In 2017, Miloš Nenezić was appointed President of the Serbian Association of Employers. In an interview for Diplomacy&Commerce, he talks about his view of the current situation in the economy, new legal provisions, and the Association’s plans.
Miloš Nenezić- President of the Serbian Association of Employers
Are business people satisfied with the business environment in Serbia?
— Most business people have a positive opinion about more efficient work of the state administration in comparison to an earlier period because they recognize that, through their activities in the Serbian Association of Employers, they have increased the possibility of participating in reforming laws and regulations that affect the business environment. Areas that have recorded certain positive developments albeit unsatisfactory include high operating costs, fiscal and parafiscal levies and the fight against undocumented work, as well as an inadequate education system and arrogance displayed by many employees in public enterprises, especially those in lower positions. According to employers, solutions that can greatly affect the overall economic environment in Serbia can be viewed through several components. The first is reducing the high costs of doing business. By reducing taxes and contributions on wages and increasing the non-taxable portion of earnings, which would offset reduced state budget revenue through the implementation of an effective control model, as well as reducing the large number of fiscal and parafiscal levies would allow employers to operate without additional losses, pay taxes and contributions, expand business, invest and create jobs.
Second is a comprehensive measure to counteract undocumented work by implementing a rigid penal policy, which will force businesses to operate in accordance with the regulations by financially penalizing them rather than preventing them from working, by enhancing the capacity of institutions, especially their control functions and by fighting corruption while reforming the judiciary.
Next is the legislative framework which can be improved by building a partnership with the Government through further development of social dialogue and joint engagement in resolving serious issues related to the implementation of overall reforms in the country, especially through the work that the representatives of the Serbian Association of Employers do in the working groups formed by the line ministries relating to drafting laws, which was adopted as the conclusion of the Socio-Economic Council, the Serbian government can make a step towards genuine dialogue in which all business people are interested. The Serbian Association of Employers, together with the Chamber of Commerce and Industry of Serbia, is establishing a system for joint action that will achieve even better results than the two organizations previously had individually.
The fourth solution is resolving workforce shortage in the labour market. There is a pronounced lack of professional and skilled staff in almost all economic sectors while the economic migration of young professionals must be on the list of priorities of all current policies, starting with economic ones, through to education and employment policies. We have to build a stable and strong institutional framework that will establish a comprehensive context and conditions in which young people will be given quality education and the opportunity to be employed in adequate jobs upon completion of formal education. The Serbian Association of Employers has initiated a comprehensive educational reform in the Republic of Serbia that will be in line with the needs of businesses and society, and not adapted solely to the existing educational staff.
The next measure is customs clearance and customs reliefs. Thanks to the business community who have pointed out to us things that can be done to alleviate doing business and thus have influenced the launch and adoption of the initiatives late last year, the Law on Investments was amended in such a way that domestic and foreign investors will be exempted from paying customs duties for the purchase of machinery that is considered a stake in their share capital. What comes next are public service reforms. It is necessary to review or direct and re-educate civil servants in order to avoid the very rigid reasoning that many of them have whereby they think that if they got a job in public administration that are not obligated to behave in a professional manner towards service users and do not have to ensure that service users are satisfied with their work and are receiving improved services which, in turn, changes their perception of the state authorities.
Last but not least, we have new technology. Digitizing the economy and society in Serbia is one of the best opportunities for the country to become more competitive and efficient, thereby ensuring faster and more sustainable economic growth, which will later yield positive results in terms of higher wages and pensions, as well as investments into education and healthcare. In Serbia, as in the EU, further development of information and communication technologies has been recognized as a major factor influencing economic growth and innovation.
What is the Association’s position on improving the flat-rate taxation system?
— One of the specific initiatives has started to be implemented on January 1, 2020. Changes have been made with the view of simplifying the flat-rate tax calculation procedure, to enable filing of tax claims electronically, as well as to automatically calculate flatrate income tax and to submit tax assessments electronically via the Tax Administration website. The new flat-rate taxpayers will receive a tax assessment in electronic form via the Tax Administration website within 48 hours from the date of incorporation of a business entity with the Business Registers Agency.
