Newsletter. Balkan Employers Round Table. Special edition

Transcription

1 Newsletter Special edition Balkan Employers Round Table The importance of Social Dialogue, the role of employers' organisations, the economic situation in the Balkan countries, progress in the accession process and current political challenges: these were main topics of the discussions at the Balkan Employers' Round Table that took place in Ljubljana, Slovenia, on 22 March This publication summarises and supplements the discussions during the event. The meeting brought together representatives of employers' organisations from former Yugoslavia (Slovenia, Croatia, Serbia, Bosnia and Herzegovina, Montenegro and the Former Yugoslavian Republic of Macedonia).

2 Slovenia: Employers priorities and involvement in social dialogue Shuerstock: Arthimedes The Association of Employers of Slovenia (ZDS) was the first voluntary employers' association in Slovenia; it was created 22 years ago. Its membership covers more than 60% of the economy in Slovenia in terms of number of employees and business income and it is thus the largest employers' association. The ZDS is organised along sectoral lines and is divided into 11 sections, each of which has its own committee, while section representatives also form the organisation's management board and assembly. The most important task of the ZDS is to represent employers interests, so we work in all areas affecting employer-employee relations and beyond to other areas which determine the conditions in which firms operate. The main aim in representing these interests is to ensure that firms remain competitive on both domestic and foreign markets by promoting a favourable business environment (a flexible labour market, highly skilled labour force, favourable tax environment, etc.). The ZDS also represents the interests of Slovenian firms outside Slovenia, the (first and) only organisation to do so: in BusinessEurope; on the Business and Industry Advisory Committee (BIAC) at the Organisation for Economic Co-operation and Development (OECD); at the International Organization of Employers (IOE) at the International Labour Organization (ILO); and, since 2015, on the European Economic and Social Committee too. It is also an active member of AREC (Adriatic Region Employers Centre), an association of employers organisations from the countries of the former Yugoslavia, established in 2008 with the help of representatives from the IOE at the ILO. The main idea behind setting up the joint AREC organisation was to strengthen cooperation, sharing experience in the field of social dialogue and speaking with one voice in international projects. The Association of Employers of Slovenia (ZDS) is proud to be chairing AREC for a second term of office. Within Slovenia, the ZDS represents its members' interests through several channels; our advantage is that we have direct access to and cooperation with both the government and trade unions, through established tripartite and bipartite social dialogue which has been going for more than 20 years. We can influence most legislative changes in our capacity as member of the tripartite Economic and Social Council, and also of all major institutions, such as the Institute for Pensions and Disability Insurance, Institute for Health Insurance, Employment Agency and the like. The ZDS is also represented in what is known as the second chamber: the National Council. The ZDS is also the most important player and partner in bipartite social dialogue, in the framework of which it has been a signatory to all the collective bargaining agreements in the country. Thus we have a direct influence on all working conditions, from working hours to wages. Our second priority is to ensure that employers are immediately and properly informed about legislative developments, and to advise and train them in such matters. We offer daily consulting hours for firms and provide information on the Internet, in an electronic newsletter, and in a monthly specialist review, which is the first and only one of its type in Slovenia. We also provide training for firms in the Employers' Academy, which offers more than 100 practical courses each year. Firms not only work to defend their interests in the ZDS, but also tackle specialist issues in the ZDS's expert committees: on wage policy, labour and social law, taxation, health and safety at work and training. This enables firms themselves to have a direct influence on economic requirements for legislative change. Thus the Association of Employers of Slovenia has sought from the outset to be involved in tripartite and bipartite social dialogue. Tripartite social dialogue in Slovenia is organised in the form of the Economic and Social Council, where government, trade union and employers representatives work together. Its way of working was laid down 20 years ago in the voluntary, mutually agreed rules of procedure, which we revised last year. Each party chairs the Economic and Social Council (ESC) for two years. The ESC deals with all the key laws affecting the economy, from the National Reform Programme to changes in labour legislation. Currently the ESC's working bodies are tackling changes in labour legislation from the point of view of decent work, healthcare reform and pension reform, and are working together to prepare the national reform programme and the Stability Pact. Despite Slovenia's good economic performance in recent years, we have not carried out any serious reforms during this time to provide firms with a more favourable business environment. Firms in the manufacturing sector and also in service industries increasingly feel that Slovenia's labour market is lacking in an adequately skilled workforce. Other difficulties for employment are caused by the very high tax wedge and shortcomings in the unemployment benefit and social welfare schemes, which do not help get the unemployed back into the labour market. The fundamental aim of the ZDS is thus to secure proper business conditions through activities in the following areas: taxes and contributions, labour legislation, healthcare legislation, collective agreements, steps to adapt jobs to the ageing population, links between the education system and the economy and the shortage of sufficiently skilled labour. Jože Smole Secretary General Association of Employers of Slovenia (ZDS)

