Half of the global population is regarded as poor to the extent that the very lives of a large number of people are endangered. Poverty is a multi-dimensional worldwide problem of modern society. In addition to similarities with other countries in transition, Serbia shows some specific features. The Government of Serbia adopted the Poverty Reduction Strategy Paper in 2003.Poverty, sustainable development, poverty reduction strategy, transition, Public Economics, I30, P46,

Tinde, Dobrodolac

English

Research Papers in Economics

Perspectives of Innovations, Economics & Business, Volume 3, 2009          
  www.pieb.cz 
 
 
International Cross-Industry Journal  
109 
THE CHARACTERISTICS OF POVERTY  
IN SERBIA 
 
  DOBRODOLAC TINDE, PH.D.  
 
Faculty of Economics Subotica 
University of Novi Sad, Serbia  
JEL Classifications: I30, P46 
Key words:  Poverty, sustainable development, poverty reduction strategy, transition 
Abstract:  Half of the global population is regarded as poor to the extent that the very lives of a large number of people are 
endangered. Poverty is a multi-dimensional worldwide problem of modern society. In addition to similarities  with other 
countries  in  transition,  Serbia  shows  some  specific  features.  The  Government  of  Serbia  adopted  the  Poverty  Reduction 
Strategy Paper in 2003. 
ISSN: 1804-0527 (online)  1804-0519 (print)    PP.109-111 
ISSN: 1804-0527 (online)  1804-0519 (print) 
Introduction 
Launched  as  a  concept  as  early  as  1983,  sustainable 
development  acquired  its  full  significance  in  Agenda  21, 
adopted  in  1992  at  the  United  Nations  Conference  on 
Environment and Development (UNCED) in Rio de Janeiro. 
At  the  Summit  on  Sustainable  Development  held  in 
Johannesburg (South Africa, 2002) elimination of poverty was 
adopted as the first of the three main goals. 
Poverty refers to the inability to adequately satisfy some of 
the  essential  needs,  such  as  food,  clothing  and 
accommodation.  But  it  also  includes  other  needs  such  as 
employment, adequate healthcare, welfare, education, cultural 
needs,  and  other  components  featured  in  the  contemporary 
lifestyle. 
Half of the global population is regarded as poor to the 
extent  that  the  very  lives  of  a  large  number  of  people  are 
endangered.  Poverty  is  present  in  developed  as  well  as 
underdeveloped countries. 
At  the  dawn  of  the  new  millennium,  poverty  is  present 
even in the most developed countries. According to an OECD 
report,  the  proportion  of  the  poor  in  the  total  population 
ranges from about 6% in the Netherlands, 7% in Sweden, 10% 
in Germany, 11% in Canada, to 14% in the USA and nearly 
20% in the UK.
1 The poverty threshold in Western Europe 
amounts to about 400 EUR a month. 
As regards countries in transition, the World Bank's 2002 
survey  states  that,  with  the  exception  of  Slovenia  and  the 
Czech Republic (without data for our country), more than half 
of the population of these countries were poor, i.e. lived off 
about 2 US dollars per day per person.
2 
The extent of poverty in the underdeveloped countries of 
Africa, Asia and Latin America is illustrated by the fact that 
the  annual  per  capita  GDP  in  192  countries  of  the  world 
ranges from 110 to 45,000 USD, the lowest being in some of 
these countries. 
                                                 
1 OECD report quoted in Guardian, January 12, 2002. 
2  Transition,  The  First  Ten  Years,  Analysis  and  Lessons  for 
Eastern Europe and the Former Soviet Union, 2002., World Bank 
Poverty in Serbia 
Poverty did not appear significantly in Serbia before the 
early 1990s, when the per capita GDP amounted to over USD 
3,000. GDP decreased about twofold in the 1990s, combined 
with high unemployment rates, plummeting salaries, pensions 
and  other  personal  revenues,  and  unprecedented 
hyperinflation. Compounded by economic sanctions, a large 
number of refugees and the 1999 air raids, this clearly lead to 
sudden impoverishment of the majority of population, but also 
to  a  considerable  wealth  amassed  by  a  small  number  of 
people. 
Faced  with  this  problem,  the  international  community 
adopted  documents  aimed  at  reducing  the  poverty  in  the 
world.  The  Fifth  Principle  of  Agenda  21  states  that 
„cooperation  of  all  countries  on  detecting  poverty  is  a 
prerequisite for sustainable development“.
3 
The  implementation  of  the  project  entitled  „The 
Sustainable  Development  of  the  Republic  of  Serbia  is  in 
progress  in  Serbia.  A  special  significance  is  placed  on  the 
2000 Declaration of the General Assembly of the UN on the 
eight millennium development goals adopted by the leaders of 
189  UN  member  countries,  with  a  primary  focus  on 
eliminating  extreme  poverty  and  hunger,  i.e.  halving  the 
proportion of population with income under $1 a day, as well 
as the percentage of people affected by starvation. 
In  October  2003  the  Government  of  Serbia  adopted  the 
Poverty Reduction Strategy (PRS), setting a goal to halve the 
poverty in Serbia by 2010, and every tenth citizen of Serbia 
(10.5%) is known to have been poor in 2003. The poverty line 
for this year amounted to 4,970 dinars per consumer unit.
4 
 
