The Italian "Ariston" opened a plant in Niš and received 22,2 million euros in subsidies for it. More than 3.000 workers recently lost their jobs in that city, while "Ariston" will employ people. Economist Goran Radosavljević explains for "Vreme" - investors will not come to Serbia at all if you don't give them a lot of money
The Italian company for the production of boilers and heating systems "Ariston" opened a plant in They are not, and for that she received a 22,2 million euro subsidy from Serbia, and the professor of the Faculty of Economics, Finance and Administration, economist Goran Radosavljević for "Vreme" explains such a move by the state by saying that "investors will not come to Serbia at all if you don't give them a lot of money."
"Without much money for subsidies even those companies that were already present in Serbia no longer want to invest in Serbia Serbia and invested, and we returned half of the money from the investments, although it is not clear why we did that. In a situation where we basically have a low number of unemployed, Serbia should attract investors who will stay for a long time, and who did not come only because of cheap labor," says Radosavljević for "Vreme".
The "Ariston" plant was opened shortly after more than 3.000 people lost their jobs in Niš, in a large wave of layoffs in that city, while "Ariston" committed to employ 175 workers by the end of this year, and at least 300 by the end of 2027. workers.
By the end of 2027, "Ariston" should invest at least 75 million euros, and the state subsidy of 22,2 million euros "covers" 29,6 percent of the cost of the entire investment.
It is also foreseen that the salary costs for new employees, in the two-year period after reaching full employment, amount to at least 7,2 million euros.
Serbian President Aleksandar Vučić said at the opening of the plant that "Ariston is coming at the right moment", but he did not mention the lucrative subsidy that the company received from Serbia.
Radosavljvević explains that from the point of view of investors, there is nothing controversial about "Ariston", because these and other Italian companies have been present in Serbia for a long time as and to investors above all in medium enterprises.
"I assume that they were looking for a location for investment, and when Serbia offered them so much money - they did not hesitate too much, and by 2027 they should employ 300 people, which they would definitely do," says Radosavljević.
He points out that the main problem in this and similar investments is that Serbia established the principle of paying investors to come in 2006 and 2007.
"We were a 'banana state', so we decided to wait ten years to no longer be a 'banana state' in terms of regulation and compliance with European rules, and all because investors would come to Serbia for the business environment, not for money. However, 20 years later, we have not done any of that, and we are an even worse country for investment, and that is why we have to pay investors heavily to come to Serbia at all," says Radosavljević.
He states that this plan dates back to the Kostunica's the goal of the government was to reduce unemployment, which was high at the time, so the authorities at that time considered that it was better to pay investors to come in order to pay some kind of wages and contributions, and to reduce unemployment.
"The idea was that in the end the benefit from the subsidies would be greater than the conditional damage we had because we gave the money for the subsidies from the budget. However, 20 years later we don't know what the benefit is from the subsidies. No analysis has ever been done that would specify how much money Serbia invested in subsidies, and how much of it was returned," says Radosavljević.
It emphasizes that unemployment essentially, it is not a big problem at the moment, because of which Serbia should pay foreign investors millions for subsidies.
"The problem in Serbia is the low standard of living, and you will not increase the standard by paying someone to hire 300 workers in Niš, who probably work for the minimum wage. In the short term, it is a benefit for 300 families who will be taken care of. However, the benefit of such an investment, since they will probably produce items for export, so no VAT will be paid for it, will be much less than 20 years ago," explains Radosavljević.
Asked why subsidies are not directed to domestic companies instead of foreign companies, and whether domestic companies can even be competitive, in this case Ariston, Radosavljević says that he is not sure whether domestic companies should be dealt with at all "or is it better not to touch them at all".
"Whenever the state was engaged in some domestic business, that business was either racketeering by the state, or that business failed. The state should not be engaged in business that way," says Radosavljević.
He notes that the subsidies are set in such a way that domestic companies cannot meet the conditions regarding the number of new employees.
He states that when the greenfield company comes, it does not have any employees and it is not a problem for it to hire 200 or 300 people, because it needs those workers anyway to work.
"However, when a domestic company already has several hundred employees, it is probably an impossible mission for it to employ another 100 people, so the criteria for receiving subsidies is set in such a way that domestic companies cannot receive that money," concludes Radosavljević.
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