SME statistics far from reality

Serbia has the highest number of self-employed people in relation to the total number of employees in all of Europe, statistics show.

It turns out that the Serbs have a developed entrepreneurial spirit more than anywhere else in Europe, but when this overwhelming statistics is analyzed in detail, the result is completely different and not flattering at all.

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When comparing the number of citizens who started their own business with the total number of employees, Serbia is the first in Europe. This share of self-employed in total employment amounts to 30.6 percent.

This means that if we had a very pronounced entrepreneurial spirit, that would positively reflect on the development of the country and the economic growth. However, this is not the case.

Behind this good statistical data, that is, an increasing number of small business owners in Serbia, there lies something completely different. To use business language, we could call it a “scam”.

Namely, in order to avoid paying high taxes and financial obligations towards the state, as well as avoide possible freezing of bank accounts, many entrepreneurs open new companies that either have no employees or only one.

Dragoljub Rajić from the Business Support Network says that such statistics are not realistic. He points out that taxes and contributions are lower when someone opens a company in their own name, and that this is one of the reasons for such a surge in the number of new business owners.

“This is more profitable than being employed and receiving a salary.  Thousands of companies have been founded in recent years, because people, instead of being employed, and in accordance with the agreement with their employer, usually open an agency, and the employer pays them out via this agency. This is more profitable for everyone”, explains Rajic.

Number of companies without any employees on the rise

On the other hand, from 2012 to date, there is noticeable growth in the number of companies that do not have any employees.

“Six years ago, there were 6.9 percent of them, and today it is 23.8 percent. That’s a huge number. It often happens that companies are unable to pay back their loans or settle other liabilities, so the owners open another company in the name of their relatives and friends. So, in case their company’s bank account is blocked, they have a Plan B. They usually transfer a part of their business revenue to a new company and continue operating”, Rajic explains.

Every seventh company has a “spare”

Rajic goes on to say that, according to research done by the Business Support Network, every seventh company in Serbia has another “backup” company.

“The conclusion is that high taxes and contributions in Serbia generate this alleged increase in the number of newly opened companies in Serbia”, Rajic underlines.

If we were to believe the statistics, Serbia would be the leader in the number of small business owners in the entire European Union, which has a 14.5 share of self-employed in total employment. Serbia occupies the first place, Greece is the second with 30.1 percent, followed by Italy with 21.9 percent and Turkey with 21.6 percent, and then Montenegro, Romania, Poland, Macedonia…

There is no entrepreneurial boom in Serbia

Zdravkovic believes that the main motivation for such an “entrepreneurial boom” in Serbia is that a lot of people were left without a job when large state-owned companies collapsed, and “they struggled to find a way to earn money and support their families.”

“The point is that, when founding small companies, the Germans, Swedes or Swiss see that as a lifelong thing, while in Serbia, people first work in shadow economy and then, when a lot of cash is generated, they legalize their operations and establish a company in line with law”, says Zdravkovic.

(Blic, 21.08.2018)




This post is also available in: Italiano

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