LM and HRM

RESEARCH MONOGRAPH ON
THE ROLE OF LABOUR MARKETS AND HUMAN CAPITAL IN THE UNSTABLE ENVIRONMENT
The monograph is published as a partial fulfillment of the project "Macroeconomic analysis and empirical evaluation of active labour market Policies in Serbia" supportedy by Regional Research Promotion Programme in the Western Balkans (RRPP) of the University of Fribourg, financed by Swiss Agency for Development and Cooperation (SDC).
iv
RESEARCH MONOGRAPH ON
THE ROLE OF LABOUR MARKETS AND HUMAN CAPITAL IN THE UNSTABLE ENVIRONMENT
Edited by
JEAN ANDREI, DRAGO CVIJANOVI, and JOVAN ZUBOVI
KARTA GRAPHIC Publishing House, Ploiesti, Romania Institute of Agricultural Economics, Belgrade, Serbia 2011
vi
Editors
Jean ANDREI
Petroleum and Gas University of Ploiesti Economics and Business Administration Department Bucharest Avenue, No.39, 100680 Ploiesti, Prahova, Romania ajvasile@upg-ploiesti.ro
Drago CVIJANOVIC
Institute of Agricultural Economics Volgina str., No. 15, 11000 Belgrade, Serbia drago_c@iep.bg.ac.rs
Jovan ZUBOVIC
Institute of Economic Sciences Zmaj Jovina str., No. 12, 11000 Belgrade, Serbia jovan.zubovic@ien.bg.ac.rs
Reviewers:
Dr Felix Arion - University of Agricultural Sciences and Veterinary Medicine, Cluj-Napoca, Romania Prof. Dr Mirko Savi - Faculty of Economics, Subotica, Serbia Dr Stejrel Brezuleanu - University of Agricultural Sciences and Veterinary Medicine, Iasi, Romania RO - ISBN 978-606-8312-45-3 RS - ISBN: 978-86-6269-001-2
e-ISBN 978-606-8312-46-0
2011. All rigths reserved. No part of this publication may be repoduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing from the editors.
vii
Preface
This thematic monograph is a collection of selected scientific papers on the topics relevant to human resources and labour markets development in the second decade of the 21st century. It was partly developed as a result of the dissemination process of the results achieved in the project led by the Institute of Economic Sciences entitled Macroeconomic analysis and empirical evaluation of active labour market policies in Serbia, which is implemented under the Regional Research Promotion Programme in the Western Balkans (RRPP Western Balkans) of the University of Fribourg in Switzerland. Contributors are primarily engaged on reviewing the role and importance of human resources that have been identified as a strategic factor for economic growth and development in the 21st century and the policies introduced by the governments aimed to reduce growing levels of unemployment, which especially increased after the breakout of the crisis in 2008. The contents are interdisciplinary, hence combining the main topic with marketing aspects, management strategies and IT systems. The book also provides some empirical findings from Serbia which need to serve as a basis for the comparison with other countries in the region, and wider with all EU countries. We would like to express our gratitude to all those who have contributed to this book either by writing a chapter or by discussing the research results.
Ploiesti, Belgrade Editors
viii
CONTENTS
Reviewing Development of Active Labour Market Policies and the Evaluation Techniques
Dr Jovan Zubovic, Dr Jonel Subic

II The Role of Information Systems in Human Resource Management
25
Dr Dorel Dusmanescu, Mr Aleksandra Bradi-Martinovic

III Improving the Quality of Human Resources by Implementation of Internal Marketing
Dr Ioan Done, Dr Ivana Domazet
47
IV Especially Voulnerable Groups in the Serbian Labour Market
77
Mr Jean Andrei , Mr Saa Stefanovic

V Importance of the Management Incentives for the Improvement of Companys Activities
105
Mr Slavica Stevanovic, Dr Ivana Simeunovic

VI Economic Crisis and its Consequences on the Living Standard and Development of the Agriculture in Serbia
Mr Marko Jelocnik, Mr Lana Nastic

About the authors Index
127
155 161
CONTRIBUTORS
Jean Andrei Department of Economics, Marketing and Business Administration, Faculty of Economic Sciences, ajvasile@upg-ploiesti.ro Aleksandra Bradic-Martinovic Institute of Economic Scineces, Belgrade, Serbia, abmartinovic@ien.bg.ac.rs Drago Cvijanovic Institute of Agricultural Economics, Belgrade, Serbia, drago_c@iep.bg.ac.rs Ivana Domazet Institute of Economic Scineces, Belgrade, Serbia ivana.domazet@ien.bg.ac.rs Ioan Done Department of Economics, Marketing and Business Administration, Faculty of Economic Sciences - Petroleum and gas University of Ploiesti, Romania, done.viorica@yahoo.com Dorel Dusmanescu Faculty of Economic Sciences - Petroleum and gas University of Ploiesti, Romania, zlin50@yahoo.com Marko Jelocnik Institute of Agricultural Economics, Belgrade, Serbia, marko_j@mail.iep.bg.ac.rs Lana Nastic Institute of Agricultural Economics, Belgrade, Serbia, lana_i@mail.iep.bg.ac.rs Ivana Simeunovic Belgrade Banking Acedemy, Faulty for Banking, Insurance and Finance, ivana.simeunovic@bba.edu.rs Saa Stefanovic GMS International, Belgrade, Serbia, stefanovic.sasa@gmail.com Slavica Stevanovic Institute of Economic Scineces, Belgrade, Serbia, lhoffman@ers.usda.gov Jonel Subic Institute of Agricultural Economics, Belgrade Serbia, jonel_s@iep.bg.ac.rs Jovan Zubovic Institute of Economic Scineces, Belgrade, Serbia, jovan.zubovic@ien.bg.ac.rs
Chapter 1
REVIEWING DEVELOPMENT OF ACTIVE LABOUR MARKET POLICIES AND THE EVALUATION TECHNIQUES
Jovan Zubovic, Jonel Subic Abstract: Active labour market policies are commonly used tool to fight unemployment. In the early 1960s all Scandinavian countires have introduced several different measures to have an effect on their labour markets. In the late 1970s in most developed countries of OECD government expenditures on those policies reached the level of 1-1.5% of GDP. High levels of expenditures created a need to assess the impact of such measures and perform their cost-benefit analysis. Evaluations have in the previous 30 years been undertaken by using different methods: from experimental and quasi-experimental, to micro and macro analyses. Most precise evaluations are based on complex econometric methods. Moreover, during last decade there have been several meta-analyses to make crossanalysis of evaluations made worldwide in a long time-span. General conclusions of most papers are that ALMP do not have very high influence on the employability. The best results are experienced in services provided by local national employment services, as well in training programs, especially in on-job training. In the last few years there have appeared some indications that subsidized employment has high positive effects, however there is no general consensus on that matter. Despite large number of published papers on evaluations, there has been no research aimed on analysing overall ALMP effects on the economy, and creation of a model which could ex-ante estimate future effects of ALMP. Key words: Active policies, evaluation, econometric models, economy JEL Classification: J08, E24, J21, H55
2 Reviewing Development of ALMP and the Evaluation Techniques
INTRODUCTION1
Unemployment is one of the most important economic and social problems of today. For that reason, the issues of unemployment became one of the key components of labour economis. Labour economics is almost for a whole century the field of intense interest and great progress in the economic science, both in theoretical and in practical terms. Although modern labour economics is based on microeconom(etr)ic studies, which almost completely dominated in the past two decades, we must not forget the importance of macroeconomic aspects and phenomena observed on the higher scale. The analysis of the unemployment economic theory begins with preKeynesian theories; it goes over Keynesian interpretation of mass unemployment, and finally deals with contemporary unemployment theories. It has shown that problems and methodology in research and theoretical perspectives on unemployment have significantly changed over time under the influence of social and economic environment. So far there has been no comprehensive theory which could offer lasting solution to complex problems of the labour market. The goal of this paper is to present the process of Active labour market policies (ALMP) development and to analyise different evaluation techniques.The paper consists of five parts: The first part will describe a brief history of active policies in the world. In the second part we analyse expenditures on ALMP in developed, developing and transition countries. In the third part we present general principles of evaluations and their importance including types of evaluations and different approaches to evaluations classification. The fourth section brings literature review and meta analyses which have been implemented during the last decade. Finaly we give conlusions and recommendations in the fifth section of this paper.
1
This paper is a part of research projects numbers 47009 (European integrations and social and economic changes in Serbian economy on the way to the EU) and 179015 (Challenges and prospects of structural changes in Serbia: Strategic directions for economic development and harmonization with EU requirements), financed by the Ministry of Education and Science of the Republic of Serbia.
Zubovic, Subic 3
THE BRIEF HISTORY OF ALMP

Active Labour Market Policies in its original form were created in the early decades of the twentieth century. They represented an attempt by public institutions to open job vacancies by introducing public works. As a consequence of World War I and great depression caused by the collapse of the New York stock exchange these measures were applied in two cycles of the so called New Deal in the U.S. Economic theorists of that time, led by Keynes were engaged in development of the (un)employment theory and the ways on how to cope with labour market trends. By using the theory of multipliers, firstly introduced by Kahn (1931), Keynes (1936) had managed to oppose the claim that public works and government spending can not solve the problems in the labour market but that only cause inflation. Kahn has demonstrated is the multiplier model that government interventions in the labour market not create only primary employment, but that there is so called secondary employment as well. Although for over eight decades there is such a theoretical assumption, one of the main problems in modern approaches to evaluations of active labour market programs is that there is still no model that estimates the level of the secondary employment. According to basic economic principles, labour demand is a derived demand. For this reason, unemployment must be observed as a consequence of economic trends. The neo-liberal approach to economics is based on the hypothesis that the market is the best and only necessary regulator of economic trends. However, in periods of recession, Keynes economic theory always appears as an alternative to this approach, and justifies government interventions through the assertion that the necessary corrective influence of irregularities in the labour market. Classical economic theory states that the reduction of wages is sufficiently to increase the demand for labour, and that the unemployment can be managed through the change of wage levels. However, Lord Keynes's interpretation suggests that the earnings (wages) are inflexible downwards, and therefore wages reducion will not be enough to sufficiently increase demand for labour (job offers), but the effect will be partially transferred to the reduction of the aggregate price level and thus decrease aggregate income. The consequence is lower aggregate demand, which according to
the above basic economic principles, results in a decrease in demand for labour - which is called the "Keynes effect". The unemployment in that way might be called involuntary or cyclical unemployment. In addition to unemployment resulting from insufficient aggregate demand which can be corrected by shifting on Phillips curve with an increase in inflation, there are two other basic categories of unemployment - structural and frictional, which result from mismatches in the labour market. Having introduced such division of unemployment types, there came the need for different types of market interventions. The question is what theoretical framework is suitable for the formulation of necessary interventions. In addition to the traditional approach to "cheating on the Phillips curve", or enhancing the relationship of unemployment-inflation (Baily and Tobin, 1977), it is understood that the present unemployment level is partly the consequence of unemployment in the previous period. This is proven in practice by the fact that the extension of unemployment reduces the probability of an individual tp find the way out of it. Since the cost of increased level and length of unemployment are extremely high, it was necessary to create a model which could generate significant positive effects on labour market. That opened the way for introduction of Active labour market policies. Although they are basically set up as a policy, formulated by the political representatives, and implemented through the political agreement, the two main adapting functions of ALMP are economic and social (welfare). The objectives of active measures are to reduce the effects created by the above named three types of unemployment. This includes mitigating the lack of available jobs through subsidies and public works, support reallocation of labour and reduce the mismatch in labour skills through various forms of training, etc. Betcherman et al (2004) note that ALMP are used to reduce the risk of unemployment and increase wages of workers, and programs are implemented to enhance labour supply (eg training), increasing the demand for labour (eg, public works, subsidies) and improving functioning labour markets (for example, employment services). Active measures are often aimed at long-term unemployed workers in poor families, and other discriminated groups. Active labour market measures are not intended to address long-term mass
Zubovic, Subic 5
unemployment, but are only defined as programs that enhance the possibility of (re) joining the labour market. Contemporary ALMPs were created after the Second World War and until today have gone through (at least) three development stages. The first stage begins after World War II, primarily in the Scandinavian countries, as an integral part of the model of economic and social change. At that time there was a need to set up systems that would reduce short-term inflationary impact of higher employment levels, and at the same time help solve problems fast-growing demand for labour (OECD, 1964, Barkin, 1967). Nickel et al (2001) showed that in the period from 1960 to 1980 there has been a significant shift to the right on the Beverage curve as a result of the initial measures, which resulted in better matching of vacancies with skills of unemployed persons. Similar analyses are presented in other papers (OECD 1993, Katz 1994, Calmfors 1994, etc.). The second phase was initialized in France, Germany and the United States during the oil shock crisis in 1973-1975 by introduction of new programs targeting labour supply, specifically vulnerable groups. Estevao (2003) and Betcherman (2004) pointed out that the constant increase in the unemployment rate in the 1970s and 1980s assessed inter alia as a consequence of a mismatch in labour supply and labour demand. Unemployment level in OECD countries grew from 3% in 1973 to 7% in 1988 (Martin, 2000). At the same time there was a significant growth on the supply-side as a result of the emancipation of women and young people who have entered the labour market. New active policies were generated to increase labour demand by creating jobs; alongside passive measures such as early retirement. The effects of these measures were short-term and proved to be insufficient to curb rising unemployment in the long-run. The third stage relates to the period of the 1990s when ALMPs have become an important policy to accompany structural changes in the EU. The goal was to encourage unemployed and inactive persons to enter into the labour market. Interventions were extensively used to facilitate adjustment of labour to market needs. During this period ALPM became a part of the employment strategies in transition countries in the form of
public works or training programs (OECD, 1990). Framework for the labour markets (OECD, 1990) claimed that structural defects were primarily on the supply side and that it was necessary to create medium and long term strategies to facilitate adjustment. It was also recommended to redirect spending from passive to active measures. During the transition period, these measures have advanced from state to market-oriented measures, but have not become part of a lasting solution to risk management in the labour market, especially in countries in transition. As noted ALMP were originally introduced in developed countries of OECD and EU. They were later transferred to the Middle East and North Africa, while the in East Asia they have not been so widely used. In the last fifteen years, the implementation of these measures has become widespread in Central and Eastern Europe and the CIS region (Spevacek, 2009). Three groups targeted by these measures are unemployed, employed at risk and inactive population. Besides them, there are situations where the authorities provide special assistance for the promotion of employment groups that do not belong in these three categories. Such measures include programs for youth employment, which are available to those young people who already work (European Commission, 2006). Active labour market policies are today classified in accordance with the document titled Labour Market Policy Database: Methodology (European Commission 2006). This methodological document classifies labour market policies into three groups: a) Labour market services (counseling, mediation); b) measures (training, job sharing, subsidies, support to employment, public works) and c) support (financial, support to the unemployed and early retirement). This classification is somewhat different from classical classification of active policies presented in table 1, where services and measures belong to a same category, and in reporting there may arise some confusing results.
Zubovic, Subic 7
Table 1 Active labour market policies in OECD countries, archetypical types of programs and generic purpose
Generic purpose Improve marching efficiency Attenuate skill mismatch; human capital accumulation Employment incentives / start-up Improve job matching process, incentives increase labour demand Direct job creation / public sector Increase labour demand, prevent employment human capital deterioration Youth measures All of the above Measures for disabled Integrate discriminated persons into the labour market Note: This classification is usually used in OECD and Eurostat reporting
Source: Lehman and Klueve (2010, pg. 38)
Type of program Public employment services Labour market training
The function of public employment services is primarily to co-ordinate matching labour demand and offer. Training measures aim to reduce the mismatch between skills required, and subsidy measures are aimed to increase the demand for labour. Direct job creation is often considered the last chance to influence the state labour market trends. Their next goal is to increase demand for labour, prevent loss of human capital that results from long-term unemployment. It is known that each person loses 50% of their knowledge which is not used during a period of one year (Zubovi, 2010), and thus re-integration of employees as soon as possible has great significance. Finally, measures for people with disabilities are significant primarily in the reduction of discrimination and exclusion of this group of people from the labour market.
EXPENDITURES ON ALMP
The consolidated data on expenditure on ALMP are available from 1985, which coincides with the end of the second phase of development of active measures. This can be attributed to the above named "Framework for Labour Market Policy" by OECD, which was the first institution to begin
with systematic recording of government expenditures on ALMP of its member states. Table two shows data on spending on active measures as a share of GDP for the period since 1985.
Table 2 - Expenditures on ALMP in OECD member states (% of GDP)

