Minimum wage will be 36,000 dinars when average salary reaches 70,000 dinars

A decision on the minimum price of labour will be made in the coming period, probably by 15th September.

The current minimum labour price stands at 143 dinars per hour and the trade unions are demanding at least a 46% increase, i.e. for the minimum wage to be of equal value as the cheapest consumer basket. Employers, on the other hand, want the increase to be no more than  6.5%.

The first next meeting of the Socio-Economic Council (SEC), which could be crucial for reaching an agreement, will be held next Monday, in the afternoon. The only item on the agenda is minimum wage, and Prime Minister Ana Brnabić is supposed to attend the meeting too.

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Judging from its experience, the SEC highly doubts that an agreement will be reached at the first meeting. As usual, trade unions are always looking for more, employers offer less, and the state usually makes a decision which falls “somewhere in the middle”. In his interview for RTS from two days ago, Labour Minister Zoran Djordjevic said that the trade unions would have to wait for another year or so for their wishes to be met.

He said that, at the last meeting, it was agreed that in the next two or three years the state would try to increase the minimum wage to match the minimum value of the consumer basket.

“I believe this will be a realistic minimum wage,” Djordjevic said. Vice President of the Association of Independent Trade Unions of Serbia (SSSS), Duško Vuković hopes that the minister has truly and sincerely accepted the position of SSSS that the minimal labour price should the same as the value of the minimal consumer basket.

“Although some do not think so, the union thinks that it is realistic that, in the next year to two, the minimum wage will be equal to the minimal value of the consumer basket. I do not believe that we will reach an agreement on this issue at this moment, but what I can say is that we will not accept an increase of about six, seven or even ten percent”, says Vuković.

Such increase, he believes, cannot satisfy the existential needs of a worker in Serbia because even a 10 percent would translate into the minimum wage of 26,000 or 27,000 dinars, which is still about 10,000 dinars less than the lowest value of the consumer basket.

The Vice President of the Employers Union, Nebojša Atanacković, the demands put forward by the trade unions go against the real economic logic.

“The minimum wage of 36,000 dinars is possible only when the average salary in Serbia reaches 70,000 dinars or more”, notes Atanacković.

He adds that the minimum wage is the only economic category that is determined by the state since everything else is determined by the economic situation in the market which has no capacity to sustain the demanded minimum wage. If that did happen, instead of 350,000 workers on minimum wage, which is how many Serbia has at the moment, their number would climb to 900,000.

Employers are sticking to the same point of view as in the previous years. “If GDP growth remains at the current level of 4.5 percent, and the inflation at between 1.5 to 2 percent, then the only real increase in the minimum labour price at this time could be between 6 and 6.5 percent. Anything higher would be a too heavy a burden for the economy”, notes Atanacković.

However, if in the following days, the negotiators agree on a 6.5% increase, then the state will have to offer some kind of concession to companies.

“If we agree to a bigger increase, then, as last year, employers should be allowed to increase the non-taxable part of their profits,” Atanacković said. He is convinced that the state is not able to withstand a major increase in the minimum wage, such as 46 percent as demanded by the trade unions.

Currently, 350,000 workers in Serbia are on the minimum wage of 24,882 dinars. The estimates show that the minimum consumer basket is worth around 36,000 dinars.

Professor of the Faculty of Economics, Mikhail Arandarenko says that the biggest problem is that the minimum wage in Serbia is heavily burdened with contributions and taxes.

“The taxes and contributions on the minimum wage in Serbia are higher than anywhere else in Europe. Costs for employers are high, net wages are low and the biggest problem is actually that the entire system of taxes and contributions is incorrectly arranged”, notes Arandarenko for the Danas.

(Danas, 04.09.2018)



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