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Serbia Offers Tax Breaks, Subsidies to Employers Who Add Jobs

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Serbia is temporarily cutting payroll taxes for employers who create jobs in an effort to reduce a 20 percent unemployment rate and crack down on illegal workers.

For the next year, companies won’t have to make payments to the state pension fund on behalf of new hires and the employer’s share of income taxes for those workers will be reduced, Prime Minister Mirko Cvetkovic told reporters today in Belgrade.

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“Starting next week it will be much cheaper for employers to hire people or to register with the authorities those already working but unreported,” Cvetkovic said.

The government is seeking to boost employment and living standards less than a year before parliamentary elections. Economy Minister Nebojsa Ciric said the package of incentives is designed to reverse a decline in employment as there were 92,000 fewer jobs in January than a year ago. The national workforce is just under 1.8 million.

The incentives won’t reduce budget revenue, Cvetkovic said.

“The state can only gain from this,” the prime minister said. “It will help reduce the gray economy” as some employers “legalize” workers who are currently unreported, he said.

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An International Monetary Fund delegation is scheduled to arrive in Belgrade next week to discuss a new, precautionary arrangement with the Balkan country. Serbia completed a 3 billion-euro ($4.3 billion) IMF bailout under which it must keep its 2011 budget deficit under 4.1 percent of gross domestic product.




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