FISCAL COUNCIL: Salaries and pensions to be raised by no more than 5%

A growth of pensions and salaries in the public sector in 2018 is economically justified, but shouldn’t exceed 5% on average, the Fiscal Council said in the report on fiscal trends in 2017 and a proposition of the policy for 2018.

They point out that the lowering of salaries and pensions from 2015 has fulfilled its purpose of avoiding the then impending crisis and that it is now possible to make the first step to permanently defining them. In order to make this step, the Council says, it first needs to be defined how economically justified it is to raise salaries and pensions in 2018.

The analysis by the Fiscal Council shows that the fiscal room in 2018 enables them to be raised by 5%. A larger raise would not be justified with the growth of the GDP, that is, would not be earned through the growth of the production of the private sector and would once again create dangerous macroeconomic imbalances.

The Fiscal Council says that, regarding pensions, to first step is for them to be increased by 2.5% in 2018 and to use the remaining fiscal space to abolish a half of the temporary reduction of above-average pensions from 2015.

The current ad hoc approach without objective arguments only further increases the chaos in the system, the Fiscal Council says and proposes as an economically better solution to abolish a half of the temporary reduction of salaries from 2015 for all employees in the public sector in 2018 (the current increase by 5%).

Fiskalni savet Republike Srbije

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GDP of Serbia

pension system of Serbia

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