Sept. 9 (Bloomberg) -- Serbian union leaders say they plan rallies beginning this month to protest a proposed overhaul of pensions that would cut benefits and raise the retirement age.
“We are all adamantly against the” pension “reform and we will show it,” said Milorad Mijatovic, vice president of the Confederation of Autonomous Trade Unions of Serbia, in an interview in Belgrade. His organization has joined with three other large union groups to prepare rallies on Sept. 29.
Raising the retirement age and cutting pensions relative to the average wage in the country are among the requirements by the International Monetary Fund in its $3.9 billion loan arrangement with Serbia, whose government has to find ways to keep the budget deficit under the agreed limit of 4.8 percent of gross domestic product.
Serbia’s ageing population and low birth rate, compounded by a recession cutting budget revenue, has led the government to propose raising the retirement age and reducing the size of pensions and the number of occupations that merit early retirement. The IMF wants Serbia to cut budget spending on pensions to under 10 percent of gross domestic product from 13 percent now.
“It is absolutely unacceptable to extend the minimum years of service” before retirement “for women from 35 to 38,” said Ranka Savic, head of the Association of Free and Independent Trade Unions. “We are already galvanizing groups into action, campaigning in factories and preparing for the first big rally on Sept. 29,” in the city of Bor in eastern Serbia, Savic said.
Bor is the home of Serbia’s heavily indebted RTB Bor mining complex where thousands of workers lost jobs when companies shut down production facilities in the transition to a market economy since the 1990s.
The unions “don’t want violence, but we wouldn’t mind if the protests gain the proportion of those seen in Greece,” Savic said. Mijatovic said “the ruling parties have to face the consequences of their irresponsible policies” and blamed the Cabinet for the average wage being among the lowest in Europe.
The average wage in Serbia is 34,600 dinars ($417), according to the state statistics office. Pensions are often less than two-thirds of the monthly wage, according to the Fund for Pension and Disability Insurance.
“It certainly won’t be just a one-day protest,” Mijatovic said, adding that the unions intend to bring “thousands” of workers to the Serbian parliament in Belgrade “the moment the proposed law on pension reform” is put before lawmakers.
Prime Minister Mirko Cvetkovic has urged unions to negotiate and avoid confrontation. Savic and Mijatovic say their suggestions were already rejected in a few meetings held with government officials so far. The parliament is expected to take up the draft law later this year.
“Chances are slim for a compromise because the government has the IMF and World Bank opinion on its side,” Savic said.
She said in a country where a vast majority of retirees depend on the state pension fund because private funds are only emerging, the way to cut spending is to slash public administration.
“With its bloated bureaucracy, Serbia is a high maintenance state,” she said.
For every pensioner in the country there are only 1.6 actively employed people, according to figures from the state statistics office and from the Fund for Pension and Disability Insurance. Monthly proceeds to the state pension fund cover barely a half of what the state-run Fund has to cash out for the retirees every month, according to the same sources.
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