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Social development of Serbia in process of
transition Vojin VidanovicVojin Vidanovic
SerbiaSerbia
September 2010, ISS, ItalySeptember 2010, ISS, Italy
2
Presentation planPresentation plan1.1. Introduction: transition in Southeast EuropeIntroduction: transition in Southeast Europe
1.1. Period of social catastrophy 1990-2000Period of social catastrophy 1990-2000
1.1. Period of transition and recovery (2000-2008)Period of transition and recovery (2000-2008)
1.1. Serbia and global crisis: actual trends Serbia and global crisis: actual trends (Post 2008 development)(Post 2008 development)
Conclusions: Actual structural problems influencing Conclusions: Actual structural problems influencing development and development possibilitiesdevelopment and development possibilities
Social development of SerbiaSocial development of SerbiaIn process of transitionIn process of transition
3Social development of SerbiaSocial development of Serbia
In process of transitionIn process of transition
1. 1. IntroductionIntroductionAfter the fall of Berlin Wall (1989) in most of After the fall of Berlin Wall (1989) in most of
countries of East Europe, a transition from socialist to a countries of East Europe, a transition from socialist to a capitalist driven democracy has begun. capitalist driven democracy has begun.
The process of transition is characterized by:The process of transition is characterized by:- Change to plural democracyChange to plural democracy- Change to market economyChange to market economy- Subsequent privatization of gouvermental goods and Subsequent privatization of gouvermental goods and
minimal state compared to command (socialist) minimal state compared to command (socialist) economyeconomy
But the process of transition should be understood But the process of transition should be understood as general process of social change of existing as general process of social change of existing toward desired society including change of political toward desired society including change of political and cultural (value) system, not only change of and cultural (value) system, not only change of economyeconomy
Transitional social problems are at the same time part of the change as well as limiting factor to social development
As a change of institutional system of a country, it includes political transition or change to multiparty system, change the role of goverment and new role of government in protecting rights of citizens
As economical change, it includes complex processes of restructuring, market liberalization, economic stabilization and privatization of goods and properties
Pre transition position When transition started in Southeast
Europe, Serbia was part of Socialist Federal Republic Yugoslavia (one of the republics in Federation)
Starting position of Serbia was good, compared to other socialist economies with 3 823$ and 760 DM salary. It was 20% lower then best of the Republics of SFRY but 50% better then Bulgaria or 127% better then Romania or Poland
However, instead of raise in development experienced deep crisis as nationalism came to rise and beginning of Yugoslav wars
Development in transition
1990 GDP is 100, upper line1990 GDP is 100, upper line
– – Central and Baltic Europe, middle ex Russian Republics, lower one SerbiaCentral and Baltic Europe, middle ex Russian Republics, lower one Serbia
Transition in Serbia Started last (2000 compared to 1989/1990) Has a pre-crisis context with Yugoslav
wars, which in Serbian context included (1990-2000):
- Long term UN embargo that seized the development, made a fall in production and stopped scientific, regional and cultural development almost for a decade
- Hyperinflation, unemployement and rise of poverty
- 1999 NATO bombing that further salvaged industry
- Rise of social inequalities, urban crime and “gray economy”
- War envirovment (refugees, PTST …)
22. . Period of crisis (social catastrophy)Period of crisis (social catastrophy) 1990 - 2000 1990 - 2000
Crisis indicators Sudden fall of income (1990 3 000$,
1992 1000$, 1993 lower then 500$ which is comparable to Africa)
Fall of industrial production: In 1999 Serbia produced 1/3 of what was produced in 1990
Sudden fall of average wages: 1990 760 DEM, 1991 224DEM, 1992 110 DEM, 1993 12 DEM, with a slow increase to 80-160 DEM to 1999, ending 87DEM 1999 in NATO airstrike year)
GDP per capita fall
3240 32492839
2018
1390143015401600174018801450
0
500
1000
1500
2000
2500
3000
3500
$
1989 1991 1993 1995 1997 1999
Godina
Per capita BNP
Rise of vulnerable groups (in risk)
0
1000
2000
3000
4000
Siromašni 1106 1447 1642 3046 2732 2513 2258 1709 1475 2559
Izbegli 0 200 400 650 415 300 200 100 150 503
Int. raseljeni 0 0 0 0 0 0 0 0 0 230
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Yellow – Under poverty line, red – Refugees, blue – Internally displaced
Impact to society Rise of urban poverty Hyperinflation, poverty and fall of the real
income, “grey economy” and “false employement”
Budget deficits and inablity to serve foreign debts
Fall of production and rise of unemployement
New forms of organized crime and rise of juvenile delinquency
Raise of social inequalities Complete block of process of transition
zastoj u razvoju i tranziciji;
Impact to society 2,8 million persons (1/3 population) below
poverty line Inability of gouverment to provide social
benefits: child benefits were 2 years late and benefits to the poor populations 3 years
Brain drain (loss of human capital) has taken a complete generations: over 400 000 young and educated have permanetly lost the contry
Decrease in quality of health care and education
Cultural and scientific isolation Loss of the value system: rise of nationalism
Lost opportunities A decade of social regression instead of development From SFRY position of partner and observer member to some
EEC trities, restart of the small new democracies Loss of positive background of one of the liberal communist
societies with mixed system good diplomacy and trade acess Creation of deep structural social problems that will affect
