It makes sense for the increase to be approximately an increase in retail prices, and anything more than that would be an irresponsible policy.
Public sector employees will receive a salary increase from January 1 next year. It is not known how much, but it was announced that the growth of salaries will be lower than last year, when they were increased from eight to 12 percent. The move was given the green light by the International Monetary Fund (IMF), which held virtual meetings with Serbian authorities last week, but said in a statement that the correction should be limited.
Sinisa Mali, the Minister of Finance, said that in the next few days it will be known by how many estimates the salaries will be increased.
– It will not be a percentage like last year, but there will certainly be salary increases in the public sector – Mali hinted.
One of the conclusions of the IMF is that the decline of the Serbian economy in 2020 will be minus 1.5 percent, and for next year it predicts growth of about five percent, while our forecasts are six percent, the Minister of Finance told Tanjug.
Milojko Arsic, professor at the Faculty of Economics, said that the increase in salaries in the public sector should be evaluated both from the point of view of budget possibilities and from the point of view of fairness. From the point of view of budgetary possibilities, an increase in salaries that would be higher than two percent would affect the growth of the fiscal deficit and the crowding out of other budget items of expenditures.
– It makes sense for the increase to be approximately equal to inflation. Anything beyond that would be an irresponsible policy, bearing in mind that some new extraordinary expenses are possible, since we do not know how the epidemic will develop in the next year. The government can decide otherwise, but the consequence would be unfavorable both from the point of view of the impact on the budget deficit and from the point of view of fairness, since employees in the public sector should share the fate of the company. There is no wage growth in the private sector. It is unlikely that it will be in the next year as well – stated Arsic.
Asked how the IMF gave the green light, our interlocutor answered that he did not believe that the IMF gladly accepted it. They probably did not want to question the entire agreement and a compromise was made to be some increase, but not to be big.
Economist Sasa Djogovic, author of the bulletin Macroeconomic Trends, said that the IMF is not so independent and that in some cases it looks through its fingers. Sometimes he closes one eye, and sometimes both eyes.
– An increase in salaries is possible, if the state borrows again. It is inexpedient in the conditions when you have a decline in GDP, regardless of whether it was 0.1 percent, one or two percent, to go to increase consumption through wage growth in the entire public sector. In this case, there could be a certain reward for health and possibly educational workers, but I see no reason why it should go to the security sector – said Djogovic.
Nebojsa Atanackovic, the honorary president of the Union of Employers, thinks that it is inappropriate to talk now about the increase of salaries in the public sector. The increase could only be in line with rising inflation and nothing more.
– We should not think about increasing salaries when this whole year, instead of having a growth of four or five percent, there will be a drop in gross domestic product. All salaries, which have been increased this year, are just a net expense. There are justifications only to increase the level of GDP growth, and as it was absent and as it will be in a small decline, it would be overpaid. Further increase of salaries in the public sector must be financed by someone. In the previous three years, the public sector had increases of more than eight percent, and GDP growth was four percent, and we have already crossed the realities – Atanackovic emphasized and added that it is not okay to pay in the public sector, which is otherwise higher in on average by about 20 percent than in real terms they continue to increase.
The average salary in the public sector in July this year was 570 euros. The average in the administration is 580 euros, in education and culture 520 euros, and in health and social protection 550 euros. The average salary in public companies was 650 euros, and in local utilities 500 euros, Politika reports.
