Since the outbreak of the global economic crisis from 2008 to 2017, Serbia has granted EUR 2 billion worth of subsidies to investors – the CEVES analysis has shown.
In 2017 alone, these incentives amounted to about EUR 250 million or 0.6 per cent of the country’s GDP, compared to only 0.2 per cent in Central and Eastern European countries.
Faced with the growing unemployment and the economic crisis, Serbia has, like many other countries, opted for incentives for foreign investors. The number of unemployed in Serbia since the beginning of the crisis from 2008 to 2012 rose by at least 200,000.
As the CEVES analysis shows, the main goal of these government subsidies was creating new jobs by encouraging investments that require a large number of workers with lower or middle-level qualifications.
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In Serbia, the law on the conditions and methods for attracting direct investments determines the number of subsidies depending on the number of jobs the investment will create, the degree of development of the location of the investment, and the investment’s size. According to the data collated by the Serbian Business Registers Agency and CEVES estimates, employment in foreign-owned companies grew by at least 70,000 in the period from 2010 to 2018.
The authors of the analysis also question the extent to which the continuation of this strategy is justified. Focusing on the number of jobs has also resulted in attracting mostly (but not exclusively) companies with labour-intensive technologies, low labour productivity, and consequently low wages.
Also, most of the foreign investors here have failed to establish collaboration with domestic suppliers, while employees remained at relatively low levels of training.
Furthermore, due to the strong decline in unemployment in recent years, companies in some parts of Serbia are now struggling to find a skilled workforce needed for new investments.
(Nova Ekonomija, 03.05.2019)
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