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News 22 Dec 14

Serbia to Cut 27,000 Public Sector Jobs

Serbia’s parliament started discussing a draft budget for 2015 which contains plans to reduce the number of workers in state-owned companies and the public sector by five per cent.

Gordana Andric
BIRN
Belgrade
Pavle Petrovic from the Serbian Fiscal Council speaks at a press conference. | Photo by Beta

As parliament started talking about the draft budget on Monday, Pavle Petrovic from the Serbian Fiscal Council, an independent state body charged with assessing monetary policy, said it envisages that the number of people working in publicly-owned companies and the state administration will be reduced by five per cent, or around 27,000 people.

Petrovic said on Monday that the government was hoping to achieve some of this through natural wastage.

“[The government] relies on natural outflow, meaning retirement, and so far this has been from 15,000 to 20,000 people annually,” Petrovic said.

But he said that some of those who retired would be need to be replaced by new employees, meaning that layoffs would also be necessary, although the government has not set out any plans for redundancies yet.

The 2015 draft budget sets revenues at 924 billion dinars [€7.6 billion], expenditures at 1,083 billion dinars [€8.9 billion] and the deficit at 158 billion dinars [€1.3 billion].

Budget expenditures will be reduced by 2.8 per cent compared to the amount spent in 2014, while the state expects that revenues will increase by three per cent on last year.

Petrovic said that the draft budget also envisages a permanent reduction in expenditures of about 600-650 million euro. He explained that the state will save about 400 million euro through the cuts to public sector salaries and pensions which were introduced in November, and from cutting the number of employees in state enterprises and the administration and restructuring publicly-owned companies.

By law, the government must adopt a budget for the following year by November 1, while the bill needs to be approved by parliament by December 15.

However, Serbia postponed the adoption of the budget while talks were ongoing on a new loan with the International Monetary Fund.

After two weeks of negotiations, the IMF announced on November 20 that it had reached a deal with Serbia on a three-year standby loan of one billion euro.

The IMF suspended its last precautionary loan programme with Serbia in February 2012 when Belgrade stopped meeting agreed targets on spending and public debt.

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