3 Croatia: Structural reforms needed to enhance competitiveness In their efforts to ensure that their citizens enjoy the best possible quality of life, the European Union and all of its Member States face a range of challenges. As citizens, we all want (as far as possible) the highest standard of living, the best educational opportunities, accessible to all, as well as optimal health care and legal certainty, and equal opportunities to achieve our potential and realise our ambitions. While we may all have similar aspirations, when it comes to meeting those public expectations, the individual Member States themselves are in different situations, which correlate directly to their economic stability and the strength of their economy. Shuerstock: bizvector In this respect, unfortunately, Croatia is one of the weakest countries in the EU. During its struggle for independence, our country suffered heavy losses, which further complicated its transition to a market economy. More recently, a six-year recession the longest in Europe further curbed our economic development. Last year, the Croatian economy finally began to recover, and returned to growth. However, we continue to come up against a series of problems that we still have to solve if we want this growth to be sustainable and more robust. Croatia is currently grappling with both high unemployment and a shortage of labour. A substantial part of its labour force is moving to other Member States in search of employment and higher wages. This situation constitutes one of the biggest obstacles to its economic growth, along with long-standing negative demographic trends, and the failure to resolve its structural unemployment problems. Croatia's education system and labour market are out of step with the real needs of its economy, its actual trends and the digital revolution, which is bringing about change at an unprecedented pace. This is a problem that is affecting both employers and workers. For this reason, the Croatian Employers' Association has for some years now been urging the country's politicians to undertake the structural reforms that can resolve the aforementioned problems, and others besides, such as the inefficiency of the justice system and the inefficiency and cost of the public service. It is in the interest of employers, workers and trade unions, in other words, of all Croatian citizens, that these reforms be implemented. If we fail to introduce them, it will not be possible to enhance the competitiveness of Croatia's economy, or to promote investment growth. These are prerequisites for increasing employment and raising wages and living standards. We believe that in order to see through these essential reforms and tackle the many challenges facing Croatia, social dialogue and partnership between the government, employers and trade unions are extremely important, and we are therefore strongly committed to continuing to pursue this path. As a key component of the European social model, all Member States, Croatia included, should endeavour to advance social dialogue. As proof of the importance of dialogue and partnership to developing an economy and building an advanced society that duly meets citizens' needs, one need look no further than the fact that the countries that give this most prominence are also the most advanced in the European Union. Implementing reforms is a difficult task for all governments, but it is made much easier where a government engages in constructive social dialogue and has the support of the social partners. We hope that the Croatian Government will follow the example of countries that are at the forefront of success and modernity and that it will continue to bolster social partnership and, in cooperation with the social partners, to focus on implementing the changes required for Croatia to become one of the most prosperous countries of the European Union. Gordana Deranja President Croatian Employers' Association

4 Serbia: Serbian employers have been in a difficult situation for the last 15 years Shuerstock: Oxy_gen The dysfunctional public authorities have long been struggling to strike a balance between their own interests, those of the trade unions - who are an electoral vote-producing machine - and the country's economic development. It has taken years to secure changes to improve labour legislation to make it more acceptable to employers. The legislation in itself, however, is only a partial solution and sometimes, due to the way it is interpreted and applied, it does a disservice to workers as well as to employers. The privatisation of major state enterprises has not always been carried through completely, with the result that they build up large debts because they are using outdated technologies and their politically-inspired management is not up to the mark: similarly, they are out of kilter with the markets. Given the large number of people they employ and the desire to avoid industrial disputes, however, no government has so far been strong enough to resolve the problems of these loss-making companies. In addition, companies that have been the subject of botched privatisation attempts, from 2000 right up to the present, also pose a huge problem. The effect of this entire situation, together with the 2008 economic crisis, is that Serbia currently suffers from very weak annual GDP growth. The difficulty is all the greater since at one point, the country's debt rose to nearly 65% of GDP. The measures taken by the government are highly questionable, even if they were showered with praise by the IMF and the World Bank. In practice, instead of concentrating on economic growth, the government has limited employment in the public sector - even in areas where this was inappropriate, such as in the health system - and cut public sector pay, even going so far as to reduce retirement pensions, with a direct impact on acquired rights. The entire approach has inevitably put the brakes on consumption. The situation is complicated by the scale of public sector employment, which outnumbers that in the private sector, and by the number of pensioners, which is almost at the same level as the working population. Pension funds have been subsidised by the state coffers for years. Going by statistics, unemployment has fallen, although this is not only as a result of creating new jobs. Young people and skilled workers have left Serbia in large numbers, and the new statistical methods include people who have worked as little as one day a month in the working population. Many workers have employment contracts renewed from month to month, and all are concerned for the future. Under such conditions, it is all too easy to understand why the minimum wage is around the EUR 200 mark, with average earnings close to EUR 380. These figures would not be a problem if fuel prices in Serbia were not among the highest in the region, even outstripping prices in many EU countries: a litre of high-quality diesel costs EUR The cost of living is high, while the state imposes charges on employers that are often unrealistic. Although income tax in Serbia is low (15%), the problem is that the private sector has very few businesses capable of making a profit. Their efforts basically focus on bare survival or minimum profitability. Parafiscal charges are a heavy burden on entrepreneurs: according to the Serbian Association of Employers (SAE), there are nearly 500 such charges spread across the various sectors of the economy. The SAE's unceasing efforts for these charges to be brought under the general tax system have met with no success. They constitute a source of income for local public authorities and often even for public enterprises: as a result successive governments right up to the present have failed to achieve anything in this area in spite of their promises. To take only refuse collection, electricity and municipal services, for example, legal entities pay virtually double compared to private individuals. Taxes and deductions from pay amount to some 64%, a situation which only serves to fuel undeclared work. In many cases, the harmonisation of legislation with EU provisions, coupled with the obligations weighing down employers in a sluggish economy, results in small companies going out of business and large concerns struggling to pay these amounts. Inequalities in the position of different economic operators on the market represent a specific problem. Private educational establishments, for

