Grey economy, crisis and transition in Serbia

Abstract

In this article the author uses a sociological approach to the study of the gray economy in a society in transition, i.e. the Serbian society. A special emphasis is placed on the socio-economic development from 2007 to 2012. This is the time just before the onset of the global economic crisis, and its deepening and expansion. In Serbia, the privatization and transition of society had just terminated. The main thesis of this paper is that the main factors of the emergence and spread of the shadow economy are primarily of domestic origin. The world crisis gave them just a special stamp. The most important factors of gray economy are systemic in nature. These are the following: the inherent nature of the state transition, the selected and implemented concept of privatization and, finally, the character of Serbian political and economic elites. They form the core of the new capitalist class in Serbia, which is dependent on the international centers of financial, political and military power. The concept of the underground, gray economy refers to the following: unauthorized activities outside the law and norms of business, avoidance of tax and other obligations, bribery and corruption. The author emphasized the multidimensionality of the gray economy and attempted to interdisciplinary approach its study. Therefore, he used a large array of data: economic, demographic and historical. Special attention was paid to the results of sociological research on the structure of society, inequality, unemployment and poverty of citizens. The first part lists the most important systemic factors of growth of gray economy in Serbia. They are numerous, but the article focuses on the following: 1. the neo-liberal model of social transition; 2. the model of 'shock' privatization of the social assets; 3. the collapse of the welfare state and the dwindling of acquired economic and social rights; 4. the influence of the 'international community'; 5. the low activity and employment rate; 6. mass unemployment; 7. the low rate of labor productivity; 8. the absence of the rule of law for an efficient functioning of the market economy; 9. restrictive labor and social legislation; 10. the tax system; 11. the poverty of the (un)employed population and 12. the systemic violation of civil and business ethics (bribery and corruption). Each of these phenomena are explained, described and compared to regional and world data. The second part focuses on the most important winners and losers of the existence of gray economy in a society in transition. It lists the most important positive and negative consequences of participation in the informal economy for individuals, social groups and society as a whole. It describes the scope and types of activities of the gray economy in total employment, GDP growth, the impact on inflation, inequality, the country's debt. It points out the advantages and disadvantages of illegal activities for entrepreneurs, employees, the state and society as a whole.

Keywords

• shadow economy
• crisis
• unemployment
• poverty
• transition