Better life after the referendum, then the fall of DPS

Since 2006, the average salary has increased by 136 percent, the average pension by 198 percent, while the total inflation was 78,5 percent.

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Monstat's data on inflation is often contested by the public, Photo: Boris Pejović
Monstat's data on inflation is often contested by the public, Photo: Boris Pejović
Disclaimer: The translations are mostly done through AI translator and might not be 100% accurate.

Since independence in 2006, until the end of last year, the average net salary grew by 136 percent, the average pension increased by 198 percent, while for the same period the total inflation was 78,5 percent. This means that the majority of citizens now live somewhat better than 18 years ago.

When looking at the years, a significant increase in wages in relation to inflation existed in the period from 2006 to the economic crisis in 2009, and then for 12 years the growth of wages was only at the level of inflation, and only in 2022 and 2023 would it rise again. there was a significant increase in income in relation to the increase in prices.

Statistics show that life was good in the first three years after independence, as the average salary rose from 282 euros in 2006 to 463 euros at the end of 2009, which is a growth of 64 percent, while at the same time inflation was 20 percent for that period. It is also the period of the highest growth in real earnings compared to inflation.

The average amount of net earnings in 2006 did not include a hot meal and the monthly part of the holiday allowance, which amounted to 63 euros. This was changed in 2011, so that the actual net salary in 2006 was 345 euros.

The average salary at the end of 2019 was 520 euros, which is an increase of 13 percent in 50,7 years, while inflation was 40 percent for the same period.

Pensions grew due to the increase in the minimum wage

The average pension at the end of 2006 was 142 euros, and in December 2019 it was 287 euros, which is an increase of 102 percent. This was influenced by the change in salary calculation from 2011, which increased the coefficients for the growth of pensions, as well as the extraordinary adjustment of pensions agreed by an out-of-court settlement with the then DPS Government due to the previous suspension of pensioners.

In the period from 2019 to 2023, the average pension grew by 48 percent, while inflation for that period was 28 percent. However, here, the increase in the average pension was mainly due to the increase in the minimum pension, first from 162 to 220 and then to 253 euros, that is, by 56 percent. Other pensions had a lower growth, slightly higher than the official inflation.

Significant salary growth in 2022.

A larger increase in the average net salary will occur in 2022, after the tax reform in which the payment of health insurance contributions was abolished and the payment of income tax was significantly reduced. Also, at that time the minimum salary was increased from 250 to 450 euros in net amount, which mathematically affected the higher growth of the average salary.

The average net salary in December 2021 was 537 euros, and with the new measures, it would already be 2022 euros in January 686. By the end of that year, it had grown to another 727 euros. That is, for the entire year, net earnings increased by 35 percent, while the official annual inflation rate was 17,2 percent.

The growth in the prices of food alone in 2022 was 28,9 percent, so that for families that spend most of their income on food, the growth in standards was only about six percent.

Public administration raised the average last year

In 2023, the average salary increased from 727 to 814 euros, i.e. by 12 percent. Inflation in that period amounted to 4,3 percent, and the increase in food prices was officially 1,7 percent. This is formally the year with the highest increase in standards, however, wages mostly increased in the public sector due to changes in collective agreements in which the coefficients for calculating wages were increased. Thus, during that year, the average salary in industry increased from 603 to 649 euros, or by eight percent, and in the state administration from 782 to 935 euros, or by 20,5 percent.

Now, wages in the state administration are 44 percent higher than in the industry sector, although according to economic logic, the situation should be the other way around because it is the industry that should support the public administration with its activities.

In these 18 years from 2006 to 2023, in only two years there was a slight deflation, that is, a drop in prices - in 2014, when it amounted to minus 0,3 percent, and in the pandemic year of 2020, it was minus 0,9 percent. In all other years there was inflation. The lowest was in 2013, only 0,3 percent, and the highest in 2022, when it amounted to 17,2 percent.

How Monstat calculates inflation and average earnings

The public often criticizes the methodology of the Monstat Statistics Authority in connection with the calculation of inflation and average earnings.

To calculate inflation, Monstat uses the so-called CPI consumer price index, which by definition is "an indicator of the average price change of all products and services that households use for consumption purposes."

The volume of consumption is determined on the basis of a household consumption survey, while the prices for selected products and services are determined by visiting selected retailers and service providers.

"The consumption of all private households permanently residing in the economic territory of the country is covered. The consumption of collective households, as well as the consumption of non-residents, is not included. In the selected cities, stores are selected where the largest turnover of goods and services takes place", it was stated in the explanation of Monstat's methodology.

Sources of data for the calculation of the consumer price index, as stated, are "retail facilities (mini-markets, supermarkets, kiosks, specialized stores), entrepreneurs, public companies, the Internet, etc."

When calculating wages, data obtained from employers is used, but employers with less than ten employees are not counted, so that an accurate picture of micro and small enterprises is not obtained.

For seven years there has been a plan to switch to the so-called administrative calculation of average earnings, by obtaining data from the Tax Administration on actual paid earnings. However, it is postponed year after year, with the explanation that there are no technical conditions.

Switching to this method of salary calculation could give a more accurate picture, but also enable the calculation of average salary in the public administration and in the private sector, as well as the so-called medial salary, which is considered the most reliable data for determining real income.

All Monstat methodologies, as well as periodic and annual statistics plans, are determined and adopted by an institution called the Council of the Statistical System, which is made up of representatives of several state institutions and users of statistics. They are appointed by the Minister of Finance.

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