The specter of unemployment is circling the south of Serbia

"Of the people I know, a third no longer live in Leskovac. People from every other house in my street went abroad," Marko Anđelković from Leskovac, a former employee, told Vreme. "Jeans" factory, which closed its plant in this city in 2023.

Marko worked for "Jeans" until 2021, but many of his friends stayed at this factory until its closure. Around 700 then people lost their jobs, they were informed about the closing of the factory by a circular SMS message.

"I had the opportunity to see that message. Before that, it was rumored that the company was in huge debts. When the salary started to be late, the alarm went off for people. Although the official information from the management was that production would be normalized, it was known that this was not the case and there was public talk about it among the workers. But the first official notification was an SMS message that the company was closing," he says.

The Turkish factory officially went bankrupt in September 2023. After 12 years of business, "Jeans" left Leskovac with huge debts, both to the local self-government and to the workers. Less than two years later, another factory in the south closes - this time in Niš. The company "Benneton" announced the closing of the plant in that city, which will leave more than 900 workers without work. However, it should be emphasized that the Italian fashion brand has had problems with business for a long time, and the plant in Serbia is no exception; before Serbia, Croatia and Turkey remained without "Benetton".

PROBLEMS IN OTHER FACTORIES

As soon as the news about the closure of "Benetton" spread through Serbia, more bad news arrived from the south. "Johnson Electric" from Niš offered to terminate the contract by mutual agreement to a certain number of workers - the media write about 300 of them - and such agreements are also offered at "Jura" from Leskovac, as well as at "Aptiv".

"The company offers paid leave and the option of mutual termination of the contract, with appropriate severance payments of 400000 dinars or 350000 dinars, so that employees who decide to terminate their employment relationship will have a fair compensation", announced "Jura" from Leskovac. They cited a 45 percent decrease in sales compared to the previous year as the reason.

About 3000 workers are employed at "Jura" in Leskovac, and a similar number is employed by "Aptiv". The independent trade union of this factory announced that its management has also started offering employees mutual termination of the employment contract.

"My brother received an amicable termination of the contract with 'Aptiva', with certain funds. And many of my colleagues and friends have not been working at 'Jura' for four or five months now," Anđelković says.

"Vreme" contacted "Aptiv" to verify these allegations, but we did not receive a response by the deadline.

UNCERTAIN FUTURE OF WORKERS

When "Jeans" in Leskovac was closed less than two years ago, the workers were promised jobs in other factories. One of them is "Aunde", opened a month later with a subsidy of 4,89 million euros, as "Nova ekonomija" later revealed. However, "Aunde" could not take over all the former employees of "Jinci", but employed 304 of them, it was stated in the announcement after the opening.

If the number of 900 people from "Benetton" who will lose their jobs are added to the 300 from "Johnson Electric" who could join them - which this company denies for now, but states that the problems faced by the auto industry could affect their company - this means that in the first half of the year, 1200 people will lose their jobs in Niš alone. And that's not counting the "Jura" plant in Niš, from where they announced that for now they are not considering offering mutual contract terminations like in Leskovac, even though they are also facing a drop in sales.

What will happen to all these people? Will some heavily subsidized investor step in as a rescuer this time, like the "Aunde" company? For now, announcements about the investor-rescue have remained at the level of promises. After the news about the closure of "Benetton" broke, Niš was visited by the Minister of Economy, Adrijana Mesarević. At a meeting with Mayor Dragoslav Pavlović and representatives of the largest companies in the territory of that city, they discussed the possibility of part of the Benetton workers being taken over by existing companies, the Ministry stated.

It was not announced whether any of the companies accepted it.

photo: jugmedia

CLOSURE OF SUBSIDIZED FACTORIES

"Aunde" is not the only one who received money from the state. Many of the factories that picked up their machines and left Serbia were subsidized from the republic's budget - an example is the Turkish "Jeans" from the beginning of this text, which received 2011 million euros from Serbia in 1,75. In addition, in 2013, "Džinsi" was exempted from paying a tax of 55000 euros for the arrangement of city construction land. According to the data from the financial reports, only in the last five years of "Jinsi" business, 4,4 million euros were paid to the company's account in the name of premiums, subsidies, subsidies, donations and similar items.