5 The Employers Group Newsletter example, pay an environmental tax per m2 from which state schools are exempt. Similarly, in its efforts to attract foreign investment, the government grants subsidies and incentives which are not matched either in format or scale for national investors. The repeated elections nearly every year since 2012 largely prevent the economy from functioning smoothly. Economic activity regularly drops during and after elections due to the uncertainty surrounding the outcome and the formation of a new government. Moreover, budget allocations for culture and science have reached extremely low levels with employers in this sector being seriously affected: this state of affairs is more broadly hampering the development of society as a whole. Young people are clearly reluctant to set up their own businesses: most bank on jobs in the public sector after leaving school. Moreover, it is general knowledge that the public sector overwhelmingly recruits members of the political party in power. These factors taken together mean that trade unions and employers' organisations, together with bodies representing other interests, are extremely weak and are unable to influence government action, even to bring about adjustments. Due to obstruction by the authorities, those independent regulatory bodies that exist are generally unable to perform their tasks. Monopolies are being created and are very skilled at disguising themselves, although legislation intended to combat them is in place and a commission has been set up to nip them in the bud. The country has for years been striving to reform its public administration, but where the documents they absolutely need are concerned, businesses are faced with procedures and access arrangements that are extremely complex and protracted. If they want to operate legally, entrepreneurs have to spend much of their time unravelling red tape. Settling commercial disputes brought to the courts is often an unreasonably protracted process, preventing economic operators from working normally. The activity and efficiency of small businesses is hampered by the increasing numbers of bankruptcies and irrecoverable debts, the lack of clarity of legal provisions and legal disputes which drag on for years. While for historical reasons, the Serbian market is essentially geared to those of its neighbours (Croatia, Bosnia-Herzegovina, FYROM, Montenegro and Kosovo), the entire region is affected by long-standing political problems. There are virtually no countries in the neighbourhood that have a stable government and are not experiencing political or economic difficulties. We are all aware of Serbia's problems with Kosovo and this is not the place to discuss them, even though trade links with Kosovo are particularly close. While business relations with the countries in the region are of crucial importance to us, the formalities - customs and otherwise required for trade between countries are extraordinarily complex and are often extremely time-consuming. It would be hugely beneficial to the region to create a customs union along the lines of the EU market, but serious political will to move in this direction is so far entirely lacking. At present, nearly all the countries in the area have been hit by the scandal surrounding the major Croatian Agrokor group, which is on the brink of bankruptcy and also operates in Slovenia, Bosnia-Herzegovina and Serbia, employing thousands of workers. The group's suppliers are also affected: they cannot recover sums due to them, and so their own survival and the jobs of their workers are under threat. Road infrastructure in Serbia is another issue. Motorways that should have been completed long ago are still under construction. Internet does not reach all parts of the country and problems involving waste disposal and recycling are still far beyond the country's economic capacity. The refugee crisis has hit Serbia particularly hard. Originally a transit country, refugees from Syria, Afghanistan etc. are now staying in Serbia for far longer than expected. The impact of the migrant crisis is only now being fully felt as a result of the new stance taken by the EU, and Hungary in particular. Lastly, the Serbian economy is in a very delicate position due to the fact that Russian and EU interests overlap in the region. Serbia is unquestionably determined to set out on the road to the EU, but it is equally undeniable that it has maintained good relations with Russia for centuries. As a result, the country is often unable to clearly coordinate its policy with its economic interests. Turkey has also traditionally taken an interest in the Serbian economy. Due to its centuries-long domination of the area, the trade links in one Serbian region, the Sanjak, are almost exclusively geared to Turkey, even though the country is currently experiencing historic upheavals. As a consequence of all these problems, doing business in Serbia is exceptionally gruelling and complicated - at least for small and medium-sized enterprises, which make up the largest number of businesses in the country. Boško Savković Member of the Presidency of the Serbian Association of Employers

