New Economy: The average subsidy per employee in 2020 reached 30,000 euros
In Serbia, in 2020, the average subsidy to investors per employee reached around 30,000 euros, Nova ekonomija announced today.In election years, investment arrives, employment grows, but it is rare to say how much it costs. For example, Serbian President Aleksandar Vučić recently opened a car parts factory of Turkish investor Teklas Automotive, which “jumped in” after the departure of the Geox footwear factory in Vranje, but he did not mention that this factory alone will cost Serbia’s budget 10.77 million euros.

Given Tekla’s obligation to employ at least 500 people, the subsidy per worker is 21,500 euros. Geox, which was picked up and left after the outbreak of the epidemic, in 2012, received money to open a factory and 11.4 million euros, but twice less per employee 9,000 euros.

From 2006, when the program of attracting foreign investments with subsidies began, until the end of 2019, investors received 638 million euros from the state.

In the last two years, the machine has heated up and the total number has reached almost one billion euros. In 2020, the state contracted subsidies in the amount of 233 million euros, and in 2021 another 107 million, bringing the total amount to about 978 million euros. From 2016 until today, 185 agreements on granting incentives to investors have been signed.

It should be reminded of the secret (blackened) part of the contract between Serbia and Fiat in 2009, which some state officials claimed was “heavy” one billion euros in state subsidies, which is an absolute record.

Despite numerous and well-argued criticisms of this system of investor bribery, this activity has intensified in recent years. Namely, out of 638 million euros, according to the analysis of the Foundation for the Development of Economic Science from last year, 60 percent was agreed in 2018 and 2019.

However, in 2020, a record of over 230 million euros in promised subsidies was reached. They are generally disbursed in two or more tranches as the investor meets its investment or employment obligations.

According to the documents of the Development Agency of Serbia, the total amount of investments amounted to 1.87 billion euros, and they should employ 7,761 people.

In 2021, this process was significantly slowed down, so around 107 million euros were agreed for subsidies, although for a much larger number of individual investments, 48 ​​of them compared to 26 in 2020.

Once upon a time, at the time when the then Minister Mladjan Dinkić was selling the so-called Slovak model of attracting investments through subsidies, incentives for investors ranged from 2,000 to 10,000 euros per job. The lower limit was raised to 4,000 euros in 2012, but today even the simplest technologies, such as cable winding, cost 6,000 euros per workplace and higher. The upper limit has long since been breached.

Henkel, which privatized Merima from Krusevac in 2002, received 14.4 million euros from the state for an investment in expanding production worth 93.57 million euros, which will employ 100 workers. With 144,362 euros per employee, the German company has received the most money so far per employee.

In second place is the investment of the Swiss company Barry Calebaut (Barry Calebaut) contracted in 2019 in a chocolate factory near Novi Sad of 45 million euros, which will employ 100 people. For it, he will receive 12 million euros or 120,000 euros per employee from the state.

In 2015, the state passed a new law on investments, in which, in addition to the number of employees, it introduced the amount of investment as a criterion for investment incentives. This has opened up space for huge subsidies.

Investments in the production of car tires, the most important export product of foreign investors in the Serbian manufacturing industry, stand out.

In 2020, the contracts with the state were concluded by the Japanese Toyo tires and so far, not for good, the famous Chinese Ling Long.

Ling Long will receive an incentive of 75.8 million euros from the state for an investment worth 800 million euros. In this factory near Zrenjanin, which is already causing great concern to citizens and environmental organizations, but also organizations for the protection of human rights, 1,200 people will work according to the contract. This means that the Chinese company will receive 63,167 euros per job.

Toyo tires are somewhat more modest in size, but more expensive for the state, observed per employee. For the investment of 382 million euros, which will employ at least 523 workers, the Japanese receive 41 million euros from the state or 78,394 euros per employee.

Another tire factory, previously present in Serbia, Cooper tires, received aid from the state in the amount of 63,478 euros per employee in 2020. For the investment of 48.3 million euros, they will collect 7.3 million from the state in order to employ only 115 people.

If this is an investment worth hundreds of millions of euros, this is not the case when investing in a new plant in the Rauh juice factory near Koceljeva. Namely, at the beginning of 2020, this company contracted state aid of 2.2 million euros for an investment of about 10 million euros, which will employ only 30 new workers. This company will receive as much as 73,333 euros per person from the state.

