Laid Off, but with a Solid ‘Pocket Money’ in the Form of Severance Pay

In Kragujevac, the only company whose workers, numbering around 4,500, had no work obligations and regularly received salaries was recently closed. The then government of Zoran Đinđić did not have the courage to clean up Zastava in 2001, so it established a new company – Zastava Employment and Education for part of the surplus workers.

This lasted more than six years, during which time the state allocated more than 100 million euros from the budget for their survival. Announcements that their subsidies or, rather, income for nothing would be abolished were used by local politicians and incompetent unions to incite rebellion. It was not a problem to rally (un)workers who did not care about their existence because they had enough time each month to collect salaries and do something on the side. They most often dealt with goods or construction work – and the family was taken care of. Despite the union’s announcements, there was no strike, and the workers decided to accept severance pay – 250 euros per year of service. This will relieve the Serbian budget by a total of 2.3 billion dinars (about 29 million euros).

When we add to this the 3.2 billion dinars (40 million euros) that the government has earmarked for subsidies to state losers, the Serbian budget will be lighter by almost 70 million euros. In the next period, as Lider has already reported, about 1,200 social enterprises are awaiting privatization. This will mean several tens of thousands of layoffs with a solid ‘pocket money’ in the form of severance pay. There is no reason to rub hands together because most of the laid-off will end up at the employment office, and the money they received usually ends up in the pockets of car dealers and white goods importers. This has also been shown by analyses from the Serbian government, according to which as much as 94 percent of workers spent their severance pay on personal items and repaying debts.

Although a good part of the privatization, during which about 70,000 were laid off in the last three years, has already been completed, the state has decided to try to reduce a new wave of unemployment. In cooperation with the UN Development Program (UNDP), the Ministry of Economy and Regional Development has prepared the project ‘Severance Pay to Employment’ aimed at encouraging laid-off workers to use their severance pay for new employment. A survey was also conducted to gauge workers’ interest in utilizing this program and investing part of their severance pay to secure their existence. Of the 14,000 workers surveyed, more than 10,000 coming from companies awaiting restructuring, only one-third are willing to take that step.

Ljiljana Džuver, the project manager, explains that people up to 45 years of age are the most interested:
– This is logical because they think differently about existence. Besides them, those with secondary, higher, and university education have also shown interest. The project is certainly good news, regardless of the current weak interest. However, the question arises as to why no one thought of this at the beginning of privatization. The question is especially interesting because many companies have so far provided generous severance packages. Others, however, are not so attractive, and the state will likely have to provide financial assistance. Zoran Matović, director of the Entrepreneurship Development and Employment Programs Sector at the National Employment Service (NSZ), believes that the state has made a mistake here, but adds that it is not too late now:

– Given that the restructuring of large public systems is just ahead, we can expect a large wave of layoffs. Besides being late with this idea, the state has made some other mistakes, but it could correct them in the next – part of the assets should have been excluded from privatization and made available to workers. If this had been utilized, a good portion of workers would likely have secured jobs. Thus, the monetary part of the severance pay could be replaced with space, used machinery, etc.
All this will not mean much if the state does not protect private entrepreneurs. Although the share of the so-called gray zone, or informal business, has significantly decreased since the introduction of VAT, this type of business remains one of the most common sources of income. To be convinced of this, it is enough to walk the streets of Serbian cities. Buying social peace has been the concern of every transitional government so far. However, the end is in sight, and to avoid even greater problems, the system must function perfectly. In an imperfect Serbia with an even more imperfect government, this will be a real challenge. (Dean Kožul)