heavily the next “democratic transition” decade One of the last societies to remain in some form of centralized
economy communism (transition to democracy started 2000) Not parttaking the global economy, informational age etc. of
the last decade of 20th century Through immigration: enormous loss of human capital and
creating a deeper population gap in country with low birth rate and high unemployement
Complete loss of integrated ex-Yugoslav trade and economical space
3.3. Period of transition and recoveryPeriod of transition and recovery2000 - 20082000 - 2008
Characteristics of transition in Serbia
Combined liberal approach (in economic transition) and social democratic approach (in keeping some of the wide basis of social rights) has been used in this period
EBRD indicators have presented that liberalization and privatization of the small enterprises has been done quite quick and well
Characteristics of transition in Serbia
However, structural reforms have only been partial: reform of the bank sector, price liberalization etc. was success, but processes of restructuring, selling large and public service companies, reduction of gouvermental spendings was significantly slowed down
Conclusion is that during this period of transition economical reforms were success, however deep social changes have been slowed down due to political dependencies
Social impact Average salary has increased 4 times, from 86
to 331 euros Purchasing power in goods has increased 3,5
times Retirment benefits has increased from 50 to
160 euros Foreign direct investments 2001-2006 over 9
billion USD However, unomployement continued to raise at
steady pace of almost 5%, with rate of 20,9% in 2006
Constant raise of GDP at rate of 5-7% per year Inflation recuded to below 10% per year
Social impact After 7 years of transition summary would be
that dynamical economical growth has decreased the “gap” compared to other transitional economies
However, the 1990. levels were not yet reached: production Gross product was 20% lower then 1990, industrial production -50%,
Living stanard is still among lowest in the Europe (purchasing power 37% of EU-27)
New social inequalities: rise of Gini coeficient to 0,31
Missed opportunities Not fully developed democratic society (civic
society, protection of minority groups) Not conducted the full social wellfare reform
to a new neoliberal model with preparations State expeditures not reduced Pension and social security systems is
ongoing reform Denationalization Last country in Europe not
to return property right Late EU acession (candidature send late
2008, not accepted yet, SAA in force since 2008)
4.4. Serbia and global crisis: Serbia and global crisis: actual trends actual trends
(Post 2008 development)(Post 2008 development)
Global crisis
Global crisis influences Serbian society since 2008.
It is considered to be the biggest economical crisis, after the great recession of the 30s
It is interlinked not only with economical crisis, but “ecological crisis” (effects of global warming, resource depletion) as well as raise of global poverty and prices of food
Crisis in Serbia
Serbia is in process of demand of investments so this was first influenced, alongside other crisis effects producing negative growth of about -3,0%
Stability of local currency (Serbian dinar) was harmed as sudden fall from 1:85 to 1:105 occured in period of 2008-Sept 2010, while salaries in public sector were “frozen”
Response and effects Gouvermental reponse was mixture of
reductionist approach (increased taxes, less gov. Spending, frozen employement and salaries) and “more spending” approach (subsized credits for citizens and companies)
Economy partially stabilized in early 2010 with “no negative growth”
Significant rise was in unemployement, but severely affected sectors were investments, job creation, tourism etc.
Increase in foreign debts: over 2,7 billion dollars of new debts to IMF
Regional comparison of crisis effectsGDP in million euros2001
2008 2009. Average growth 2001-2008
Growth rate 2009.
Bulgaria 15 250 34 188 33 877 5,6 -5,0
Romania 45 537 137 035 115 869 6,2 -7,1
Hungary 59 521 105 244 93 086 3,4 -6,3
Croatia 25 501 48 183 45 143 4,5 -5,8
Slovenia 22 707 37 516 34 894 4,4 -7,8
Serbia 12 821 33 418 30 916 5,4 -3,0
Regional comparison of crisis effects
Country 2008 2009 Index
Slovenia 1391 1439 103
Croatia 738 737 100
Hungary 460 458 100
Bosnia 408 410 100
Romania 373 349 94
Serbia 400 338 85
Macedonia 260 325 125
Bulgaria 226 237 91
Social effects Decrease in average salaries to 85% In 2009. Further increase of unemployement
to 16,6% (14% in 2008., 18,1% 2007.) Below national poverty line of 80 euros 9,2%
population, about 700 000 in risk of poverty Long term and structural unemployement
endured (65% of unemployed) Slight recovery in 2010 (+2% GDP) but it
will level up to the period before crisis. A real GDP rise (3-5%) is not expected before 2012
Conclusion
Overall stability was preserved, maintaining 35th place in HDI and GDP PPP
However,a period of recovery of at least two years is expected, as well as old transitional structural problems iherited needs to be resolved at new social costs
120 000 persons were newly unemployed in last five years, so job creation needs to be priority
5. Actual structural problems 5. Actual structural problems influencing developmentinfluencing development
and development possibilitiesand development possibilities
Development factors
• Political stability and ideology• Human capital characteristics• Economical development• Science and technology
Structural problems of Serbia
• Unemployement• Poverty and raising inequalities• Aging and depopulation• Regional differences –
decentralization and regional approach
Top bottom approach
• EU developments and influences (Lisabon indicators, Leaken indicators, Europe 2020 strategy)
• UN Human development approach (MDG, Global Compact, Review)
• Theoretical approach – developmentalism social policy, PRSP, medium and long term social planning
“Risk populations”
- Roma- Elderly- Children in risk- Youth- Refugees and IDPs
