In-work poverty in Montenegro

Abstract

Montenegro has the highest in-work poverty (IWP) rates among all ex-Yugoslav countries. Although the IWP rate in Montenegro is significantly below the average poverty rate for the entire population, it has increased substantially since 2013. Despite that, IWP is rarely discussed as an important topic in the media or by policymakers, although some policies do target the working population at risk. This article starts with the identification of factors that affect IWP and differences in IWP of specific population groups between Montenegro and selected ex-Yugoslav countries (Slovenia and Serbia). As low earnings and low wages from employment are the main causes of IWP, the article focuses on the analysis of policies that influence income: minimum wage policy, family policy and tax policy and their influence on IWP of specific population groups. We use SILC data to map trends of IWP, while further analysis is based on desk review and expert interviews. We conclude that the approach to IWP in Montenegro requires more integrated policies that should target population groups most exposed to IWP.

Introduction: social protection in the Western Balkans

“…Income tax arrangements exhibit little or no progressivity, with few countries having a tax-free allowance for low-income earners. This has led to high levels of in-work poverty, as is documented for the case of Montenegro by Golubović, Mirković, and Kaludjerović (2022).…”

“…In the Yugoslav successor states, most work-based benefits were lost following privatisation, while other elements of the social protection systems, including social insurance contributions on wages as a basis for financing social protection (pensions and health care in particular) were carried over. This is highlighted in the analysis by Golubović, Mirković, and Kaludjerović (2022) in this thematic section, who identify the continuation of inwork benefits in Slovenia compared to the relative absence of such benefits in Montenegro and Serbia. This reflects, in part, the gradualist approach to privatisation that was adopted in Slovenia compared to the rapid privatisation that took place in the Western Balkans in the 2000s (Bartlett, 2008;Mencinger, 2004;Uvalić, 2010).…”

“…Universal child benefits have been introduced in Montenegro and will be introduced in Kosovo in 2023, while broad means-tested child allowances are available in North Macedonia and Serbia (Dobrotić, 2022). In addition, there has been an emphasis on introducing minimum wages to reduce in-work poverty (Golubović, Mirković, & Kaludjerović, 2022). Nevertheless, the increased exclusion of workers in the informal economy, of Roma and of young people in precarious jobs, has limited the impact of the minimum wage on reducing in-work poverty.…”