Australia Austria Belgium Canada Czech Republic Danemark Finland France Germany Helas Hungary Ireland Italy Japan Korea Luxembourg The Netherlands New Zealand Norway Poland Portugal Slovak Republic Spain Sweden Switzerland UK USA Average 1985 1990 1995 2000 2005 2008 0,36 0,22 0,74 0,37 0,37 0,29 0,28 0,32 0,38 0,52 0,63 0,67 1,17 1,09 1,21 1,16 1,11 1,28 0,61 0,49 0,55 0,4 0,32 0,3 .. .. 0,13 0,2 0,25 0,23 .. 1,06 1,72 1,89 1,58 1,35 0,73 0,84 1,42 0,89 0,91 0,82 0,6 0,72 1,19 1,19 0,89 0,81 0,58 0,79 1,19 1,23 0,89 0,81 0,16 0,19 0,4 .. .. .. .. .. 0,41 0,38 0,3 0,3 1,06 1,06 1,35 0,81 0,64 0,7 .. .. .. .. 0,57 0,45 .. 0,33 0,32 0,28 0,25 0,26 .. .. .. 0,38 0,12 0,2 0,41 0,2 0,14 .. 0,5 0,42 1,31 1,27 1,36 1,47 1,3 1,04 0,87 0,88 0,68 0,49 0,39 .. 0,59 0,89 1,25 0,61 0,74 .. .. 0,12 0,38 0,25 0,42 0,56 0,21 0,48 0,5 0,63 0,69 0,57 .. .. 0,75 0,31 0,34 0,25 0,33 0,78 0,43 0,79 0,72 0,73 2,09 1,68 2,35 1,75 1,29 0,99 0,19 0,21 0,47 0,56 0,75 0,47 0,71 0,58 0,43 0,24 0,45 0,32 0,26 0,23 0,19 0,17 0,13 0,17 0,66 0,66 0,80 0,71 0,64 0,57
Source: addopted on OECD (2011)
Zubovic, Subic 9
The data in table 2 clearly show the tendency in some groups of countries. The first group consists of non-European countries with relatively low level of expenditure which goes up to 0.3% with a tendency of continuous fall. The second group is made of the Scandinavian and neighbouring countries, where the level of spending was stable at the level of around 1% of GDP, until 2008 when it began to decline slightly. The third group consists of the Mediterranean countries, where the share of spending is about 0.7% with no significant oscillations. The fourth group consists of (transitional) countries of Eastern Europe, where spending is at a relatively low level with a slight increasing trend. Germany, Austria and Ireland are the countries that have their own trends which are different from all abouve named four groups.
Table 3 Expenditure on ALMP in transitional countries of EU (% of GDP)

EU 27 EU 15 Cyprus Malta Transition countries of EU* Bulgaria Czech Republic Estonia Hungary Latvia Lithuania Poland Romania Slovak Republik Slovenia 2006 0,70 0,72 0,09 0,15 0,28 0,44 0,26 0,07 0,28 0,26 0,27 0,45 0,14 0,32 0,27 2007 0,64 0,67 0,13 0,14 0,25 0,36 0,25 0,05 0,31 0,17 0,32 0,50 0,11 0,22 0,20 2008 0,65 0,67 0,11 0,18 0,23 0,32 0,23 0,07 0,30 0,13 0,22 0,56 0,09 0,26 0,18 2009 ... ... ... ... 0,28 0,22 0,24 ... 0,32 ... ... 0,07 ... 0,33
* Transitional countries of EU are 10 countries of Eastern Block
Source: Eurostat (2011)

The beginning of economic reforms in countries with centrally planned economies (countries in transition) from the beginning of the 1990s had
strong effect on the increase of open unemployment, and increased levels of unemployment to above the average of EU 15 countries. For this reason, in these countries funds allocated for ALMP began to increase. This increasing trend has been maintained by 2005, when it began to decline slightly, while the level of funds allocated for passive measures remained at the same level of about 0.3% of GDP. Data on trends in transitional countries is shown in the table 3. Like in other transition countries, Serbia experienced similar trends in the labour market, and consequently increased spending on labour market policies. In Table 4 one can see the levels of spending on active measures in Serbia during the transition period.
Table 4 Expenditures on ALMP in Serbia

Year 2005 2006 2007 2008 2009 2010 2011 Expenditure (mil. Dinars) 750,00 1.300,00 2.384,40 3.014,00 3.500,00 3.700,00 5.550,00
Source: MERR (2011)
Share in GDP 0,04 0,07 0,10 0,11 0,12 0,12 0,17
Distribution of funds among measures is shown in the table 5. According to presented data it is visible that Serbia is following a trend recommended by the European Commission that most of the funds should be used for education and training. Their share increased from initial 1% in 2008 to 48% in 2011, the share of public works decreased from 37% to 18% of total expenditure, while subsidiesed employment decreased from 50% to 33%. Given the volume of funds allocated to ALMP, we can expect that they will have some impact on target groups or the microeconomic level. However,
Zubovic, Subic 11
these effects will spill over into macroeconomic level. Programs such as job creation, wage subsidies or training not only affect the employability of workers targeted groups, but may influence the relationship between inflation and unemployment. One of the key justifications for the use of active measures is that, under appropriate circumstances can reduce the inflationary impact of increasing employment in the short term and the long term to reduce structural unemployment (OECD 1993).
Table 5 Distrubution of funds among types of measures (million RSD)

Type Active job search Training and education Subsidised employment Public works Total 2008 5,95 8,05 1.535,00 710,00 3.014,00 2009 5,00 2010 5,00 2011 10,00 1.890,00 1.300,00 700,00 3.900,00
1.495,00 2.095,00 700,00 900,00 1.300,00 700,00 3.500,00 3.700,00
Source: MERR (2011)
PRINCIPLES ON ALMP EVALUATIONS

Findings in the section two lead to necessity for evaluation of the funds used in active labour market policies. If governments use up to 1% of their GDP at annual level for financing those policies it is necessary to implement continuous and precise evaluation of the effects these policies create. To what extent should the authorities rely on active labour market programs? This is a controversial issue on which there are many answers. Proponents argue that active policies are the most direct instrument to combat unemployment and poverty. Opponents counter that active policies largely waste public money and that any benefit to the participants is realized entirely at the expense of other workers. For this reason it was necessary to precisely evaluate impacts, effectiveness and benefits of the interventions. Assessment and evaluation of active labour policies require good knowledge of evaluation methodology carried out in different countries.
At the same time one must take into account the specificities of the country in which the assessment is conducted including the level of economic development issues, labour market trends and the influence of state regulation on labour market imperfections. The literature on the evaluation indicates that during periods of economic growth effectiveness of active measures increases (Dar and Tzannatos, 1999), which means that it is necessary to observe a longer period of time so as not to get overestimated results. According to Harrell et al (1996), there are four basic types of evaluation performance monitoring, impact evaluation, cost-benefit analysis and the process evaluation. Hujer et alia (2002) give the instructions on what the evaluation should include: the process of adjustment of supply and demand for labour; the benefit of the unemployed; the competitiveness of the labour market; productivity. Similarly Fays defines evaluation as consisting of three steps (Fay 1996). First one needs to assess the impact of the individual (micro-evaluation). Second, we should examine whether it achieves sufficiently large net social benefits (macro-evaluation). Finally, it should answer the question whether this is the best outcome that could be achieved for the funds spent. Since there has been a great progress in the IT sector in the past fifteen years, such as databases and various state institutions and the associated improved, there cam an opportunity for adding a fourth step - to evaluate the net social gains from policy implementation. This fourth step is based on Harrella and Razik principle with a difference that at macroeconomic level we do not assume that the increase in the level of employment is the main goal of active measures. It is necessary to conduct the evaluation coverted into monetary value, where the input parameters the amount of funds allocated to ALMP, should be compared with output parameters - the value of increased gross value of work of new employees for the time spent at work over time. The first scientific papers on evaluations, for example, the one written by Calmfors (1994) gave very confusing results. However after Lehman and Klueve (2010) improvement the research methodology, recent studies
Zubovic, Subic 13
show that ALMPs do have significant effects, both on employability and the net increase in employment, especially in developed countries,. Many other papers define methodological framework for the evaluation of the impact of ALMP (Dar and Tzannatos 1999, Daguerre, Etherington 2009, OECD 1993). For example, de Koning and Peers (2007) focus on assessing the net impact by using experiments or non-experimental models (matching and econometric methods). In experimental (classically designed) evaluations there is a randomly selected sample before the intervention (measures). If the sample is large enough and if there is a properly set control group, by chaging the independent variable (in this case participation), we may measure the change in the achieved results. Such changes can be attributed to participation in ALMP. Such experiments have their disadvantages, like inproper selection of a random sample, change in behavior after learning about participation, high cost of creating large samples and some ethical issues on deliberate exclusion of specific group from participating in the measure. Quasi-experimental techniques differ from experimental because control group and sample are selected after the implementation of selected measures. In analyzing the effects by this method some econometric techniques are used to correct the disparities between the two groups. The advantage of this evaluation is that the price is far lower and that active measures may be implemented independently of the evaluation process. There are several quasi-experimental methods which include: a) regression analysis with monitoring of observable variables, b) regression analysis of observable and unobservable variables, c) different matching methods. In a) we define observable variables (eg gender, age, education level) that differ in the target and the control group. Evaluation of the impact of these factors enables us to assess the influence of the measures on employability. In b) in addition to defining the observables, we introduce unobservable variables (difficult to measure, such as innate ability or behavior change after the inclusion of the measure) which can alter behavior and results. Finally, the matching methods create a subset of the
control group whose members are paired with participants in the factors measured, and thus get precise and robust results. Martin (2000) divides the evaluation of individual programs into two basic groups. The first group measures the impact program participation on employment and earnings after exiting the program, by comparing participants results with the results of the control group. The second group measures the net effect on the aggregate employment, taking into account externalities such as deadweight, substitution and displacement effects. Martin and Grubb (2001) make addition to such division so that the first group utilise micro data to measure the impact of the program on employability and earnings of an individual, while the second use aggregate data to measure the net effects of programs on aggregate employment and unemployment. Somewhat different division of the evaluations is offered by Spevacek (2009) and Fields (2007, p. 32). They identify six types of data analysis aimed at measuring and evaluations of the interventions in the labour market: Aggregate cross-sectional quantitative data analysis Cross-sectional study of micro data analysis Panel data analysis Cross-country time series analysis Experimental studies Qualitative data analysis The first scientific papers on the evaluations, like Calmfors (1994) brought very confusing results. Development of information systems facilitated data analysis, and Lehman and Klueve (2010) claim that by improved research methodology, recent studies show that ALMPs do have the positive effect both on individual likelihood of exiting unemployment and on aggregate employment growth, especially in developed countries. While the first papers on the development of evaluation methodology were written in the United States, over the past fifteen years significantly increased the number of papers among researchers in Europe. In the transition countries of Central and Eastern Europe during last ten years
Zubovic, Subic 15
also emerged several high-quality studies on the impact of ALMPs. These studies have helped to better understanding of labour markets in the new economic environment (Lehmann, Klueve 2010). In transition countries, the available budgets for ALMP are very limited, and for that reason it is important that the effects are properly assessed in order to make the right distribution among different types of measures. Evaluations in transition countries include several papers (Lehman, Klueve 2010, Ognjenovic (2007), Bonin, Rinne (2006); Betcherman, Olivas, Dar (2004); Spevacek (2009) and many others).
REVIEW OF EVALUATIONS AND META-ANALYSES

