Will the lack of affordable labour make foreign investors leave Serbia?

There is a tendency for foreign investors to leave Serbia in recent years.
For example, the Benetton factory in Niš will be closed by April.
Receiving significant state subsidies is a common feature among many of these foreign investors. This situation has various reasons, but the crisis in the automotive industry in Europe and in the world is certainly one of the most prominent.
Relocation to other countries with more favourable business conditions could be another reason why foreign investments are withdrawing from Serbia.
As Milorad Filipović, a professor at the Faculty of Economics in Belgrade, says, Benetton operates in a low-margin and low-profit sector. He adds that even 20 years ago all production was taking place in Asia (Pakistan, Sri Lanka, Vietnam), while in Italy, only strategic development, product design, finance, and high-level management were based, so Serbia may have been an attractive location for Benetton more than a decade ago because of the financial incentives it received and due to the low labour costs and generally low unit production costs, such as electricity and utilities. Nowadays Serbia has stopped being a country with an abundance of cheap labour. Unit production costs have increased making Serbia’s competitiveness in investment sectors such as textiles, footwear, and other unprofitable industries significantly decline.
Serbia’s heavy reliance on Western countries’ automotive industry is another reason why some investors are leaving the country.
Filipović explains that the forced “transition” to more expensive energy sources and the severing of ties with Russia are the main causes of the automotive industry crisis in Europe.
According to economist Aleksandar Stevanović, companies can fail, emerge, merge and relocate in any business. The time for investments attracted ten years ago when Serbia tried to employ poor classes has passed.
As the Mayor of Niš, Dragoslav Pavlović, has confirmed, around 900 employees will be unemployed after the closure of Benetton. A support has been promised to the affected workers by the Ministry of Economy, the Government of Serbia, the National Employment Service, and the Serbian Chamber of Commerce.
Pavlović promised that in the coming months suitable job positions in other companies will be offered to Benetton workers, as there is a demand for labour in Niš.
Pavlović stated that, as in previous years, active employment and self-employment measures will be implemented for all those who wish to start their own business, as well as for hiring individuals from hard-to-employ categories and those who are considered essential in the labour market.
The mayor promised compensation in accordance with their years of service and assistance to Benetton workers in registering with the National Employment Service.

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