Social development of Serbia in process of transition

1. Social development of Serbia in process of transition Vojin Vidanovic Serbia September 2010, ISS, Italy

2. Presentation plan • Introduction: transition in Southeast Europe • Period of social catastrophy 1990-2000 • Period of transition and recovery (2000-2008) • Serbia and global crisis: actual trends (Post 2008 development) Conclusions: Actual structural problems influencing development and development possibilities Social development of Serbia In process of transition 2

3. 1. Introduction • After the fall of Berlin Wall (1989) in most of countries of East Europe, a transition from socialist to a capitalist driven democracy has begun. • The process of transition is characterized by: • Change to plural democracy • Change to market economy • Subsequent privatization of gouvermental goods and minimal state compared to command (socialist) economy • But the process of transition should be understood as general process of social change of existing toward desired society including change of political and cultural (value) system, not only change of economy Social development of Serbia In process of transition 3

4. 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

5. 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

6. Development in transition 1990 GDP is 100, upper line – Central and Baltic Europe, middle ex Russian Republics, lower one Serbia

7. 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 …)

8. 2. Period of crisis (social catastrophy) 1990 - 2000

9. 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)

10. GDP per capita fall

11. Rise of vulnerable groups (in risk) Yellow – Under poverty line, red – Refugees, blue – Internally displaced

12. 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;

13. 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

14. 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

15. 3.Period of transition and recovery 2000 - 2008

16. 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

17. 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

18. 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

19. 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

20. 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)

21. 4.Serbia and global crisis: actual trends (Post 2008 development)

22. 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

23. 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”

24. 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

25. Regional comparison of crisis effects

26. Regional comparison of crisis effects

27. 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

28. 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

29. 5. Actual structural problems influencing development and development possibilities

30. Development factors Political stability and ideology Human capital characteristics Economical development Science and technology

31. Structural problems of Serbia Unemployement Poverty and raising inequalities Aging and depopulation Regional differences – decentralization and regional approach

32. 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

33. “Risk populations” Roma Elderly Children in risk Youth Refugees and IDPs

34. THANK YOU FOR ATTENTION • Contact: • vojinvidanovic@gmail.com • Skype: rastavox FB: ras voja (vojin.vidanovic)