 
                                                 
3  Narodi  ujedinjenih  nacija  za  bolju  životnu  sredinu  21.  veka 
(1992), Rezultati  svetskog samita u Rio de Žaneru, Brazil [We the 
peoples of the United Nations united for a better environment in the 
21 century (1992), Outcome of the World Summit in Rio de Janeiro, 
Brazil], Belgrade: Federal Ministry of Environment. 
4  Survey  of  living  standards  conducted  by  the  Republic 
Statistical Office, 2003. Perspectives of Innovations, Economics & Business, Volume 3, 2009          
  www.pieb.cz 
 
 
International Cross-Industry Journal  
110 
TABLE1. THE BASIC INDICATORS OF MACROECONOMIC TRENDS IN SERBIA 
  2001  2002  2003  2004  2005  2006  2007* 
GDP per capita (EUR)  1748.4  2241.5  2401.4  2629.7  2814.0  3354.0  4058 
Real net wage growth (%)  16.5  29.9  13.6  10.1  6.4  11.4  17.4 
Real GDP growth rate (%)  4.8  4.2  2.5  8.4  6.2  5.7  7.0 
Note: * estimated value 
Source: Ministry of Finance of the Republic of Serbia, 2007  
The  PRS  defines  poverty  as  a  multidimensional 
phenomenon  which,  in  addition  to  inadequate  income  to 
satisfy  the  basic  needs,  also  includes  lack  of  employment 
opportunities,  inadequate  accommodation  and  access  to 
welfare, healthcare, educational and cultural services. 
Poverty in Serbia is measured: 
-  based on the Survey of Living Standards (SLS) carried out 
in 2002 and 2003. In order to secure data comparability 
and gain clear insights into trends related to poverty, the 
Republic Statistical Office (RSO) conducted a new survey 
of living standards on the territory of Serbia in May and 
June 2007; 
-  in addition to the SLS, poverty in Serbia is also measured 
with  the  Household  Consumption  Surveys  (HCS) 
regularly  carried  out  by  the  Republic  Statistical  Office. 
Due  to  problems  in  conducting  the  HCSs  in  2004  and 
2005, this research cannot be used for calculating poverty 
trends for the period 2004-06. 
It  is  generally  accepted  that  consumption  in  transition 
countries is a better indicator of the living standards. 
According  to  the  latest  survey,  the  HCS  for  2007,  all 
households with monthly consumption under 8 883 dinars per 
consumer  unit  were  regarded  as  poor.  The  consumption  of 
6.6%  of  the  population  of  Serbia  lies  below  this  level, 
meaning that about 490 000 inhabitants of Serbia are poor. 
The gap between the richest and the poorest in Serbia is 
somewhat wider than the average of some Eastern European 
countries  in  transitions.  One  of  the  gap  indicators  used  for 
measuring poverty levels is the share of consumption in 25% 
poorest  households  in  the  population's  total  consumption. 
Their consumption accounted for 11.1% in 2006. 
In comparison with other countries in the region, poverty 
in Serbia in 2003 was at a level similar to Romania, lower 
than in Albania, and higher than Bulgaria and Poland.
1 
Poverty in Serbia increased dramatically in the 1990s. The 
middle class disappeared, the number of poor population grew 
2.5  times,  and  an  increasing  number  of  people  live  only 
slightly  above  the  poverty  line.  The  increase  in  poverty  is 
mostly  due  to  a  sharp  decline  in  the  GDP  over  the  past 
decade. In late 2000, the total GDP amounted to 45%, and the 
per  capita  GDP  was  40%  lower  than  1989,  which  is  the 
greatest decline of GDP in Central and Eastern Europe. Such 
a situation had negative consequences on all the aspects of life 
in Serbia. 
                                                 
