SAVIC: Measures to Only Artificially Stop Unemployment for a While

The explosion of unemployment – that's how numerous experts describe the worsening economic landscape as a consequence of the spreading of Covid-19, especially considering that, globally, this will lead to up to 225 million people being laid off.

Still, the prospects for Serbia are slightly more optimistic. Serbian President Aleksandar Vucic is convinced that the implementation of new economic measures will help avoid mass layoffs in the country. He recently said that he expected the post-crisis unemployment rate not to be higher than the average unemployment rate in the countries of the European Union. He added that “we will be slightly better off than other countries.”

Economists consider the new economy stimulus package to be very well designed, especially the part pertaining to the payment of three minimum wages and the postponement of tax and contribution payments. However, as Ljubodrag Savic, a professor at the Faculty of Economics in Belgrade, says for Politika, if companies fail to bring back their business within those three months, the state aid will mean nothing for their further development, as their business also largely depends on global trends, which have experienced great turbulence already.

– If we measure the unemployment rate in the first month or to, it will possibly be lower, as new economic measures will only artificially stop the growth of unemployment initially. Companies will use this to recover and keep their head above the water, rather than to change the way they operate and consider what to do next. The question is what will happen in our economy after those three months. I do not share the optimism of some of my colleagues. Instead, I expect that there will be a long waiting period when it comes to the growth of GDP, which will be one of the reasons for an increase in unemployment – Savic explains.

Another reason, according to Savic, is that around 400,000 people, who until recently worked the simplest jobs in the neighboring countries, will return.

– All those people know that Europe and the world are looking at a difficult period in which there will be 40 to 225 million layoffs. A number of our fellow citizens will be able to return where they came from, but my estimate is that most will not be able to do so, at least not immediately after the epidemic ends. That is why they will turn to our National Employment Service. Among others, these are the citizens that helped bring down the unemployment rate in Serbia when they left the country in search of jobs – Savic reminds.

The professor believes that the economic crisis is underestimated in the country.

– Most believe that it will all pass if we lie low, but it should be known that many companies will cease to exist in the meantime, especially small and medium enterprises, who live from month to month, as their reserves are small. This will cause a chain reaction, as another company depends on a small company... Neither of those companies are Fiat, which can afford the luxury of not working for half a year – Savic concludes.

Ekonomski fakultet Beograd

Faculty of Economics in Belgrade

Ljubodrag Savić

coronavirus

economy

economy stimulus package

unemployment

Aleksandar Vučić

GDP

GDP growth

layoffs

economic crisis