According to the IMF’s estimates, between 140,000 and 160,000 workers in Serbia could lose their jobs this year and small businesses are expected to be the first to lay off workers.
The report points out that lowering interest rates on loans, providing state guarantees for loans to small and medium-sized enterprises, and the Development Fund granting soft loans have only reduced interest costs in the short term.
“Risky corporate debts could increase by more than 40% by the end of 2020 if measures are not implemented to mitigate this situation,” the IMF report said.
The pandemic could further increase unemployment and granting of new loans could affect the ability of companies to pay the interest rate. Furthermore, the IMF mentions in the report that 100,000 to 120,000 workers in Serbia are employed in companies that have problems with interest payments and liquidity, and points out that sectors such as machinery and equipment, retail, wholesale, transportation and catering are particularly sensitive.
“The production and service sectors are the most at risk,” says Dragoljub Rajić, coordinator of the Business Networks. A recent analysis conducted by this organization showed that 23% of companies in the manufacturing sector are in jeopardy and that they have recorded a decline between 15 and 20%.
The situation is even worse in the service sector because 38% of companies are at risk and their decline averages 40%.
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“We expect 40,000 to 50,000 jobs in the service sector to be lost. Mainly micro and small businesses will lay off workers, i.e. those with one, two, three employees, especially those that cooperate with foreign companies. IT companies also have problems, as well as translators and interpreters and people who render specialized services”, Rajić adds.
He goes on to say that “one way to curb the crisis could be to suspend taxes and contributions so that employers continue to pay net wages to employees. This could maintain the system, wages and employment “.
Trade unions were not surprised by the IMF’s assessment. Duško Vuković, vice president of the Federation of Independent Trade Unions of Serbia, said for the Danas daily, adding that the state has allowed companies to lay off up to 10% of their workforce.
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