In Serbia, in 2020, the average subsidy given to foreign investors for each hired employee reached 30,000 euros.
In an election year, investments are coming in, employment is growing, but no one has calculated how much will all of this cost Serbian taxpayers.
For example, Serbian President Aleksandar Vučić recently opened an auto-part factory by the Turkish investor, Teklas, but failed to mention that this factory alone will cost Serbia’s taxpayers 10.77 million euros.
Given that Teklas is obligated to employ at least 500 people, the subsidy per worker will therefore amount to €21,500. The Italian footwear producer Geox, which closed down its factory in Serbia after the outbreak of the epidemic, received state subsidies in 2012 in the amount of €11.4 million, i.e. €9,000 per employee.
Starting in 2006, when the programme to attract foreign investors through subsidies began, until the end of 2019, foreign investors in Serbia have received 638 million euros from the Serbian state.
In the last two years, the subsidies reached the amount of almost one billion euros. In 2020, the state granted subsidies amounting to 233 million euros and in 2021, another 107 million, bringing the total amount to around 978 million euros. Since 2016, 185 agreements stipulating state subsidies have been signed with foreign investors.
We should also mention the clandestine contract between the Serbian government and Fiat, concluded in 2009. Some state officials have claimed that Fiat has received almost a billion euros in subsidies from the Serbian government, an all-time record. Despite many economic experts justifiably arguing that the current system of subsidies is corrupting investors, this activity has intensified in recent years.
The state subsidies are generally disbursed in two or more tranches as the investor fulfils its obligations. According to documents of the Development Agency of Serbia, the total amount of investments made by foreign companies amounted to 1.87 billion euros and they are supposed to create a total of 7,761 new jobs.
In 2021, this process was considerably slowed down, so some 107 million euros have been agreed for subsidies, albeit for a much larger number of individual investments, 48 compared to 26 in 2020.
At one time, the then Economy Minister Mladjan Dinkic ‘used’ the so-called Slovak model to attract investments through subsidies and the incentives for investors ranged from 2,000 to 10,000 euros per new job created. The lower limit was raised to 4,000 euros in 2012, but today even the simplest technologies, such as the production of cables, cost the Serbian taxpayer 6,000 euros per worker.
Henkel, which acquired Merima from Krusevac in 2002, received 14.4 million euros from the state for its investment in production expansion worth 93.57 million euros, which consequently led to the creation of 100 new jobs. At 144,362 euros per employee, the German company has received the most money in subsidies so far.
In second place is the investment of the Swiss chocolate producer, Barry Callebaut, with whom the Serbian government concluded a contract in 2019. Barry Callebaut is building a chocolate factory near Novi Sad worth 45 million euros, which will employ 100 people. The company will receive 12 million euros in state subsidies, which adds to 120,000 euros per each employee.
This post is also available in: Italiano