Employers intend to compensate for the difference in costs due to the increase in the minimum wage by increasing the prices of products and services, and those who are not helped by this will resort to layoffs. For many small and medium-sized enterprises, it is simply too big a burden
The beginning of the new year 2026 will bring a new, regular increase minimum wages, the so-called minimum wage, by 10,1 percent, i.e. from 500 to 550 euros. In addition to joy for those who are paid the least, this measure also brings headaches employers who should pay the increase.
Employers intend to compensate for the difference in costs by increasing product prices, and those who are not helped by this will resort to cancellations.
Ljiljana Pavlović from the Union of Employers of Serbia tells "Vreme" that during the negotiations on the regular increase of the minimum wage, that organization indicated authorities that it could be a problem for employers and the economy if the state does not take over part of the burden.
"The most vulnerable are micro and small businesses, because our surveys of employers' attitudes show that a third of them are already operating with serious difficulties and that such a high increase in the minimum labor price will have a negative impact on their business," says Pavlović.
He points out that part of the employers stated that they will compensate for the increase in the minimum wage through growth dinner products and services, while the other part, which cannot compensate the cost in this way, stated that the number of employees in their companies might be reduced.
"We asked the state to take on part of that burden, and in that sense the non-taxable part of wages was increased by the same percentage as the minimum labor price was increased. In this way, the amount of the cost was compensated, but even so, a third of employers, especially in eastern and southern Serbia, and even in Šumadija and western Serbia, cannot achieve as much traffic as can be achieved in larger cities, so they are not able to pay even the minimum wage," warns Pavlović.
He states that the Union of Employers of Serbia, in contrast to the extraordinary increase in the minimum wage in October to 500 euros, did not agree with this regular increase in labor prices, because it considered that it had already been increased enough.
"We agreed to that extraordinary increase in October, the majority of employers at that time were in favor of it, but the gender-related increase in the minimum wage is now too much for employers," says Pavlović.
Noting that the Union consults only with businessmen in the private sector, she warns that there is a danger that some private companies will be closed due to the increase in the minimum wage.
"In our surveys, there is always a third of employers who are not in favor of an increase in the minimum labor price, and these are mostly companies that are already operating with poor results. For them, any large cost is a problem, after which the question arises as to whether they will survive at all the market. Therefore, there is certainly a possibility that some companies will shut down due to the increase in the minimum labor price. "Fortunately, the other two thirds of those surveyed have almost no employees who have minimum wages," says Pavlović.
When it comes to activities that are particularly threatened by the increase of the minimum wage, he points out that there are already big problems in the textile industry, which for many years has had numerous problems due to unfair competition and the existence of numerous online stores.
"Our people who work in the textile industry simply cannot compete with such competition, so they have a problem with a shortage of personnel, which is caused by the fact that these are occupations with fairly low wages," says Pavlović.
He adds that in addition to the textile industry, the service sector is also quite threatened.
"If we are talking about the minimum wage, it should be freed." taxes, but for now the state can only increase the non-taxable part of wages, which also means businessmen, but it would mean much more if taxes and contributions on wages were reduced, because they are really extremely high," concludes Pavlović.
On the other hand, economist Saša Đogović says that when it comes to increasing the minimum wage, the state will take on part of the burden, "so employers will be able to bear it."
It indicates that the cost will be higher for those paying minimum wages than for those employers paying higher wages.
He reminds that the regular adjustment of minimum wages was announced earlier and was included in the budget, which is why it is not a surprise.
Đogović points out that the ad hoc increase in the minimum wage in October caught all employers and the economy by surprise.
"It was an expression of the desire to meet the increased dissatisfaction of citizens due to high inflation. Employers have already calculated the January regular determination of the minimum labor price into their operations for the following year, so it is not a surprise factor," says Đogović.
For this reason, he notes, some employers will raise their prices in order to be able to increase revenues and thus amortize a certain increase in labor costs.
"Companies that could be closed, not only because of the increase in the minimum wage, but also other costs, are companies in the segment of labor-intensive activities that are looking for cheaper labor, such as the textile and leather and footwear industries," says Đogović.
"The state must have a clearly defined industrial policy and no longer give subsidies to those labor-intensive activities, but only to clearly defined high-tech jobs. The state must also insist on the retraining and upskilling of the workforce and through a public-private initiative enable the raising and commercialization of certain natural resources, such as tourism, agriculture, animal husbandry and fruit growing, in order to encourage the population to start developing domestic entrepreneurship on the basis of economic resources in underdeveloped areas," he says. Đogović.
He points out that because of this, a strategic turn is needed in the current economic policy in the direction of developing domestic entrepreneurship and building an institutional and predictable environment in which capital from the diaspora could flow into Serbia, and where people from the diaspora could feel safe in the Serbian market.
In this way, he concludes, this new capital and new jobs could improve the economic position of Serbia.
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