Union: By insisting on austerity, Minister is leading us into deeper recession

NEWS 30.11.2022 19:08
Source: Emil Kalibradov on Unsplash / ilustracija

By insisting on austerity, Finance Minister Marko Primorac will lead us into a deeper recession, the Independent Union of Science and Higher Education warned on Wednesday, commenting on the government's fiscal policy for 2023.

In 2023, when recession and further price growth await us, Minister Primorac announces state austerity and wage stagnation, the union says in a press release. That can be read from his statements that “the government’s commitment to fiscal consolidation is unquestionable”, that “by limiting consumption, that is, by not exceeding certain normal levels of deficit, they would ensure the government does not act inflationary…”, and that “tax relief on wages is not an option at the moment”.

These are wrong messages, the union said.

Fiscal consolidation, it said, should be left for normal times, not recession. With the suppression of government spending recession will be deeper and longer next year because in years of crisis only the state can somewhat compensate for the drop in foreign demand and investments from the private sector.

In the 2023 budget, the government also envisages a significantly slower wage growth. Although there is no proof that an adequate increase in wages would lead to a spiral increase in prices, the government was very rigid in terms of increasing the wages of its employees, and now it signals that it has no intention of reducing income tax because, as Minister Primorac explains, there is no room for such a move in local government budgets. At the same time, the minister says this is not the time to introduce an excess real estate tax, which could fill local coffers. That sends an extremely bad message, the union said.

Inflation will be present no matter what the government does, the only question is how deep recession will be. Fiscal policy in the coming year should act as recession shock absorber and help citizens and business to cope with further price increases, the union said.

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