Between 140,000 and 160,000 jobs could be lost in Serbia this year, the IMF estimates, and the fears of employers and unions that it could be even more if the epidemic spreads and if the state does not find a way are unrealistic to help the economy again.
They stated similarly in the IMF, where after the fourth revision of the arrangement with our country, they pointed out in the report that the reduction of interest rates, state guarantees for loans to small and medium enterprises and subsidized loans from the Development Fund only reduced interest costs in the short term.
“Risky debts of companies could increase by more than 40 percent by the end of 2020, if measures are not taken to mitigate that situation,” the IMF report points out.
They note that the pandemic could further affect unemployment, and that approving new loans could affect the ability of companies to pay interest. In addition, the IMF notes in its analysis that 100,000 to 120,000 workers in Serbia are employed in companies that have problems with interest payments and liquidity, and point out that sectors such as machinery and equipment, retail, wholesale, transport and catering are particularly sensitive.
The production and service sector is the most endangered, claims the coordinator of the Business Support Network Dragoljub Rajic, and their recent analysis with businessmen showed that 23 percent of companies in the production sector are endangered, and that the decline is between 15 and 25 percent. He notes that the situation in the service sector is even worse because 38 percent of companies are endangered, and their decline is on average 40 percent.
“We expect that 40,000 to 50,000 jobs will be lost in service activities. It will most often be micro and small companies, those with one, two, three employees, especially those who work abroad. Even companies in the IT sector have problems because there is no need at the moment, then translators and a whole range of those who deal with some specific services,” Rajic points out.
Firms from the manufacturing sector, he says, are divided into two camps, in the first are those companies that have adapted to the conditions, reduced production, in the second are those that continued to work, not reducing the number of workers, whose orders fell from 10 to 35 percent and which will be in trouble if the demand does not start growing.
“Then the question will begin to arise whether, if the demand does not start growing, those companies need so many workers, and that is why it is important to enable such companies to keep workers. That is why the state, but also unions and employers would have to find a way to help people stay in employment,” our interlocutor noted. Rajic believes that a way should be devised to help preserve the level of salaries and the number of employees, whether by paying the minimum wage or some other solution.
“One of the ways could be to suspend taxes and contributions for a while so that employers continue to pay net salaries to employees. That could maintain the system, the level of salaries and employment,” Rajic points out.
In this situation, a lot will depend on the pandemic, on demand, but also on other markets. Although it is difficult to predict how all this will move, Dragoljub Rajic says that it is realistic to expect that some 35,000 to 50,000 entrepreneurs and employees in micro companies will lose their jobs, as well as 70,000 to 100,000 in small, medium and large companies.
For unions, the IMF’s assessment is nothing new.
“With these measures to help the economy, the state has already foreseen layoffs, because the aid has given everyone the opportunity to lay off up to 10 percent of workers with that help as well. We can’t say that we have any estimates, but we are afraid that a good part of the employers who took the help could lay off more than 10 percent when the period they pledged not to lay off passes,” said Dusko Vukovic, vice president of the Federation of Independent Trade Unions of Serbia. What the union fears, he says, is what will happen to the workers if there are no new aid measures. Already now, he notes, there are employers who are considering returning the money they received as aid from the state, just so they can lay off more workers, Danas reports.
