It is now almost certain that Fiat will remain in Kragujevac after the expiration of the ten-year agreement with the Serbian government, but will, according to the Serbian state officials, operate under different conditions. Both Kragujevac and the Serbian state budget could be better for billions of dinars, depending on the company’s operations.
“The new contract with the Turin company will, unlike the previous ones, be in the best interest of the citizens of Serbia”, says Prime Minister Ana Brnabic and adds: “We have played the role of mediator in the negotiations between the trade unions and Fiat’s management and worked towards Fiat signing a new three-year contract”.
More details about the new cooperation agreement are yet to be announced while the Vecernje Novosti unofficially learns that the main change refers to Fiat Chrysler Automobili (FCA) no longer receiving state benefits and the subsidies from the city of Kragujevac.
In the first contract, Fiat was exempt from paying local property taxes and urban planning tax, as well the trademark tax. Considering that Fiat’s plant in Kragujevac spans over 140 hectares of land and that the company’s insignia is visible in every part of the city, the local budget should definitely benefit from the new agreement.
The continuation of the cooperation will bring numerous financial benefits to the state, as Fiat will not probably have to pay full income tax and social contributions for about 2,500 of its workers. Also, the company will now have to pay profit tax, VAT, property tax and so on, in line with its ownership share. The list of benefits that this company has been enjoying in Serbia is long and many economics expert think that they are inappropriate given the current market condition.
The indication of a new course that the cooperation between the state of Serbia and Fiat was about to take became apparent after the workers’ strike regarding their salaries which took place in mid-2017. Following the talks between the Serbian government, which was a mediator between the company’s management and trade unions, a new contract is supposed to be drafted with the validity period of 3 years. . At the beginning of the year, the average salary was increased to 42,500 dinars, while employees in Fiat’s suppliers were not covered by this agreement. Last month it was announced that the automotive component company Magneti Marelli PCMA would start operating under FCA.
According to Zoran Markovic, head of the Independent Trade Union of FCA Serbia, the process of incorporating a hundred or so of Magneti’s workers into FCA’s operations should be completed 1st May. From that moment on, they will receive an (increased) salary at the parent company level.
The ten-year agreement on business-technical cooperation between the state of Serbia and Fiat expires on 29th September. Since the beginning of the production of Fiat 500 L, the demand for this car has not significantly oscillated, but experts agree that the time has come to launch a new model. This will also be included in the new contract, with the Serbian government most likely and in proportion to ownership stake in the factory (financially), participate in the launch of the new model.
(Vecernje Novosti, 09.04.2018)
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