The government did not talk to business partners when making a new decision on limiting margins, and there was no economic analysis, social dialogue, the business and competitive environment will be damaged, create negative consequences for companies, the measures have elements of populism, traders are not responsible for high price levels. .
These are some of the criticisms that the Chamber of Commerce, part of retail chains and two employers' associations, sent to the Government after it made a decision at its session on Wednesday to limit margins for 66 food and hygiene products in wholesale and retail stores.
The Government pointed out that with this measure, more than 1.000 items will be available for sale.
Compared to the earlier campaign "Limited prices", the list of products now includes fruits, vegetables, a little more meat and food for personal hygiene. This measure will begin eight days after its publication in the Official Gazette, and will last until January 31 of the following year. Margins for the food sector in wholesale and retail stores are limited to 10 percent, while for hygiene products they are limited to a maximum of 10 percent in wholesale and 15 percent in retail.
Traders remained speechless
The largest domestic retail chain "Voli" told "Vijesta" that they will respect the measures as well as all Government decisions, but that they were not consulted about the new margin limit. They emphasized that prices have risen on a global level and that domestic prices are not higher than in the region.
"Our position is that this will not affect the reduction of inflation, because margins are not the reason for rising prices. Margins are not, nor will they be, the reason for inflation. The company "Voli" in its market chain applies the lowest margins that can ensure stable and uninterrupted operations. Margin restrictions and salary increases do not go hand in hand," said this trading company.
Minister of Economic Development Nick Djelosaj said at the press conference that after the implementation of this decision, he expects a reduction in prices, because according to the findings of the market inspection, trade margins are much higher than those to which they will limit them.
The Budva company "Mega promet" confirmed to "Vijesta" that they were not asked either. They pointed out that they will also respect the measures and highlight products with limited prices, but they believe that for these and similar steps, it would be necessary to talk with the economy in order to find a common sustainable solution that would satisfy everyone.
"In terms of the number of articles, we could not influence, and therefore we did not have the opportunity to react and comment. We learned about the range and number of items included in this campaign after a letter from the First Chamber, after the Government session. Although we are recognized as a company that operates exclusively on the territory of Budva, we believe that we could have contributed to the preparation of this campaign. As an import-oriented economy that produces very little, we are directly dependent on the prices we receive from suppliers from abroad. Prices should not be compared with countries in Europe and the world, which are production-oriented and are individually large markets, and they do not import the same products, but produce them, so even those products cost less to purchase in those countries," the company pointed out.
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They added that they will participate in any future initiative to improve citizens' standards, and that the items on sale in their markets will be marked separately compared to those that are part of the state sale.
"Vijesti" requested comments from "Domača tradje", "Merkator" and "HD Laković", but the answers to the questions did not arrive.
The Union of Employers (UPCG) announced that they do not openly support the Government's new decision. They emphasized that it was adopted without prior consultation and that the solutions had to be discussed with the social partners, through a dialogue that was absent this time. They also pointed out that they are not surprised by the fear of the economy that this approach destroys the basic market postulates, economic theory and practice and ignores the obligations that companies settle from the margin, i.e. regular business expenses, maintenance, salaries, investments...
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They pointed out that Đeljošaj, who is a member of the Social Council, violates basic principles from the point of view of the International Labor Organization and the EU with unilateral decisions, which imply the participation of the economy in making decisions that concern it.
"The Union was informed about the Decision and the list of products exclusively through the media, that is, from the relevant ministry, until today, neither an invitation to a meeting, nor oral/written information or an official email informing about the planned decision has arrived at our address. In addition to avoiding social dialogue, it also showed the absence of sensibility for an analytical approach and discussion by which, as social partners, they would consider the data and attitudes of the economy, and on that basis agree on a model that would not allow the negative effects of the measures to outweigh (completely or partially) the positive ones - at least for the citizens", they pointed out from the Union and added that they have so far shown themselves to be a responsible social partner, so they call on Đeljošaj and the Government to look for solutions to problems and challenges through consultations and compromises, especially with those who will have the most negative impact on decisions.
The dialogue is pointless, there is no deflation
Minister of Labour, Employment and Social Dialogue and President of the Social Council Naida Nišić is in mid-August, in response to the messages of the President of the State Jakov Milatović that the social dialogue has collapsed, after the Social Council gave consent to changes to the Labor Law by overvoting, announced that they are strengthening the social dialogue and that they are adopting measures in the interest of citizens, the economy and the state. Then she pointed out that unanimity is not good and that every vote against is an additional value for every decision.
The Chamber of Commerce (PKCG) announced that the analysis of professors from the Faculty of Economics on the prices and operations of retail chains in Montenegro showed that the rise in prices did not occur as a result of the irrational behavior of the economy, but rather factors that are not affected by it. They explained that they forwarded that analysis to the Department of Economy after receiving the decision on limiting margins, with a request that the adoption of the measure be considered.
"Unfortunately, the PKCG was not consulted this time, and the Decision was forwarded to us via email on August 27, a little less than 24 hours before the Government session where it was adopted. We are of the opinion that such or similar solutions would be of better quality if the actions were coordinated with the economy, because deflation cannot be created in this way, and such policies can cause damage not only to traders but also to businessmen in the entire chain. Responding to the effects, rather than the cause, can only produce short-term effects. Analysis of the impact of limiting margins on the value of the consumer basket showed that for 30 products, the basket leads to a decrease in the value of the minimum consumer basket by 3,2 percent", stated PKCG and emphasized that a comparison with the reduction of margins in Serbia, North Macedonia and Croatia showed that these measures do not have an anti-inflationary character.
They added that the balance on the market is created by the ratio of supply and demand, whose indicator is the price, and that if the Government sets lower prices, it is possible that the revenues will not reach the costs. They claim that traders and manufacturers can withdraw goods from the market, in the hope that the Government's decision will be revoked, that margins can be increased on products that are not covered by the decision, which would lead to an increase in the general price level, while the worst case would be a reduction in the volume of work of companies and rising unemployment, lower wages and falling GDP.
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The Montenegrin Association of Employers (CUP) announced that the Government continues to make economic decisions without consulting the economy, thereby playing tricks on employers and making social dialogue meaningless. They claim that decisions without clear analyses, with a touch of populism and without respect for the market situation on the market, will seriously damage the environment of competition and create negative consequences.
They also emphasized that the Government must create an adequate market environment for the benefit of the economy and citizens, and not make decisions contrary to the market and the principles of social dialogue.
"The decision without consultation and adequate dialogue with employers is a continuation of the Government's anti-market behavior. With this approach, the business environment is collapsing, and the ranges will essentially not have a positive impact, on the contrary - it will harm both the economy and the citizens. Essential challenges and problems in the economy are postponed, and primacy over the creation of an appropriate business environment and adequate market conditions is taken over by the "race" in adopting measures, which are contrary to market operations and almost always end up with negative consequences. CUP believes that it is now more than obvious why the Government does not want to reform the social dialogue, but instead artificially maintains the monopoly position of an association for almost two decades, which clearly has no influence to defend the interests of employers through social dialogue, to stop decisions that are anti-market and in the long term to the detriment of the economy and citizens", pointed out from CUP.
Net profit 35,5 million
The six largest chains and one largest importer of food and other necessities had a total revenue of 2023 billion euros in 1,08, which is a growth of 16 percent compared to 930 million revenue in 2022.
Last year, those seven companies had a net profit of 35,5 million euros, that is, it increased by 62 percent compared to 21,9 million from the previous year, reports on financial operations showed.
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