The literature on empirical evaluations of ALMPs is very complex and often with contradictory conclusions depending on country, time period of observation and the specific program being observed. As noted above, most evaluations were conducted in developed countries, although recently there are findings in other countries. Evaluations are conducted by international organizations, specialized research institutes and individual researchers. Most scientific studies have analyzed the policy in individual countries; while only few studies are multi-country evaluations. In this section we will present a summary of various evaluations and metaevaluations Dar and Tzannatos (1999) conducted a review of 72 evaluations conducted in several countries and provided an overview of the effects. Betcherman et al (2004) in their work add to initial 72 evaluations another 80 in their review. Summarized effects of 152 evaluations show that the employment services and mediation generally are the most cost-effective interventions. Impact on employability and earnings is positive in general, and costs are lower than for the other measures. Training programs for the unemployed can also have a positive impact on employability, but not on earnings. These programs are most effective when conducted in on-job. Other types of training - for workers who became unemployed as a result of mass layoffs and youth participants in the labour market generally give less favorable results. Interventions that are successful often include several measures (education, employment, social assistance, if needed), which
complement the training. The review also proved the weak effects of job creation - employment subsidies and public works. Also, Public Works have shor-time positive effects, but in most cases do not increase the employability of participants after the completion of measures. Finally it was confirmed that projects of subsidies for self-employment have a positive impact on the small number of users, but these are mainly people with higher education levels. Martin and Grubb (2001) in their overview of evaluations conducted in the period 1985-2000, without a clear emphasis on the coverage, concluded that the impact of many measures being implemented in the labour market do not have encouraging results in terms of increasing employment and earnings, especially when it comes to programs for youth. However, they stress that there are some programs that provide positive indicators, such as counseling, subsidies for employment in the private sector and training, but with a note that the effects are small. Calmfors et al (2002) gave an overview of more than 70 evaluations conducted in Sweden. He classified them on 30 microevaluations and 40 macroevaluations. Among other findings, he notes that measures only slightly help match supply; demand for labour and that subsidized employment results in high level of substitution (displacement); and training programs are not effective. Conclusion of the research is that in both micro and macro evaluations the results are disappointing. In general the programs help reducing unemployment level, but at the samed time not having impact on the aggregate level of employment. The greatest impact was achieved in increasing activity level. Also very important conclusion of the study is that the programs lose their effectiveness with an increase in volume, so it is advisable to keep the volume at a lower level, which for Sweed is below 1% of GDP. Kluve and Schmidt (2002) have conducted a meta-analysis, a technique that synthesizes a variety of statistical studies. They assessed the results of 53 evaluations using the binom indicators of THE ALMP effects. For explaining the effects of measures they have analyzed different types of programs, design studies, implementation time and impact of the macroeconomic environment. Results showed that the probability favors
Zubovic, Subic 17
training for increasing employability, while public works and subsidies almost never have a positive impact. Greenberg et al (2003) also used meta-analysis of effects for the synthesis of 31 evaluations in 15 voluntary training programs conducted in the United States between 1964 and 1998. Programs use different types of training, including structured job search, continued education, training, on-job training, as well as programs that allowed subsidized employment in the public or private sector, in order to determine which programs and how much they have influence on earnings growth. The results show that programs are most effective for women, with moderate effects on men and no effects for youth. The greatest impact of training programs are made for women who have generated a wage increase of around 2,000 $ a year. Estevao (2003) uses substantially different methodology for evaluation of active measures. It is based on panel data from 15 OECD countries on the amounts of funds allocated to ALMPs and their distribution. By controlling data on institutions, peculiarities and the level of economic development of different countries, he found that the greatest effects are achieved with different types of subsidies, at the same time with a negative impact on wages. Very important part of this paper os that the author has established linear equation for calculating the level of allocations to active measures, depending on the rate of employment: ALMP/GDP = 0.03 0.04 * ER where ER stands for employment rate. He also set an equation for distribution of funds between active and passive measures: ALMP/GDP = 0.28 + 0.36 * PLMP/GDP With PLMP representing passive labour market policies. Estevao also showed that there was a substantial change in the effects of ALMP for the period before 1993 and beyond. While in the period 1985(2) (1)
1992 the coefficient was negative and amounted to -0.12, in the period 1993-2000 there was a growth of 1.88, meaning that every 1% increase in spending on ALMPs (as a share of GDP) resulted in an increase in the employment rate by 1.88%. Betcherman et al (2003) have made a review of the effects of nearly 200 evaluations in developed and transitional countries. The survey concluded that most effective measures are counseling, with training being effective if implemented at work (on-job tranining). The effects of subsidies were higher in more recent studies, but generally they do not have a significant effect. He also shows that the effects are not differing in transitional countries compared to developed ones. However in transitional countries he emphasizes a problem of a large share of the informal economy (employment) which significantly alters the results of evaluations. In their research, de Koning and Peers (2007) also used meta-analysis, although they note limitations of price efficiency, the time horizon of observation and non-economic aspects including health and social exclusion. Using regression analysis, with 155 observations constituted of net impact evaluations they have observed a set of controllable factors, as stated in an equation: NI i = X i + i (3)
NI stands for a net impact; X is a group of factors affecting the volume of estimated effects, and an index number of studies (evaluation), is a vector of unknown parameters and stands for an error. With such a precise econometric approach de Koning and Peers came up with results that be accepted as a basis for deciding on the introduction and implementation of ALMP. The conclusion is that the net impact of ALMP is only 3%. The greatest impact create training and counseling with 7%, while subsidies have negative effects. Spevacek (2009) has done pioneering work in the evaluation survey conducted in Central and Eastern Europe and CIS. The review included 20 studies from 10 countries and 4 cross-country studies. The survey
Zubovic, Subic 19
concluded that econometgrics significantly contributed to the quality of evaluations, and that it is necessary to increase the number of evaluations on cost effectiveness. In general it is the overall conclusion that ALMP reduce unemployment, increase the number of employees. Not all types of measure have equal effects, with consulting and training being widely applied and most effective. Kluve (2010) added on hios study from 2002, by including greater number of studies and expanded the number of countries analyzed. Introduction of improved methodology by using trinome indicators facilitated better monitoring of effectiveness of ALMP. Conclusion of this paper is that since ALMPs play a key role in the "European employment strategy" and that the funds allocated for these measures 2008 amounted to 80 billion of which 57 for the measures, and 23 billion for services, there is a growing need to develop scientifically based method of measuring the effectiveness of various types of ALMPs. Kluve analyzed a total of 137 programs from 95 evaluations in 19 European countries using the method of metaanalysis. He found that 54% of programs achieve positive effects, 21% had significant negative effects, while in 24% of the studies were not able to measure neither positive nor negative statistically significant impact. Using trinome results as a dependent variable and by controlling independent variables which included the types of programs, research design, institutional and economic situation, he has come to the conclusion that trandicionalni mediocre training programs are likely to have a meaningful impact on employment rates. Compared with training, subsidies and support programs in employment had a 50% positive effect, while the public works programs had 25% less chance of success. Finally Kluve concludes that youth programs have very little chance of success, and that the positive signs in recent years show that the national employment serviced became more effective compared to external projects. Finaly the study of Forslund et al (2011) showed that depending on the phase of economic cycle, different programs have different effects. They showed that in periods of recession, the greatest effects provide training programs, since they significantly reduce length of job search.
CONCLUSIONS
Active Labour Market Policies (ALMPs) first appeared between the two world wars, and they were based on the Keynesian interpretation of unemployment, with the wider use after the World War II. Today they have become one of the most important elements of the European Employment Strategy. Given the scope and volume of their application, which is in the EU over 80 billion euros a year, it was clear that there was a need to address the question of their usefulness. Review of over 200 evaluations in more that 100 research papers shows that there are different conclusions in the matter of the effectiveness of ALMP. Such a large number of papers gave answers on the effectiveness of individual programs on their participants, as well as on the net effects on macroeconomic trends in employment. The fact is that during the period of more than half a century of implementation of ALMP they have become a significant part of life for all inhabitants in developed countries, while in the last 20 years that is the case with economies in transition as well. The basic functions of ALMP are economic and social. Since from the presented results one can see that the effects are limited from the economic point of view, we may conclude that measures have a far greater social impact than economic. This means that active measures are used in order to increase the psychological safety of participants in the labour market, as well as confirmation that decision makers are taking care of the population in working age in the periods when they are not productive, or when they are unemployed. In this paper we have not made the analysis of social effects of active measures, and for that reason we have not given a final conclusion on non-economic effects of ALMP. The methodology used in research on the effects of active measures is steadily improving in quality, but it must be stressed that all evaluations, reviews and meta-evaluations have not provided answers to two very important issues. The first question is how to allocate funds for active measures to achieve the highest net effects. The other is what is net monetary social benefit achieved by allocating resources for the implementation of active measures. These two questions remain open for future research.
Zubovic, Subic 21
REFERENCES
Baily, M., and J. Tobin (1977) Macroeconomic Effects of Selective Public Employment and Wage Subsidies, Brooking Papers on Economic Activity Vol. 1977, No. 2, pp. 511-544 2. Barkin S (1967) Meeting the demands of an active manpower policy with the assistance of the academic disciplines, De Economist, Vol 115, Issue 6, Springer Netherlands 3. Betcherman, G., Olivas, K., Dar, A. (2004), Impact of Active Labour Market Programs: New Evidence from Evaluations with Particular Attention to Developing and Transition Countries, Social Protection Disscusion Paper Series 0402, the World Bank, januar 2004. 4. Boeri, T., Ours, J. (2008), Active Labour Market Policies, in The Economics of Princenton Univeristy Press, Imperfect Labour Markets, http://press.princeton.edu/chapters/s12_8771.pdf 5. Bonin, H., Rinne, U. (2006), Evaluation of the Active Labour Market Program Beautiful Serbia, IZA Discussion Paper 2533 6. Bonoli, G. (2010), The Political Economy of Active Labour Market Policy, Working Papers on the Reconciliation of Work and Welfare in Europe 01, RECWOWE Publication, Dissemination and Dialogue Centre, Edinburgh. 7. Calmfors, L. (1994), Active Labour Market Policy and Unemployment: a Framework for the Analysis of Crucial Design Features, OECD Economic Studies 22, summer 1994. 8. Calmfors, L, Forslund A, Hemstrom M (2002) Does active labour market policy work? Lessons from Sweedish experiences, Sweedish Economic Policy Review 8 (2), pp. 61-124 9. Dar A, Tzannatos Z (1999) Active labour market programs: A review of the evidence from Evaluations, Working paper, World Bank, (accessed 12.02.2011) http://rru.worldbank.org/documents/toolkits/labour/toolkit/pdf/reference/Dar_ Tzannatos_1999_854C0.pdf 10. Daguerre, A., Etherington, D. (2009), Active Labour Market Policies in International Context: What Works Best? Lessons for the UK, Department for Work and Pensions, Working Paper 59. 11. Estevo M (2003) Do Active Labour Market Policies Increase Employment?, International Monetary Fund (IMF) Working Paper 03/234. Washington, DC: IMF. available at: http://www.imf.org/external/pubs/ft/wp/2003/wp03234.pdf (accessed 12.05.2011.) 12. European Commission (2010), Europe 2020: European strategy for smart, 1.
sustainable and inclusive growth -
22 Reviewing Development of ALMP and the Evaluation Techniques http://eunec.vlor.be/detail_bestanden/doc014%20Europe%202020.pdf (accessed 14.01.2011) European Commission (2009), Addendum to the 2006 LMP Methodology, March 2009, Office for Official Publications of the European Communities, Luxembourg. http://epp.eurostat.ec.europa.eu/portal/page/portal/labour_market/documents/ Addendum_2006_LMP_EN.pdf (accessed 16.04.2011) European Commission (2008) Statistical classification of economic activities in the European Community, available at: http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-RA-07-015/EN/KS-RA07-015-EN.PDF European Commission (2006), Labour Market Policy Database: Methodology, Revision of June 2006, Office for Official Publications of the European Communities, Luxembourg. http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-BF-06-003/EN/KS-BF06-003-EN.PDF (accessed 27.01.2011) European Commission (1993), Growth, Competitiveness, and Employment: The Challenges and Ways Forward into the 21st Century, White Paper, Office of Official Publications of the European Commission, Luxembourg. http://www.ena.lu/commission_white_paper_growth_competitiveness_employm ent_1993-2-10799 (accessed 14.05.2011) Eurostat on-line database: http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database (accessed 11.05.2011) Eurostat (2011) On-line database on labour market policies, available at: http://epp.eurostat.ec.europa.eu/portal/page/portal/labour_market/labour_mark et_policy/database (accessed 12.05.2011) Fay, R. (1996): Enhancing the Effectiveness of Active Labour Market Policies: Evidence from Programme Evaluations in OECD Countries, Labour Market and Social Policy Occasional Papers, OECD. Fields G.S. (2007) Labour Market Policy in Developing Countries: A Selective Review of the Literature and Needs for the Future, Policy Research Working Paper Series, No. 4362. Washington, DC: World Bank. Greenberg DH, Michalopoulos C, Robins PK (2003) A Meta-Analysis of Government-Sponzored Training Programs, Industrial and Labour Relations Review 57 (1), pp. 31-53 Harrell, A., Burt, M., Hatry, H., Rossman, S., Roth, J., Sabol, W. (1996).
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
Evaluation strategies for human services programs: A guide for policymakers and providers. Washington, DC: The Urban Institute. 23. Hujer R, Caliendo M, Zeiss Ch, Blien U (2002) Macroeconometric evaluation of active labour market policies in Germany - a dynamic panel approach
Zubovic, Subic 23
using regional data, ERSA conference papers ersa02p225, European Regional

