Economic tiger and hungry citizens

The negotiations of the Social and Economic Council on the increase of the minimum wage for 2024, which started on August 21, are still ongoing. But the President of Serbia, Aleksandar Vučić, has already announced that the minimum salary will be 400 euros next year. And what was proposed at the meetings largely fits Vučić's promise - an increase in the minimum wage by 17.8 percent, that is, to 47.154 dinars. However, the final amount of the minimum wage will be known, as announced by the Minister of Finance Sinisa Mali, in mid-September. What is clear is that the union's request to first negotiate the minimum wage for this year has not been fulfilled.

The vice-president of the Federation of Independent Trade Unions of Serbia, Duško Vuković, says that the correction of the minimum wage for this year had to be carried out bearing in mind the high level of inflation, especially food costs and other existential needs.

When determining the amount of the minimum wage, according to the Labor Law, Article 112, it is prescribed that, among other things, the starting point is the existential and social needs of the employee and his family expressed through the value of the minimum consumer basket.

In this light, the question arose as to whether the price of the minimum consumer basket should be harmonized with the minimum wage. Opinions differ. Siniša Mali says that the minimum wage has nothing to do with the minimum consumer basket, and that their equalization is not a legal obligation. He added, however, that they wanted to do it in 2018, but the circumstances did not go their way: "We are working on it, but in 2020 there was a corona epidemic, in 2021 there was an energy crisis and we have a problem with the performance of the economy, no our already worldly."

On the other hand, the trade unions have so far demanded that the minimum wage be equated with the minimum consumer basket. The minimum net salary this year is between 36.800 and 42.320 dinars, more precisely 230 dinars per hour; according to the data of the Republic Institute of Statistics, the minimum consumer basket for a household of three for the month of May this year was 51.874,39 dinars.

IS EQUALITY POSSIBLE

Among the recommendations of the UN Committee for Economic, Social and Cultural Rights for the Republic of Serbia for the year 2022, it is written that the Committee is concerned about the inadequate amount of the minimum wage, which is lower than the amount of the minimum consumer basket, with the recommendation to increase the minimum wage, and regularly adjust it to the costs of life in order to ensure a decent life for workers and their families.

Duško Vuković believes that the mentioned equalization would bring at least an increase in the minimum wage and that it has been for a decade helmet around 20.000 for the minimum consumer basket.

"It seems that the minimum consumer basket is just a mathematical expression of what the poorest can buy because they have no more money. The trade unions will move to the standard of the average consumer's basket because this minimum is insufficient when it comes to calories, quantity of food, quality and selection of food items", says Duško Vuković. He states that, for example, there is no seasonal fruit in the minimal consumer basket. Bananas, apples, lemons, oranges and prunes are planned. Out of a total of seven kilos of fruit planned, five kilos are apples, while, for example, lemons are planned in the amount of 200 grams.

"We don't want to say that we stand for something that you can't really be healthy from," concludes Duško Vuković.

Economist and president of the economic research unit "Libek" Mihailo Gajić, on the other hand, is of the opinion that it is physically impossible to equate the minimum wage with the minimum consumer basket. It explains that the minimum consumer basket is calculated by taking into account household consumption data and that the height of the minimum consumer basket is determined by the 30 percent of households with the lowest consumption.

"In that group of households, there are people who work, who do not work, who receive social assistance, benefits, pensioners and the like. It should be borne in mind that the people who work are usually those with the lowest earnings and whose incomes are included in the amount of the minimum consumer basket. If you were to equate the minimum wage with the minimum consumer basket, then the consumer basket itself will grow", says Gajić.

THERE IS NO TURNING BACK AFTER THE PRICE INCREASE

In the Report "Purchasing Power Movements in the Republic of Serbia for May 2023", which was compiled by the Ministry of Internal and Foreign Trade based on data on the value of the consumer basket and data from the Republic Institute of Statistics, it is written that 0.60 of the average salary was enough to cover the minimum basket . There was no calculation of how much the median and minimum wage was enough to cover.

With the minimum net income from 2023, you could cover the minimum consumer basket, but from 2019. However, the increase in inflation in recent years has also affected the prices of products and services. So, for example, according to the table from the Report, a liter of fresh milk cost 2019 dinars in 87,41, while the price of fresh milk in 2023 is 150,73 dinars. Furthermore, for the sake of comparison, the price of edible oil at the end of 2019 was 117,93 dinars, and in May of this year it was 213,69 dinars.

Mihailo Gajić points out that people who work for the lowest wages in every country have much higher expenditures for basic foodstuffs, primarily for food, than it is in the average consumption of the population, so that inflation hits those with the lowest incomes much harder: "When we talk about the minimum wage, an increase of about 17 percent will not be able to achieve the growth of the lost standard at all, if the increase in the price of food was over 25 percent in the last year. And the biggest part of their budget goes to food. We see that they have lost much more purchasing power than the official inflation statistics say".

He further emphasizes that the drop in inflation does not mean a drop in prices and that they will return to the level of a year or two ago, but that prices will rise more slowly than was the case.

Duško Vuković also points out that the main problem is the marked increase in food prices: "According to our estimates, the price increase is between 40 and 100 percent. A kilogram of tomatoes, for example, in September 2022 was about 142 dinars, and now in May it is about 229 dinars."

HOW HUNGRY ARE WE?

The minimum consumer basket for the month of May 2023 for a household of three contains 61 items of food and soft drinks. In addition, it also contains a number of other categories such as education, health, housing, water, electricity, gas and other fuels, clothing and footwear...

Everywhere one looks, the data is not encouraging. So, for example, 125 grams of sardines in oil and 500 grams of hake are expected per month.

"In addition, this is all for the full minimum wage, and since the minimum wage is less than 52.000 dinars, it means that you cannot even buy half a kilo of hake", concludes Duško Vuković.

Or, as Vuković points out, by choosing the fruit listed in the minimum consumer basket, it is possible to consume 45.5 kilocalories, while the World Health Organization and nutritionists recommend between 300 and 350 kilocalories of fruit. He also emphasizes that this basket should provide about 2.300 kilocalories, that this one is composed in such a way that it cannot provide more than 1500.

The conclusion could be – economic tiger He is starving.