The number of registered unemployed people fell by 6.2% y/y and by 1.1% m/m to 692,409 in August, according to a report of the National Employment Service (NSZ). The number of newly registered jobless people also fell by 2.5% y/y to 32,344. Out of the total number of unemployed, 68.3% were without a job for more than a year and their number fell by 0.7% m/m. The number of unemployed youths also declined by 1.7% m/m. Vacancies fell by 39.7% y/y in August. In monthly terms however their number increased by 21.2%.
The survey-based unemployment rate fell by 3.8pps q/q to 15.2% in Q2, according to LFS data released by the Serbian statistical office. The number of jobless people continues to decline and we expect the trend to be preserved in the summer as employment in agriculture, food processing and construction usually increases during these months. We still think that downside risks to the labour market persist and they are associated with the ongoing rightsizing process in the public sector, restructuring of major public companies and resolving of the status of firms in restructuring.
The number of public sector employees should be cut by about 6,500 by the end of the year, which is less than originally planned but given the revenue overperformance it will not pose a risk to the fiscal targets for this year, the IMF said. Media reports suggest that 5,000 employees could leave the public power utility EPS and the railways within plans for restructuring of the companies. Staff surplus in the railways is estimated at 2,700 people who should leave by the end of the year, while 2,300 employees of the EPS should retire with severance pay by Apr 2017.
On the positive side, the private sector offset the job cuts in the administration and public companies for now as the economy grew faster than anticipated and investments are expected to continue thanks to the implemented reforms to improve the business environment.