Public enterprises – from money-makers to money-losers

Representatives of the state authorities use every available opportunity to brag about Serbia’s economic progress. Recently, they haven’t been that vocal about how well public enterprises in Serbia are doing. 

Research conducted by Macroeconomic Analyses and Trends (MAT) magazine shows that the state has big problems in managing public companies which, in only five years, have gone from being “winners” to losers.

Even the reforms, which have been going on for 20 years, have failed to bring order to the public sector. The research says that the public sector is as huge as it was 20 years ago and that the problem is that hiring employees is a political rather than a business act.  

There is no financial discipline in the public sector that desperately needs to be modernized.

To illustrate its size, the report says that every 14th worker in the Serbian economy is employed in large infrastructural public companies. In the five observed years, however, there was a reduction in the number of employees, with 8,603 of them losing their job in public companies.

The research further shows that the net profit of the 22 companies that were analyzed decreased by 40 percent in the last five years while the net loss increased by 50 percent.

In 2018 and 2019, energy companies also joined the group of public enterprises that have been losing money in the last few years, along with several state-owned railway companies, Putevi Srbije (Roads of Serbia) and Resavica, the company that is engaged in underground coal exploitation.

They also point out that Telekom Srbija’s net financial result has dropped by 4.4 times, and that Srbijagas, Serbian Post Office and Elektromreža Srbije have also recorded a decline in their financial results.

Despite the general assessment that people who are in charge of public companies do not manage them efficiently, more than 50 percent of subsidies and state allocations given to the Serbian economy went to those companies.

The authors of the research also say that, in 2019, state subsidies amounted to a total of 1.5 billion euro, of which 772 million euro went to public companies.

Twenty-two companies covered by this research lost 155 million euro that year but received the aforementioned 772 million in state subsidies.

(N1, 07.04.2021)

This post is also available in: Italiano

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