6 Montenegro: Progress on social dialogue; challenges still to be tackled Since 2006, Montenegro with its small economy - has recorded significant progress in economic policy-making and social dialogue. The period after 2006 was marked by economic growth (especially from 2006 to 2009), as well as by an increase in foreign direct investment. On the other hand, the privatisation and transformation of companies has resulted in drastic changes to the structure of the Montenegrin economy. It previously had an exceedingly well developed industrial sector, but now Montenegro has turned more to services, so the dominant economic sectors nowadays are trade, tourism and construction. Furthermore, it is important to note that 99% of the Montenegrin economy is made up of small and medium-sized companies, with only a few large companies, predominantly in foreign ownership. Since the crisis, the weaknesses of the economic system primarily in Montenegro's real sector have become evident. As a result, currently over companies in Montenegro have their accounts blocked (more than 50 per cent of the total number), the unemployment rate is over 22 per cent and liquidity is a major problem for businesses, amongst other problems. In everyday communication with its members, the Montenegrin Employers' Federation (MEF) receives information on the most significant barriers facing employers, which, ultimately, make the business environment unattractive for both domestic and foreign companies. Major problems identified by employers are the unstable and unpredictable regulatory framework, weak law enforcement, low levels of receivables collection and significant public liabilities towards the real sector, numerous fiscal and para-fiscal burdens, inconsistent practices by administrative institutions and the courts (especially inspections, which generate discontent among employers), inefficient and problematic public procurement procedures, an unsuitable penalty policy that disregards the burden of the rules on violations and tax payers economic strength, the relative size of the informal economy, difficult access to financial resources, the heavy tax burden on wages, unfair competition, difficult access to finance and the amount of collateral required, as well as the mismatch between the education system and labour market needs. The afore-mentioned barriers have been confirmed in numerous surveys carried out by MEF, and have been grouped into 5 major problems that have been monitored since 2013: the regulatory framework, access to finance, the informal economy, corruption and the mismatch between education and labour market needs. Comparative practice has shown there are numerous recurring problems, which leads us to the conclusion that there is no strong desire, nor has there been much action taken, to enhance the state of the arts, and none of the action taken to date has achieved the desired results. As stated above, social dialogue in Montenegro has significantly improved over the last couple of years. It is carried out on a tripartite basis (between the government, employers associations and trade unions) and on a bipartite basis (with trade unions and employers associations as counterparts). Social dialogue takes place at national and local levels. In accordance with the law establishing the National Social Council, this Council provides an institutional framework for tripartite negotiations between the social partners the government, employers associations and workers associations. The Council comprises 33 members: 11 government representatives, 11 employers association representatives (Montenegrin Employers' Federation) and 11 trade union representatives (six representatives from the Trade Union Association of Montenegro and five from the Association of Free Trade Unions). The Council is chaired by the Minister of Labour and Social Welfare. Despite the fact that Montenegro has made enormous progress in social dialogue, some other issues now need to be tackled. Firstly, the role of the Council clearly needs to be strengthened by making the recommendations adopted at its sessions mandatory in the decision-making process. In the regulatory framework, all legislative documents should be examined by the Council. Furthermore, Montenegro needs to enhance social dialogue at sector and company levels. From the social partners perspective, it is necessary that they all be included in creating a regulatory framework for industrial relations (which is not now the case, since there are numerous cases of MEF not having a representative in working groups drafting new legislation). Another step towards strengthening the role of the National Social Council would be for it to have a rotating chair so that all the social partners can chair the body on an equal basis in each mandate. Suzana Radulović Secretary General Montenegrin Employers' Federation

