Climbing back up the ladder

Zoran Djindjic , the Serbian Prime Minister, sets out the new government's plan for repairing the damage done to the Serbian economy and society

The conditions that the new Serbian government faces, according to almost all indicators, are dramatically bad. The real standard of living of our citizens, the unemployment rate, the state of our technology and traffic infrastructure, the level of indebtedness of our companies and our country as a whole, general safety and the degree of criminalisation of society - judging by all of the above indicators, we are at the bottom of the ladder of European countries.

This is not a modern and successful Serbia, not even the Serbia of our parents, the Serbia in which we grew up, where people worked and went shopping freely, where the streets, school playgrounds and national borders were safe, and where domestic budgets enabled people to go on summer and winter holidays.

Over the last ten years, Serbia has been a country without a sensible plan and management, left to the mercy of brutal interest groups at home and international interests abroad. That is now in the past. On October 5 2000 Serbia took its destiny into its own hands. We are beginning the implementation of a national consensus for radical change.

The first precondition for this is general political stability in the region. This means, first of all regulating relations between Serbia and Montenegro in a democratic manner, then eradicating terrorism in the south of Serbia once and for all and establishing a way for Serbia and Kosovo to live together and finally establishing real co-operation between Serbia and its neighbours.

The second is the stability of democratic institutions in Serbia, first of all, an administration immune to corruption, an independent judiciary and safety for the individual and property.

The third is good laws, primarily in the business domain.

The fourth is a high-quality transport infrastructure for people and goods.

The fifth precondition is a qualified and dependable labour force and high-quality management of companies.

The core of the reforms pertains to the economy and society. Despite urgent day-to-day problems it is important that we do not turn into a stopgap government, one that loses track of the long-term vision of the economy

Our society and our economy need not only fresh capital but a new attitude. Our technology has been devastated by the bombing campaign of 1999; our labour force lags behind in terms of educational aptitude for a new economy.

Investments will come, but the investors’ motives remain an open question. Investments are directed towards very cheap or high quality labour, where the risk and profit are very high or where the business climate is very stable. Our strategic objective is to become a country of stable institutions and a highly qualified labour force.

The Serbia we envisage is a society where the middle class would predominate, with well-to-do families, where a large number of citizens would have savings accounts and private property, with quality jobs and a solid national health service and educational system, and a dependable pension fund. That is a Serbia in its role of a regional factor of stability.

Moving towards this goal, we must resolve pressing problems, and among the most difficult ones are unemployment and a low standard of living. According to the official data, there are 2.2 million people employed in Serbia, plus about 820,000 unemployed, that is, about 27%. However, not only is there a great number of unemployed but the employment structure is problematic as well.

About 500,000 people work in permanently illiquid firms, so that they may be regarded as de facto out of work. That makes an additional 15%, bringing the total up to over 40% unemployed. About 400,000 people receive their salaries from the state budget. This is undoubtedly too great a number for scope of our economy.

It is our intention to rearrange the employment structure through a restructuring of the economy, so that those two million employed should have stable and good quality jobs. We shall reduce the number of employees in the state sector by at least 20% to begin with.

However, it will not suffice to improve the existing employment structure. Our task is to make new jobs possible by attracting investments into the country. For this to be achieved, it is necessary to renew the technology and the qualifications of labour force. The technology will come to those who know what to do and are ready to work. So the strategic priority is to train the labour force for the new economy, We should not shed tears for the old technology, we should turn to the challenges of the future instead. We must be prepared to face them, and that means we must be qualified and trained to do so.

Big investments are needed for this. But these investments are the most justified that exist - investments in people. This will also be an opportunity for the young, for all who are young either in terms of age or in terms of spirit and energy. Also, we shall endeavour, through a general improvement of living and working conditions, to get as many experts who have left our country is we can to return. We shall endeavour in a resolute manner to put a stop to the current brain drain. Ireland has set aside the equivalent of half a million Deutschmarks from its national budget to get every engineer who as left the country to come back. Our top experts would come back immediately if they had decent working conditions and pay.

After many years of falling employment we undertake to make the year 2001 a year of growth in employment. This will be one of the most important criteria of the success of our economic policy. Our aim is to bring about a considerable improvement in the standard of living of our citizens. According to official statistical data, the average earnings of a four-member family are barely sufficient to cover 70 per cent of the average consumer basket of goods. Our aim is to ensure that, by the end of 2001, an average family should be able to cover the costs of at least an entire consumer basket of goods

What we expect in the way of outside investments in the forthcoming period are investments in agriculture, transport infrastructure, and the energy generations system. By upgrading these sectors to a satisfactory level, we shall be approaching goals the likes of which we could not even dream about before 5 October. Our country will become a significant exporter of food products again and I believe that I am not taking a great risk if I promise, on behalf of this government, that we shall have enough electricity next winter, since we shall undertake in the course of 2001 an overhaul of the entire electric power industry the first such overhaul in the past 10 years.

We shall provide significant loans for small and medium-sized enterprises industries and we shall strive for balanced regional development. Also, the new local administration law will make possible a decentralisation of power and finance. The province of Voivodina will have a real autonomy, suited to the needs of its citizens and those of Serbia as a whole.

Our economic strategy must consist of finding and attracting new investments, so that Serbia can get back to work over the next four years. After 10 years of deterioration, we need a real New Deal, the most dynamic economic development since World War Two.

The task of this government is to create through legislative initiatives conditions favourable for investment and doing business. We shall gradually harmonise our regulations with those of Europe, with a view to becoming a member of the European Union member in ten years at the very latest.

Firstly, we shall establish quite clearly the situation in Serbia concerning finances, property, obligations and rights. We shall propose an act regulating property illegally taken away from its rightful owners, which is a way of providing at least partial compensation to the people whose property has been taken away from them for ideological reasons. We expect the federal government to annul the relevant legal acts of half a century ago. Also, we expect that the Karadjordjevic family will get back the citizenship that was taken from them, and that this most famous Serbian family will finally return to its rightful home, the White Palace.

Secondly, we shall unblock the economy financially by converting debts into ownership, through reprogramming or compensation.

Thirdly, we shall establish a clear ownership structure and in connection with this, a modern management structure in our companies. There will be no more socialist type managers who managed the property of others without any financial liability.

Fourthly, we shall complete a legislative system that makes untrammelled business communication possible. In close collaboration with the federal government we shall pass legal acts regulating foreign investments, mortgage, arbitrage, concessions, donations and the securities market.

Fifthly, we shall establish a new taxation policy, which will lift part of the heavy burden from the economy and employees’ earnings. It is our intention to simplify the tax system to a great extent to lower the taxes considerably and to make up for the budget deficit thus created through the suppression of the black market in oil derivatives and cigarettes. We shall do away with other levies and taxes imposed by the previous regime.

This is our programme. The least we can promise is that this will be a government of rapid action, efficiency and transparency. We shall react to every problem immediately, we shall present it truthfully and propose a solution. We shall not lie nor steal. In all fairness, we do not have a magic wand. What we have is know-how and energy. I am convinced that, with the support and active participation of our citizens, we shall succeed.

Signed articles represent the views of the authors only, not necessarily those of Socialist Affairs or the Socialist International

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