frames.
During the last several years, the number of employees in the public sector has been growing to the current half a million of those working in the state administration, regional and local administrations and public enterprises. It is stated that there are 80,000 employed in regional and local administrations while local representatives claim 22,000 out of that number are municipality employees and those working in public enterprises.
An economist Miroslav Zdravkovic considers the Government plan should be based more on savings and less on revenues but he still doubts this plan`s feasibility. However, the economists, again, the biggest package of measures objections have regarding the lack of economic activities stimulation and giving priorities to parties` agreements.
"It is obvious such a big coalition cannot make efficient agreement," says Zdravkovic adding, "in such a coalition the smallest get whatever they wish for and therefore, once again, Mr. Jovan Krkobabic has won through for the pensioners to be completely protected."
Until April export and import in Serbia have fell down for even 30 percent in comparison with the last year first three months. Both Nikolic and Zdravkovic agree that the next year public works and capital expenditures have to be priority. They also believe that with the recent, repeated budget rebalance exactly these items will be completely erased.
Owing to the first budget projection when the planned GDP was even 3.5 percent and just a couple a months later, we are at the doorstep of recession, Serbia lags behind other European countries in the economic crisis struggle. Although claiming it minimises the financial crisis effects, the Government of Serbia probably just rehabilitates its own mistakes and late decisions. Some of them are even nine years late.
* Dragana Peric is a journalist with NIN weekly. (Photo: European Communities, 2009) CEV Magazine is an online publication of the Centre for European Values.
