ROOTS OF ROOTS

One Third of the Citizens on the Verge of Poverty

Poverty in FRY

AIM Belgrade, 18 November, 1996

Or why did last year 650 thousand inhabitants of FRY live in poverty, and an army of almost three million people were not able to meet the minimum of their needs for food

When in the beginning of nineties, the then current Yugoslav politician Branko Kostic warned that state interest would be defended even at the cost of reducing the national diet to "roots", this statement was, despite its ominousness, experienced by the public rather as an anecdote and not a vision.

For quite some time now, Branko Kostic is a political pensioner, but it turned out that his threat should have been taken quite seriously. The recently published study by Aleksandra Posarac and Srdjan Bogosavljevic ("Program of Public Kitchens in FR Yugoslavia and Identification of the Most Vulnerable Groups which Need Humanitarian Aid") speaks of the fact that last year 28.9 per cent of the population of FRY or almost three million people, had great difficulties in bare survival. It is self-understood that this dramatically large portion of the Yugoslav population did not eat roots, but their monthly incomes were insufficient for purchasing the minimum consumer basket of food and drink, which is the criterion for determining the threshold of poverty. Even 650 thousand people have been extremely poor: their incomes have not reached even half the value of 65 products necessary for meeting basic needs for food.

Disappearance of the Middle Stratum

In the period between 1990 and 1995, the number of the poor doubled (in 1990, 14.1 per cent of the total population was poor) accompanied by an interesting phenomenon. While on the eve of dissolution of the former state, in 1990, rural population - in fact all those who draw an income from agriculture regadless of where they live - had lower standard of living than the urban one, five year later the situation is inversed: 70.5 per cent of the total Yugoslav poverty is located in the cities. This is not the result of improvement of the economic situation of peasants, but of the simple fact that farmers were able to alleviate decline of the standard of living by producing food for their own needs.

General characteristic of Yugoslav poverty is that it strikes all socio-economic categories of the population. Economic differences between low and middle social strata are disappearing, as well as those between the rural and urban population and, as authors of the study note, the middle stratum has practically disappeared. In just four years, one third of the population of Yugoslavia has been stricken by poverty, and another third is on the verge of poverty. Average income of this group is very close to that of the threshold of poverty. As an illustration of this specific egalitarianism, among other, the fact may serve that in May this year, in 14 industrial branches which employ 60 per cent of industrial workers the average earnings were by 46 per cent lower than the Yugoslav average (it amounted to 58 Americal dollars). Approximately 70 per cent of the employees receive an income lower than the average, with the generally known fact that salaries and pensions are delayed up to a few months.

Majority of households in Yugoslavia, which are on the threshold of poverty, in normal economic conditions would not be poor. This is one of the findings of the study. An average (read: poor) family still lives in comparatively decent conditions, they have a refrigerator, a washer, a colour tv set... supplies of clothes and shoes. Finding of a new, better paid employment would automatically bring these families almost back to where they were before the crisis.

We are Still Persisting

Of course, the greatest problem is how to find such a job, because Yugoslav economy is in a profound crisis. Real social product in FRY was last year twice lower than in 1989, the level of industrial production amounts to only 37.3 per cent of the one in the mentioned period of reference, and it is assessed that the value of export and import reaches only the level of 30 per cent of those six years ago. Unemployment rate, by definition of the International Labour Organization reached 25.7 per cent, although to the mass of about 800 thousand of those who are officially looking for a job, just as many workers should be added who are a surplus manpower in regards to the level of economic activity.

Before the economic crisis became acute, in 1991, with the income per capita of 3,060 American dollars, Yugoslavia belonged in the group of medium developed countries.

Four years of economic collapse lowered the income per capita to hardly one thousand dollars, but despite that, quality of life in Yugoslavia is higher than in the countries of similar economic power, measured by income per capita. Death rate in general, as well as that of newly-born infants and children up to the age of five has increased, 12 per cent of children of the adequate age remain unenrolled in elementary school, and 30 per cent do not continue education after acquiring elementary education. But, despite serious signs of decline, the network of institutions in non-productive branches of the economy has not been completely destroyed, the infrastructure has not been completely ruined... Habits have remained, education level, supplies of clothing and shoes have not been exhausted yet, the old tv sets still work. However, the authors of the study warn that if economic revival fails to occur, both individual and social standard of living will drop to the low level of the income per capita.

Gloomy Prospects

The key question is: where are the roots of the economic crisis the baren visible tip of which is the dramatic increase of poverty which spread on almost two thirds of the Yugoslav population? Aleksandra Posarac and Srdjan Bogosavljevic believe that dissolution of the former SFRY is partially responsible for the gloomy economic reality, then there is the war in Croatia and Bosnia & Herzegovina and the response of the international community (in the form of the sanctions) to the controversial defence of national interests. In other words, this could be characterized as the influence of the external factors.

Internal reasons which have contributed to the idea about roots as the alternative diet becoming much more than a political gaffe but fortunately not quite a prophesy, can be brought down to an inefficient, closed economic system and wrong economic policy and strategy of development. Inadequate ownership structure (90 per cent of employees in FRY are employed in state or social sector), poor management, obsolete technology and know-how, enormous redundance of labour, lack of working capital and investments, ... these are characteristics of Yugoslav economy which produces - net losses.

Despite reformist rhetoric, the authors of the study point out, command management of the economy is at work with powerful resistance to market changes. In a situation which can be described as absence of transition, and in some segments even as anti-transition, manoeuvring space for defining and pursuing economic policy is restricted to such an extent that according to some opinions recession and inflation are inevitable in Yugoslav economy.

Accumulated foreign debt of the country which amounts to about nine billion dollars, at the time of economic decline was not paid off, but it is merely a question of time when this problem of Yugoslav authorities will be open again. Re-establishment of relations with international financial institutions will, to be sure, be a chance to shorten the list of internal obstacles to economic revival, but even despite that, forecasts are bad: for return of industrial production to the level of 1989, under the condition that average increase rate is five per cent, a quarter of a century will be needed.

(AIM) Vlastimir Stevanovic