As of 2020, the minimum wage is set at 172.54 dinars per working hour. Are you satisfied with the agreement you have reached with trade unions and the government?
— The Serbian Association of Employers is in constant consultation with employers, examining their views to take into consideration the viewpoints of the business community in regard to the minimum wage in Serbia. The Law on Personal Income Tax has increased the non-taxable part of earnings so that it now amounts to 16,300 dinars. The mandatory social insurance contribution rate has been reduced from 26% to 25.5%, i.e. the contribution to the employer’s pension and disability insurance has been reduced from 12% to 11.5%. Although there is still room for reduction, we should certainly welcome the Government of Serbia’s and the Ministry of Finance’s decision to finally reduce tax burdens and to take into consideration the initiatives of the business community expressed through the Serbian Association of Employers. These benefits are a result of negotiations about the minimum wage conducted by the Serbian Association of Employers, under the auspices of the Socio-Economic Council, with the government and trade union representatives in September 2019. The Serbian Association of Employers’ initiative allowed employers to hire unemployed persons under certain conditions and to be entitled to a refund of part of the paid social security contributions, at the expense of both the employee and the employer, based on the earnings of the newly employed person. Increasing the minimum wage is a temporary measure that enables a company to pay workers the set price if the company starts experiences operational problems until those problems are solved. Good employers want their employees to be satisfied and the salary is one of the main reasons for the employee’s satisfaction.
You were appointed president of the Serbian Association of Employers two years ago. Are you satisfied with the results achieved so far?
— One thing is certain and that is that, in the last two years, the Serbian Association of Employers has become more stable and has improved its work. The shortcomings from the previous period were resolved and inherited obligations were fully settled, while we also established a much closer relationship with employers. Furthermore, we have improved the internal operations thanks to a better delegation of tasks and responsibilities, better understanding with employees, and significantly improved the work of the Presidency, the Executive Board and the individual sectors. Socio-economic dialogue has been improved, primarily owing to better understanding and frequent discussions with social partners, trade unions and the Government of the Republic of Serbia. We have also collaborated more with international institutions and the cooperation was raised a much higher level, primarily with Business Europe and the International Association of Economic and Social Councils. Numerous changes to the regulation have been initiated which, as a result, should improve the environment for doing business, almost all of them have been adopted and some of them have already been implemented. However, there is still plenty of room for doing more and our work will take several directions this year. Together with the Chamber of Commerce and Industry of Serbia, we have improved our communication with employers to create the best possible conditions for improving the business environment. There is also the continuous cooperation with representative trade unions in defining conditions and signing collective and branch agreements, enhanced cooperation with line ministries through working groups in which the Serbian Association of Employers will participate in regard to changing the legislation, primarily reforming the public sector and actively insist on a radical reform of the education system to suit the needs of businesses and the society, all in accordance with plans for industrial development of the Republic of Serbia and according to the future national strategy of the Republic of Serbia, which should be written soon. The Serbian Association of Employers, as the only representative organization of employers, will constantly monitor the legislative framework and its implementation in order to improve the business environment and enable efficient and better functioning of companies, for the benefit of all citizens of Serbia, because strong economy means strong Serbia.
Labour laws
The Serbian Association of Employers has issued a publication containing useful advice about the implementation of labour laws. Who were your main advices?
— As a responsible social partner, the Serbian Association of Employers is obligated to inform companies about existing regulations promptly, with a focus on the rights, obligations and responsibilities of both employers and employees. Hence, our activities are aimed at constantly educating companies with the view of them having better understanding and consistently implementing obligations stemming from relevant laws. To this end, we cooperated with the International Labor Organization and the Ministry of Labour to prepare this publication in which we tried to provide answers to the most frequent ambiguities and questions that employers face. The Serbian Association of Employers continuously carries out such activities in various segments that are beneficial to employers.