MARKO ČADEŽ, President of the Chamber of Commerce and Industry of Serbia: WE HAVE FOUND THE COMMON INTEREST

For years, Germany has been a key economic and first external trade partner to Serbia. The growth trend in trading in goods and services and the influx of German investments continued in 2018 too.

The value of trading in goods and services between the two countries broke a record last year – 5.11 billion euro, while Serbian exports amounted to 2.52 billion euro, which makes Germany the No 1 destination for Serbian exporters. The external trade grew by 12.5% relative to 2017, and amounted to the record-breaking 4.88 billion euro, which is twice as much as the trade value in 2008. In the last ten years, the Serbian export to Germany grew 2.5 times, to the value of 1.94 billion euro.

Export-oriented German investments have been significantly contributing to the growing export to the German market for years. Last year, almost 2,500 companies from Serbia – about 650 more than five years ago – exported to Germany, with 13 German companies making it to the list of the top 20 exporters to Germany, with a 40% share. “Notwithstanding the latest investments, which are currently being implemented, the investments made by German companies in Serbia have exceeded 2 billion euro,“ says Marko Čadež, President of the Chamber of Commerce and Industry of Serbia.

German manufacturers have also contributed to substantially improving the structure of our commodity exports in favour of higher processed products. “More than 90 percent of our exports to Germany comes from the sale of industrial products, 51 percent are machines and transport equipment, and almost a third of the goods we export to Germany are final products,” our interlocutor adds.

Regardless of the aforementioned, Serbia is still recording a major deficit in trading with Germany?

– The fact remains that last year’s trade deficit increased considerably; to around one billion euro. However, it is important for the Serbian economy that this was due to the increased import of state-of-the-art equipment, machinery, intermediate goods for the needs of German and other investors in Serbia, and that that brought new technologies and modernization of the Serbian industry. Our desire is to have a more balanced external trade in the coming years. Of course, this balance should be as strong as possible, bearing in mind the huge differences in the capacity of the two economies and the need to import products that we can hardly substitute for a short period of time. Unlike trading in goods, Serbia has recorded a surplus in trading in services which, last year, grew by almost a third. In 2018, Germany was the top partner to Serbia in the overall value of trading in services – 885 million euro, and the revenue generated from exporting Serbian services – 590 million euro.

Do you expect that the slowdown of European economies, including Germany’s, could have consequences on the external trade and the influx of German investments to Serbia?

– The slowdown in global growth always carries great risks for small and externally dependent economies, such as ours: the danger that smaller economic activity, especially in the countries that are our major partners, will cause the reduction in demand for our products and serviced could postpone previously planned investments and limit investment operations of the German companies that are already doing business here. In terms of Germany, which is the strongest economy in Europe, I am confident that, relying solely on its power, the country will manage to find the right answer to global challenges, as always, and that, despite the slowdown in the global economy in the fourth quarter, it will continue to expand in a stable manner in 2019 too. All the more, since, in 2018, Germany was again the country with the highest surplus in the balance of current payments in the world. The latest official statistical data came as a pleasant surprise to cautiously pessimistic economic analysts who said that Germany’s imports and exports, not only on the annual level but also in December relative to November, increased more than it was expected in this situation.

We often hear German companies talking about a lack of sufficiently qualified workforce in Serbia. What can Serbia do to mitigate this problem that the domestic companies are facing too, apart from implementing dual education?

– In last year’s survey conducted by AHK, German companies, which operate in Serbia and employ over 55,000 people here, expressed their satisfaction with the productivity and motivation of employees, their qualifications, academic education and labour costs, as well as the quality and availability of local suppliers. 56 percent of the survey participants announced the recruitment of new workers. Dual education was introduced in high schools based on the good experiences of German investors which they shared with us, that pointed to a solution to the problem that the entire economy – both foreign and domestic companies – is facing. The introduction of dual education in high schools was the first big step in harmonizing the educational system with the needs of businesses and rapid technological changes. Today, there is a fitting environment to change the curricula at all levels of education. The Chamber of Commerce and Industry of Serbia participates equally in devising school enrollment plans.

How do you explain the low workforce activity rate, despite the strong demand for workers? What can be achieved through re-training measures considering the unfavourable structure of the unemployed and work inactive persons?

– The mismatch between the educational system, on one side, and the needs of the economy and rapid technological changes, on the other, lack of qualifications, knowledge and skills in workers that companies need, the lack of professional orientation and guiding students towards getting jobs that are in demand in the labour market, poor worker mobility in individual countries and in the region, non-compliance with national regulations and standards – these are just some of the problems that all the economies of the region face, along with the high unemployment, especially among young people, lack of adequate workforce, many vacancies, brain drain and delay in investments due to insufficient number of suitable workers. Serbia is already cushioning this through dual education and other education reform activities. In terms of re-training, this is one of the ways to correct irregularities and shortcomings in the education system in the previous period. But the gist here is to adapt education system to the needs of businesses.

To what extent will the liberalization of the German labour market affect the brain drain in Serbia?

– The fact that, according to the latest Eurostat data, the EU needs 3,800,000 additional workers, of which Germany alone needs 1,200,000 high school and university graduates, represents an additional challenge for both Serbia and all Western Balkan economies. It is now certain that, come January 2020, the visa process for the people from the Western Balkans will be simplified, and that many people will try to get a job in Germany in competition with their EU peers, with many of them actually getting one. As a result, they will have a better salary, and better working and living conditions, as well as greater opportunities for training and further education. The new EU Member States have already had to deal with this problem immediately after their accession. Regardless of this, borders should not be closed because nobody is entitled to deny this guaranteed right and the opportunity for people to go where they will have better opportunities for their personal and professional advancement. Our only rational response to this is building a more inclusive environment, including the labour market, conducive to the growth and development of our economies.

Do you think that the German investments in Serbia will be jeopardized if the brain drain becomes very pronounced?

– I really don’t think that that will happen. Serbia offers to foreign investors a whole array of reasons to invest in our economy, including the quality of the workforce, with which German investors are satisfied, despite the lack of certain worker profiles, which we are working together to eliminate. Foreign and especially German investors are our biggest allies in reducing unemployment and preventing brain drain. The more of their investments, new factories and new jobs we get, the more work will our companies have more and our people will have more reasons to stay and work here. Foreign investors will significantly contribute to keeping people here by sharing their experiences, as in the case of dual education, transferring their well-established work and earnings policies to Serbia, opening training centres here, like Siemens did in Kragujevac, and enabling their workers to improve and further educate themselves at local factories, their headquarters in Germany and branch offices around the world.

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