7 Former Yugoslavian Republic of Macedonia (FYROM): The society must grow in parallel with the economy, education, health and social security Former Yugoslavian Republic of Macedonia is facing its most difficult political and socio-economic times since independence in Unfortunately, politicians have shackled both democracy and economic growth. The country needs collective action and all of its major social stakeholders should gear up for action. That is our responsibility and obligation. Shuerstock: CAT SCAPE As an employer's organisation, the Business Confederation of Macedonia is part of the tripartite social-economic dialogue. Since our establishment, we have been focused on socio-economic growth, the internationalisation of country s economy, the introduction of international and European standards, equality, mutual understanding and regional cooperation. Over the years we have doing our best to enhance socio-economic policies through dialogue, policy papers and recommendations based on analysis and consultations. We are convinced that cooperation and dialogue within the terms of the law is crucial to mutual understanding and consensus. The society must grow in parallel with the economy, education, health and social security. The greatest challenge for BCM and the employers are the frequent amendments to the regulations, the administrative burden entailed in their implementation and operating costs arising from other legal provisions. Regulations are amended one-sidedly, without significant prior consultation with the business community and without conducting a full and high-quality Regulation Impact Assessment (RIA). Frequent amendments to legislation have helped to undermine the concept behind the legal framework in this domain. Employers believe that a high-quality legal and regulatory environment plays a key role in the creation of a dynamic market economy and the sustainable growth and development of enterprises. Moreover, the active involvement of the business community is essential to identifying the needs to be met and to drafting regulations. Apart from changes to the costs of doing business, which are a burden on companies, improvements are also needed on tax regulation and social contributions. Reforms on the inspection front should be aimed at preventing a subjective approach in how this is carried out and achieving consistency of action in all sectors. High standards of business culture and conduct are crucial to achieving dynamic and sustainable economic and social development. This is why almost every country in the world makes business development an economic policy priority. Apart from Macedonia's strategic commitments in recent years to achieve swift economic growth by attracting foreign investment, a strategic approach is also needed, as well as committed, focused action to boost and harness the country s domestic entrepreneurial potential. Quality of education plays an equally important role in the development of an entrepreneurial culture. The education system generates both future entrepreneurs and the workforce to be employed in the various companies. Formal education in Macedonia fails to match the needs of the economy and the labour market. It offers a great amount of theoretical knowledge, but does not instill the practical knowledge and skills necessary for future entrepreneurs. In addition to the formal curriculum, the education system should foster and stimulate a proactive culture characterised by creativity, initiative and independence, which is essential to the success of entrepreneurs. Competition is crucial to the development of a sustainable market economy. Fair competition is healthy and benefits both society and business. It encourages the advancement of company operations, investment in new technologies and the development of human capital in a constant striving for improvement. It offers consumers products and services of better quality, with competitive prices and greater choice. Weak and unfair competition, on the other hand, undermines market mechanisms, stifles growth and fails to provide optimal products and services to consumers and buyers.

8 BCM members believe that fair competition is one of the key factors in the creation of a business-enabling environment. According to the GCI, there is a lot of room for improvement when it comes to the efficacy policies to combat monopolies and to a client-oriented approach. A small number of companies still say that they face a monopoly or monopolistic competition. In some sectors large companies use their monopoly position against smaller suppliers, seeing they lack the necessary legal and institutional protection. Innovation provides the impetus to achieve higher growth and standards of living. It is inextricably linked to competition: businesses invest in development and innovation in order to become more competitive in the market. In order to stimulate local competitiveness and to increase investment in innovation, research and development, employers want first and foremost to see the removal of all legal and institutional impediments to company operations. The environment should create a level playing-field and equal development opportunities for all enterprises according to their size. Policies and measures also need to be designed that will provide stimuli and the impulse for enterprises to invest in improved productivity, staff education, new technologies and research and development. Mile Boskov Executive President the Business Confederation of Macedonia Balkan countries in figures Croatia FYROM Montenegro Serbia Slovenia * * * * * GDP growth (annual %) Inflation (annual %) Unemployment (% of total labour force) Global Competitiveness Index (GCI) 2016/17 74/138 68/138 82/138 90/138 56/138 * forecast Source: Eurostat and World Economic Forum (for the GCI) Editors Leszek Jarosz leszek.jarosz@eesc.europa.eu Monica Procopet monica.procopet@eesc.europa.eu THE EESC IS NOT RESPONSIBLE FOR THE CONTENT OF EXTERNAL WEBSITES Contact European Economic and Social Committee, 99 Rue Belliard, 1040 Brussels Tel. +32 (0) Fax: +32 (0) gr1@eesc.europa.eu For any use or reproduction of the photos/illustrations, permission must be sought directly from the copyright holder(s). Print: QE-AH-17-S01-EN-C ISSN EESC: EN Online: QE-AH-17-S01-EN-N ISSN EESC: EN EN