And when "Džinsi", burdened with debts, left Leskovac, part of the back wages of the Turkish factory was paid from the Solidarity Fund - that is, from the budget, that is, with the money of Serbian taxpayers.

The Italian "Benneton" received a smaller subsidy of 9000 euros per employee in 2013, while "Johnson Electric" received so much money from the state treasury that it had to return part of the money. Namely, according to the contract from 2013, this company was supposed to receive a total of 19,2 million euros in incentives from Serbia, paid in four equal installments. After several annexes to the contract, "Johnson Electric" has so far fulfilled the condition only for the first two installments, and committed itself to return almost one million euros to the state of Serbia by December 31, 2024 at the latest.

YEAR OF THE GROUNDMOOT

When everything is taken into account, Serbia has been experiencing the same scenario for years. Since the subsidized "Jeans" left Leskovac, "Aunde" came to take the chestnuts out of the fire. Less than two years later, when Benetton announced the closing of its plant, there were rumors again about a new foreign investor who would take over the workers of the Italian company. Is there an end to the vicious circle and how profitable is it to constantly bring in foreign investors who often pick up the machines and leave as soon as the budget funds run out?

Economist Saša Đogović tells "Vreme" that there are several alternatives to the current subsidy policy. A big problem is the non-transparent black box system, which raises the suspicion that this area is also a generator of corruption.

"We do not have a clearly defined industrial policy. Subsidies are fine, but they should be transparently defined, with clear rules of the game, and they should be directed towards high-tech industries, which are looking for better quality, more skilled and better paid workforce. In this way, we would also export products with a higher unit value", says Đogović.

He explains that the textile industry is a labor-intensive industry that moves capital to where it will have the lowest labor costs. In the beginning, Serbia met these conditions, but over time, the minimum wage and the average wage increase, labor costs increase and the price of electricity rises.

"That's why the process of disinvestment is happening in that branch," Đogović points out. On the other hand, he states that the problems in factories like "Jura", "Aptiva" and "Johnson Electric" are partly the result of problems on the European market.

"Investments in startups and in the commercialization of those ideas are important, so that Serbia can compete in the international market through innovative products, and not just raw materials and semi-finished products", says Đogović, emphasizing that the state should invest more in energy infrastructure in order to meet the need for a greater amount of electricity.

"EPS has been galloping for years with the development of renewable energy sources, in that area we had untimely investments, which is why we are often importers of electricity. Last year, an agreement was made with the Americans on the construction of solar power plants, it is a good move and it must be praised", Đogović points out.

SEARCH FOR A BETTER LIFE

The Austrian crane factory "Pfalinger" started operating in Niš last year, which received 4,6 million euros in subsidies, and by 2027 it should have 375 employees. By next year, the Italian "Ariston", a manufacturer of household electrical appliances, should open in that city. This company received as much as 22,2 million euros from Serbia, and it is obliged to employ 2027 workers by 300.

Will these factories take over some of the Benetton workers or other workers who are at risk of losing their jobs due to problems in the automotive industry? The mayor of Niš hinted at this possibility, but, for now, without official confirmations.

Whether and when there will be significant changes in industrial policy is unknown. Everything indicates that state and local officials continue as usual. And until radical changes occur, workers from the south of Serbia will remain cheap labor.

"In Leskovac, we mostly work for the bare minimum. In addition, uncertainty drives the best people out of the company. People don't want to risk their existence waiting for things to get better," says former employee of "Džinsija" Marko Anđelković.

Maybe he will join the neighbors who left Serbia in search of a better life.

"Both my brother and I got Croatian work permits. "One good offer separates me from leaving," Anđelković concludes.