BELGRADE — The nation of Serbia is located in the Balkan Mountains, and its capital, Belgrade, is one of the largest cities in East Central Europe. Although the country is very beautiful, its storied history is also riddled with poverty struggles. With the intention of being inducted into the European Union (EU), Serbia implemented their Survey of Income and Living Conditions in 2013, and came to the conclusion that 24.5 percent of the population were at risk of poverty or already impoverished.
Unfortunately, of those struggling with poverty in Serbia, a good number of them live in densely populated portions of the country — making it more difficult to find affordable housing and work.
Patterns in economic development and a high unemployment rate of 19.7 percent indicate that Serbia has a structural issue. Former Yugoslavian President Milosevic mismanaged the economy, leading to a number of international economic sanctions that stymied growth. Following Milosevic’s ouster, Serbia rejoined the World Bank and renewed a contract with the International Monetary Fund — leading to progress in privatization and enterprise restructuring.
Yet, the primary reason why the economy has not yet recovered and the poverty rate is so high is that a number of the manufacturing industry and large enterprises are state-owned. Since the companies that made the largest impact on the economy are state-owned, there is a less competitive market which causes higher prices and less available jobs.
After all, if there is a monopoly in the industry, there is only one company hiring — and the unemployment rate will continue to rise as a result.
Therefore, one of the immediate ways the government can combat poverty in Serbia is to allow private industries to flourish and compete against state-owned enterprises. Yet another way is to combat pervasive corruption in the judicial system and beyond. On Transparency International’s corruption index, Serbia got a score of 42 on a scale of 0-100, with 100 being the least corrupt. This score falls below the global average of 43. Bribery and other incidences of corruption continue to be a primary concern that hinders private industry growth in the region.
In a 2013 study, the United Nations Office on Drugs and Crime (UNODC) found that 17 percent of Serbian business owners paid a bribe to a public official and that bribes are an everyday practice in most privately owned businesses. The most common reason given for bribery is to “speed up business-related procedures,” accounting for 40.3 percent of all bribes. The UNODC also found that Serbia experiences more bribery on average than other nations in the region.
If businesses must resort to bribery in order to continue daily operations, then the industry will not be as efficient and ultimately weigh down the economy. Serbia can use several tactics to bring down such corrupt practices, from instituting legislation that provides harsher prison sentences and punishments for bribery, to employing better background checks when they hire officials. Corruption may not be an isolated incident in Serbia, but its prevalence can be diminished with the proper actions.
By encouraging private industry growth and working to decrease corruption, more job opportunities may be available, leading to a decline of poverty in Serbia. Continuing to be a part of the World Bank, and maintaining a contract with the International Monetary Fund will also work in favor of Serbia and its economy.
– Rachael Blandau