Science Association 24. de Koning J, Peers Y (2007) Evaluating ALMP evaluations, SEOR Working Paper No. 2007/2, Roterdam 25. Kahn R.F. (1931) The Relation of Home Investment to Unemployment, Economic Journal, June 1931 26. Keynes J.M. (1936) The General Theory of Employment, Interest and Money Macmillan Cambridge University Press, for Royal Economic Society in 1936; available at: http://www.marxists.org/reference/subject/economics/keynes/generaltheory/index.htm (accessed 12.05.2011.) 27. Kluve J (2010) The effectiveness of Eruopean ALMP, Labour Economics, doi: 10.1016/j.labeco.2010.02.004 28. Kuddo, A. (2009), Employment Services and Active Labour Market Programs in Eastern European and Central Asian Countries, Social Protection Disscusion Paper 0918, the World Bank, oktobar 2009. 29. Lehmann, H., Kluve, J. (2010), Assessing Active Labour Market Policies in Transitional Economies in The Labour Market Impact of the EU Enlargement, Caroleo, F.E., Pastore, F. (eds.), Springer-Verlag Berlin Heidelberg, pp. 275-307 30. Martin, J.P i Grubb D (2001) What works and for whom: a review of OECD countries experience with active labour policies, Swedish Economic Policy Review 8 (2001) 9-56 31. Martin, J.P. (2000), What Works Among Active Labour Market Policies: Evidence from OECD Countries Experiences, OECD Economic Studies 3, OECD Publishing. 32. MERR (2011) National action plan of employment for 2011, Ministry of economy and regional development of Serbia 33. Mosteanu T, Iacob M (2008) Theories And Approaches Regarding The CostBenefit Analysis Role And Principles, Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, Vol. 11 (528 s), pp. 713, November. 34. Nickell S, Nunziata L, Ochel W., Quintini G. (2001) The Beveridge curve,
unemployment and wages in the OECD from the 1960s to the 1990s preliminary version. CEPDP, 502. Centre for Economic Performance, London
School of Economics and Political Science, London, UK. 35. OECD (2011) on-line data base on public expenditure for active labour market policies, available at: http://stats.oecd.org/Index.aspx?DatasetCode=LMPEXP http://stats.oecd.org/Index.aspx?DatasetCode=LMPEXP (accessed 22.02.2011) 36. OECD on-line database on Labour market policies. http://stats.oecd.org/Index.aspx?DatasetCode=LMPEXP
24 Reviewing Development of ALMP and the Evaluation Techniques 37. OECD (2010), OECD Employment Outlook 2010: Moving Beyond the Jobs Crisis, OECD: Paris 38. OECD (2008) Serbia: A Labour Market in Transition, OECD: Paris 39. OECD (1993) Active Labour Market Policies: Assessing Macroeconomic and Microeconomic Effects, chapter 2, pp. 39-79, in Employment Outlook, OECD: Paris. 40. OECD (1990) Labour Market Policies for the 1990s, OECD, Paris. 41. OECD (1964), Recommendation of the Council on Manpower Policy as a Means for the Promotion of Economic Growth, OECD, Paris. 42. Ognjenovi, K. (2007), The Use of Propensity Score-Matching Methods in Evaluation of Active Labour Market Programs in Serbia, Economic Annals 52 (172), pp. 21-53, Faculty of Economics, Belgrade. 43. Robinson, P. (2000), Active Labour-Market Policies: a Case of Evidence-Based Policy-Making?, Oxford Review of Economic Policy 16 (1), pp. 13-26. 44. Schmann, K. (1995), Active Labour Market Policy, Wissenschaftszentrum, Discussion Paper FS I 95-201, Berlin. http://bibliothek.wzberlin.de/pdf/1995/i95-201.pdf. 45. Spevacek AM (2009) Effectiveness of Active Labour Market Programs: A review of Programs in CEE and CIS, USAID konowledge service center 46. Tobin, J., Baily, M.N. (1977) Macroeconomic effects of selective public employment and wage subsidies. Brookings Papers on Economic Activity, No. 2 47. World Bank (2006), Republic of Serbia: Assessment of Labour Market, Report No. 36576-YU, Washington D.C. 48. Zubovi J (2010) Razvoj privrede zasnovan na ulaganjima u ljudske resurse i stranim investicijama, Institut ekonomskih nauka, Belgrade, pp. 39-57 49. Zubovi J, Hani A (2009) Recruitment practices in Serbian Financial Sector Employee Referrals and Cooperation with Educational Institutions, Internationall Tempus conference Business Opportunities in Serbia: the Case of Italian Business, BBA and IEN, Belgrade, June 2009. 50. Zubovi J, Domazet I (2009) Uticaj tranzicije na zaposlenost i zarade u Srbiji The effects of transition on employment and wages in Serbia, Nacionalna monografija "Efekti tranzicije u Srbiji i suoavanje sa globalnom ekonomskom krizom", Scientific Association of Economists, Belgrade, 2009
Chapter 2
THE ROLE OF INFORMATION SYSTEMS IN HUMAN RESOURCE MANAGEMENT

Dorel Dusmanescu, Aleksandra Bradic-Martinovic Abstract: Persistency of the organization, competitive advantage and
realization of extra profit, in contemporary environment, are directly connected with balance of the resources available to the firm. One of the key issues of successful business is human resource management and that process is under great influence of modern information technology. Human Resources Information Systems (HRIS) are systems used to collect, record, store, analyze and retrieve data concerning an organizations human resources, but it is not merely reduction of administrative procedures. The importance of HRIS system is multifaceted, ranging from operational assistance in collecting, storing and preparing data for reports, simplifying and accelerating the processes and controlling the available data, reducing labour costs for HR departments, and providing timely and diverse information to the management of the company, based on which it is possible to make quality strategic decisions related to human capital. The aim of this paper is to highlight the importance of HRIS and to give a comprehensive insight of the subject. Special focus in the paper will be on companies in Serbia, which have started to apply this concept, but in most situations not widely, but just partially. They must be aware that positive results can be expected only if this subject is approached in the right way.
Key words: Human resource management, information systems, HRIS, ERP JEL Classification: M15, J24
26 The Role of Information Systems in HRM
INTRODUCTION2
Social and organizational changes in the economic environment are numerous and extensive. According to that, it is important for human resource management (HRM) to be comprehensive, high in quality, fast, flexible and in line with upcoming trends, because it is one of the parameters of successful business. Use of information and communication technology becomes an imperative for HRM, as well as the other activities in the company. Enterprise Resource Planning (ERP) is very widely applied in HR departments. For instance, company can track employments life cycle or engagement of the new labour. These changes can be viewed as transactional data, because employment of workers begin and end within the organizational structure of one company. As a result of that, HRM with its data is ideal for traditional ERP infrastructure, thus it has found the appropriate support in ERP systems. However, modern Knowledge economy and labour statistics impose the need for consistent initiatives in real time, so HRM department must implement these initiatives before the actual employment of workers. For these reasons, HRIS systems separate from standard ERP solutions and become stand-alone platforms with wider range of options, such as adjustable employment statistics for each enterprise.3 There are lot of terms in use for these systems, but the most common are the following: e-HRM (e-Human Resource Management), HRIS (Human Resource Information Systems) and HRMS (Human Resource Management Systems). We must be aware that there is a fundamental difference between e-HRM and HRIS. HRIS, as human resource
2
This paper is a part of research projects numbers 47009 (European integrations and social and economic changes in Serbian economy on the way to the EU) and 179015 (Challenges and prospects of structural changes in Serbia: Strategic directions for economic development and harmonization with EU requirements), financed by the Ministry of Science and Technological Development of the Republic of Serbia
We must be aware that software market is characterized by sharp competition, so ERP producers reacted very fast and they added new features in their platforms.
Dusmanescu, Bradic-Martinovic 27
information system, has direct implementation in HR department and employees in this department are users of that system. Enhancement of HR department is the main goal of HRIS, which will indirectly improve business. Term e-HRM covers services not only for HR department, but also for wider range of employees, potential employees and management. Those services are available over Internet or Intranet. The difference between HRIS and e-HRM could be defined as transition from the automation of HR services (Transactional Systems) to IT support of HR information (Management Information Systems). Apart from that, HRIS can be viewed as a database system or a series of interconnected databases, and HRMS as software that can combine multiple HR functions (Venkateswaran, 2007). The differences between two systems are quite blurred so these terms are in use as synonyms in many references. In this paper term HRIS will be used in a wider context, because the aim of this paper is not to define the term precisely, but to give an insight into the importance and necessity of introduction of modern information technology in the processes of HRM. The aim is to comprehensively show the role of HRIS systems, their evolution, structure, advantages and possible shortcomings, as well as the process of implementing the systems in organization and to highlight the importance they play in modern business. In the first part of paper HRIS systems are explained in details with the brief history. Evolution of the systems is shown from the point of new role in organization, because they switch their role from transactional to strategic. Following the changes, HRIS systems adjust and start to offer new features for increasingly wider range of users. The second part of paper expose structure of standard HRIS solutions with most important functionality of software designed for a whole variety of activities related to HRM, while the third section presents the advantages of using the system. The fourth part gives an insight into numerous of HRIS advantages for enterprises, and also points to a few problems faced by the enterprises during the implementation. Description of methods that are available to companies during the decision process of HRIS introduction is part of the fifth section, while the sixth section provides a brief overview of the situation in this particular field in the Republic of Serbia.
HRIS SISTEMS DEFINITION AND EVOLUTION

Effective HRM, in order to provide competitive advantages, requires adequate updated information on current employees, as well as potential employees in the labour market. IT evolution has improved a technique of collecting this information through the development of HRIS systems (Kavanagh, Mohan, 2009, p. 5). HRIS includes systems and processes that connect the function of HRM and information technology. Enterprises often choose to introduce this information system after the successful implementation of ERP (Enterprise Resource Planning) and CRM (Customer Relationship Management) solutions, aiming to improve the processes associated with making decisions about employees. Information technology have enabled the broad implementation of HRIS applications and help companies to improve efficiency in general by increasing the efficiency of HRM (Nuasair, Parsa, 2007, p. 70). Vujovic (2005, p. 310) points out that the modern HR function is not merely reduced to administrative procedures in the processes of recruitment, organizing the employees, regulating their rights and obligations, but also has a major role in creating corporate culture. In the new environment employee can propose, control and execute planning decisions, so development of HR must adapt to the new requirements. De Sanctis (1986, p. 15) indicates that apart from daily and operational information, HRIS has the ability to supply with strategic information management of the company. Data collected within the HRIS provide a mechanism for management decision support. With proper HRM companies are able to provide calculations that will have consequences for the entire business. These calculations include the following: health care costs per employee, turnover rates and costs, the time required to fill in the appropriate position, return on invested capital in HR and increase the value of human capital. Numerous studies have offered evidence supporting the recognition of the role of HRIS systems in support strategic decision making. For this reason, there has been a dramatic increase in the use of HRIS systems in companies, over time. For example, Lower and Mohrman (2001) reported that the use of HRIS is in constant increase over the years. Obviously, the use of HRIS solutions raised sustainable
development, even in those companies where HR management does not have a strategic role. Vujovic (2005, p. 311) put the specific dimension on this themes with the view that modern business requires intensive use of knowledge based on multidisciplinary approach, while education should provide the acquisition of new skills, such as finding relevant information, encouraging creative thinking, effective communication, teamwork etc. We already have companies where employees, in addition of official duties, acquire new knowledge and these organizations are called learning organizations. Hendrickson (2003, p. 382) made a first step in accepting the employee in the form of human capital. It was in the period 1945-60. However, that has not led to the substantial changes in the functioning of the HRIS (at that time information systems have existed and operated without the use of modern information technology). In the next twenty years (1960-80) HR departments have become an integral part of the core activities in the company. During this period, computers (mainly mainframe) provided a new dimension in collecting, storing and processing HR information. At that time HR departments have become one of the most important users of computers resources in company. Despite that, HRIS were only useful in transactional information processing. The new period started in the last twenty years of the 20th century when computers become available to many users (with commercial use of the Internet) and when companies started to use HR information for strategic management. Management started to relay on HRIS systems in the decision making process about human capital, even in small and medium enterprises. According to that,
HRIS become integrated system with the objective to provide information for decision making on human resources. The base of their functioning
are databases that are used for collecting, storing, searching and manipulating data on employees and other data related to human resources. Typical HRIS includes personal information about employees, information on income, information on various types of training, the most diverse reports etc. HRIS are developed following needs of HR department or company management. Changes that have taken place in the role of HR in the
strategies that are integrated within companys strategy ensuring that culture, values and companys structure together with the quality, motivation and commitment of employees fully contribute to achievement of companys objectives (Dainty, Loosemore, Lingard, 2003,
p. 37). In this stage, the level of integration in the processes of HRM is much higher, then in the previous stages. The transformation process can be observed in Figure 1.
company, also reflected in the development of HRIS. The role of HR had three stages: a) phase of personnel or staff management, b) phase of HRM and c) phase of strategic HRM. Personnel management was focused on various forms of services in the HR departments. Those departments had to collect and store personal data (records) of each employee, handle their salaries, benefits, vacations etc. In the next phase, when it became clear that the importance of HR is much higher, personal management becomes HRM. Since then, this function developed and became very important function of management, while HR became a component of competitive advantages. The last stage introduces a strategic component in HRM and can be defined as: development and implementation of human
Figure 1 Parallel functions development of HRM and HRIS
Source: Authors own research
The next dimension in HRIS is related to direct or indirect users. Modern HRIS can be seen as a spine of the company and it has to meet the needs of all stakeholders in the company. We can recognize three main groups: 1) HR professionals and directly involved in HR department, 2) management of the company and 3) employee. Each of these groups has unique interest in the use of HRIS (Hendrickson, 2003, p. 381), and because of that, each of these groups of users have a special module(s) which can meet the needs. HRIS can be ranging from strategic to operational level in one company, as we can see in Figure 2.
Figure 2 Three levels of HRIS systems
Source: Authors own research
The HRIS achieved new dimension with development of computer networks. By then, only trained employees, mainly from the HR department could perform operations in separated computers or in
mainframes4, through a local network of terminals. However, the sudden expansion of networks and falling prices of computers enabled everyone to become part of the system, no matter where they are. Under the new conditions each employee can use the HRIS. The level of use is determined by the need and permissions. Structure of the HRIS becomes significantly more complex, and the new problems appear, primarily related to security and privacy of information about employees. HRIS, like other information systems must be flexible and adaptable to changes. They have to follow the development of the organization in order to satisfy all existing and new needs. On the other hand, if the company does not follow trends in the field of information and communication technology, it can have a problem with inefficient or insufficiently effective HRIS (obsolete or unfit to the company needs). Consequently, it will affect the overall business, especially in large enterprises with complex organizational structure.
THE STRUCTURE OF HRIS SYSTEMS

