"Europe Now 1" had an impact on inflation in 2022, just as "Europe Now 2" has an impact on inflation now. We have proven that beyond doubt," said Maja Baćović, professor at the Faculty of Economics, yesterday at a panel discussion with Prime Minister Milojko Spajić and his Chief of Staff Branko Krvavac.
She stated this after Spajić tried to conclude in his presentation that "Europe Now 1" had no impact on inflation in 2022.
Professors from the Faculty of Economics stood by their research conclusion that the 1 "Europe Now 2022" measures had an impact on inflation, while Prime Minister Milojko Spajić and his Chief of Staff Branko Krvavac claimed that the Faculty of Economics team used incorrect Monstat data and that they were led to the wrong conclusion.
Both of them stated this at the panel discussion "Analysis of prices and operations of retail chains in Montenegro", which was organized yesterday at the Faculty of Economics in Podgorica and lasted almost three hours.
Two weeks ago, at a panel discussion at the Employers' Union, Spajić said that the Faculty of Economics' analysis of inflation growth in 2022 was "shameful", that it was "a pure lie" and that he would talk "to the people who did it."
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The conclusion of the analysis by the Faculty of Economics is that food prices in Montenegro, when they rose by 29 percent according to Monstat, primarily increased due to increased import prices from suppliers, increased material costs for retailers, and increased wages in 2022. The Prime Minister himself linked this third reason to "Europe Now 1", the implementation of which began in January 2022, because this program is not directly mentioned in the analysis.
Yesterday, Spajić also convinced the professors that they were calculating productivity incorrectly, that is, that it did not fall in 2022 as claimed in the analysis. He said that the assessment that "wage growth that is not accompanied by productivity growth leads to price growth" is incorrect.
The Prime Minister stated that they calculated productivity by dividing GDP by the number of employees, and that they thus obtained a decline in productivity because the number of employees increased significantly, by 80 thousand, in 2022 compared to 2021. He also said that this was not the real number of job increases, but that due to the reduction in contributions and income taxes at the beginning of 2022 (Europe Now 1), there was a reduction in the gray labor market.
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Baćović, who led the team that conducted the analysis, said that productivity is not calculated in this way, but rather based on scientifically established methods, but that did not stop Spajić from repeatedly stating that productivity was calculated incorrectly and that it was not declining.
The Prime Minister said, allegedly citing data from the analysis, that it claims that the increase in imported prices was 29 percent, and that the total increase in food prices in Montenegro was 31 percent, which for him was proof that all other domestic influences on prices were two percent, or that they practically did not exist.
Professor Baćović said that this was a miscalculation and that the bases were different, but she was interrupted several times by Spajić and Krvavac, even though she begged not to be interrupted for at least three minutes.
She stated that traders had significantly higher gross salary costs in 2022, and that they compensated for this cost through a partial increase in margins, with the main reason being the increase in import prices. Baćović also pointed out that they did not address the reasons for the increase in gross salary costs.
Spajić claimed that this was not true because the Government, through "Europe Now 1", reduced taxes on wages and that traders could only have lower costs.
However, Monstat data shows that the average gross salary in trade in 2021 was 591 euros, and in 2022 it was 729 euros. Also, the financial reports of the largest retail chain show that in 2021 they had a gross salary expense of 19 million euros, and that in 2022 it amounted to 21,2 million euros.
Spajić finally said that it was clear from everything they presented that inflation in 2022 was caused by the rise in import prices and that "Europe Now 1" had no influence, to which Baćović said "that's what you claim" and pointed out that their indisputable scientific analysis determined that "Europe Now 1" had an influence on the growth of wages, and that prices are now also rising due to the influence of "Europe Now 2".
Spajić and Krvavac didn't even read what they were commenting on
Explaining her analysis, Baćović said that they conducted it due to the state's action to limit margins in order to determine the reasons for inflation and whether measures to limit margins and prices could affect inflation.
She stated that through analyses of price movements and comparative experiences in similar measures by state authorities in Serbia, Croatia and Macedonia, they concluded that these measures do not have a significant impact on reducing inflation.
Spajić and Krvavac said that these were measures that only the state could implement, and that there was mild deflation in those months, and asked that this analysis be sent to them.
However, it is the same analysis and the conclusions about the impact on prices, which were commented on throughout the forum, and about limiting margins are located next to each other.
Jocović: We chose not to remain silent
The Dean of the Faculty of Economics, Mijat Jocović, commented on Spajić's words about the shameful analysis full of "pure lies", stating that the Prime Minister has made contradictory statements.
He also said that he was then considering whether to react to his statements, and that they decided not to remain silent.
"What kind of professors would we be if we said we had no opinion and were afraid to express it. What kind of society would we be if we told professors that they were incompetent and had no opinion," Jocović asked.
He said that economic institutions must be open and independent, in order to create independent and free academic citizens.
"The essence is monopolies and we need to answer whether they exist in Montenegro in any markets, not just food retail, and whether someone is abusing the market. Monopolies are determined by functional institutions, not professors at the Faculty of Economics," said Jocović.
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