ECONOMICS: Devastating "Free Market" Reforms Imposed on Serbia

by Gregory Elich (Global Research)

Nine years ago, neoliberal political forces took power in Serbia, promising a radical transformation of the economy. Today, deep into that transformation, Serbia is foundering from its effects exacerbated by the worldwide economic downturn. Industrial production has fallen 15 percent compared to the average of last year, while unemployment remains high.

The outcome for those who work at enterprises that undergo privatization has been all too predictable. Companies privatized in accordance with the 2001 privatization law have shown a decrease of 45 percent in employment over the first two years of private ownership. Those companies that are privatized based on the 2003 law dropped just 15 percent by the end of the first year, but this apparent difference was only because of the extensive downsizing that these firms must undergo prior to sale, in order to make them more attractive to investors. The textile industry has been particularly hard hit, with steep job losses and falling performance. As the Privatization Agency reveals, "the performance of privatized companies is worse than the performance of the sector as a whole," an interesting admission.

Inevitably, it is working people who bear the brunt of privatization. Unemployment in Serbia steadily grew since 2000, when neoliberal political forces came to power, quickly reaching 32 percent within four years. After that there was a modest economic recovery, due in part to the short-term influx of cash from the sale of enterprises through privatization. Unemployment dropped to 16 percent by April 2009, but this apparent improvement is illusory, having to do mainly with the recent adoption of the current American model for calculating unemployment. Under this method, workers who are not regularly and actively seeking jobs are counted as "discouraged," and "out of the job market," and therefore not belonging to the ranks of the unemployed. If one adds back in the number of workers who are classified as "inactive" but who profess both the ability and the desire to work, then the unemployment rate increases to 25 percent. In real terms, then, there has been no meaningful improvement in the unemployment rate. To put this in perspective, at its peak in 1933, unemployment during the Great Depression in the U.S. reached 25 percent, a figure that was then not calculated to exclude a significant portion of workers. Today Serbian workers are enduring their own Great Depression, but one that has been imposed through adoption of the neoliberal economic model. For those who lose their livelihoods, there is little hope. Nearly two thirds of the non-discouraged unemployed have been without work for a year or longer, sometimes much longer. They are society's discards.
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