MARTIN KNAPP, Director of the German-Serbian Chamber of Commerce (AHK Serbia): BUILDING INDUSTRIAL MIDDLE CLASS TAKES TIME

Both German investors who are manufacturing goods in Serbia for further export or focus on the domestic market have reasons to be satisfied. Yet each group see the rule of law as a problem. Furthermore, the emigration issue is becoming a worrying subject

Today emigration bothers German companies operating at the Serbian market much more than the labor law or the incentives given to investors, says Martin Knapp, Director of the German-Serbian Chamber of Commerce (AHK Serbia). Indeed, dual education is yielding first results thus contributing to restoration of the industrial middle class in Serbia but existing reforms of education can’t on their own reverse the emigration trends. On the contrary, industrial workers are today in high demand everywhere. However, there are many pos tive things which are contributing to the good economic relations between two countries and bright prospects for the future. Indeed, the status of German-Serbian relations today which is closer than ever before in history, says Mr. Knapp. “Serbia is unique in many ways, but when it comes to economy, there are a number of countries that have a fairly similar structure. We like to ask potential investors which other countries they have on their candidate list, and we almost always hear the same names. Usually, Bulgaria and Romania are on the list, quite often Northern Macedonia and Ukraine, sometimes the Baltic countries too”, says Director of AHK Serbia. Yet he adds “the investment spirit is, I think, doing quite well. All over Serbia, people are aware of the fact that investments are necessary if the prosperity of the population is to be brought in line with the European average.” In the past, it was often the cost of labour in industrial production that was decisive for an investment decision.

What experiences do German companies in Serbia have regarding the business environment, the quality of the workforce and the new investment outlook?

There are two major groups of German investors. One of them is manufacturing products for the world market. This group is generally satisfied with the conditions. The other group is, at least partially, also active in the Serbian market. Of course, life is not that easy for these investors, since they have to deal with competitors, some of whom have been established in Serbia for a long time. Both groups are very satisfied with the local workforce. But both still see the rule of law as a problem. This is reflected in our annual survey regarding the business environment.

What do your members say are their reasons for doing business in Serbia? What is appealing to them?

In the past, it was often the cost of labour in industrial production that was decisive for an investment decision. In the meantime, it has become known that Serbia is also a country of engineers and computer scientists, and more and more investors want to attract these people. What is still missing is the industrial middle class, the skilled workers. We are working on this, especially by supporting the introduction of dual vocational training, but that takes time, of course.

What initiatives did the Serbian government implement to create an investor-friendly environment?

One thing you really can’t blame the Serbian government for is that it is not doing enough to attract investors. Of course, there are still subsidies, but that cannot be avoided as long as the competition is also paying them. But there are also other things, such as a very flexible policy on freezones or the supply of land. Permits of all kinds are usually granted quickly, and some investors have wondered how fast everything goes in Serbia…

How do trends in the German economy impact the activities of your members?

It is still too early to give a final answer to this question. It is true that the economy in Germany has cooled down considerably in recent months. But not much of this has reached our members so far. The automotive industry is a special topic. German car manufacturers are struggling to keep pace with their competitors in the development of electric cars. In addition, those car component manufacturers whose products are used exclusively for traditional cars with gas engines, will have to think about their future.

Both businesses and the government are saying that the lack of a competent workforce is becoming a rampant problem. Does the key to remedying this situation lie in labour legislation or somewhere else?

I would not place labour law in the first place here. It’s more the emigration that’s bothering our companies.

Are you satisfied with the implementation of dual education in Serbia so far?

Thank you for that question. The subject is really close to our hearts. Together with our Austrian and Swiss colleagues we had encouraged the Serbian Government to introduce a national system of dual vocational training instead of launching more and more pilot projects. So far, the results have exceeded our expectations. For some people the implementation of the system is not going fast enough. I would like to say to them that this takes time. Tens of occupational profiles are to be reworked, curricula are to be written, schools have to reorganise themselves and so do companies. Trainers must be trained and accredited. There is also the question of what profession is needed where. The youngsters and their parents must be convinced that dual vocational training is a real alternative to university studies. Of course, there are people who are especially talented in penetrating things theoretically. For them, university studies are the most suitable way. On the other hand, there may also be people whose talent is so clearly on the practical side that they may have difficulties with the high level of theoretical content of dual vocational training, at least in some occupations. But for the vast majority of people theoretical and practical skills are well-balanced. Dual vocational training is designed exactly for that majority. It is the best way to learn a challenging profession that they really can enjoy and that pays well, also. That’s why for the German-speaking countries, dual training became the core of their industrial success story.

How can we advance the relations between the two countries?

German-Serbian relations today are closer than ever before in history, and this should remain that way for ever – to the benefit of both sides!

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