Vucic’s games with average salary – if you don’t reach a goal, change it

Serbian President, Aleksandar Vucic “honoured” us yesterday with another great announcement that, by the end of the year, the average salary will be “at least 470 euro, which is slightly less than 500 euro”.

Every few months in the past few years, we have had the opportunity to hear new promises regarding average wages, which is somewhat understandable, given that this is information that people are most interested in.

So in January 2016, Vucic, then Serbian Prime Minister, stated: “I hope that in two years we will be able to say that the average salary in Serbia is 500 euro.” Unfortunately, this hope proved to be wrong, because in January 2018, the average salary was 422 euro. However, then the prime minister and now president continued with optimistic promises.

For example, in March 2017, he announced that, by the year end, the average salary would reach 440 euro. And indeed the average net salary paid in December amounted to 456 euro, but soon afterwards the Statistical Office of the Republic of Serbia changed the method of calculating the average wage, as well as the source of its data, and it turned out that the average salary in December amounted to 409 euro. The president already knew that when in December 2017, he said that “the current average salary in Serbia is 401 euro, that in March, it is expected to be between 430 and 440 euro, and that by the end of the next year, it will amount to 500 euro”.

Failed deadlines

So, since the goal has not been accomplished, the best thing to do would be to set a new one, so in this case, the president set 440 euro as the new target to be accomplished between December 2017 and March 2018. Unfortunately, again, the working people of Serbia have not been paid this average salary but only 418 euro. Again, of course, this did not stop our president from sending more positive messages regarding the average wage, and in April 2018, he said that “today, the average salary stands at 425 euro, and it will grow between 480 and 500 euro before the yearend”. Almost identical promise was repeated yesterday when he said that “with the increase, in November, the average salary will be at least 470 euro, which is slightly under 500 euro.”

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It is interesting to note that the president speaks exclusively in euro when he makes promises regarding the salary. An explanation for this could be found in the fluctuations in the euro / dinar exchange rate. For example, the average salary in May 2017 amounted to 47,147 dinars, which at that time, amounted to 382 euro. In May of this year, the average net salary reached 50,377 dinars, or 426 euro. In dinars, the average wage grew by 6.9 percent, while in euro, the growth was 11.5 percent, as the dinar appreciated in this period by 3.5 dinars against the EU currency.

Even if the dinar continues to appreciate, it is quite certain that the average salary at the end of this year will not reach 500 euro, and probably not even the mentioned 470 euro.

The president announced a salary increase in November, although this topic is still to be discussed with the IMF, as a new arrangement has been recently approved. However, the question is how high the increase in public sector wages so that the average salary reaches 500 euro. Even in the public sector, wages have, on average, reached and 470 euro, with the workers in the private sector paid much less.

The state pays well, private sector not so well

The average salary in the public sector, according to the official data for May, amounted to 56,268 dinars or 476 euro. On the other hand, the average salary in the private sector amounted to 392 euro. And while the state could still increase public sector salaries, it will hardly be able to do something about the salaries paid out in the private sector, which are also growing, but at a considerably slower rate.

Also, during fiscal consolidation, when wages were reduced, the government’s argument was that civil servants were paid much more than their counterparts in the private sector. In the last three years, the gap between public and private sector salaries has been reduced, but since the beginning of this year, it is widening again. In the public sector in 2017, the average salary was 18 percent higher than in private, and in the first five months of this year, this gap was increased to 20 percent. If in November, as announced by the president, there will be a new salary increase, this would cause an even greater gap between public and private sector employees.

In addition, even if the average salary in the public sector increased by 10 percent and amounted to 514 euro, and the salaries in the private sector grew by 5 percent by the end of the year, again the total average salary in Serbia would not exceed 460 euro. However, due to the fact that the promises about the average wage are far removed from reality, and that we are at the European bottom in terms of the average wage, they are still growing.

(Danas, 26.07.2018)

This post is also available in: Italiano

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