Entrepreneur or employee: a choice in a small open developing economy

Ljumović, Isidora and Zubović, Jovan (2016) Entrepreneur or employee: a choice in a small open developing economy. In: Leadership and organization development : International scientific conference leadership and organization development,. University Publishing House "St. Kliment Ohridski", Sofia, pp. 962-968. ISBN 978-954-07-4129-1

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Abstract

The choice to be an entrepreneur or employee is relatively new phenomena for the former socialist and communist countries that went through the process of transitions, mass privatization and restructuring. The first perquisite that enabled this choice were structural changes and reform measures. On the other hand, privatization, restructuring or shutting down the enterprises with socially owned capital left number of people jobless. This created a space for the development of entrepreneurial sector, where former employees could create job for themselves, but also could employ other people and create new jobs. During the period of transition new segment, of small and medium private enterprises and entrepreneurs, that emerged was supposed to be one of the main drivers for economic growth and development in Serbia. Unfortunately, policy makers missed an opportunity to create a sustainable and favourable business environment that would stimulate and foster entrepreneurial spirit in transitional years. Stable macroeconomic environment is essential perquisite for favourable business environment, boosting entrepreneurial spirit and developing the SMEs segment. Unfortunately, the business environment in Serbia is not favourable and is characterized by high unemployment, high level and constant growth of external and public debt, low level of investment and slow level of recovery from the economic crisis. On the other hand starting a business has a lot of obstacle. Bureaucracy is complicated, no enough sources of finance are available for startups and existing companies and also there are a lot of fiscal and para-fiscal burdens. The labour market in Serbia is underdeveloped with low labour mobility, devastated transition downturn in conditions of political instability, wars and economic sanctions. Since the beginning of the transition, the employment rate is falling, but on the other hand the number of people employed in the public sector is rising (with the exception of the last year and the program of downsizing in public sector). This led to the paradox that the average wages in the private sector are lower than in the public administration, while terms and conditions are harder. Having this in mind, a trend of aspiration towards employment in public sector is identified in Serbia. Job is relatively easier than in the private sector, wages and conditions are better. However, it is necessary to mention that the last downsizing in public sector brought uncertainty in this segment also. The most optimistic estimates are that during 2015 and 2016 the number of employees will be reduced by 20 percent in the public sector. Having in mind all this it is not surprising that the option of being an entrepreneur gains importance.

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