DW: Serbia could be hit by a strong wave of layoffs in January

State aid during the pandemic crisis delayed the wave of layoffs. But as early as January, it could be felt in full force, say DW experts. Many employers are supposed to turn to undeclared work.

“We are going with the quick payment of another salary, I am talking about travel agencies, travel guides, fellow travelers, car rental agencies, catering companies and hoteliers,” President Aleksandar Vučić said on Thursday. “That is a total of 72,500 people. In ten days they will receive a minimum wage for all.”

Already on Friday, the government earned almost two billion dinars for that measure. Considering that the minimum is around 30,000 dinars, there is a good chance that 72,500 people will not receive the money, as the president says, but about 66,000.

However, will that be enough to prevent a dramatic wave of layoffs and the transition of people to undeclared work? Interlocutors warn of such a scenario early next year DW.

At the end of the year, three months expire, during which time employers who took other state aid – twice 60 percent of the minimum for employees – could not lay off more than ten percent of employees, otherwise they would have to return all the help they received.

As Finance Minister Siniša Mali said, 235,000 companies received aid at that time, that is, more than a million workers, and due to the expiration of this deadline, the professional public says that the Serbian economy could be hit by a wave layoffs in January.

Especially since starting in January, employers should start paying taxes and contributions at the minimum that the state gave their employees, and it can be expected that many companies will not be able to meet these obligations.

Fight for survival

DW interlocutors hope that some employers will try to solve these problems by avoiding paying taxes and contributions, that is, officially firing a worker in order to hire him illegally.

“Whoever was in the informal sector will stay there, and I suppose more of them will enter the informal sector,” Jelena Zarkovic, associate professor at the Belgrade Faculty of Economics, told DW.

“It is known that there are a lot of unregistered workers among catering companies, and the minimum will be paid only for those who are formally employed. In essence, it is designed to amortize the decline that will follow in early 2021,” Zarkovic added .

Sarita Bradash, a researcher at the Center for Democracy Foundation, agrees with the assessment that the number of informal employees will increase. The measures so far have postponed the crisis, so Bradas emphasizes that we will see its dimensions only from January 1.

“It can happen, especially since the biggest problem is entrepreneurs and micro-enterprises, that people move from the formal to the informal sector, to somehow survive in the market,” he added in an interview with DW.

On Friday, the director of the Serbian National Association of Tourism Agencies (YUTA), Aleksandar Senicic, told the Beta agency that any help was welcome, but that it was insufficient and late because they had already laid off many workers.

New measures and new risks

As of Friday, as part of the fight against the pandemic, the work of catering companies and companies engaged in service activities is limited to 5:00 p.m. from Monday to Friday, while during the weekend there will be a kind of curfew for them, closing from Friday at 5:00 p.m. to Monday at 5:00 a.m.

Thus, these activities, together with tourism and hotel management, will be the ones that will suffer the most again, considering that they were completely without income even during the close of spring.

To make matters worse, it remains to be seen whether these measures, long overdue, according to some crisis staff, will be enough to curb the epidemic, or will be needed even more drastically, putting other sectors of the economy at risk.

Let us remind you that the state has set real GDP growth of six percent for 2021, which the Fiscal Council assessed as an “optimistic forecast” that “cannot easily be realized.”

It’s not just “in the black”

Aside from these sectors, it is rare for the public to speak of an entire army of people who were the first to be affected by the measures against the epidemic, employed informally.

What are informal workers? At first glance, it seems that these are only those who work illegally, that is, they do not have any contract or work in unregistered companies. However, we are talking about all those workers who do not have an employment contract: therefore, both those who are without a contract, as well as those who have a contract for temporary and occasional jobs, an employment contract.

“We did a study that shows that people with informal employment have lower hourly wages than the minimum wage,” says Professor Zarkovic. even their hourly rate is lower than the minimum, even though there are no other costs to the worker. That is an additional aspect of vulnerability. “

According to official data from the Office of Statistics of the Republic (SORS), in the April-June 2020 period, the number of informal workers was almost 133 thousand less compared to the same quarter of last year.

Although data from years ago shows that the number of informal employees increased significantly during the second and third quarters, mainly due to seasonal work in agriculture, this did not happen in the second quarter: from 564 thousand informal employees last year, that number fell to 432 thousand.

This week, the SBS published data from the Labor Force Survey for the third quarter of this year: the number of informal employed increased, but not to the same extent as it decreased in the second quarter, by 77.5 thousand (a total of 509 one thousand).

Therefore, we should expect this number to increase even more in the first months of next year, to the detriment of formal employees, but we will only have this data when the Labor Force Survey for the first quarter of 2021 is published, that is, at the end of May.

Real unemployment 18 percent

That, in fact, many more people are looking for work in Serbia than the number of unemployed from the Labor Force Survey shows, can be seen in the data on so-called underemployment, explains Sarita Bradash.

“When we see that the unemployment rate is 7.3 percent in the second quarter and nine percent in the third quarter, that’s just part of the population, says Bradash.

“They are unemployed people who want to work but are not looking for work. They are counted as inactive, because the definition of an unemployed person is one who wants to work and look for work. work: an unemployment rate of more than 18 percent is reached in the third quarter, “concludes Bradash.