Development of economy in previous years - Republic of Serbia - Zoran Ristić, TUC NEZAVISNOST Sarajevo, 7 December 2017

Economic growth

Contributions to real growth of GDP:

Since the beginning of year, net influx of FDI was 1 Since the beginning of year, net influx of FDI was 1.64 billion EUR (+12.6 mg). Projection for 2017 is 2.1 billion EUR Improvement of business environment was also confirmed on the World Bank Doing Business list, where Serbia is among the 10 countries which improved their ranking the most in this year (from 47 to 43 place)

Labor market and social development (Source: ARS) 15-64 2008 2009 2010 2011 2012 2013 2014 Unemployment rate 14.4% 16.9% 20.0% 23.6% 24.6% 23.0% 19.7% Employment rate 53.7% 50.4% 47.2% 45.4% 45.3% 47.5% 49.6% Activity rate 62.7% 60.6% 59.0% 59.4% 60.1% 61.6% 61.8% 15-64 2014. 2015. 2016. Q1 2017 Q2 2017 Unemployment rate 19.9% 18.2% 15.9% 15.2%  12.3% Employment rate 50.7% 52.0% 55.2%  54.3% 58.8% Activity rate 63.3% 63.6% 65.6% 64%  67%

Income Source: RZS *Euro introduced in 2002

System of compensation for unemployment (Source: NSZ)

Exercising basic rights of employees based on labor (Source: ARS)

Informal employment (informal employment rate 15+, 2014-2016) (Source: ARS)

Effectiveness of national institutions and instruments of financial control Central state debt at the end of September 2017 was 24.1 billion EUR, which is 64.6% GDP (compared to 71.9% at the end of 2016)

Structure of total expenditures (% GDP): Source: Ministry of Finance

National programs/actions against corruption Global barometer of corruption, designed by Transparency International, is carried out since 2003. (It is the largest global study on the experience of citizens with corruption, perception of citizens on corruptive practices of individual institutions and their readiness to engage in fight against corruption).

How do citizens see the changes in levels of corruption (previous barometer noted a sudden rise in optimistic projections – study carried out in 2012 after the change of government):

How does the Government fight corruption:

Why the citizens do not report cases of corruption:

Role of IFIs, American Chamber of Commerce and other actors: Austerity measures and effects on economy Government of Serbia, following 2000 was in a situation similar to those in which were the countries of Central and Eastern Europe following 1990, when they were completely loaded with different suggestions for strategy of reforms New economic policy harmonized with IFIs, Council of Foreign Investors and other actors was defined and oriented towards creation of conditions for “long term sustainable economic stability and transition into the open and efficient market economy” IFIs expected Serbia to implement the policy in line with these recommendations, simultaneously and completely To achieve their expectations, they, just like in many countries of Central and Eastern Europe, using the position of authority in the area of global economy, applied the policy “carrot and stick”

What is the role of IFIs in these processes and what are the implications of their policies on social position and labor rights of the employees? Did the trade unions mange to impose their demands and protect the interests of employees, and also stop negative consequences of policies imposed by IFIs, particularly those affecting the workers? Was the Government concerned more with the attitude towards social partners of IFIs? Is the “conductor’s stick” in the hands of IFIs or national government? Could trade unions have an active role in bargaining with the IFIs in the period ahead of us? ...

IFIs were often used as an “alibi” for the actions taken by Government, which significantly and negatively affected the social position of employees While the statistical data of the official (state) and international sources suggest that the Serbian economy is slowly transforming in line with the market criteria, trade union representatives and many independent experts in the country od not believe that the situation is so good The IFIs studies base their assessment of the success of the reforms only on the performance of the company, especially the increase in revenues and productivity, without considering tje effects on labor force (employment rates, wages, income) or the wellbeing of population So, for example IMF sees the positive effects of the increased social inequality and argues that they signal that the labor market now values people and skills, as it is the case with the developed market economies

C O N C L U S I O N S It is obvious that the program of reforms designed by the Serbian government created ample problems for the employees and trade unions Economic policy in Serbia, according to trade unions, was based exclusively on promotion of one goal – fast economic growth One of the basic assumptions of this theory was that the benefit from the economic growth will start spreading after a certain period of time even on the poor

No reform can be based only on the reduction of expenditures, but primarily on the increase of revenues, that is the creation of adequate conditions, favorable legal, economic and administrative environment for large investments, increase in competitive production This would create GDP which would further stimulate cost- effective and export oriented production, and also cover all real public expenditures, without any serious attack on already low level of public services – particularly healthcare, education, rights related to pension insurance, and a low standard of employees in these activities, as well as rights of pension insurance beneficiaries Measures will not have any effect if economy is not revived, if the employment is not increased, and prices and inflations are not placed under the control by economic, market and administrative measures