Economic reforms difficult for both sides in Serbia

21/07/2014

Although unions have launched protests over the adoption of the reformed Labour Law, Finance Minister Lazar Krstic resigned, believing that the reforms should be even swifter and tougher.

By Igor Jovanovic for Southeast European Times in Belgrade -- 21/07/14

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Union members march in Belgrade on July 17th to protest Labor Law reforms. Unions believe the laws will make it too easy to fire workers. [Nikola Barbutov/SETimes]

Serbian Prime Minister Aleksandar Vucic is in the crossfire over the country's Labour Law – while unions are protesting that the law is too dramatic and unfair to workers, Finance Minister Lazar Krstic resigned his post because reforms were not aggressive enough.

Unions are upset because they believe the law will make it easier for employers to dismiss workers, that workers will lose a portion of their rights, and salaries will be cut.

"We have to fight because other difficult things will follow if we allow this law today; tomorrow they will take away all of our rights," Nezavisnost independent union leader Branislav Canak told SETimes.

The opposition, which thinks workers will become "a cheap workforce," has also joined them. "The law puts into question the workers' rights that have existed for more than 150 years, you cannot find that anywhere else in Europe," said Borislav Stefanovic, an official of the opposition Democratic Party.

However, Minister of Labour Aleksandar Vulin dismissed the unions' allegations and, defending the law before MPs, said the reform provisions would increase workers' rights and lead to the employment of new workers.

"This law is certainly not to the detriment of workers, but rather for their protection. The necessary enhancement of the legal framework is to help attract business and investment in Serbia as well as overcome the economic crisis," Vulin said.

Vucic said the passing of the law was necessary for the state's progress toward the EU and for establishing economic stability, adding that he will not give up on the law despite protests.

"Serbia has essentially entered into reforms today; those are no longer empty words. Without these reform measures, we would have the same fate as Greece (bankruptcy) as early as next March," Vucic said.

The new law has mainly been supported by Serbian economists and foreign investors in Serbia.

"This really is the first reform law that should have been passed…It will be a big step forward if the law is implemented," Belgrade Faculty of Economics professor Danica Popovic said.

Krstic's resignation came as a surprise. The former finance minister, who left office July 12th, said he left his job because he believes the state's financial situation is dire and quicker reforms are needed. Krstic proposed cutting pensions by 20 percent, public sector salaries by 15 percent, an electricity price increase of 30 percent and that the public sector shed 160,000 jobs in the next two years.

"The prime minister has a soft heart, which is why he enjoys such great support among the people. I have no doubt that anyone understands better than him what needs and can be done. I, on the other hand, thought the measures should be implemented immediately and in full scope," Krstic said.

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Vucic said that Krstic's demands were justified, but that he could not carry them out. "I could not accept his proposal for reducing pensions by at least 20 percent, because one has to apply those measures to living people who cannot bear it," Vucic said.

Analysts believe that the finance minister's resignation will not seriously threaten the government.

"Perhaps Krstic's resignation will facilitate the implementation of the reforms, because people will realise that the situation is serious. If the reforms are not carried out, there is a danger of bankruptcy," Faculty of Economics professor Milojko Arsic told SETimes.

How will the new labour law affect employment in Serbia and its chances for European integration? Add your thoughts in the comment field below.

This content was commissioned for SETimes.com.
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