Prime Minister Milojko Spajić said that the Faculty of Economics' analysis that "Europe Now 2022" had an influence on the rise in inflation in 1 was shameful.
"I will talk to the people who did it because it is a complete lie," the Prime Minister said today at the panel discussion "Business Agenda 2025 - Favorable Business Environment" of the Montenegrin Employers' Union.
The Faculty of Economics recently published an analysis stating that the main reason for the increase in food prices in the period 2021-2023 is the increase in producer and import prices, as well as the increase in gross wage costs at large retailers, which they could only compensate for by increasing margins.
This analysis does not mention "Europe Now" anywhere, but it states that in 2022 there was a decline in productivity and wage growth, and that this must lead to price increases.
"It is important to emphasize the importance of the level and dynamics of labor productivity, and the impact on the volume of business, the level of wages and employment. In conditions of labor productivity growth, conditions are created for real wage growth. Otherwise, wage growth that is not accompanied by productivity growth leads to price growth. Compared to 2021, labor productivity (output per employee) in 2023 was, in nominal terms, lower at the level of Montenegro by 3,35%, and in the trade sector it increased by 4%. Given the growth in gross wages in the same period (29,46% and 45,3%, respectively), it is concluded that wage growth was not a consequence of productivity growth," the analysis stated.
Spajić also said that the European Commission and the World Bank did not state in their reports that Europe Now 1 had an impact on inflation.
That's not true.
The European Commission's 2023 report, which refers to 2022, when "Europe Now 1" was applied, states that in addition to the global impact on inflation in Montenegro, "large wage increases caused by domestic policy" also had an impact.
"Due to rising prices following Russia's aggressive war against Ukraine, inflation peaked at a record high in 2022. Driven by global inflationary pressures, particularly on food and fuel, as well as large wage increases driven by domestic policy, average inflation jumped to 13% in 2022. Annual inflation peaked at 17,5% in November 2022 and eased to 6,9% in July 2023. The government adopted numerous and not always well-targeted support measures for households and businesses to counterbalance the impact of higher inflation, including reduced value-added tax rates on basic foodstuffs and lower excise duties on unleaded gasoline and gas oils.
Also, a European Commission report published in November last year states that Europe Now 2 is affecting inflation growth.
"The recently adopted Europe Now 2 program aims to increase disposable income by increasing the minimum wage and reducing pension contributions. These measures will support GDP growth in 2025, but will also contribute to increasing inflation," the EC stated.
Also, in October last year, the World Bank presented its regular economic report, where it was stated that "Europe Now 2" would have an impact on inflation, but that it would be smaller than the impact of "Europe Now 1" on inflation.
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"This amount of wage increase will not be as large as we saw in the net wage increase in "Europe Now 1", so it is therefore expected to have a milder impact on inflation," the World Bank said at the time.
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