Stojan Stamenkovic, research coordinator at Macroeconomic Analyses and Trends (MAT) magazine, says that it is possible to reach the average wage of 900 euro by 2025 under certain conditions and that it would be positive if the people who endorsed the Serbia 2025 programme actually explained how it is possible, which implies a “complex calculation”.
At a press conference, Stamenkovic said that taking into account the average salary of 500 euro, which is expected to be reached in January this year, an 80% increase is needed if we are to have the average salary 900 euro by 2025 as announced by Serbian President Aleksandar Vucic.
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Vucic has recently introduced the Serbia 2025 programme, which foresees that the value of investments by that year should amount to 14 billion euro, that the average salary will reach 900 euro and that average pension will range from 430 to 440 euro.
“Assuming that the gross domestic product (GDP) in Serbia grows by 4% per year, in six years’ time, starting from 2020, it will be higher by 26.5%. However, the average salary expressed in euro is comparable to the value of GDP in euro and, providing the inflation rate stood at 3% per year, this would all imply a GDP growth of 7.1% per year,” said Stamenkovic.
Under these conditions, the value of GDP in 2025 would be 51% higher than in 2019 and there would be several ways to bridge the gap between 80% wage growth and 51% GDP growth.
One way would be to reduce the share of investments in GDP, another to boost import and reduce the external trade deficit and the third way would be to increase the share of net profits in gross profits. The fourth way to reach the average salary of 900 euro would be to have the average real GDP growth of 7% per year, with inflation not exceeding 3%. Nominally, this would imply 10.2% annual growth of wages which, in 2025, would then amount to over 79% cumulatively.
Ivan Nikolic, the editor of MAT, said that “a similar case has been seen in Romania”.
“In Romania, the average net salary in 2019 was 641.4 euro, while in 2013, it was 357 euro, which is an increase of about 79% in six years. Over the same period, Romanian GDP has increased nominally by 50.6%, with an average annual real GDP growth of 4.4%,” said Nikolic.
Average net wages in Romania grew about two to three percentage points faster than GDP each year, with the gap widening further last year when wages grew by 12.9% and GDP by 6.3%, i.e. twice as fast.
This post is also available in: Italiano