Trade unionists against freezing salaries and pensions

Representatives of trade union organizations do not support the IMF's proposal for a period of ten years freeze pensions and salaries in the public sector in order to reduce the public debt and they hope that the Government will not resort to that solution, but they support the abolition of tax incentives.

The General Secretary of the Union of Free Trade Unions (USS), Srđa Keković, told "Vijesti" that the talk of freezing salaries and pensions for a period of ten years sounds frivolous. In USS, they expect the Government not to reach for that measure, and if that happens, they will oppose it.

"Measures where the IMF requests the abolition of tax breaks that are lightly given to those who do well are acceptable to us. "I will give concessions for Porto Montenegro or for the construction of the highway, while citizens and employers must properly settle all obligations," said Keković.

He added that they expected the IMF to propose to the Government other measures to reduce the public debt, such as collection of the tax debt that accumulates every day, concessions, contributions for pension and health insurance.

"Since 2009, we have not collected about 60 million euros in contributions from legally registered employers. The IMF did not demand that 40 workers who work illegally be transferred to legal streams, that the Government sanction the illegal spending of budget units' money, increase the profit tax, tax financial transactions, confiscate illegally acquired property..." said Keković.

The IMF proposed to the Government a set of new fiscal consolidation measures until 2025, among which are a temporary freeze on public sector wages and pensions, an increase in taxes for tourism and the abolition of VAT exemptions. Long-term options include reducing the number of employees in the state sector, introducing new strategies to improve tax collection, getting rid of public companies and refraining from investment subsidies. In this way, according to the IMF, the state's public debt would be lowered below the Maastricht threshold of 60 percent of GDP by the end of 2025 and risks in public finances would be limited.

President of the State Administration Trade Union and General Secretary of the Union of Independent Trade Unions (SSSCG), Duško Zarubica, does not agree with the IMF's proposal, because salaries are still low and expect their increase.

Economic analyst Zarija Pejović believes that the Government must carefully analyze each item of spending and transfer the burden of taxation from labor to capital and introduce progressive taxation for companies with a higher level of profit.

He said that the IMF's proposals in the case of an increase in public debt are already known and that they amount to cutting public spending and increasing taxes.

Zarija Pejović believes that there are no conditions for increasing salaries and pensions, as this would further increase the public debt

"Further guarantees to private companies that would be implemented at the expense of the budget are unacceptable. On the other hand, we cannot reduce subsidies to agricultural producers, because we have the lowest investments in agriculture per capita compared to neighboring countries. For now, despite social dissatisfaction, there are no conditions for increasing wages and pensions in the public sector, because that would lead to an additional increase in debt," explained Pejović.

For him, it is unacceptable that small and medium-sized companies pay profit tax at the same rate as companies with a monopoly or oligopoly position (mobile phone service providers, sellers of petroleum products, banks and energy companies). He also adds that the IMF's proposed fiscal policy regime is partly justified because every year the state borrows up to 250 million euros, plus it borrows additionally to refinance existing debts. He believes that the country needs inclusive economic growth.

Goran Tuponja (Positive) announced that the practice of borrowing for current consumption must be stopped and that Finance Minister Radoje Žugić is manipulating pensioners while talking about a possible increase in pensions, while the IMF is asking for their freezing.

Pensions in Montenegro have been frozen for two years.

The Ministry has yet to consider the IMF's proposals

The Ministry of Finance did not specify whether they will act on any of the recommendations of the International Monetary Fund to reduce the public debt until 2025, and whether it is possible to expect the introduction of some of those measures in 2016, such as freezing pensions and salaries for employees in the public sector.

"In the coming period, the Ministry of Finance will analyze the IMF report in detail and consider all potential measures and activities that can lead to better and more efficient management of public finances and debt.

We will try to incorporate opinions and consultations with relevant financial institutions into our own analyzes and reviews of the state of public finances with the aim of strengthening public finances and bringing the level of public debt within the framework of Maastricht", the Ministry of Finance told "Vijesta"