HRIS applications are systems of databases that allow users to store and track all types of data that are related to human capital in the company. It is necessary to pay attention to the fact that in practice company can buy partial software solutions, which only partially cover the needs of HRM (for example, just a collection of basic information about employees and payroll). These systems cannot be classified as HRIS, because under the term of systems we imply complex and comprehensive software with all integrated functions for HRM. Only properly implemented systems that permeate the entire company will have maximum positive impact. These are systems that are used to collect, store, manipulate, analyze, retrieve and disseminate HR information. Individual HRIS software solutions differ according to the need of company that developed a specific application. The solutions offered by software companies can be generally divided into three groups. The first
4
Mainframe solutions were available and cost-effective only for large companies.
group represents modules for HRM as part of ERP systems (for example SAP HRMS, as one of the biggest module of SAP R/35 system). The second group represents the integral software solutions which merge different modules for computerization of HRM, i.e. integral HRIS. The third group includes partial software packages that cover only one function. This group of software is much simpler and relatively cheap solution for small companies that do not require all modules or solutions for those companies which consider it necessary to automate and improve only certain segments of HR. Regardless of the group they belong all of these solutions are the parts, i.e. modules that are integrated into the HRIS system in one company. In most cases HRIS contains all or most of the following modules:
Collection and monitoring of applications for employment or online recruiting is an application that allows candidates to apply for a certain position in the company, but also for HR department to collect and process the received applications. In this module of HRIS the using of computer systems and networks are very important, especially because of online accesses to the system. Online collection of application has become standard in developed countries. After collecting applications, the company accesses to the next level using the HRIS module. This includes support for the following activities: generating reports with statistics about labour market in the country (in U.S. it is called EEO Form), monitoring of interviews and the score assigned by the staff responsible for their evaluation, monitoring of job descriptions, keeping internal statistics on employees, auto-tracking and analysis of profiles of candidates, creating a list of e-mails (for sending circulars), making online remarks etc.
The last version of SAP systems R stands for real-time data processing and 3 stands for 3tier (three-tier client-server architecture).
Record keeping of all personal data is application which has database with data of all employees. It is very important for each company to have these data, and in most cases data must be standardized. For instance, if company needs information on whether an employee has a certificate for particular type of work and if the company has 7000 employee only search of standardized records can be effective. This module usually includes data for regular and emergency contact with the employee, data on all previously received wages (wage history), data on absenteeism from work, trainings and certificates, estimates the characteristics of employees, information on possible disciplinary action, injuries at work, and data that companies can define by itself, unless they are part of a standard software package. In addition to these data, it is possible to store scanned documents (education diplomas, birth certificates, judgments, etc.).
Payroll module automates the pay process by collecting data on employee time and attendance, calculating various deductions and taxes, and generating periodic pay checques and employee tax reports. This module is often not fully part of the HRIS, because it is heavily integrated into the system for financial management of the company. However, the financial management system cannot work without necessary input of the payroll data on time spent at work, absences, performances or regulatory compliances. We can find very different solutions in synergy of these two applications. Benefits Administration provides administration of employee participation in various forms of benefits. All employees must be aware of their rights and obligations. The most important activities are included in pension plans, buying life insurance policies, but also in the distribution of shares of the company or division of profits. The primary function of this module is to monitor all benefit programs and to notice any potential deficiencies.
The advantage of online access is very important in this module. The fastest and cheapest way to maintain the beneficiary database is ability of online access to the data by the employees. In self service module they can fill the forms about their preferences.
Training module and learning management systems provides a system for organizations to administer and track employee training and development efforts. Company can buy this module on the software market as a separate solution. The most important functions of this module are tracking the education level of employees, their qualifications and / or skills. It allows storing and displaying various types of courses, books, lectures or materials that are suitable for web learning. Online learning and testing of employees is a remarkable savings in time and money, and provides a high flexibility.
Performance management is very important for each company because continuous monitoring and evaluation are essential when company makes conclusions about effectiveness of HRIS. It is also important to realize whether the objectives are met and which segment should improve. The goal of this process is not criticism but insight in potential updates and upgrades of the system. This module contains features for monitoring system performances, which provides valuable information for the management of the company. Employee Self-Service in modern environment is module based on web technology which allows employee, together with professionals in HR department to manage the employees database. With the right permission they can access their data with read-only or change status. Depending on the exact solutions data access can be provided within Intranet (safety is increased) or through the Internet (in which case the company has greater availability of data). These applications are usually used with standard Internet browsers, such as Internet Explorer or Firefox.
In addition to these modules, which cover the basic functions of any HRIS, there are still a number of solutions. These include modules with corporate documents such as instructions for the various programs for employees6, HR planning module which include the analysis of previous employment policy, documents about employees database development, assessment tasks and jobs and the implementation of various satisfaction survey of employees in the company. Selection of software solution depends on the company's management and its decision. This situation also involves the possibility of internal development, acquisition of complete solutions (outsourcing) or renting the resources, i.e. cloud computing. Regardless of the choice management must assess their needs and thus choose a software solution that will have the highest level of utilization. It is equally wrong to choose software that has too many options, which will never be used or does not possess the necessary options. Decision on HRIS choice must be taken as a strategic decision.
ADVANTAGES OF USING HRIS

In situation when administrative and HR department tasks become too large, the implementation of HRIS is solution to the problem. Companies, regardless of the size have already recognized the benefits of this solution, so they continuously implement software packages. In that way they improve the efficiency of the entire organization. HRIS advantages can be systematized according to Kovach (Kovach, et.al., 2002, p. 47) as follows:

Increase competitiveness by improving the operational transactions in the HR department; The ability to implement a number of different operations related to HR;
The name of this module is Employee Manual (Handbook) and usually contains all the instructions for new employees (various guidelines and codes of conduct, code of ethics, various policies, procedures) in order to easily turn-up companies.
Shift the focus from the operational (transaction) HR information to strategic HR information; Include employees as an active part of the HRIS and Re-engineering the entire HR department.
Many authors (Hendirks, 2003; Beadles, et all, 2005, Kovach, 2002) emphasize the advantages of HRIS. If we collect all those opinions with practical advice in web sites of HRIS producers (www.employease.com, www.hrworld.com, www.link-softsolutions.com etc.) we can observe all HRIS advantages through three dimensions: the benefits for the management, the benefits for the HR department and benefits for employees. The most important advantages for management of the company are:

Increase of overall decision making efficiency, Cost reducing and better control of budget, Business transparency, A clear business vision and A clear insight into the process of hiring and firing employees, at the aggregate level.
The HR department also has a numerous benefits for HRIS:

Possession of single database of all employees in the company with all necessary information and opportunities for different reports, The ability to update databases in real time, on the basis of all changes, which is of extreme importance to regionally diversified companies; Elimination of paper forms that are much slower and with much higher probability of errors; Minimize errors caused by human factor; Employees in HR department do not have to constantly refer to the instructions on working hours, because the application is configured according to existing guidelines, which have reduced delays and uncertainties; Improved management system in accordance with the legislation;
Reduction or elimination of redundancy in the system; Standardization of business processes; Highly reliable data in the system, whether it is external or internal threats; Increased employee satisfaction in HR department because the easiest and efficient execution of the tasks; The ability to establish full control over internal migration of employees and the management of their talents and The ability to take preventive measures to avoid unpleasant situations in the company.
HRIS provide the advantages to the employees among which the most important are the following:

The possibility of independent access to data, which often means working in one software window; Saving time (for example, if the employee wishes a day off the simplest wait is to fill the online form available as an option of the HRIS and wait for approval by superiors); Automatic tracking and reminder to the business obligations and events; Encouraging employees to make decisions and initiatives on the basis of information obtained in the HRIS system (for example, workers can monitor the internal competition for jobs and thus to advance in your company); Data availability 24/7; Reducing the time required for desired information, which are available in the system; The ability to attend internal training courses via the web and the development of personal skills and knowledge and Increasing staff morale.
Besides all these advantages, there are a few shortcomings that need to be mentioned. First it is the need of additional training of employees for using self-service module. There is a problem to force employees to use new features that system provides instead the way they previously used (for instance, some of employees always use contact phone in order to
obtain the desired information). In addition, employees in HR department must attend several trainings to be able to use modules and to exploit all the options it provides. This problem is given special attention in companies, because without competent software users the company can miss a large number of advantages. The last problem is connected with the process of replacing the old system with the new one. If the company chooses another producer or provider the problem may arise with incompatible data or possible danger to the security of database. Because of privacy issues, replacement process can be much longer comparing to other types of software integration. Regardless to the shortcomings connected with the implementation of HRIS the benefits provided by these systems are dominant. However, these systems may not be introduced without prior analysis of company needs. In this context, the main question is: What are the criteria that should be fulfilled when the company has to decide whether to introduce or replace the existing HRIS system?
INTRODUCTION AND REPLACEMENT OF HRIS

