Open Balkan: Losers and winnersALTax
The political roots of the current reaction against the Open Balkan initiative taken by the current heads of government in Serbia, Albania and Northern Macedonia to integrate the labor market and the economic market between the three Western Balkan countries stem from the divisive consequences of the economy and the lack of opportunities to solve internal labor market problems and foreign policy competition in view of the integration of countries into the EU, considered as a final political and further economic station.
Another reason for the reaction is related to the implementation of the principles of the common market, which referring to the European common Single Market, which was not merely a union of markets, but a political initiative and in function of the visionary geopolitical strategies of the countries, that founded it was first a union of policies between countries that had in common and not simply because they were bordering on each other.
In fact, based in the initiative popularized by the desire of the current government leaders of Serbia, Albania and Northern Macedonia, it seems that consumers and businesses of each country will benefit by increasing export opportunities, through expanding trade volumes and capacity building, and knowledge of the labor markets of each country.
In reality, if one country will benefit from exports, the other country will lose by importing and this happens when countries are economically unequal in the trade balance between them.
From this approach, which in fact exceeds the levels of a decision-making morale of government on behalf of all voters / citizens, to date there is no complete analysis and presentation from our Government of the part we gain and lose from a decision taken by the current heads of government, without asking us even once in direct or indirect format.
For an initiative that transcends the borders of Albania, at least surveys and national dialogue should have been conducted with citizens, to be discussed and known by citizens and businesses in more detail about the nature, manner and form of gains and losses from the agreements that will enter without knocking on our economy.
However, a nationwide discussion will be needed to understand and discuss the reality that is conveyed to us about the future with the present of economic and labor market indicators.
What do Albania solve from the hitherto unaddressed problems regarding the economy? What about informality and employment market and decent work issues?
What about in terms of economic foreign policy and strategic partnerships, do we need to know about the forecasts that produce an orientation towards this form of organization?
The same efforts and energy must be consumed to achieve the strategic goal, that of integration into the European Union.
Although economic integrations aim to raise the general living standards in a country, it also generates winners and losers in the country, where the organization, structure and management of the economy are at unfavorable levels compared to other countries, which will be part of the integrated economic market. In the event that of all the unresolved problems over the years related to the economy, labor market and fiscal system we are still unclear about the standards achieved up to date it is likely to be significantly opposed by businesses and the citizens themselves further liberalization of barriers trade and labor market, seeing that from this hasty policy and without consulting with almost any interest group within the country are jeopardizing the economic benefits created in the domestic market, but also for society as a whole. When economic gains are unfavorable, and losses can be concentrated in the weaker and less organized economy and market in the neighboring country’s economy, disgruntled workers and businesses can become a political constituency likely to attempt to undo liberalization.
The experience of rapid and hasty integration of the economies of countries in different parts of the world has occasionally resulted in potential losses of income and jobs in lower income countries than other countries.
If we analyze the possible economic sectors that can be included in this political and economic organization (Open Balkan) we see that agricultural producers in Albania are unlikely to be in profitable activities, as long as the costs of production, transport and trade are still high and not at all competitive with those of agricultural producers in Serbia, Northern Macedonia. If the customs / tax cost barriers are removed, in fact the level of protection of domestic products is reduced. Meanwhile, the entire regulatory framework needs to be consulted and updated in line with these new policy movements, which are not part of any strategic policy document in agriculture, energy or transport.
What is most surprising and disturbing is that the effects of cross-border trade on income and employment are geographically concentrated and with long-term effects. The effects of trade will depend on a country’s exposure to import and export shocks. Businesses in countries with high concentrations of export-oriented industries outperform businesses in countries with lower concentrations of exporters. This is statistically and logically to the detriment of the Albanian market and economy.
According to the economic interest from the development of the political and economic project (Open Balkan) another expected development could be the relocation of businesses and individuals from Albania that has a lower standard of living than the other two countries to Serbia / Northern Macedonia, which are considered by macroeconomic indicators and living standards with a better level than Albania and Kosovo, producing as a direct effect the transfer of income to these countries, as well as the lack of proper and competitive development of the economy, which will be in function of the most economies. This consequence has happened with less developed in EU countries like Poland, Romania, Bulgaria with their integration.
In reality, experience from these countries has shown that there is unequal cross-border mobility of workers. The move is costly and could lead to the fluctuation of social security and other contributions, as there may be an alienation of the fiscal residence of all businesses and individuals who prefer not to work in Albania, and will incentivize the element of tax evasion/tax avoidance.
This development should also be analyzed by politicians and the government, to review the entire fiscal legal framework in view of this movement, but in fact not only this legal framework, but also that of social policy and beyond.
Meanwhile, markets for property and productive assets can make it difficult to buy and sell important elements of people’s livelihoods and well-being.
Research suggests that the reasons for worker mobility are country-specific conditions, depending on the level of economic development, government policies, and social norms.
If the government wants to keep alive and effective support for free trade, which is potentially even more important than ever in today’s world of global supply chains, it has the primary need to help empower those economic sectors that have been left without jobs and markets due to political crises and pandemic crises, making an incomplete opening of the economy and market, but with the selection of those sectors that really need to be effective, emphasizing national security and the need to increase investment. foreign inflow and not out.
Exactly how the government should help the injured is the subject of a specific analysis and debate which should be related to the context, depending on the level of economic development of the country, the flexibility of the labor market and the structure of public finances.
Let us not forget that the current situation of public finances is at its worst, a fact that is not found at the same levels in either Serbia or Northern Macedonia.
The integration of economic markets, including that of labor and free movement, should draw its lessons from the policy that has been declared for a common market in last years with Kosovo, which is the closest spiritual, political, traditional, economic partner to Albania.
Although various facilitation initiatives have been undertaken between Kosovo and Albania, in fact it was noted that they have not had the performance fulfillment as firstly the partnership must be accepted by businesses and should be reflected in interactive initiatives and different levels of competitiveness between them.
Another factor that Albania should keep in mind in this initiative is the necessary care, that through this process that is already entering the initial stages of creating conditions for cooperation not to overlap or bypass the de facto dialogue between Kosovo and Serbia, which has existential problems at its core. A hasty implementation initiative has an impact on this dialogue, as Albania is important influencer in Kosovo and on the other hand should maintain untouched the strategic diplomacy regarding the region as a factor of stability.
Without having on our side and assistance for initiatives of any kind the health of Kosovo cannot be aimed at achieving a viable initiative between Balkan states that contain in the relations between them the need to clarify and hold mutual responsibility for the good and the evils they have caused each other.