IMF: Freeze public sector wages

IMF Belgrade Resident Representative Harold Hirschhofer says Serbia must put a lid on the rise of public sector salaries. Hirschhofer expressed worry in an article published in the Serbian media that the huge increases in salaries seen in state-owned enterprises and elsewhere in the public sector will be detrimental to the country's economy, and recommended a freeze. IMF: Freeze public sector wages He added a cut in budget spending and higher taxes, along with accelerated structural reforms, should also be considered by those in charge of Serbia's economic policy. Hirschhofer pointed out that average salaries in Serbia in May 2007 were over 30 percent higher than a year before, although retail prices increased by only 4.4 percent in the same period. The IMF's representative to Serbia concluded that the country's institutional framework is not sufficiently changed today to avoid the classic mistake of the self-management era – unsustainable wage growth at the expense of investments and future economic development. Harold Hirschhofer (Photo courtesy IMF)

IMF: Freeze public sector wages

He added a cut in budget spending and higher taxes, along with accelerated structural reforms, should also be considered by those in charge of Serbia's economic policy.

Hirschhofer pointed out that average salaries in Serbia in May 2007 were over 30 percent higher than a year before, although retail prices increased by only 4.4 percent in the same period.

The IMF's representative to Serbia concluded that the country's institutional framework is not sufficiently changed today to avoid the classic mistake of the self-management era – unsustainable wage growth at the expense of investments and future economic development.