The work that employees in the HR department do is very suitable for computer processing. Many of these activities are the transaction processes, routine, recurring daily, weekly, monthly. A study of a pharmaceutical company7 showed that just before the HRIS introduction 71% of employees in the HR department s conducted the transactional and administrative tasks. In other words, it is time consuming to perform tasks such as checking worksheets (carnet), updating various information about employees (change of addresses, phone numbers, different status, etc.) and tracking data and employees for the benefits (insurance, contributions, etc.). Introducing HRIS is a significant investment for each company, but most of the companies are forced to do that when HR activities become extensive, slow and inefficient and start to limit the decision making
7
www.citeman.com/8022-hris-in-action/#ixzz1A4KwG16u
efficiency. But there is a huge difference between small and medium enterprises and large companies. For example, if we consider the organization of a large company with decentralized structure, number of branches and numerous employees it is obvious that this company must introduce a certain level of HRIS in HR department. Performing tasks manually or partially computer-integrated in these conditions is very slow and expensive, so they choose to implement one of the solutions. Some of them internally developed information system, relying on its own capacity, while some implement external ERP systems that include modules for HR management. Small and medium enterprises generally find alternative methods for resolving the backlog of manual labour in this department. For that purpose they usually use standard Microsoft Office or similar software, especially spreadsheet (Excel). There are also open source solutions, such as Orange HRM8 software. Web sites like www.comparehris.comoffer free advice about HRIS/HRMS software9. In practice it is common for companies, and this applies particularly to small and medium ones, to begin a job with the ad-hoc network and information system. They start from the basic needs and then they add information step by step as well as communication resources. They do not need feasibility study for that process. Such a system slowly grows and becomes more difficult for future maintenance. After a while, when the information system reaches critical point, management of the company meets with the problem of further development, so they must define objective criteria for replacement of the earlier solutions (Milainovi, 2010, p. 1).
This company offers the ability to download program from the web site www.orangehrmlive.com,with the reference of 500,000users. They also offer so-called Live versionand this software does not require IT professionals, software installation or server -it is for online users. After filling the series of questions, company get a list of proposals with the best software for them.
9
There are few available techniques for assessing cost-effectiveness of HRIS, regardless of companys size. The first criterion that can measure the contribution and importance of the introduction of these systems is the return on investment or ROI coefficient. It is a ratio of profits and investment. The calculation of this ratio is not easy because many financial benefits are immeasurable. However, despite of that it is strongly recommended to carry out this analysis. ROI analysis should include the following segments: 1. Data Management (with the goal of achieving a satisfactory level of operational efficiency). In this segment, it is necessary to calculate the savings that are realized through the reduction of time and resources to fulfill the task, the benefits to be obtained by increasing the reliability and value data in the system and eventually to incorporate the costs for the purchase and maintenance. 2. Human resource management (as an organizational unit department). It is necessary to calculate the savings that are realized through the reduction of time and resources to fulfill the task, the benefits to be obtained by increasing the reliability and value data in the system, the benefits of improving individual and team performance and improving the attractiveness of jobs in this department, which retain high quality employees. 3. Talent management. As in the previous two cases it is necessary to calculate the reduction in time, the benefits of increased reliability, but also contribute to achieving strategic business goals and achieve strategic objectives in the development of talent within the company. 4. Organization Management. In this segment it is needed to be focused on the expression of the global benefits of achieving the strategic goals and objectives in the field of talent.
Further analysis of the ROI ratio is reduced to the inclusion of measurable investment costs and direct costs, which are necessary for HRIS implementation or replacement. This is useful for cross-section analysis of the system, at some point of work. As we can conclude, the ROI coefficient is an extended Cost/Benefit analysis. Cost-benefit analysis includes consideration of all the positive and negative impacts that occur when implementing new or replacing old HRIS system. The aim of this analysis is to relate all positive and negative impacts, to perform a certain type of evaluation and to make a decision, based on results. This analysis is very useful for HRIS evaluation over long time. The third method that can be used is the Kaplan-Norton's method Balanced Scorecard performance measure system. It assumes that it is necessary to consolidate financial and non-financial measures in order to provide a quality requirement for decision-making by management. This method requires that each company develops its own system of measures for assessing organizational performance. It is necessary to perform through four dimensions: a) the perspective of users, b) internal process perspective, c) the perspective of finance and d) learning and growth perspective.10 Now we can make a conclusion that presented methods, which are used in practice, are not ideal solutions, but it is certainly recommended to use one of them. In the future, information systems will be changed and improved, so it is useful for the companies to have a specific benchmark that will help them in decision making process about this business segment.
HRIS IN SERBIA
The business use of information systems in the Republic of Serbia is increasing over the years, although the situation is far from satisfactory.
More about the subject: Hagood, W., Friedman, L. (2002), Using the Balanced Scorecard to Measure the Performance of Your HR Information System, Public Personnel Management, Vol. 31, No. 4
10
Based on data obtained from survey of the Statistical Office of Serbia presented in the publication Use of ICT in the Republic of Serbia in 2010 during that year 97.8% of enterprises used a computer in their business and 79.5% of companies have Wire based LAN. If we observed using of ERP systems the situation is very bad, because only 11.5% of companies use this type of systems. Analysis of enterprises by size shows that 43.1% of large enterprises use ERP, while the number of medium-sized enterprises is more than half - 17.8%. The worst situation is in small businesses, because only 7.6% own ERP system. Banks and insurance companies use these systems the most - 27.3%, and followed by companies from the manufacturing industry - 15.4%. The reason for this situation is that most of large companies are faced with the need to increase efficiency and cost savings benefits so they are forced to implement modern information system. Companies that have introduced ERP systems as an integral part of these systems use modules for managing HR, to a greater or lesser extent (for example 2008. Zdravlje Actavis has introduced a SAP HR module).The situation in small and medium enterprises is much worse. Most of these companies do not have specialized and trained employees for HR, and often they do not know enough about this topic. In small companies Microsoft Excel is more than enough to satisfy all the requirements of HRM sector, but with increased number of employees companies need appropriate specialized software. In the software market in Serbia there are two producers of HRIS modules. SoftLINK company from Belgrade offers HRIS (trademark), software platform with all options for HRM in companies regardless of the size or type of business. Wurth, Imlek, Tropic Group and Tagor Electronic use their own software. The other one is company Perfecta, also from Belgrade. They made Module KADROVI which includes all most important records, but also additional options like training on protection and safety at the workplace or scholar records. Awareness of this need in Serbia has increased over the last ten years, but the general impression is that there is no systematic analysis during the implementation process. In many situations, the introduction of the HRIS is done ad hoc. It would be interesting to conduct a comprehensive
analysis of domestic companies, small, medium and large, in order to reach a conclusion at what level of development is the implementation of HRIS system in Serbia.
CONCLUSIONS
HR management had undergone radical changes over the last fifty years, while technological development has enabled the transformation of many business activities. Small and medium enterprises managed to overcome the HR management tasks without specialized software, more or less successfully. Large enterprises, with numerous employees and complex structure, on the other hand are no longer able to do that. The importance of HRIS system is multifaceted, ranging from operational assistance in collecting, storing and preparing data for reports, simplifying and accelerating the processes and controlling the available data, reducing labour costs for HR departments, and providing timely and diverse information to the management of the company, based on which it is possible to make quality strategic decisions related to human capital. In the conclusion it is necessary to point out several trends that lead to further improvements. First of all we expect improvement in the field of dashboard type of view over data, so management of the company can access accurate information when they need it. Then, we expect the improvement in the Intranet and Internet interface for self-service modules, as well as further development of e-learning, which is believed to become very popular among younger generations. We also expect further development of distance working and in that environment HRIS will improve control and track the impact of this category of employees. Technological development will enable the widespread use of certain functions of HRIS through web, mobile phones, WAP or PDA, with e-mail, as a key component. At the end we can point the importance of these systems with the citation of Martyn Sloman11: Professionals who deal with human resources, and
11
Martyn
Sloman,
CIPD
Training,
Learning
and
Development
Adviser,
www.hrplatform.org/general/a/articles/embrace_hrtech.html
who fail to realize the potential importance of HRIS system will not be able to fulfill their role in the organization. They will not be able to provide information which management need for successfully manage operating costs and development of their employees. Management of the HR department should be more ambitious in terms of their requirements and to unite with the IT sector, to enable better functioning of the system.
REFERENCES
______ (2010) Upotreba informaciono-komunikacione tehnologije u Republici Srbiji, RZS Srbije 2. Beadles, A., Lowery, C., Johns, K., (2005), The Impact of Human Resource Information Systems: An Explarotary Study in the Public Sector, Communications of the IMMA, Volume 5, Issue 5 3. Dainty, Loosemore, Lingard, Human Resource Management in Construction Projects - Strategic and Operational Approaches, Taylor & Francis, 2003 4. De Sanctis, G. (1986), Human Resource Information Systems- A Current Assessment, MIS Quarterly, Vol. 10, No.1 5. Hendrickson, A. (2003), Human Resource Information Systems: Backbone technology of contemporary humam resources, Journal of Labour Research, Volume XXIV, No. 3 6. http://www.e-hrmresearch.org/index.php?id=submissions.htm 7. Kaplan, R., Norton D. (1992), The Balanced Scorecard: Measures that Drive Performance, Harvard Business Review 8. Kavanagh, M.J, Mohan, T. (2009), Human Resource Management Basics, Applications and Future Directions, Sage 9. Kovach, K.A, Hughes, A.A, Fagan, P, Maggitti, P.G. (2002), Administrative and Strategic Advantages of HRIS, Employment Relations Today, Vol. 29, Issue 2 10. Mayfield, M, J. Mayfield, S. Lunce, (2003), Human Resource Information Systems: A Review and Model Development, Advances in Competitivness Research, Vol. 11, Issue 1 11. Milainovi, S. (2010) Optimizacija informacionih sistema korienjem Cloud Computing reenja, Savetovanje ZITEH 10 Zloupotreba informacionih sistema i zatita, Beograd 12. Nuasair, K.K., Parsa, H.G. (2007) Critical Factors in Implementing HRIS in Restaurant Chains, Advances in Hospitality and Leisure, Vol. 3, ed. Joseph S. Chen, Elsevier, UK
1.
46 The Role of Information Systems in HRM 13. Venkateswaran, N. (2007) e-HRM, Department of Management Studies Panimalar Engineering College Chennai, available on: http://www.indianmba.com/Faculty_Column/FC555/fc555.html 14. Vujovi, S. (2005), Informacioni sistemi u poslovanju i menadmentu, Slobomir P Univerzitet, Republika Srpska
Chapter 3
IMPROVING THE QUALITY OF HUMAN RESOURCES BY IMPLEMENTATION OF INTERNAL MARKETING

Ioan Done, Ivana Domazet Abstract: Internal marketing includes programs intended for employees
and their development. It is targeted on identifying, motivating and retaining customer oriented employees. For that reason, it is ov great importance for labour intensive, and especially service oriented companies, since knowledge, expertise, activity and behavior of employees create overall business portfolio that the consumers/clients are buying on external market. Regardless of its industry, adoption and implementation of internal marketing concept lead to long-term growth and success of the company. Internal marketing has important points of contact with human resources field of activity; therefore the analysis of internal marketing concept and its basic dimensions is a significant factor for creating competitive advantage in current business environment. The goal of internal marketing is to focus attention of employees on internal activities that need to be developed, maintained, and promoted for the purpose of business and strengthening competitiveness of the company on the external market. Human resources management through qualifying and motivation of employees to fulfill customer market needs as much as possible, namely to recruit appropriate personnel, and maintain and improve long-term relationship with them, is one of the key prerequisites for companys business success.
Key words: Human Resources, Internal Marketing, Competitiveness Improvement JEL Classification: J24, M31
48 Improving the Quality of HR by Implementation of Internal Marketing
INTRODUCTION1
Basic goals of internal marketing are the choice, motivation and retention of high-class and competent personnel, who are focused on the quality of overall portfolio of the company in order to improve its profitability. Practicing of internal marketing concept leads to high level of fulfillment of business obligations, internal competitiveness, as well as considerable improvement of the quality of the personnel. In this context, internal marketing is often connected to human resources management and the model that a company uses to develop its business culture. While analyzing the internal marketing concept, one must take into consideration the tasks of the human resources management, concerning motivation of employees and creation of such personnel structure that will assure highest possible level of overall interactions efficiency. Here, internal marketing plays an important role, since its implementation is related to development and retention of internal business culture that contributes to fulfillment of companys goals.
THE CONCEPT AND SEGMENTATION OF INTERNAL MARKETING

More than twenty years ago, Leonard Berry has applied the term internal marketing, defining it as a theoretical and practical marketing implementation in respect to servicing of external customers in a way that purports: employing and retaining of best personnel and their readiness to accomplish their tasks at their best (Little and Marandi, 2003, p. 114). Internal marketing includes programs designed for employees and their development. It is targeted on identifying, motivating and retaining customer oriented employees. For that reason, it has extreme importance of labour intensive, and especially service oriented companies, since
This paper is a part of research projects numbers 47009 (European integrations and social and economic changes in Serbian economy on the way to the EU) and 179015 (Challenges and prospects of structural changes in Serbia: Strategic directions for economic development and harmonization with EU requirements), financed by the Ministry of Education and Science of the Republic of Serbia
1
Done, Domazet 49
knowledge, expertise, activity and behavior of employees create overall business portfolio that the consumers/clients are buying on external market. Some of the internal marketing critics claim that it is a synonym for human resources management, but researches show that they differ. Human resources management is a wider concept than the internal marketing, and has four meanings: branch of science, management function, special business function within the organization and specific management philosophy. Basic internal marketing goals are: Successful fulfillment of personnel business obligations in a whole in order to accomplish companys goals, Motivation of employees to perform their tasks as customer oriented experts, concentrated to quality of the product/service, Attract and retain high-class personnel, focused on companys clients. Internal marketing demonstrates its results externally. The company might have brilliant ideas, but if it fails to accomplish, there is no object in doing that. The time and money spent on product promotion are a waste, if employees do not understand the product and its value. The time, process, resources and knowledge must operate mutually and effective if the company wants to make a profit on external market. The core of internal marketing lays in a fact that the employees should treat their colleagues, who come after in the business process, as their customers, and that the principles of internal marketing are implemented through the organization. If all personnel is to accept marketing principles, than each and every employee is trying to make the work of his colleagues easier. On internal market, the company treats its employees as consumers/clients. Internal and external markets are quite different. Therefore, for the successful implementation of the marketing on internal market it is important to adopt specifics and to develop appropriate approach. Internal market is reserved, and here, the supply and demand relation is relatively fixed. In addition, the influence of external factors on the internal market
participants is significantly reduced. For that reason, the communication of internal market parties and exchange of values between them is of key importance. Accordingly, the psychological aspects and the quality of relations between the internal market participants are a key for accomplishing results that are measured with motivation and satisfaction intensity, professional task performance, etc. Segmentation of internal market has to be conducted due to the existence of heterogeneous preferences of internal consumers within the company. People differentiate in respect to their role as consumers on external market, as well as when they are acting as employees on internal market. Internal customers (clients) have fractional or no choice in respect to who they will make business with, while consumers on external market can (unless in the case of monopoly) choose between several suppliers.
Figure 1 - Internal marketing

Internal consumers
Internal marketing segmentation
Target group
Target group
Target group
Sympathizers
Internal marketing mix 1 - product - price - communication - distribution
Neutral
Opponents
Source: Jobber, 1995
Done, Domazet 51
Internal marketing is focused on internal consumers, i.e. internal market that includes employees and segmentation of internal market is shown in Figure 1 (Jobber, 2005). Three fundamental internal market segments consist of the following groups of employees:

Sympathizers those who support changes; Neutral those who have no opinion in respect to labour organization changes and Opponents those who are against the changes, and who would like to retain status quo.
THE ELEMENTS OF INTERNAL MARKETING MIX

Basic instrument of the companys management, in the process of satisfying and motivation of personnel, and in order to accomplish the best quality of service possible, consist of additional elements of internal marketing mix (Saad, Ahmed, Rafiq, 2002, p. 33): Strategic rewards, Internal communication, Internal coordination, Education and training of personnel, Organizational structure, Senior management, Physical environment, Employment, future employees choice, Motivation system, Invigoration and Operational/process changes. At a glance, it looks like there is no difference between the motivation system and the strategic reward. Nevertheless, the nuance that differentiates the strategic reward is that it influences behavior, functioning and achievements that contribute companys progress in accomplishing business goals. The motivation system refers to principal reimbursement
system defined within the company, aiming to establish organizational culture, through remuneration of business activities, behavior and values that senior management would like to encourage. Stipulated elements of internal marketing mix are control susceptive and it is necessary to implement them properly in order to achieve desired results, defined as organizational possibilities that have the direct influence on business performance.
Figure 2 - Internal marketing elements

MarketingPhilosophy
Organizational skills Market orientation Employees satisfaction
Internal Marketing Mix
Business performances
Marketing Instruments
Individual skills (competences)
Source: Saad, Ahmed, Rafiq, 2002, p.34
Market orientation, employees satisfaction and special/individual competences are presented as the instrument that intermediates internal marketing mix and organizations business performance. Market orientation stands between that relation, sin a proper o that the organization can take cognizance and properly react on customers needs and capabilities of the competitors. Market orientation creates competitive advantage in consumers perception, and leads to better organizational performances (Domazet, 2011, p. 265). The essence of internal marketing means that the key for gratifying business results resides in creating satisfied and motivated employees oriented towards external clients.
Done, Domazet 53
The company is governed by various factors arising from external environment. Although those factors cannot be influenced on, and are unchangeable, they have to be constantly monitored and familiarized by the company in order to adjust business goals and accomplish planned results. Unlike external environment, for the internal environment it is necessary to provide peremptory conditions for business goals realization using the best possible combination of the following elements:

