In the future, the government’s attitude towards the oldest will change.
Economists Ljubodrag Savic and Ljubomir Madzar assessed for Nova.rs that the citizens of Serbia will not receive pensions in the way they are used to in the future, and that there will be a change in the government’s attitude towards the oldest citizens. They emphasize that in the long run, they will reduce the real amount, which will be received by pensioners, but that the changes will primarily depend on the will of the political elites.
Economist Ljubomir Madzar assessed that the trends in the area of the pension system are extremely unfavorable.
“The number of pensioners per employed person is systematically increasing, so pensions are an increasing burden for employees. In the long run, that will create serious problems and difficulties, and we can expect that pensions will adjust to these negative economic trends,” Madzar told Nova.rs. He explained what these trends really mean.
“That means a reduction in pensions in real terms, and that tendency does not promise anything good to those who will retire in the next 15-20 years. I do not belong to the people who believe that we are overly successful in the economy. When you calculate longer-term growth rates, we are the worst with Croats in the entire region. The unfavorable circumstance is that domestic savings are very small, as well as the fact that domestic investors are not mentioned at all. All hope is placed in foreigners, which cannot be a satisfactory solution in the long run,” explains Madzar.
He added that he expects painful cuts in the pension system and predicts further postponement of retirement deadlines.
“It simply came to our notice then. Shifting the time for retirement is another negative component of these trends. Since this has happened two or three times so far, we can expect relocations,” concluded Madzar.
Professor of the Faculty of Economics in Belgrade, Ljubodrag Savic, told Nova.rs that it will be difficult for such a pension system to survive.
“He could function when there were three or four workers per one pensioner. Since we are aging as a society, and that happened to, say, the West and before us, with such a tendency to age and reduce the ratio of the number of employees to one pensioner, the system simply will not be able to remain sustainable. We recently, a few years ago, had an equal number of employed and retired people – so that ratio was one to one,” explains Savic and adds that the difference must be covered by the state.
Savic says that at one point, Serbia added as much as 46 percent of the funds for pensions from the budget.
“30 years ago, a worker could finance a pensioner because that relationship was higher, but this concept is unsustainable if we want to be on a sound economic basis. Such a pension system can survive as long as the government agrees to cover that part, but it is always a question of how long it will last. I think we are moving more and more towards the western concept, according to which a person will have as much pension as he will set aside for himself during his working life. Whether it will be through the pension system, so there will be as much contribution as many pensions, we will see,” Savic continued and underlined once again that the pension that some pensioners receive today, for example, will be only one part of the total pension.
The professor pointed out that it is important for the resources to be in state ownership in order for the state to service the pensions of its citizens in that way.
“It is an example of Scandinavian countries, such as Norway. The banks are theirs, the gas is theirs and then they can invest in their citizens in this way,” Savic said.
He added that he expects the standard of pensioners to be weaker and weaker, without us following world trends and not seeing how this problem will be solved.
“However, we are between that market approach and what the welfare state represents. The social component is present here and it is always part of political decisions. You had an example that pensioners played an important role in 2008 when forming the Government. That later dragged us into a debt crisis, and the guild was later paid the most by the pensioners themselves. The current government accepts the option of subsidizing in order to service pensions, but I do not know if it will be in the next government. There are the most pensioners, they are disciplined voters and they respect those in power,” the professor pointed out.
Savic added that the upper limit for retirement can be expected to be moved again.
“In the West, working hours are reduced to six working hours, which automatically means moving the retirement age because your working life is extended. By doing so, you are relieving the pension system,” said Savic and concluded that our capitalists do not understand this model of work organization, Nova reports.
