New economy: 11.510 workers lost their jobs in the processing industry
Last year’s trend of layoffs, shutdown of certain factories and plants, and the departure of investors from Serbia led to the fact that as many as 11.510 workers were left without a job in the manufacturing industry.
According to the data RZS five years ago, more precisely in 2021, there were 2.212.631 employees in Serbia, 2.253.473 in 2022, 2.306.955 in 2023, and 2.319.535 in 2024. Last year saw a drop for the first time to 2.318.648 employed people. It is feared that the year ahead can only deepen that decline.
By far the largest number of people lost their jobs in the processing industry – 11.510 workers, farmers are the most vulnerable after the workers in the processing industry, and innovative activities are not doing the best either, he writes. Aleksandra Nenadović for the New Economy.
“Even though it was once believed that regular income protects against poverty, in Serbia every fourth employed person lives in a household that has a very hard time “making ends meet”. There is a justified fear that due to the stagnation of employment and the decrease in the number of jobs, an increasing number of people will cross the edge of poverty as soon as they lose their jobs,” says Sarita Bradaš from the Center for Decent Work, for the New Economy.
The World Bank, which conducted research two years ago, determined that every third family in Serbia is at risk of of poverty as soon as one of the household members becomes unemployed. Economists would say that this might be a good thing because it forces you to find new employment immediately so you don’t end up poor.
Investor departure
But what happens when investors start leaving and new ones don’t come? Judging by the data from the balance of payments of the National Bank of Serbia, the meager 55 million euros of foreign direct investment in January is not promising, because in previous years it was around or more than 200 million euros.
What we know from the data is that the decline in foreign direct investment (FDI) inflows started last year, and that we are expecting an even bigger one this year.
“The earlier investment boom was supported by proactive government policies, including generous state aid, tax incentives, fast permitting and active targeting of investors, along with competitive labor costs and proximity to the EU market. Although these factors remain largely present, the scope for further changes in inflows may be shrinking as Serbia has already taken advantage of many easier greenfield opportunities.” Rising labor costs and a more challenging global environment may also weigh on new inflows. Although Serbia is still well positioned to benefit from the trends of moving production to a closer area and relocation of production, we expect that the inflows of direct greenfield investments will structurally normalize below the previous peaks, and that they will remain a key anchor of Serbia’s external financing profile,” S&P economists say in their recent report on Serbia.
According to their opinion, FDI inflow worsened last year due to internal political instability. In the meantime, that stability has continued with the addition of the war in Iran, so it’s safe to say that anything we save from investments this year should be a reason to celebrate.
In other words, this year we are expecting a worse situation than last year, and we will know exactly how big the drop in investments will be, as well as the withdrawal of existing ones, at the end of the year. According to this trend, employment will then continue to decrease.
Wages are rising, but so are prices.
And anyway, everyone’s mouth is full of praise that wages are growing, these wages are not enough to live in an overvalued, fixed currency, the highest prices of food and fuel in the region.
“Serbia is at the very bottom of the European Union in terms of minimum, median and average wages, with worse data recorded only by Bulgaria according to data from 2022. The figure that the risk of poverty rate is slightly less than five percent does not reflect the true state of citizens’ standards. The threshold of risk of poverty in 2024 was less than 46.000 dinars for one person, about 82.200 dinars for a family of three, while for a family of four with two of children under the age of 14 was about 96.000 dinars. A person who receives the minimum wage cannot cover the basic needs of a three- or four-member family. Even the average wage is not enough for a family with one breadwinner, while the average wage in 2024 was only about 2.000 dinars above the poverty threshold,” says Bradaš.
As for the bills that citizens have to pay, indicators of subjective poverty show that 34 percent of Serbian citizens live very hard, while more than half of the population has difficulty meeting monthly obligations.
Housing costs represent a huge burden, 43,5 percent of households are significantly burdened by these costs, while only 5,7 percent of households have no problems with paying bills and rent, explains the interviewee of New Economy.
“The state does not show concern for the living standards of the majority of residents, given that Serbia has not had a social protection strategy or a strategy to combat poverty for 15 years. Changes to the law from 2015 introduced more restrictive criteria for receiving aid, and allocations for the unemployed and the poor are among the lowest compared to the members of the European Union,” says Bradaš.
As he adds, the situation among the unemployed is even worse, where half are at risk of poverty, and thousands of people who lost their jobs last year have virtually no income.
Cash benefits for the unemployed are so low that they do not even meet basic existential needs, and they are paid in a very short period of time.
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