People with their knowledge and skills, Technologies and Labour organization.
Primary results of internal marketing mix instruments implementation are high-class, capable and motivated employees, who are focused and service oriented. On the other hand, important factors of internal marketing are (Ferdous, 2008, p. 25):

Duties (business tasks); Environment in which the tasks are performed; Authority, rights and responsibilities of the employee; Resources that the employee can utilize; Shaping processes themselves: organizational structure, task force or group structure, structure of rights and responsibilities delegation, remuneration structure; Operational aspects (i.e.: when, where and how the meetings are held; who can run them, etc.).
Duties or business tasks, should motivate employees to answer management demands, related to shaping, implementing and customer oriented development of successful interactive and external marketing, in adequate manner. Important element that must not be neglected while shaping marketing reflects in a situation that almost all companies, even in most developed countries, are facing. Job attraction for employees is reduced, and on the other hand expectations and stress are increasing, and more flexibility is demanded. Inversely, there is no appropriate progress, in terms of status,
material resources and benevolence towards the employees. In such an environment, it is quite challenging to maintain the attractiveness of offered product (workplace) in stagnating or even aggravated market conditions. Marketing acts towards development of techniques and procedures that can assure employees skills and desires for offering highquality services. Employees and clients satisfaction are tightly interlinked. In the context of internal marketing it is advisable to consider the price as the balance between the benefits/values and the cost for the company and its employees. The price is mainly determined through traditional concept of expenditure (financial and non-financial) with respect to the value derived in return. Thus, it is possible to calculate the cost of the employee (for example, psychological demands and time spent) when he is asked to change his behavior at his workplace, as well as what benefit/value can be achieved with such change. For example, the employee can be asked to perform higher quality, to practice different working tasks, to master new knowledge and skills (from his point of view those are expenses), but in return the employee could gain: more freedom in decision making process, promotion, supervise higher number of employees, higher salary, or become more competitive on internal (and external) labour market, etc. Accordingly, internal marketing price is considered related to invested efforts, time, work applied and other criteria connected to expenditures, with respect to value that the employee is granted for the role he plays within the organization. That value should reflect employees personal satisfaction while maximizing his performance. Sales and distribution as internal marketing mix instruments include sales activities and distribution channels, as well as the combination of both, in order to achieve desired targeted market segment. Sales and distribution are visible and tangible, but also invisible and intangible workplace and business environment aspects. They are related to physical workplace and the atmosphere in which the transactions between the company and its employees are made, as well as companys culture and symbolic values of the company. Since for the external marketing it is highly important to have optimal combination and coordination of sales and distribution activity, in internal marketing it is important to shape adequate surrounding. The number, the structure, and the hierarchical level of
Done, Domazet 55
workplaces, on one hand, and delegation of rights and responsibilities on the other, will create the environment that should enable successful business on internal and external market. Researchers conducted in the US, questioning What the employees desire? have a dominant answer Open communication (Lings and Brooks, 1998, p. 330). In those researches salary is ranked 16th. When the examinees are asked why they want to quit, common answer was that they want an acknowledgement for their contribution, and not to feel as they are working in the vacuum. Communication as an internal marketing mix element implies flow and information sharing. This information can be transmitted via: company journals, direct mailing, video presentations of new skills and practices, and a like. Information is transferred in order to increase employees level of consciousness, so that they can act in accordance with demands set by the company. The goals of internal communication can include (Domazet, 2011, p. 270): communication and analysis of arguments pro change, motivation of employees (communication meaning that employees concerns and interests are observed and included in new practices planning), motivation of employees and mediators to accept the significance of the change, education and training of employees for new practices, admonishment of all employees in respect to requirements and implemented changes, Q&A and problem solving, Feedback. Internal communication and promotion are successful in introduction of employees with the facts regarding to what is expected in business performing. In this way, each employee has clearly determined role in the company. Stauss and Hoffmann are differentiating communication goals depending on desired influence on knowledge, attitudes and behavior of employees (Stauss, Hoffmann, 2000, p. 145). If the goals are related to knowledge, the
communication has the purpose to inform the employee (for example regarding to consumers/clients demands, product/service attributes, and a like). Communication connected with the attitude of the employees is related to, for example, shaping and adoption of the orientation towards the consumer/client. Knowledge and attitudes influence the behavior, and appropriate communication is aimed to accomplishing active, independent engagement into process of solving various challenges.
Figure 3 Communication within the company Golden Triangle

Company
External marketing communication
Advertizing Sales improvement Sponzorship Public Relations Direct marketing Personal sales
Internal marketing
vertical communication horizontal communication
Employee
Interactive marketing
Personal sales Client services centre Sales outlet Services environment
Buyers/clients
Source: Kitchen, 2004, p. 112
Figure 3, apart from two primary communication flows between the company and its clients, shows the third communication flow directed towards internal public (employees), in other words internal marketing. Communication flows directed towards customers/clients include the following:
Done, Domazet 57
External marketing communication through advertising, sales improvement, sponsorship, PR, direct marketing and personal sales, one is communicating with targeted clients; Interactive marketing oriented on establishing contact with services personnel and/or services environment with the client and communication is transmitted via personal sales, call and contact centers, the sales outlet itself and services ambient with all its elements. Internal marketing is aiming to enable free communication within the company, as through different levels in organization structure (vertical), as well as various organization departments, or business functions (horizontal communication).
It is extremely important to improve internal communication, namely to ensure free communication within the company through internal marketing, as through different levels in organizational structure (vertical), as well as various organization departments, or business functions (horizontal communication). Internal marketing mix can generate satisfactory results only if the following conditions are fulfilled (Grnroos, 2000, p. 232):

Internal marketing is a part of strategic management Internal marketing program must not be disabled by existing organizational structure, Management of the company must have continuous positive attitude in respect to internal marketing process.
Internal marketing and internal marketing mix elements implementation is in the early phase of development, and it is considered that this area of marketing will experience intensive research and applying in practice in near future. Growing necessity for internal marketing exists due to dominant peoples role in doing business in todays competitive business environment. The presence of transformation of industrial into services activity is growing. The meaning of the service and service know-how have more and more importance since well educated, trained and service oriented employees are the most critical resource that a company needs.
The basis for top-quality business is the investment into high-class employees. Even more companies are delegating responsibilities to higher number of employees in order to build long-term relationship with their clients, thus increasing the necessity for continuous improvement of their task force. New ways of doing business demand that the employees adopt new skills and practices. Numerous enterprises are constantly transforming. Acquisitions, alliances, demerging and taking over occur. All this processes demand continuous communication with employees. Internal marketing concept has been adopted by successful companies, and especially by world leading service enterprises. The best known world enterprise that successfully practices internal marketing concept is The Walt Disney Company. Internal marketing is impeccably functioning in other American companies, such as Delta Airlines, The Marriott Corporation, Dun Bradstreet (consulting), etc. In Europe, we must highlight British Airways, SAS Scandinavian Airlines, Marks & Spencer, and Ericson. Current researches show that the implementation in Europe is not that often as in the US. Nevertheless, these studies indicate that the European examples that have formally shaped internal marketing programs are still relatively inconsiderable. Although the internal marketing implementation in Serbian companies was not the subject of systematic research, occasional data collected in respect to the level of its application, point out that there are numerous activities that by their nature respond to internal marketing (for example: employee training, election and remuneration of best employees, remunerative impetus trips, etc.). Those activities are commonly planned and conducted without formal internal marketing plan, and usually are a part of a human resources management practice within the company.
INTERNAL MARKETING ACTIVITIES

Selection and motivation of appropriate personnel, as well as maintaining long-term relationship with them, represents the basis for internal marketing installation. Integral process starts with the selection and choice
Done, Domazet 59
of appropriate staff. Selection criteria are knowledge and skills that the potential employees possess, their willingness to educate and progress together with the organization, as well to adopt its goals. To that effect, the development of internal marketing strategy includes three-stage approach (Egan, 2004, p. 164): 1. Create a business environment that promotes safety of employees; 2. Designing organizational structure and lines of communication with no functional barriers; 3. A clear vision of the internal organization by top management. The company should create a business environment where the employees will feel safe. In this way the company demonstrates its commitment to human resource development and creating conditions for proper com munication with employees, including the creation of organizational structure in which the functional barriers are cleared. A good way for effectively erasing functional barriers of employees and managers is organizing various trainings for promotion of team spirit (Team building), which quickly removes the distance between managers and employees. The main task of these meetings is to present and solve potential problems without the pressures associated with the function of the company. The profitability of a company depends on a company's ability to continuously adjust to the dynamic and competitive environment. Hence, the entire company's development strategy must incorporate high-class internal marketing strategy whose main activities are:

Education of employees in order to adapt to the changing environment; Concern and motivation of employees; Creation of team spirit through the promotion of mutual interaction and Development of appropriate infrastructure in order to avoid barriers to internal marketing communications.
Todays conditions have forced companies to harmonize their business with innovations, if they want to keep pace with market processes. One of
appropriate ways to follow trends of the modern world is the continuous education of employees. Education is indispensable in hiring new staff, while introducing new products or services, or while introducing any innovation in the company's operations, because it contributes to improving knowledge and performance of employees and their productivity. Particular importance is education of employees in the process of accepting new technologies. Development and application of new technologies are reflected through increased effectiveness in communication and execution of tasks in the internal environment, but also by increasing the effectiveness of the process of developing good long-term relationships with customers. The success of the company in a competitive market largely depends on the extent of finding the optimal integration of new technologies, but also the creation of appropriate ways for overcoming employees resistance, which is a priori present when introducing new technologies related to work performed by employees. Most of the companies have educated their employees and thereby reduced resistance to change and trained them to use new technologies in performing their daily tasks. In doing so, companies have pursued different strategic approaches and tactics. One of the most successful internal marketing tactics is to include training, with the aim to encourage formal and informal communication, while at the strategic level internal marketing expands to a wider acceptance of management styles and personnel policies that promote employees, customer services training and planning procedures (Egan, 2004, p. 164). Studies that develop investment models in the areas of employees performance, if implemented properly, result in companys profit growth. The results of studies that have focused on the impact of training on ROI (Return on Investment) were an increase in productivity of 17% and achieving long-term relationship with a company of 14% (Trust Technology Solutions). However, if we want the results of implementation of these models to be even better, through the concept of internal marketing, it is necessary to incorporate interactivity, as basic determinant of direct communication of managers and employees. The reason is simple - a traditional internal
Done, Domazet 61
mass marketing practices (distribution of companys newspapers and other information in writing within a company) become insufficient, since they do not communicate with staff in a proper way, and therefore it is necessary to add a social dimension in the interaction with employees (Gummesson, 2003, p.198). Concern for employees and motivation of employees by the companys management directly, determines creation of long-term relationships between the employees and management, and are thus an important dimension of the entire management process. The main task of any manager is to continuously analyze the environment, correctly anticipate development trends and to guide the company in step with changes in it. Hence, the role of manager implies the identification of the maximum interest arising from cooperation between the organization, its employees and external environment. As an important factor for success during the process of cooperation, excels the emotional intelligence of managers. Emotional intelligence is the ability to recognize feelings, their clear identification, and understanding, ability to control and use to express thoughts. In this regard, the importance of emotional intelligence of managers in business and everyday stress situations, or the decision making process is understandable. The involvement of managers in solving problems of employees, their empathy, increases the motivation and loyalty of employees. Expression of empathy, along with the knowledge and skills, is of particular importance in contact between employees and customers. Show genuine interest and involvement in a friendly conversation with people you might meet, represents so called emotional effort (Zeithaml, Bitner, 2003, p. 322). To reach employees with these skills, organizations should carefully select people who are able to bear emotional stress, but at the same time conduct trainings towards acquiring the necessary knowledge and skills. Managers, at which a high degree of emotional intelligence is present, are able to motivate others in the organization. Such a mode of communication between managers and employees, combined with properly created system of mutual interactions, significantly improves the quality of business environment.
Enhancing mutual interaction and communication reduces the risk of potential conflict between employees at a minimum, but also acts preventively in terms of reaction to potential problems among employees. The business environment in which all employees will feel well and do their best as a team, can cause an increase in the quality of delivered products and services, whose customers are satisfied with the purchase and as such potentially loyal to the organization. In this segment of internal marketing resides an evident cause and effect relationship between employees and customer satisfaction, since the team effort investment in improving the quality of provided services is the purpose of internal marketing activities. To make these activities produce a synergistic effect, it is necessary that all employees, including all levels of management: be loyal to the company, that there is a high degree of mutual trust and to believe in the quality of their products. If your employees are at the same time consumers of products that are being produced or sold, their effect in contact with external customers will be higher. Then, we might call the company employees internal clients. Moreover, if the employees are loyal to the company, they will be the best promoters of their surroundings, thus the value of propaganda "by word of mouth" would came to the fore. If the company takes care of employees outside business environment as well, and if it understands and meets their individual needs, the impact of loyalty will not fail. In addition, it is important that the employees can trust each other, and especially their superiors. Mutual support in performing business tasks can create an atmosphere where there will be less conflict, or will they, if they occur, be quickly resolved. A proper system of rewards and sanctions, the effective exchange of information in the function of acquiring knowledge and information, and treating employees as the most valuable resources are key factors for achieving the effectiveness of internal marketing. The internal marketing is a concept that works as a system, so it is necessary that the elements of the system produce the appropriate synergetic effect. Consequently, it is necessary that all activities are synchronized to the positive influence on satisfaction and employee loyalty. The basic
Done, Domazet 63
condition for the coordination of activities is to establish effective information exchange system that would improve internal communication between the marketing staff at all levels (the vertical and horizontal basis). Possible barriers of internal marketing communications are (Wright, 2004, p. 374):

