Novelties in budget system of Serbia

In order to mitigate the effects of the crisis caused by the COVID-19 pandemic, on December 10th, 2020, the National Assembly of the Republic of Serbia adopted the Law on Amendments to the Law on the Budget System, hereinafter (the “Law”).

One of the most important changes is related to the increase of salaries in the public sector, as follows:

• employees in health care institutions;
• employees in the military health care system;
• employees in health care in social care institutions;
• doctors in penitentiaries;
• caregivers in social welfare institutions;
• health workers in the Institute for Sports and Sports Medicine of the Republic of Serbia.

For these categories of employees, the base for calculating the salary will be increased by 10% first and then such increased base will be increased by 5% starting from the salary for December 2020.

• Other employees of budget users i.e. users of funds of organizations for compulsory social insurance, will have their salaries increased by 3.5%, starting from the salary for December 2020, also the base for calculating тхе salary from 2019 will be increased by 5 percent starting from March 2021.

One of the most important changes is related to the introduction of a new Article 27k entitled “New employment and employment with users of public funds”, which provides for the following:

• Users of public funds are enabled to receive new employees for a definite and indefinite period of time in the period from January 1st, 2021 to December 31st, 2023, without the consent of the Government of the Republic of Serbia, thus abandoning the current employment control system that existed from 2013.;
• Institutions and companies will be able to hire new employees according to their needs and the money at their disposal, but with the restriction that they can not hire more than 70% of new workers from the number of employees who left those jobs in the previous year.

These restrictions do not apply to:

• judges, public prosecutors and deputy public prosecutors, teaching staff of a higher education institution and scientific and research staff of a scientific research organization accredited in accordance with the law.
• appointed and appointed persons in state bodies and bodies of territorial autonomy and local self-government units, as well as directors of public companies, capital companies, institutions and public agencies founded by the Republic or territorial autonomy units, i.e. local self-government.
• persons with disabilities in accordance with the regulations governing the field of professional rehabilitation and employment of persons with disabilities.

Other changes:

• Hedging is defined as an instrument of financial risk protection;
• the effect of the misdemeanor provisions is extened to the new Article 27k, which regulates the facilitated employment of new workers in the public sector.

The introduction of these legal changes seeks to maintain the stability of public finances as well as the pace of public debt reduction and thus help the development of the economy. In addition, the new solutions seek to provide an opportunity for more efficient action in the event of new crises that we may encounter in the future.