eKapija Investigates: Salary Difference Between Municipalities in Serbia up to EUR 800, Much Bigger Than in Neighboring Countries

Can the poor south catch up with the rich north? If the differences in the average salaries between the municipalities, which are getting bigger with each year, are any indication – not likely. According to the most recent data of the Statistical Office of the Republic of Serbia for June 2023, the average salaries in certain Belgrade city municipalities are nearly three times as high as those in the least developed ones in the south of the country, more precisely, slightly over EUR 800.

According to the data of the Statistical Office, the average net salary in June amounted to RSD 85,539. The highest average salary was paid to the residents of the municipality of Stari Grad, and it amounted to RSD 151,408 (EUR 1,292), and the lowest one was paid to the residents of Presevo – RSD 57,074 (EUR 487).

So, the residents of the “richest” municipalities were paid RSD 94,334 (EUR 805) more than those from the “poorest” one!

There are differences in other countries in the region, but they are nevertheless not that pronounced. In Montenegro, for example, the difference is EUR 238, in the Federation of Bosnia and Herzegovina, it is RSD 336, and in Croatia, it is EUR 345.
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Salary trends by towns and municipalities

Salaries higher than the average salary in June in Serbia were paid to the residents of Novi Sad, Bor, Majdanpek, the Nis city municipality of Medijana and all the Belgrade city municipalities, except for Barajevo, Grocka, Mladenovac, Obrenovac, Sopot and Surcin.

The highest average net salary in June was paid to the residents of the Belgrade municipality of Stari Grad, and it amounted to RSD 151,408, followed by Vracar, where it was RSD 148,022. Next are New Belgrade with RSD 142,361 and Savski Venac with RSD 139,972.

On the other hand, on average, in June, less than RSD 60,000 was paid to the residents of several municipalities from the south. The lowest average salaries were paid to the residents of Presevo (RSD 57,074), Bojnik (RSD 58,170), Vlasotince (RSD 58,246), Blace (RSD 59,092), Svrljig (RSD 59,409), Crna Trava (RSD 59,526) and Gadzin Han (RSD 59,683).
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All this points to the fact that the income inequality in Serbia is bigger than in EU states, the financial adviser Djordje Ostojic says for eKapija and adds that this is also confirmed by the Gini coefficient, which is the most frequently used measure of dispersion, and is used as a measure of the inequality of income and the inequality of wealth distribution.

– For Serbia, this coefficient amounts to 33.3% for 2021 (the most recent available year), whereas, for the same period, for the whole EU, it amounts to 30%, whereby a lower percentage indicates less inequality – our interviewee says.

This, he explains, is a result of the long-standing policy of economic centralization, where Belgrade has positioned itself as the administrative, business and political center, which has led to “the inequality of opportunities available and a dramatic increase in outcome inequality.”

– In this situation, children and young people who come from smaller places have worse education and less access to modern technologies, which results in reduced opportunities to reach well-paid professions in the future. What international experts certainly emphasize is that opportunity inequality and outcome inequality reinforce each other, so it is pretty likely that Belgrade will keep (and even boost) its dominant position – Ostojic says.

Tadija Mitic, the program manager of the National Coalition for Decentralization (NCD) believes that there are several reasons for why there are big differences between the average salaries in the regions in Serbia.

– Above all, the geographic unevenness in development and economic concentration in bigger urban centers can be the main causes for these differences. Considering the highly varied social-economic areas that characterize Serbia, this is not an isolated phenomenon – says Mitic.

What could the National Development Plan bring?

As Mitic adds, in order to reduce these differences, a national development plan should be adopted, which, he says, would be in line with the needs of the citizens who live in different local communities.

– This plan should be shaped so that it complies with the principles of decentralization, but also human rights, leaving enough room for regional and local adjustment. In time, this should enable a more even development and economic stability on a regional level – Mitic believes.

At the end of June, the Government of Serbia adopted the Decree on the Procedure of the Preparation of the Draft Development Plan of the Republic of Serbia.

– The decree came into effect on July 8, 2023, and the deadline for the forming of the Management Body was September 8, 2023, about which there are no publicly available data. That means that, for now, there is no public information about whether and when the expert group, which is supposed to prepare the Draft Development Plan of the Republic of Serbia, and within which the NCD sees itself as an inevitable member, is to be formed. Through a request for access to information of public importance, the NCD had requested additional information about the criteria for entry into the membership of the expert group, when the call is to open and whether it is to be a public call, to which we received a response from the Republic Secretariat for Public Policies and the Ministry of Public Administration and Local Self-Government, saying that they have no such information for now – the NCD says.

The decree envisages paying special attention to an even regional development, as well as planning development in line with Agenda 2030.

