Urban Agony

Serbia will not undergo transition in the imminent future, at least not in the way most ex-Socialist countries have. Were transition and reform to be, then they would not have been thwarted in every possible way in 1990, nor would they have been stalled for five years. There would have been no attempts to preserve the inefficient, unsuccessful and historically outdated economic and political systems at all costs.

The economic consequences of such a policy on Serbia and most of its population are disastrous. Unlike Poland, the Czech Republic and Slovenia, which are expected to regain their pre-reform and pre-privatization economic levels soon and to continue the growth of their economic systems, Serbia has over the past five years lost half of its social product and is on the verge of joining the club of underdeveloped countries (it had once belonged to the upper half of the medium developed economies).

The social product decline resulted in the drop of the per capita income, i.e. poverty. A recent research conducted by the Institute of Economic Sciences shows that 7.7% of Serbia's population was poor in 1990, if one uses the poverty criterion applied in Central and Eastern European countries; approximately three-fourths of the Federal Statistics Office consumer basket per family member per month. If one uses as the criterion the whole consumer basket, which is methodologically correct, as the basket comprises the minimum healthy, normal nutritional needs of a four-member household, then 14.1 percent of Serbia's population would be considered poor five years ago.

Only four years later, in 1994, 23.5% of Serbia's population was poor according to the lower criterion and 44.4% according to the higher one. Therefore, in 1994, 44.4% of the population was unable to purchase the minimum healthy, normal food in Serbia. Not to mention the other needs, which are also considered normal.

Poverty is becoming a predominantly urban phenomenon. Those most affected by it are city industrial workers (the working class) - 43.6% of them were poor according to the lower poverty criterion. Households of the executives (white collars) suffered the least - only 13.6% of them were poor.

The relatively higher living standard of the rural households in comparison to the urban ones is the consequence of their return to the obsolete way of fulfilling their needs - they produce to satisfy their own needs. Urban households have not had this opportunity. Their survival strategy has mostly boiled down to involvement in high-risk and uncertain activities connected to the black market.

The middle class in Serbia is disappearing. As much as 70% of the population is under or just above the poverty line. Most of Serbia's citizens are becoming equal in their poverty. Only between 1 and 3 percent of the Republic's population boasts much higher salaries then their fellow citizens. The nouveau riche, who have appeared over the past few years by profiting from power, the war, inflation and the sanctions, i.e. at the expense of the poor, are, as a rule, not included in the statistical research upon which the poverty analyses are based.

Families with children, particularly urban families, are the most affected by the grave economic and social crisis. 36.3% of the urban families with children are poor according to the lower criterion, while as much as 59.7% of them are poor according to the higher one. According to a recent poll, merely 11.3% of the families with children under 7 regularly buy them toys, while 45.5% buy them rarely; the costs of "free" elementary schooling are excessive for 71.1% of the families; 64.2 percent of the families buy their children clothes and shoes only when they have to.

The real drop of the social product also resulted in the collapse of the socialist "state of prosperity". Guaranteed benefits (children's bonuses, paid maternity leaves, welfare, pensions, etc.) and social services (health and education) are almost equal to those in capitalist countries. But they are not implemented. This is why all promises of social(ist) justice sound cynical.

The trap called transition has been wisely avoided. The system has been preserved and it should be merely upgraded. The attempts of some to qualify the current economic management capitalism is aimed at scaring the people by capitalism. The Serbian economy, which is absolutely dominated by socially- and state-owned property, is not even near capitalism.

However, despite all these achievements, Serbia faces a deep economic and social crisis. The authorities blame the sanctions for it. Economic experts argument that it has been caused by the inefficient and irrational economic system, postponement of necessary changes, Yugoslavia's disintegration, an erroneous economic policy and the sanctions. The war stopped, the sanctions are suspended, links with the ex-Yugoslav republics - which, we were promised, would be ruined without Serbia, and they haven't- will be restored, if we behave rationally.

We therefore return to the key issue of changing the institutional mechanisms into an efficient and prosperous system, Serbian economy's structural adaptation, an open economic strategy and an efficient economic policy, the aims of which, according to the capitalist economic moguls, are prosperity, equality, stability and continuity of stability. Serbian economists are in absolutely no dilemma that these are the prerequisites for the revival and growth of Serbia's economy, and, hence, the long-term growth of the population's living standard. Any other course would prolong agony and result in further decline.