Serbia’s Social-Economic Council presented its study, “The Effects of Privatisation in Serbia,” and concluded the results of the privatisation have been devastating despite netting 2.6 billion euro.
Over 3,000 public enterprises were privatised in Serbia in the past decade, the council said, but 65% of them have stopped working or are about end operations. The cost to the economy is huge; about 83,000 jobs, or two thirds of all jobs prior to the privatization, have been lost.
Such results, the council said, must be taken into account to avoid repeating costly mistakes in the forthcoming public sector restructuring.
A United Trade Unions “Nezavisnost” representative, Zoran Ristic, told SETimes that the poorly conducted privatisation program has had negative effects even on workers who managed to keep their jobs.
“Labour rights have been significantly reduced, which led to great uncertainty among employers as well as the entire economic system,” Ristic said.
An additional problem is that most workers who lost their jobs continue to be unemployed. Bogoljub Tasic from Cacak, 49, worked in the Bozho Tomic paper factory for 12 years and was fired soon after the company was privatised.
“I have not worked for three years and think I will never find a job,” Tasic told SETimes.
Tasic said he has been forced to re-sell vegetables at Belgrade’s open-air markets to support his wife and two children, even though he is unable to move much due to arthritis and has no health insurance.
Serbiaˈs State Privatisation Agency undid 636 privatisation contracts mostly because the new owners did not pay the installments, failed to maintain continuity in the business and did not comply with established and agreed on social programs.
The agency has taken 178 owners to court, while 158 of the new owners have taken the agency to court.
Belgrade University Economics Professor Danica Popovic told SETimes privatisation led to poor results because the system was fundamentally flawed.
“The goal of the transition should not have been simply to sell an enterprise to a private owner and put the money in the budget, but to create a new economic climate and bring in new capital,” Popovic said.
Serbia should have followed the example of Hungary, she argues, a country which today has only 30% of the old capital and 90% foreign companies.
“The Hungarians brought in Siemens, Nokia, Electrolux, while we sold our companies to local or foreign tycoons, who then robbed and closed them,” Popovic said.
One of the worst privatisation cases is the fertilizer producer Azotara in Pancevo, near Belgrade. It was sold in 2006 to a consortium of the Lithuanian firms Arvi and Sanitex, as well as Belgrade’s Universal holding, for 13m euro.
The new owners promised to make Azotara a leader in the production of artificial fertilizers but sold the most valuable part of the factory to a Russian company for 32.5m euro the following year.
“It was a big robbery by the state together with the tycoons,” Azotara Workers’ Union President Milan Ivovic told SETimes.
Ivovic explained the facility sold was disassembled and transported to Russia. The workers and trade unions repeatedly informed the privatization agency, but no one there reacted.
Serbia is yet to privatise the large public enterprises which contain over 40% of the countryˈs total capital. Only the Serbian Oil Industry (NIS) was sold to Russia’s Gazprom in 2009 for 400m euro.
There are also 600 public, loss-producing companies, whose losses amount to four billion that add to the gravity of the economic situation in Serbia.
It appears the government lacks a coherent strategy for public enterprise privatisation at a time when the EU and the IMF seek reduction or elimination of subsidies. Facing upcoming elections, the Serbian government is reluctant to reduce the wages of a large number of workers or fire them.
“The experience of countries that privatised municipal services shows that prices immediately increased and municipal services deteriorated, while the number employed automatically decreased,” Federation of Trade Unions President Ljubisav Orbovic said.
Unions announced they would begin collecting signatures to organise a referendum on whether Serbian citizens are ready to accept private capital entering public utilities.
