Savic: The majority of minimum-wage workers in Serbia are in the private sector

Economist Ljubodrag Savic tells Kosovo Online that workers in Serbia earning the minimum wage mostly work in the private sector, and he notes that the level of the minimum wage in the region is in line with the development of the respective countries.

"I heard from the finance minister, who precisely stated that 114,000 people in Serbia live on the minimum wage. The majority of these people are in the private sector. There are some roles that have been marginalized in the public sector, but it's a smaller number. In the public sector, more educated people with higher qualifications generally work, and naturally, this is one of the reasons why there are fewer people there receiving the minimum wage. In the private sector, the jobs are mainly manual and physical, where people work without qualifications or with only basic ones, so in a way, it’s natural that things are this way," he explained.

He doesn't believe the claims by certain employers that raising the minimum wage could negatively impact the labor market or lead to a reduction in the number of employees or an increase in undeclared work.

"That is not based on research. It is more of a story from employers. It’s their legitimate right to negotiate with the Serbian government and unions on what the minimum wage should be. I wouldn’t say they are in such a bad position. Now, the minimum wage has increased to 53,000 dinars, which is equivalent to the minimum consumer basket. But the tax-exempt portion has been increased by the same percentage. In their complaints, employers argue that labor costs should be lower so that their product prices would also be lower, though the two aren’t connected. Labor cost is one thing, and the final price depends on the market. The situation with the minimum wage in Serbia is very complex, and the people in the worst position are those who earn the minimum wage," the professor emphasized.

He adds that an increase in the minimum wage cannot lead to a reduction in the workforce.

"For a simple reason, if you have a production process, you can’t just stop it. You’ll have to employ some people. I’m shocked by the fact that foreign workers coming to Serbia are working for significantly less than the minimum wage. And what's worse, these people work significantly better under all conditions. It rains, and the work doesn’t stop. They even send part of their meager earnings to their families. It’s a legitimate form of pressure from employers to highlight some effects of the minimum wage increase," Savic said.

He points out that workers have the least say and bear the consequences of decisions and agreements made between the government and employers.

"Unions try to make changes, but unions in Serbia are marginalized. Neither the state nor the workers are interested in helping unions function in a way that applies the right pressure, as is done in the West. It is hardest for the workers. They can only change jobs, but even then, it won’t be much better. You leave one employer, and with the next, it won’t be much better. Both the unions and workers are in an inferior position. I must admit that the state has been trying recently, but is it enough? No, but it’s better than it was five or ten years ago," Savic noted.

Speaking about the situation in the region, he says there aren’t significant differences between countries.

"Just as there is a difference in development, with Slovenia and Croatia, as members of the European Union, significantly ahead of us, Montenegro also led in terms of average earnings for several years," the professor said.

Savic explains that there is no exact data on how much money is truly needed to live because studies focusing on this part of Europe show that the amount changes from year to year.

"There was a period of relatively stable growth from 2016 to 2019, where inflation was practically halted or was at a few percent. In some places, there was even deflation. The situation is completely different after COVID and the war in Ukraine. I wouldn’t narrow the entire problem down to just the minimum wage. There are people living in rural areas without any income. A significant number of people receive agricultural pensions of around 12,000 dinars. What can a person do with that? These are very poor people. Of course, some earn the minimum wage but don’t live badly. Some are involved in business or other work. But if we look at an isolated individual, who in Serbia today could think they could truly live on the minimum wage if it’s their only source of income?" Savic emphasized.