The German company Continental first opened a research and development center in Novi Sad in 2018, for which it received 9.5 million euros from the state, and employs 500 people, mostly engineers. In 2020, that company signed a contract for the construction of a factory worth 140 million euros with 500 workers, and received a subsidy of around 28 million euros in the name of the investment.
Another German company from the ZF car industry has opened a development center in Pancevo with 750 employees. This company committed to an investment of 160 million euros in 2020 and received a subsidy of 19.6 million euros.

But the couple of companies that transferred the research to Serbia are visited by many more who are looking for cheap labor, who employ thousands of people for a minimum plus 20 percent, as stipulated in the agreements with the state.

So much money went to companies like Aptiv (25.5 million euros) for cable production whose workers fell unconscious after 12-hour shifts last year, then PKC wiring (14 million euros), Krombert and Schubert (9.5) million), Leoni (12 million), and then car seat manufacturers such as Adient (9 million) or Magna Sitting (6.4 million euros) or textile factories such as Turkish Taj (16.5 million euros) ).

Such factories employed a large number of people, but with rather low salaries and often without paying too much attention to their rights or labor law.

So, the state has invested a lot of money in attracting, primarily foreign investors, since some analyzes by 2019 show that 90 percent of the funds went to foreign investors, but so far we have not seen any analysis of the effects of these payments.

It is indisputable that the export reached 21.6 billion euros last year, and that 3.9 billion euros of foreign direct investments entered the country, but the value of the factories has not been calculated yet.

Perhaps one indicator may be the growth of gross value added (GVA) of the manufacturing industry in which most of these investments ended. In four years, from 2016 to 2020, according to the Bureau of Statistics, the GVA of the processing industry increased by six percent. At the same time, nominal gross domestic product (GDP) as well as total GVA increased by 16 percent.

Hence the criticism of economists that the assembly of imported components and cheap manual work is mostly performed here, and that apart from paid salaries and taxes on them, which should be admitted that it is not a small thing in a country with high unemployment, there are no other major effects.

The more the state gives to foreign investors, the more economists point out that there is no development without domestic investments, especially in research and development.

With the opening of labor-intensive factories, people are being hired, but the economy is threatened by something called the trap of medium development, characterized by high employment but relatively low wages and living standards and inability to leap due to economic structure.

Foreign investors who are chasing low costs around the world, which further reduce state subsidies, both come and go, as Geox left when the subsidies expired.

In the last three years, subsidies for the construction of hotels have appeared, and so far they have been mostly used by domestic businessmen, some of whom are close foreigners in power. Of the ten or so, the most money went to Millennium Resorts, owned by the construction company Millennium Team, known for its participation in state projects from gasification to Belgrade on the water.

They received 10 million euros for the construction of a hotel and wellness in Vranjska Banja. In Vrnjačka Banja, the state helped build four hotels. People close to the ruling party bought the Fontana and Slavija hotels in Vrnjačka Banja.

According to KRIK, the Tonanti Hotel was built on the site of Slavija, owned by the Alcantara company of Aleksandar Papic, close to Minister Nebojsa Strefanovic, and sold to Darko Djurovic, the son of the former director of the Serbian Corridor. The state gave 1.1 million euros in subsidies for the construction of the hotel.

The state has set aside 1.4 million euros for the reconstruction of the Fountain owned by Milan Vlaisavljevic, a member of the SNS and a member of the provincial assembly.

The owners of Vrnjački terme also received subsidies for the hotel business, 1.1 million euros and the Park Hotel 500,000 euros. The owner of the Park Hotel is Miroslav Aleksić, the owner of the Alko Group, which also received 2.5 million euros in two contracts for the construction of the Tornik Hotel on Zlatibor.

The company Planinka, the owner of Kursumlija Spa, received 2.5 million euros for the purchase and renovation of the Hotel Žubor in this spa.
Novi Sad-based company Promont received 2.6m euros for a hotel in Vrdnik and 4.8m euros for the construction of a hotel in Novi Sad.

The list also includes the company TM Hospitaliti, which received 2.1 million euros for the construction of a five-star hotel on Zlatibor, as well as the company Trebic, which received one million euros for the reconstruction of the Sunce hotel.

The company Sport Agent, owned by the brother of the famous basketball player Miloš Teodosić, also received 1.5 million euros for the construction of a resort in Divčibare.

By Editor

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