– What should be known at the moment is that, within 120 days (4 months) at most, we should have a formed expert group which will work on the preparation of this document and then, later on, on its implementation as well, we hope – they add.



How to reduce the differences?

If we want to achieve the effect of evening out salaries by municipalities, or perhaps better said, the evening out of the rest of Serbia with Belgrade, I believe that we primarily need measures and investments which will facilitate lives for people in smaller places, believes Djordje Ostojic.

– For example, if there is a person who is an expert in their field (whether it is a technical, medical, economic or IT profession), there’s a very small chance that that person will stay in a smaller place, primarily due to infrastructural deficits, such as, for example, frequent power cuts, bad water quality, bad healthcare etc. – says Ostojic.

The other aggravating factor, according to him, is the lack of quality jobs which offer the possibility of an above-average salary, because there is a chronic centralization of senior management positions in cities such as Belgrade, and to an extent, Novi Sad and Nis.

– If we want the average salaries to grow in “other” municipalities, we need jobs which will be demanding and attractive enough to draw the most competent workers and prevent their leaving to bigger cities. The problem is that the process of the creation of new jobs is conditioned on the free market, so a potential cure could be the forming of business-technology parks in smaller places, as well as certain financial measures of assistance for entrepreneurs in smaller places in order to improve the business climate – the financial adviser believes.

The differences in average salaries by municipalities in Serbia, according to Tadija Mitic, occur primarily because of the uneven regional development that is currently present in the country.

– This is a complex problem and can be partially ascribed to the centralization of resources and decision-making, which often results in bigger investments and better economic opportunities in urban centers, whereas rural areas remain neglected – our interviewee believes.

Additionally, the regional differences, according to him, could be a consequence of an insufficient adaptation of development strategies to the specific needs and resources of local communities.

– Decentralization, which has not yet been fully implemented, would enable municipalities and regions to create strategies and programs which are more in line with the local circumstances, which could contribute to a reduction of these differences. Also, the insufficient involvement of local communities in the processes of making decision that directly affect their economic development should be taken into account. Active participation of local communities in creating and implementing regional development strategies can help identify the right directions of development and the possibilities for increasing the employment rate and the average salaries in those communities. In addition to that, salary differences could be a consequence of variations in the quality of public services and human resource management between the municipalities, which can directly affect the attracting of investments and economic circumstances in different regions. Furthermore, I think it would be important to implement an obligation or a recommendation for the founding of consulting bodies which would be in charge of the preparation and the monitoring of the implementation of regional development strategies. Through this initiative, local self-governments and civil society organizations could work together on the development of documentation which will best suit the needs of local communities. The establishment of an independent state organ/body, which would supervise the real impact of the implementation of the policies of the Government of Serbia on an even regional development, should also be considered. Through analyses and timely reporting, this body could provide precious insight and recommendations for future development strategies. Finally, I believe that initiating a campaign that would educate the citizens about the importance of an even regional development, as well as potential ways to achieve it, could have a far-reaching positive impact. Raising awareness about this issue could be the key step toward realizing concrete and sustainable solutions – Mitic concludes.

What is it like in the neighborhood?

The Statistical Office of Montenegro (MONSTAT) has announced that the average net salary in July amounted to EUR 797. The highest salary is paid in Tivat, EUR 934, and the lowest one in Petnjica (EUR 696). So, the difference between the municipality with the highest salary and the one with the lowest average salary in Montenegro was EUR 238 in July.

According to the latest data of the Croatian Bureau of Statistics, the average salary in that country in June amounted to EUR 1,150. The highest net average salary was paid in Zagreb, EUR 1,341, and the lowest one in the Virovitica-Podravina County, EUR 996, which is a difference of EUR 345.

According to the data from the document Macroeconomic Indicators by the Cantons of the Federation of Bosnia and Herzegovina, the highest average net salary in FBiH last year was paid in the Sarajevo Canton – around EUR 712 (BAM 1,390), and the lowest in the Central Bosnia Canton, EUR 458 (BAM 893), which is a difference of around EUR 254.

The data of the Statistical Office of Republika Srpska show that the average net salary last year was around EUR 586 (BAM 1,144). The highest salary, EUR 746 (BAM 1,455) was paid in the municipality of Stanari. The lowest average net salary in this period was paid in the municipality of Donji Zabar, EUR 410 (BAM 801), so the difference between them is EUR 336.

Ivana Zikic

Republički zavod za statistiku

Statistical Office of the Republic of Serbia

National Coalition for Decentralization

NCD

MONSTAT

Djordje Ostojic

Tadija Mitic

Gini coefficient

National Development Plan of the Republic of Serbia

average salaries

difference in average salaries

average salaries in Serbia