1 ECAPOV II, World Bank, 2005. 
In  2006,  poverty  levels  in  the  Republic  of  Serbia  were 
calculated based on household consumption. Central Serbia is 
the region with the highest proportion of poor population. 
Living standard indicator in Serbia                                        
in the transition period 
Among  others,  macroeconomic  trends  in  Serbia  in  the 
transition period from 2001 to 2007 are marked by a growth 
in  economic  activity  and  personal  revenue,  as  shown  in 
Table1. 
The  economy  of  Serbia  achieved  a  growth  of  5.7%  in 
2006. This growth in GDP is somewhat lower than in 2004 
and 2005, when it amounted to 8.4% and 6.2% respectively. 
Average  net  wages  in  the  first  seven  years  of  transition, 
especially in the first three-year period, showed real growth, 
generating a rise in the population's living standards. 
The share of expenditure on food in the total household 
consumption can be used as an indicator of living standard. 
The structure of personal consumption in Serbia for the period 
2003-05 shows that expenditure on food and soft drinks fell 
from 42.5% to 37.1%, as opposed to costs of accommodation, 
water,  electric  power,  gas  and  other  fuels  (from  15.1% 
to17.5%), transportation (from 8.2% to 10.7%). 
Such a trend in the structure of personal consumption in 
households is a characteristic of transition countries. In most 
countries  of  the  EU,  the  highest  share  of  personal 
consumption  is  accounted  by  housing  or  accommodation, 
water, electric power, gas and other fuels and transport costs, 
while  expenditure  on  food  and  soft  drinks  is  on  the  third 
place.
2 
Based on a decile analysis from 2005 (RSO Bulletin 470, 
Belgrade,  2007,  p.  46),  it  can  be  concluded  that  in  the 
households  of  the  first  decile  (the  poorest  households),  the 
highest share of total personal consumption is accounted for 
by expenditure on food and soft drinks (59%). As we move to 
higher  deciles,  the  share  of  expenditure  on  food  and  soft 
drinks is reduced (amounting to 28.2% in decile 10). 
The  household  consumption  of  deciles  9  and  10  (the 
richest  households)  accounts  for  approximately  40%  of  the 
total expenditure of all households in the Republic of Serbia. 
Conclusion  
Although macroeconomic trends in the Republic of Serbia 
are favourable and the population's living standards show a 
                                                 
2 The Republic Statistics Bureau, Bulletin 470, Belgrade, 2007. Perspectives of Innovations, Economics & Business, Volume 3, 2009          
  www.pieb.cz 
 
 
International Cross-Industry Journal  
111 
growing tendency, our country cannot be content with the fact 
that 9% of Serbian population are living in poverty, let alone 
the  fact  that  poverty  levels  are  2.5  times  higher  in  Central 
Serbia than in Belgrade. 
According  to  the  Sustainable  Development  Strategy 
defined in the Second Report on the Implementation of the 
PRS in August 2007, the strategic guidelines aimed at halving 
the number of the poor in Serbia by 2010 are: 
-  dynamic economic growth and development with a focus 
on generating new jobs in the private sector; 
-  preventing the emergence of new poverty resulting from 
restructured  economy  and  rationalised  public 
administration; 
-  efficient  application  of  the  existing  and  defining  new 
programmes  and  activities  targeted  at  the  poorest  and 
vulnerable social groups. 
Sustainable development cannot be viewed isolated from 
global inequalities. The concept of sustainable development 
must  take  into  account  the  specific  problems  of  poor 
countries, because an  excessively  wide range of changes  is 
hardly feasible in these countries. 
 
References 
Minić  V.,  Ajduković  G.,  2006.  „Siromaštvo  kao  ključni  problem 
Srbije u tranzicionim procesima“ [Poverty as a key problem of 
Serbia in transition processes], Collection of papers: Tehnologija, 
kultura i razvoj [Techology, culture and development] issue 13, 
Belgrade,  Technology  and  Society  Association,  Tehnologija  i 
društvo, pp. 247-256. 
The  Republic  Statistical  Office,  Household  consumption  survey, 
Begrade, 2005. 
The Government of Serbia, National Millennium Development Goals 
in the Republic of Serbia, Belgrade, 2006. 
The Republic Statistical Office  (1997), Empirical consumer goods 
basket and living standard indicators, 2001-2006, Bulletin 470, 
Belgrade, www.rzs.sr.gov.yu (accessed September 3, 2008). 
The government of Serbia, Poverty Reduction Strategy for Serbia, 
Belgrade, , www.prsp.sr.gov.yu (accessed September 3, 2008) 
The  Government  of  Serbia,  The  Second  Report  on  the 
Implementation  of  the  PRS  in  Serbia,  Belgrade, 
www.prsp.sr.gov.yu (accessed September 3, 2008). 
 
 
 
 
 
 
 
 
 
 
 

The characteristics of poverty in Serbia

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