By Ljilja Cvekic
BELGRADE, June 19 (Serbia Today) – Like in 1929, when the Great Depression drove many businessmen to commit suicide after losing fortunes overnight, the current global financial crisis is leading some Serbian entrepreneurs to end their lives to avoid bankruptcy, shame and poverty.
Seven Serbian building contractors have committed suicide since last December after their businesses went bankrupt. Some 72 small businessmen -- owners of restaurants and cafes, computer shops and small handicraft workshops, auto shops and transporter firms -- have killed themselves in the last five years.
“Being an entrepreneur in Serbia is a guerilla war,” Dragoljub Rajic, a spokesman of Serbia’s Association of Employers, told Serbia Today on Friday. “Since socialist times to this moment, the entrepreneur is considered to be a social category that can take all kinds of burdens, and from whom the state can take money any time it needs it.”
Business failure and sudden impoverishment were not traditionally seen in Serbia as such a blow that would warrant one to commit suicide, and sociologists had marveled at the resilience of the Serbs during the 1990s, when the nation soldiered through a million percent inflation, economic sanctions and shortages, followed by a sudden lurch into liberal capitalism, quick privatizations and mass redundancies.
But psychologists say that although a severe crisis in a society might make people stronger and more capable of dealing with problems, it can also have a totally opposite effect long term, especially if there is only a short recovery period -- people might feel that they have had it enough and just cannot take it any more.
While employees can just lose their jobs, employers, who are relying on loans taken with their own property as collateral, face losing all they have if their businesses fail. The situation is even worse for those who turn to loans from local usurers, who might lure clients with lower rates than banks but with the subtext of physical violence in case the debts go unpaid.
Businessmen say the burden in Serbia is disproportional compared to the rest of ex-Yugoslavia. Small and medium enterprises in Serbia are faced in the first year of business with financial obligations, including taxes, pension fund and health insurance contributions that are over five times higher than in neighboring Croatia. Prices of electricity and water, office space and land are twice as high in Belgrade than in Zagreb, and taxes and contributions are the highest in Europe – on 10,000 dinars paid to an employer, 6,825 dinars have to be paid to the state.
Out of 108,000 small and medium enterprises currently registered in Serbia, only 38,500 are financially liquid, while all the others have frozen bank accounts for their debts. The state is the greatest debtor, owing 100 billion dinars ($1.5 billion) to big and medium companies, and privileged big retail chains owe additional 50 billion dinars. The price of those debts is paid by small firms on the bottom of the pyramid, who have the smallest capital turnover.
“Instead of helping the economy, the state is generating crisis by keeping huge administration and public sector wages by 40 percent higher than in economy and increasing taxes and contributions instead of reducing them,” Rajic said. “Enterpreneurs in Serbia are victims of the public sector. Serbia employs one administrative worker on four production workers, while that number in the European Union is one per 36.”
Economists estimate Serbia would need an additional 50,000 small and medium enterprises by 2015 to create jobs, reduce poverty and improve living standards. But last year their number dropped by 2,000.
“It has never been worse than now. If you have a small business and want to do everything by the book, you’re lost. I couldn’t feed my family,” said Petar Zivkovic, who had to close down his small business, a corner store in downtown Belgrade, in March.
“Luckily, I didn’t have any great debts.”