Serbian pensioners still stick to the promise of President Vucic given during the electoral campaign and hope that after a long period of fiscal consolidation (2014-2019), when pensions were first reduced and then “frozen”, they won’t be subject to some new government restrictive measures again. Vucic namely promised that “Serbia will pass through corona crisis more smoothly than other countries, without reduction of pensions and salaries in public sector”. A guarantee for that, he said, was a rather tolerable public debt, which stopped growing and makes up round 57% of country’s GDP at the moment.
The Fiscal Council is, however, much more skeptical. In their newest report it’s claimed that in 2021 wages could be frozen and pensions allowed only a slight growth. They insist the government should respect its own decision and instead of regulating pensions according to some arbitrary criterion, strictly respect the adopted “Swiss formula” (50% of pensions increase depending on inflation and 50% on productivity growth). The system, established in 2019, is now under a threat because of the pandemic and the economic crisis it triggered. In such difficult times it’s not the best one, but it could survive by modifying the parameters of the “Swiss formula” (75% of pensions increase depending on inflation and 25% only on productivity growth). That’s exactly what the Council suggested in 2019.
The pensioners’ associations and trade unions are unwilling to predict the future developments. Still, they are convinced that if our economy gets out of the present crisis relatively untouched, the existing level of pensions could be preserved – even with the application of the modified Swiss formula. There is, however, a problem related to 30.000 to 50.000 new unemployed – a fact that could seriously affect the financial input to the budget (still considerably contributing to Serbian pension system). It makes some extreme pessimists among the pensioners suspicious about government’s intentions and gets them to predict new measures that might lead to new reductions and freezing of the already poor pensions.
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