Entrepreneurship in Serbia - how to get real growth

01. July 2019.

According to the data of international organizations and bodies of the EU in charge of monitoring the economic climate in the member states and candidates for EU membership, the citizens of Serbia are leading in the number of self-employed in relation to the total number of employees.

So, there are more entrepreneurs than those who have found employment in an existing company. It looks like we are leaders in the whole of Europe on the matter - more than one-third of the newly employed have just employed themselves.

Innovative and entrepreneurial bonanza takes up Serbia, how did we come to this? Did the Serbian entrepreneurs finally get rid of administrative and legal stitches, big taxes, or is something else?

Maybe there's a little bit of everything. Many actors in public life in Serbia, got into polemics, as they were concerned with the Serbian official statistical data, it's National Employment Service and the Statistical Office. The way of looking at unemployment has really changed, so we have come to the conclusion that in Serbia about 22% of employees are informally employed - data that the state itself has not taken into account before! You wonder why? That so-called informal sector was used to describe the gray economy, an area that should have been suppressed and strictly adhered to the Labor Law, as well as other regulations on employment and business start-ups.

How many new entrepreneurs we have then?

Let's look at how this reflects on the growth and the development of the economy. Does the spirit of the new age really takes in, have the standard and GDP been increased? We could not come across such data, so we might need to analyze a little deeper. The statistics data can discover as much as they hide. Thus, the growing number of entrepreneurs can also be a consequence of the strategic thinking of the same entrepreneurs, in situations when they face the market conditions in Serbia.

businessman-having-headacheThe taxes and contributions that every employer must allocate for each worker, outstrip the budget many employers can afford to offer to future employees. That is why many unemployed faces a choice – to set up their own agencies and receive payments this way, or to receive salaries well below their own needs and demands.

That's why many choose to open new firms without any employee or with just one employee. Taxes and contributions for someone who starts their own company is far lower than in the case of standard employment. This is the main reason for the rapid growth of entrepreneurs.

We do not want to enter into other combinations of the new companies’ establishment, like for speculative reasons, but we will notice that this way of cooperation between employer and the employee is much more relaxed from the position of the labor law. So, choose what you like.

We have another high taxes and contributions consequence in Serbia - false growth of entrepreneurship. For those who are true innovators and entrepreneurs, this can be another warning sign, showing the absence of the right desire to systematically solve an important and strategic area.

Young and responsible

So a solution came up. The fact is that many new entrepreneurs do not want to invest their time and money instantly in obsolete state pension and health insurance systems, especially because they have no guarantees that the money invested will be adequately returned.

Especially young people, as the most important resource of each country, want to be recognized as someone who is not and cannot be a ballast but a carrier of innovation and entrepreneurial spirit. That is why better legal solutions, as well as the reduction of administrative barriers and legal security, are the basis for any future "real" growth in the field of entrepreneurship.

How can we change the current situation in entrepreneurial waters?

Let's continue where we stopped - after pointing to high taxes and contributions that burden our economy. Right there, with legal protection and the rule of law.

businessman-hand-holding-envelopeRecently, the Business Registers Agency sent a notice to commercial entities regarding commercial offers that are offered to users by a regular mail and telephone, allegedly on behalf of the APR. “So, someone was bold enough to mail envelopes with payment slips of 2,000, 3,000, 6,000 and more thousands of dinars, for the purpose of "registering changes in the Business Register" and accompanied by an explanation that this is an advertising service that has a commercial nature. But also there are reports of individual businessmen being presented as employees of the Agency, offering the same services.

If someone is so free to play around with one of the most important institutions in the country, the question remains how serious the state's response will be in preventing such fraud and legal protection of business entities.

Preventing such crimes and strengthening the judiciary system can be the most important ingredient that, with more sensible tax policy, can lead to the growth of genuine entrepreneurship in Serbia. We, as entrepreneurs in the world of digital services, can only provide support and help these new colleagues and their business, like we always did.