Nine-Year Long Downfall of the Economy of Yugoslavia

The Art of Survival

In the past nine years earnings in Serbia are three times lower while living expenses have increased several times. The population is exhausting the last reserves to meet the basic necessuities of life

AIM Podgorica, 5 November, 1998

Exactly nine years ago, economic collapse of Serbia has begun and it has not been interrupted to this day. In autumn 1989, Serbian authorities broke into the monetary system of the former Yugoslavia, and took more than two billion dollars for pensions. After this notorious move which undermined the economic foundations of the country which at that moment had at its disposal almost 10 billion dollars of foreign currency reserves, the political dissolution of former SFRY began.

Although nine years is not a long period of time, according to the destructive effects produced during this interval, it seems as if a whole century has been erased. National income at the time exceeded four thousand dollars per capita (nowadays it amounts to 1500 US dollars), which classified Yugoslavia among medium developed countries, and the European community at the time was interested in receiving Yugoslavia among its members. Talks on this topic were just initiated, but it was assessed by the EEC that Yugoslavia had good preconditions to become its full-fledged member.

Instead of membership of "big" Yugoslavia, nowadays, its fragmentised parts - states which emerged after its disintegration, are waiting in line to be received with little hope to succeed in this attempt in the foreseeable future. In relation to some of them, like present Yugoslavia, there is open odium, because its regime, under the pretext of preservation of independence, is applying methods of rule which, to say the least, do not fit into international standards. Similar avesrion exists when Croatia and B&H are concerned.

Even if political reasons for such attitude of the European Union had not existed, the newly established states lag behind in the economic sense to such an extent that they cannot even approximately meet the requirements for joining European associations. Nine years ago, the average salary in Yugoslavia amounted to 500 German marks. This figure is not impressive although it is three times higher than the amount of the current average pay of 150 marks. Its height was reflected in the fact that this amount of money was sufficient for a decent living, because prices, contrary to the present ones, were incomparably lower.

Nine years ago, when tenancy rights prevailed in housing relations, instead of the present private ownership of housing units, housing expenses amounted to about 10 per cent of the average monthly pay. Nowadays, the owner of an apartment must allocate 25 per cent of the average monthly salary for municipal expenses.

With an average salary at the time it was possible to buy 580 litres of milk, and nowadays just 350. Similar is the comparison with edible oil, since once it was possible to buy 223 litres of it with a single salary, while nowadays only 92 litres, under the condition there is any. Pensions were regularly paid and they were sufficient for the pensioners to afford a summer vacation on a mountain and a winter vacation at the seaside. Nowadays, pensions and pays are irregularly paid in halves, amounting on the average to 500 dinars.

From the aspect of today, for someone who has not experienced it, it is hard to believe that the citizens have lived prosperously just nine years ago, with the convertible dinars in their pockets. Their present concern is how to survive in poverty. Many wonder where the end is of continued decline of the standard of living, without realizing that the low limit of poverty does not exist, just as nobody has ever discovered the highest peak of wealth.

Life is also becoming harder due to the evident intention to burden the citizens with some of the expenses that the state or the economy used to cover. Numerous taxes and duties are introduced, and expenses for municipal service have been increased. With the average pay which reached 1,138 dinars in September, it is unthinkable that anyone can think of replacing dilapidated household appliances. According to the words of merchants, daily expenditure per buyer is hardly 20 dinars which indicates that the salaries are spent solely on the basic victuals.

Statisticians have calculated that the so-called monthly basket of food for a family of four costs 2,297 dinars, or twice more than the average monthly pay. From the 1.6 employed persons per household, this figure has dropped to less than one, but it should be noted that many work but are not paid for it, while many do not work but receive a salary which is irregular and very low, of course. The question which arises is how the Yugoslavs manage to survive, because with 150 German marks it is difficult to make ends meet even in Africa where expenses, thanks to the climate, for clothing and footwear are lower, but also even for food.

Salvation is sought in the grey economy which reaches almost half of the value of the annual social product of 108 billion dinars planned to be made by the end of this year. The federal government, back at the time of prime minister Radoje Kontic,made a plan to put grey economy under control. Even the current prime minister Momir Bulatovic, at the time of his inauguration, announced that one of the most immediate tasks of his cabinet would be a struggle against grey economy. It turned out, however, that grey economy is much tougher and more resistent to the attempts to be put under jurisdiction of the currently valid laws and regulations.

The regime itself has become aware of that, so it seems to have given up on the intention to "discipline" grey economy. It decided to transfer a large portion of the expenses on its citizens. That is why the highest ever participation in the health care expenses paid by the citizens has been introduced, as well as in those of prescribed drugs. School fees have also been introduced with the intention to increase them, and expenses of municipal services, along with their entire uneconomical burden, have been shifted to the citizens. Belgraders pay a special city tax of three per cent on everything they buy, which are used for financing city infrastructure. It proved in Belgrade that the opposition, which is in power in the capital, is capable of solving all the problems only by raising prices, just as the regime is doing on the state level. It seems that the logic which prevails is that as income of the citizens goes down, they should be levied with additional expenses.

After a certain pause caused by the developments in Kosovo, the social dimension of life is gaining priority again. This is characteristic for the winter, because during this time of the year expenses go up for heating, expensive electric power, warm clothes and footwear. With about 150 German marks received on the average by the Yugoslavs it is impossible to meet any of these winter living expenses in Serbia.

Ratomir Petkovic

(AIM)