In the five-year period 2017-2021, salaries in the public sector will increase by as much as 36 percent (2017 – 3.5 percent; 2018 and 2019 – 9 percent each; 2020 – 10 percent, and 2021 – 4.5 percent.) In the same period, the total growth of gross domestic product will be 15.5 percent (2017 – 2 percent; 2018 – 4.4 percent; 2019 – 4.2 percent; 2020 will see a decline of 1 percent, and 2021 an increase of 6 percent). So, even if we assume that the official forecasts of GDP growth will be fully realized (which many economists doubt) the growth of salaries of civil servants will be almost two and a half times faster, better, higher than the growth of total production. Is that realistic, is that normal? That is, is it fair for salaries in the public sector to be almost 25% higher than in the private sector? What colossal discrimination, right?
Of course, this does not mean that the salaries in the public sector are high. Even less that certain parts of the public sector should not have higher salaries than they currently do. Healthcare workers, for example. Three years ago, it was pointed out that the salaries of police officers in Serbia are both absolutely and relatively (when compared to the ratio between the salaries in the countries of Central and Eastern Europe) significantly higher than the salaries of medical workers. To this day, that nonsense has not been corrected.
For three years now, there has also been a delay in the reform of the public sector wage system, i.e. introduction of pay grades and rewards according to the “amount and results of work.” For examples, when it comes to the aforementioned medical workers, it is unclear why those who work in the “red zone,” in hazmat suits and the like, aren’t additionally rewarded with high bonuses and incentives. Who would even oppose something like that? But that does not suit the authorities. Instead, money is being thrown around left and right, populism is spreading and egalitarianism is being enforced.
Where there is egalitarianism, statism is always close behind. That enormous increase in public sector wages – with no relation to one’s contribution to the community – is just the tip of the iceberg. Namely, it is an indicator of a wider phenomenon, a general attitude (the word “strategy” comes to mind, but that would imply a greater level of seriousness than is being shown here) and an intention to strengthen the role of the state in the economy, and, through it, in all other spheres of social life.
This is evident even in those places where it’s best camouflaged – in so-called capital investment. Public investments (according to the budget for 2021, they should reach 330 billion dinars) are simply not questioned. Who could say that Serbia does not need new and better roads, railways and the like? But, on the other hand, the experience from the previous few years has raised the question of the usefulness of many of these projects. In that respect, the Turkish or Balkan Stream gas pipeline is paradigmatic. Its construction cost almost two billion euros (the exact amount is kept secret, and we won’t find out about it from the current government), but gas is not flowing through it yet, nor will it flow soon. However, that is not important because, last year, it contributed to about a third of the GDP growth (the total officially estimated at 4.2 percent), and that is what President Vucic is interested in.
Or, let’s look at another example, the Kraljevo-Krusevac highway. Is there enough traffic to make the construction of a “full profile” highway profitable, or is it only important that the work be profitable for those who are involved in it? Maybe a so-called semi-highway would be quite sufficient to satisfy not only the current, but also the future needs of the (larger) population and the (more developed) economy? And, secondly, does all this really cost as much as we are told, and why are public tenders, which would surely ensure a lower price, persistently avoided?
Another question arises in this regard. Why is road infrastructure being favored over the perhaps even more urgent investments in ecology? A rather prosaic explanation would be that, in previous years, people close to the SNS party bought or put under their control quarries and other production facilities of construction materials, as well as construction machinery, and now they need it to pay off. In environmental projects, the value of equipment (water factories, sewage collectors, etc.) makes a much larger share, so construction works and respective profit are (relatively) small.
Then there is the Office for Public Investment Management. This body was established as a short-term project in 2014 to deal with the consequences of the floods, with a budget of a few billion dinars. However, since then, it has grown into a respectable investment authority with ten times more available funds. What other point could there be for such a transformation, apart from opening another channel for the outflow of state (or, more precisely, people’s) money, and additionally complicating and making control more difficult.
The other side of this investment coin is that a large part of the private sector is tied to the state. This has not only economic, but also political consequences, since it is a public secret that only companies which are close to the ruling party get jobs.
Another channel through which the dependence of the private sector on the state is established are – subsidies. Instead of reducing them, as promised – among other things, in order for Serbia to comply with the rules of the European Union in that field – subsidies are growing. Next year, they will reach 120 billion dinars, which is 15 billion more (over 10 percent) than this year. Can you imagine what a billion euros can do in a small and poor country like Serbia? It is not only a matter of amount, but also the scope of this state aid. Let’s leave aside the biggest items (primarily 42 billion for agriculture, which is also vulnerable to manipulation) – it is interesting that those seemingly small expenses grow the most. For example – subsidies for attracting investments, for the purchase of electronic fiscal cash registers, for private financial institutions, for taxi drivers (purchase of eco vehicles), air traffic (airport in Trebinje), credit support to companies in privatization, etc. Of particular interest is the very high growth of subsidies to attract investors. There was also a bit of a twist when the Government very suddenly changed its tune in regards to subsidies – as the Fiscal Council notes in its analysis of the budget, only a month ago, during the preparation of the rebalance for this year, the Government committed itself not to exceed 12 billion dinars in the next budget cycle of subsidies. But, wouldn’t you know it, in the budget for 2021 they have already reached 15 billion, while the limit for 2022 and 2023 was increased to 16 billion.
Anyway, if we go back to the main topic, there is practically nothing that the state does not finance, there is no area in which it isn’t involved. Often, those sums, when they are broken down to individual users, are not very high, but that only shows that the current government leaves no one and nothing to chance. It goes without saying that those who receive that money must, in some adequate way, repay it. Somewhere corruption is high, somewhere medium, somewhere low. But, in general, it’s enmeshed into our entire society.
And it all serves a single goal – keeping Aleksandar Vucic in power after the next election. And that is the primary goal of the budget for 2021, adopted only a few days ago, on December 10th.
Translated by Marijana Simic