If the government would cut down the income taxes by 30 percent, small and medium companies would be able to employ 100.000 people in one years time. Those are the words of Milan Knezevic, owner of the clothing company '' Modus'' and vice president of the Association of small and medium companies.
The offer sounds more than attractive, because 100.000 newly employed people would significantly reduce the 730.000 unemployed who, by the oficial statistic, are looking for a job, and would contribute to the change of Serbia's status of being one of the leaders by unemployment in the region. The latest report of the Europian Comission (EC) on the economic revival of the contries of the west Balkans states that, in spite of the ongoing economical revival in Serbia, the unemployment rate reached 20 percent in 2010.
The record holder for unemployment for the last year is Bosnia and Herzegovina with 42,7 percent of the work force being without a job. The rate in Croatia was 11,8 percent and was in a slight fall compared to the last period, while Macedonia had 32,1 unemployed, Albania 13,7 and Montenegro 12,1 percent in the last year.
The proposal for employing 100.000 people is a part of a wider project for the revival of the Serbian economy which has 25 points that tha Association made in imitation of the europian political aids for small and medium companies. Knezevic recalls that the same suggestion was given last year by Dragana Dragutinovic, who was at that time the minister of finance, which was within a wider project of the tax reform.
„We believe that a lot of people could be employed in a short amount of time. When the system has a problem, and the problem is a million unemployed people, than only the system can give the solution. But since the system wasn't working, Mladjan Dinkic, the minister of economy, tried to employ people by improvizing, and he employed 15 000 people. But, in the meantime, another 74000 people were left without a job and now there is a million of unemployed people. They can be employed only if there is a systematic solution“, says Knezevic.
They are explicit in the Association about the fact that the taxes and fees are only a part of what is taken. Besides these there are another 44 taxes and fees. Knezevic warns that all those grabs have gotten some 80 000 companies literaly to a state of collaps, and that insolvency is the biggest problem now but also that the subsidized government loans only intravenously pumped the current solvency.
“What we are suggesting to the state is that it cuts down the taxes and fees by 30 percent, and than small and medium entrepreneurs will have a motive to employ one more employee per company and receive this rate of liberation. In that way every third registered entrepreneur, craft store or legal entity would employ one worker each, which means that some 100.000 people would get a job.
That kind of a response from the government would be a signal for us, private entrepreneurs, to continue with, for example, rigidly pressuring and reporting our colleagues that have some 600.000 unregistered workers to the inspection.
Knezevic’s answer to our question when these 100.000 people would be able to get jobs if the project would start functioning right away is ‘’in one year’’:”The Association would be ready to publicly sign such a commitment and a contract with the government, because it is in our interest. The reason is this; if I am employing 160 workers and my taxes and fees are six million dinars, and if the government cuts them down for 1,8 million dinars, it gives me a motive to employ another 10 employees.
At the beginning of April the delegation from the Association of small and medium companies spoke about this problem with Nebojsa Ciric, the minister of economy. At that time the minister pointed out that the government in ready to cut the taxes and fees even for 50 percent, but only to the employers who register and employee that worked for them illegally. Knezevic finds that kind of an offer meaningless, because how can you differentiate an employer from the grey zone and one that employs by normal procedure.
“It is in the interest of an employer that works in the grey zone to embezzle a 100 percent of his earnings, so why would he consent to embezzle only 50 percent now. And thirdly, there is no ‘’whip’’ or a sanction for this offer. Minister Ciric informed us that Mirko Cvetkovic, the prime minister and minister of finances, probably wouldn’t consent to changing the system at this moment. I cannot believe that, because if the system is what we have now, and that is 600.000 unregistered workers, then I don’t know how this system is functioning. If we don’t make at least 100.000 of those 600.000 legal, I don’t know how the system is going to function.