Consequences of the Rise of Price

Three Salaries for Normal Life

Cost of food has risen by 60, hygiene 91, public services by 73 per cent, and salaries by only 27 per cent. Public transportation costs more than a medical check-up. Value of pensions has been cut by half. City authorities in Belgrade strained the standard of living of Belgrades to the limit of endurance.

AIM Podgorica, 11 february, 1999

(By AIM correspondent from Belgrade)

According to the opinion of Group G-17 formed of renowned economic experts, the difficult economic conditions in the country affected pensioners the most. Pensions are not only paid irregularly, but their value has actually been cut by half in the past year.

In the past four years, pensions have increased 5.6 times, but prices of electric power and public services have gone up much more. According to data of the mentioned group of economists bills for electric power have increased in this period 20 and for public services 25 times. The latest rise of prices of city transportation in Belgrade has not been included in the mentioned rise of prices, although it has practically condemned pensioners to spend their time at home: many of them would have to pay transportation to their physicians more than the check-up.

There are other categories of the population living in very difficult economic conditions, who are also affected by the faster increase of prices than that of their salaries. Official statistic data show that prices of food products have increased by almost 60 per cent, and salaries by 27 per cent. The cost of the so-called "food basket" amounted last December to 2,235 dinars, while a year before it was 1,577 dinars worth.

Prices of products determined in the market, that is by offer and demand, but also by general economic conditions have risen more, while prices of food products which are controlled by the state, have increased less. In this way, state authorities are preserving social peace, but as a boomerang, shortages have begun of commodities prices of which are controlled. Therefore, they are cheap but nowhere to be found. By occasional interventions from state commodity reserves, these scarce products, primarily table oil and sugar, are brought to shops, but the quantities are insufficient to meet the demand, so that smuggling of these products is blooming.

Among 65 food products in the "basket" prices of which are registered by the official statistics, prices of citrus fruit have gone up the most. Since these are imported products their prices are formed on the basis of dinar exchange rates. Therefore, on the example of the price of oranges which has doubled it is possible to determine the trend of exchange rate, because in the same period the value of the dinar has gone down by half in relation to the German mark.

Other products experienced a smaller increase of prices which ranged from 50 to 70 per cent. The price of a kilogram of beef has increased from 35 to 54 dinars, poultry from 19 to 27, a type of sausages from 58 to 88 dinars. Statistics has noted that prices of certain agricultural products, for example of beans, potatoes, cabbage, apples, have gone up faster as the producers tried to catch up with the increase of prices of other, industrial products.

For a normal diet, on condition that he is employed, a Yugoslav citizen needs two, or more precisely 1.9 salaries. A year ago, this expenditure amounted to 1.6 salaries, which means that the economic position of the citizen has deteriorated, although statistics registers a rise of salaries. In November last year, the average salary was 1,218 dinars, and in past January 1,305 dinars. However, prices have also gone up in the meantime. Officially, they have gone up by 2.1 per cent in January.

On the other hand it has been noted that the number of employed persons is decreasing. According to the data of the Republican employment agency, 35,106 persons receive unemployment compensation, which is an increase of 185 per cent in relation to 1997. The trend of increase of the number of those who are reporting to the employment agency continues, at the rate of about two thousand a month. This increase is a reflection of the situation in the economy, of the fact that an increasing number of companies is going bankrupt or that the number of workers who have become technological surplus is increasing. The number of those whose companies have been liquidated has increased by 250, and those who belong to the surplus has gone up by 420 per cent. That is why the sum of 218 million dinars planned by the employment agency to be paid as compensation to the unemployed will be significantly exceeded. The number of the unemployed is in fact much bigger (about two million) but they have no right to compensation, but must shift around for themselves in order to survive.

Although expenses for food have increased by almost 60 per cent, prices of food have increased at a slower rate than those of other types of commodities. According to data of the city administration for prices which operates as part of Belgrade secretariat for the economy, in December, a family of four needed 3,359 dinars for their basic needs. This is by 41.8 per cent more than a year before. Expenses for clothing and footwear have gone up by 44.2 per cent, housing by 73.4, house equipment by 71.9, hygiene by 90.6, and education expenses by 60.8 per cent. Electric power cost has gone up by 56.9 per cent, and heating by 102 per cent. Prices of furniture have increased by 168 per cent, and those of household appliances by 91 per cent. Therefore, when speaking of equipment for their apartments, one must be aware that the citizens with their extremely low salaries, can only buy an electric bulb or two.

The population is forced to choose cheaper, but poor quality hygienic means, but also to give up completely on going to the cinema, the theatre and sport games, because prices of entertainment as well as of school utensils have also gone up. Results will show much later on.

Such circumstances which undoubtedly show that living standard of the population is in a decline which should cause concern happened in the first year after parliamentary elections when in the campaign promises had been made to the citizens, especially pensioners that better days were coming. Promises were then forgotten, and it is obvious that the parties which had crossed from the opposition into the ruling structures have contributed to the rise of prices the most. The leader of the Radicals, for instance, boasts that he has been the most persistent of all in introduction of numerous taxes and burdens, and their increase. Serb Revival Movement has done the same on the level of city authorities in Belgrade, where prices of public services have drastically gone up.

The present situation is explained by the difficult economic situation in which the country is because of the developments in Kosovo, and that in order to defend this province "every citizen should bear a part of the burden". That is why results of the negotiations in Rambouillet are expected with exceptional interest, not only for political, but also for economic reasons.

Ratomir Petkovic

(AIM)