Hike expected in Serbian unemployment rate as privatisation deadline expires

Hike expected in Serbian unemployment rate as privatisation deadline expires
By Ivana Jovanovic in Belgrade June 1, 2016

Serbia's unemployment rate jumped to 19% in the first quarter of 2016, up from 17.7% recorded in the fourth quarter of 2015. The increase brought the unemployment rate back to the same level as in Q1 2015, the statistics office announced on May 31 in its labour force survey for January-April 2016.

The unemployment rate in Serbia will likely keep rising as the Serbian parliament adopted on July 31, 2015 a law on the method of determining the maximum number of employees in the public sector, with the aim of helping to reduce that number. The law is in line with Serbia's precautionary €1.2bn three-year stand-by arrangement (SBA) with the International Monetary Fund (IMF) according to which the country has to reduce the number of employees in the public sector by 5% within the next three years, with some 9,000 individuals currently employed in public administration to be laid off as soon as possible. Massive lay-offs are also expected from June 1, since the extended deadline for privatisation of 17 companies of strategic state interest which employ around 21,000 people expired on May 31.

The unemployment rate in Q1 2016 decreased compared to the unemployment rate in Q1 2015 when it stood at 21.3%. The employment rate, which in Q1 2016 amounted to 42.6%, increased from 41.2% in Q1 2015.

The employment rate of the population aged 15 and over amounted to 42.6% - 49.8% for men and 35.9% for women, the latest labour force survey showed.

The unemployment rate of population aged 15 and over amounted to 19% - 18.5% for men and 19.6% for women.

In quarterly terms, in the first quarter of 2016, the employment rate decreased by 0.1pp, while the unemployment rate increased by 1.3pp.

Serbia has been trying to reduce the high jobless rate, which is a combined result of the closing or restructuring of former state-owned companies and the global economic crisis that affected private sector. According to the statistical office's revised labour force survey data for 2014 and 2015, the country managed to reduce its annual unemployment rate in 2015 to 17.7% from 19.2% in 2014.

Serbia’s Minister of Economy Zeljko Sertic told public broadcaster Radio Televizija Srbije (RTS) on May 28 that none of the 11 companies of strategic state interest whose privatisation deadline has been extended until May 31 and for which the government has not found a solution will go into bankruptcy, but they will no longer be protected by the state from their creditors.

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