Serbia: Right-Sizing the Government Wage Bill

Abstract

Serbia’s public sector wage bill constitutes a significant share of total government expenditure. In response to the recent fiscal crisis, the Government has frozen wages and hiring. While this approach has succeeded in reducing the wage bill (as a percent of GDP) it is not sustainable over the long term. This report recommends a more durable approach to the wage bill, based on reforms in the system of establishment control and wage setting.