Unawareness of the highest management level of their strategic importance, Lack of formal or informal strategic approaches, Lack of communications system, Bureaucratic structures and a like.
In order to improve the final effect of all internal marketing activities, it is necessary to bear in mind the potential limitations, especially in the field of internal communications. Tool that can simplify and speed up communication is provided in the form of new information and communication technology (ICT). Managers and employees who have the knowledge of information and ICT have the chance to progress faster than the others. Continuous improvement of business procedures in accordance with the progressive development of new technologies enables companies to establish effective internal communication. In this way it is possible to prevent potential conflicts in the field of internal communication and also promote activities that constitute an internal marketing. In addition, internal communications systems set in this way present a solid basis for developing effective communication with customers.
INTERNAL MARKETING AND CUSTOMER SATISFACTION

Internal marketing is aimed at improving employees satisfaction, which will, through increased company loyalty, impact on customers satisfaction with whom they are in direct or indirect contact. Hence, employees should be informed about the company offerings, but also to understand the business mission, goals, strategies and organizational processes. According to Gummesson, internal marketing has emerged from the service marketing and its purpose was to influence the personnel in interactive contact with customers/clients (i.e. first-line employees) towards better
management of the business portfolio and the manifestation of greater autonomy in dealing with customers/buyers. In services industry, delivery channels are shorter, and the buyer is usually in direct contact with service providers (producer of service). The services are inseparable from the service and cannot be stored, so it is very important that the service provider is satisfied his task and the conditions he operates in. Employees are promoters of their company even when away from their jobs, so their behavior in public may affect the company's image. Employee satisfaction affects customer satisfaction (Little, Marandi, 2003, p. 123). If the employees believe in what the organization does and means, they are motivated to work harder and their loyalty to the organization is grater (Bradley, 2004, p.7). In the external environment, the outcomes of implementation of customer retention strategies are directly dependent on their satisfaction with product/service. In the internal environment, employees retention depends on their job satisfaction and the quality of internal services. The positive correlation between these dimensions implies the implementation of various activities that should be organized and coordinated in order to achieve continuity. If one dimension is not displaying properly, activities carried out further will not make any sense. This is the reason why there is no evidence that there is causality between employee- and customer satisfaction (Egan, 2004, p. 165). In other words, employee satisfaction alone is not sufficient. However, if properly directed and if it refers to the work environment in which a quality product/service is created and delivered, it can be a factor in customers satisfaction and loyalty and, consequently, greater profitability of the company. The basis for linking employee satisfaction and satisfaction and loyalty of customers/clients and, consequently, making profit, is shown using the service-profit chain that is basically the same as a positive feedback and employee satisfaction as shown in Figure 4. Dependency between satisfaction and loyalty of employees, and customers satisfaction, shows a positive feedback loop, because the profitability increases if there are more loyal customers, which means that we should make special efforts to maintain good long-term relationships with
Done, Domazet 65
existing customers, and to the direction of expanding cooperation. Also, customer loyalty increases if they are satisfied, and their satisfaction is even higher if the quality of service is above their expectations. This value will be delivered only by employees who are satisfied and motivated, and who know their job well.
Figure 4 Circle of employees and customers satisfaction

Satisfaction of employees Carefulness of employees Productivity of employees
The quality of internal services
The quality of external services
Productivity and growth
Loyalty of employees
Satisfaction of clients
Source: Adapted on Zeinthaml, Bitner, 2003, p. 320
The service profit chain illustrates the relationship between internal services quality, satisfaction of employees, their productivity, the value of services provided to customers and ultimately the satisfied clients, maintaining long-term relationships with them and profit. The essence of their explanation rests on the following points (Zeinthaml, Britner, 2003, p. 229):

Hire the right people; Retain the best people (reward high-class and professional staff); Educate employees to deliver best quality services (trainings for technical and interactive skills); Promote team work; Provide the necessary support systems by measuring the quality of internal services and to provide supporting technology and equipment; Develop internal employee-oriented processes.
Considering the above stated, internal marketing can be defined as a set of management activities conducted to ensure conditions for the delivery of quality services through activities related to recruitment, training, motivation, remuneration of staff and provision of modern equipment and technology (Zeinthaml, Britner, 2003, p. 230). As the concept of internal marketing includes the activities listed in this definition, there is an evident connection with the quality of employees that comes in the form of products/services delivery, or the advancement of their knowledge and skills. On the other hand, the quality of the offer defines customer satisfaction and his willingness to become loyal and, as such, valuable for the organization. However, in addition to quality of the offer, there are several factors that can affect customer satisfaction. One of the most important relates to the perception, and preformed expectations of the customer. If expectations are greater, the less likely that the customer will be satisfied and vice versa. Therefore, the process of customer relationship management (CRM) should be used as a tool to comply the planned product quality with the customers expectations. In other words, customers perception that depends exactly on their expectations, results in customers satisfaction.
THE ROLE OF CRM

CRM involves the concept of capability, methodology and technology that allows the company operates through improved customer relationships. The purpose of CRM is to enable more effective (and efficient) implementation of companys goals through a more analytical review of real customers needs. CRM is focused on creating and maintaining long lasting relationships with customers. Although there are several commercial CRM program packages on the market that support the CRM strategy, it is not technology itself, but a fundamental change in organizational philosophy whose emphasis is on the consumer. These program packages, namely the development of appropriate software and hardware, enable that CRM system becomes largely automated process, with a mission to provide not only information but also to serve as an important tool for decision making and the market analysis. However, successful CRM strategy cannot be implemented simply by installing and integrating a software package and cannot be implemented overnight. The changes are necessary at all levels, including corporate policy, training of
Done, Domazet 67
employees, marketing systems, information management and the like. This means that all aspects of business must comply with the principles of CRM (Domazet, Zubovic, 2007, p. 83). CRM represents the alignment of business strategy, organizational structure and culture of the company, customer information and information technology, in order that all contacts with clients meet their needs and achieve business benefit and profit. Client's business strategy that sets the client in the center of business activities provides the answer to a question that many companies often cannot answer how many clients do they have and which of them are really profitable. The effectiveness of CRM processes, which should be integrated throughout marketing, sales and customer relationships, includes (Domazet, 2010, p. 197):

Identification of factors that contribute to a successful relationship with customers, Development of customer relationship practices, Development of processes that will serve the customers, Formulating questions that would most appropriately help in solving potential customer issues, Suggesting solutions for customer complaints regarding to product/service, Tracking sales and customer support.
CRM model could be applied in the internal environment as well, but then it would comprise modified activities of the bid value, segmentation, targeting and positioning, the system of business operations and delivery, metrics and feedback, external and internal market (Figure 5). By the selection and hiring of employees, the organization creates the right foundation for growth and development, continuously identifying new processes for the maximal utilization of personnel potential. Internal marketing as a concept that links employee satisfaction, their commitment to the organization, together with improvement of business expertise and skills, and consequently customer satisfaction and loyalty, points to the necessity of creating individual relationships with them in order to establish attractive work environment.
Figure 5 CRM chain

INTERNATIONAL MANAGEMENT (Internal planing of marketing, culture, climate and employee loyalty)
-Segmentation, targeting and positioning -Costumer preferences identification -Sectoral profitability analysis -Creation of package values
Business operations system and delivery -mass adapting -partnership -process reengineering
Measuring and feedback -process review and consultancy -costumer satisfaction studies on product / services -employee satisfaction studies
EXTERNAL MARKET MANAGEMENT (External planing of marketing, CRM)
Source: Adapted on Lovreta et al. (2010, p 180)
Analogous to strategies in an external environment that consists of a wide variety of customers, companies need to create a personalized relationship with their employees, in order to get to know their range and utilization of their potentials towards developing a working environment that will, together with the promotion of human resources, profitably meet the needs of customers/clients and the thus achieve raison de vivre of each company the profit. CRM concept can significantly improve the relationship with customers, but also internal communication within the company. Fundamental requirements for successful implementation of CRM include: appropriate business skills and competition intelligence; understanding of end consumers in depth, market way of thinking, synchronized company behavior an integrated approach to managing channels of communication, sales, and database development. These assumptions form the basis of a conceptual framework for developing the CRM strategy (Payne A, Frow P. 2005, p.171). Here, one must emphasize and recapitulate that CRM process includes: defining bid value, segmentation, targeting and positioning, operations and delivery systems, measurement and feedback, external and internal market as shown in Figure 5.
Done, Domazet 69
This process requires strategic approach in its implementation. Possibly the most adequate strategic approach to organizational design was given by Mack et al. (2005) in which they organized the elements of a successful CRM strategy into a Diamond framework as presented in Figure 6. It focuses on vision and basic business activities as key factors for successful implementation of CRM.
Figure 6 - CRM diamond

CRM-Activities CRM-Activities Customer Segmentation Customer Transaction Mgmt. IT/ Systems Customer Inteligence Mgmt. Customer Product/ Service Mgmt. Customer Lifecycle Mgmt. Customer Valuation CRM Guidelines
CRM-Basis
Organization
CRM-Vision
Culture
Source: Adapted on Mack, Mayo and Khare (2005, p. 100)
Buttle (2001) presented The CRM value chain (Figure 7) as a proven model which businesses can follow when developing and implementing their CRM strategies. The model is grounded on strong theoretical principles and practical requirements of business. The ultimate purpose of the CRM value chain process is to ensure that the company builds long-term and mutually-beneficial relationships with its strategically-significant customers. Not all customers appertain onto this group of customers. Indeed, some customers are simply too expensive to acquire and service. They buy little and infrequently; they pay late; they make extraordinary demands for customer service and sales resources; they demand expensive, short-run, customized output; and then they defect to competitors.
CRM value chain refers to primary and secondary activities in the process of creation of long term relationships with customers, in order to achieve higher level of their satisfaction as the basis for long-term loyalty. Five primary activities in the CRM value chain include: 1. Customer portfolio analysis analysis of the customer database aiming to offer different products to them (cross sales). 2. Customer intelligence activities in respect to understanding individual or groups of consumers and setting up database accessible to all stakeholders whose decisions and activities may affect the attitudes and behavior of consumers. 3. Networking building a strong relationships network with employees, suppliers, partners and investors who understand the requirements of target consumers. Central role in the model is reserved for customers, who are surrounded by other elements: suppliers, owners, investors, employees, and partners. Management and coordination, according to these elements, can ensure the structuring, communication and delivery of preferred products to customers. 4. Development of products/services value development of proposals which are creating value for the customers and the company. 5. Managing relationships with customers with a focus on structures and processes. Supporting activities are aimed at: culture and leadership, procurement processes, Human Resources, data management process and company organizational design. There are different approaches for defining what necessary elements are needed for successful implementation of CRM strategy. According to Zubovic, Bradic and Dzopalic (2010) fundamental requirements for creation of high quality CRM models are:

Customers satisfaction and loyalty Data protection Business intelligence tools Enterprise resource planning Creation of integrated business systems.
Done, Domazet 71
RECONSIDERING THE MOTIVATION FOR CHANGE

Any strategy in management and marketing must be built on a permanent and full compliance fund with specific labor market. Without proposing any comprehensive overview of issues involved, consider the following significant components: uneven, inconsistent and segmented elements which are limiting flexibility and labor factor mobility; rigid, sensitive and prone to conflict confrontation between supply and demand occurs with direct involvement of the main carriers of interest - employee, employers and the state, things which determine the presence of some restrictions of economical, social and political nature; equilibrium price, namely salaries are determined by the reduction of the supply accepted because a priority is to maintain and sometimes to increase the wages, even if it determines certain inconsistencies in the sphere of profitability and competitiveness; it is a market where intervention elements are based on direct participatory democracy foundations that do not exclude the occurrence of elements from the dictates area; it is the market that has the most domestic and international regulations, which gives the status of an imperfect market. (Done I, 2000, p. 22 ) Obviously, any marketing strategy aims to create and to maintain the balance between different markets and focus on harmonizing specific elements. In this context, giving the fact that labor market is "the active and the decisive factor of any production," it requires respecting specific priority. Not accidentally the labor market is presented as a "sphere of consequences", while other market influences are found in the "sphere causes". For example, it is enough to think that the employees cannot spend money on consumer goods if they didnt sell their labor force for a sufficient wage, and the producers will not make any hiring unless they have sold or contracted a physical production, which by selling it ensures the expenditures recovery and economical profit. (Gilbert Abraham-Frois, 1994, p.304)
A marketing strategy that aims for the harmonization of human needs, under the existing economical and social imbalances, has to pay a particular attention to moral motivation, especially cultivation of behaviors that ensure the fundamental human rights. In this context, it is essential to stimulate fundamental economical correlations, particularly the correlation between production and consumption, between the temptations of consumerism, the ostentatious and potential recovery of themselves in the factors of production. Life has shown that when people are strongly and positive motivated by the values and the nonconsumiste sources, they are less inclined to consume more than what is normal and they are willing to help and support those who have problems. This strategy is known as "voluntary simplicity." (Amitai Etzioni, 2002, p.98.) Although the position of various states in ranking happiness and wellbeing are not identified and not sufficiently correlated with GDP per capita level, studies show that the real motivation for performance is conditioned by the existence of a functioning and competitive market economy. Anyone who would establish a state economic policy in transition economies, as in Romania and Serbia, and wants to join the European Economic Area must be based on the fact that, from the six criteria of convergence of the European community of values, four are being related to human factors: work is a strong cultural value as pleasure; increasing the value of multiple social relationships (friendship, partnership, voluntary association etc.); orientation towards global self; foreshadowing quality of life as a new religion.
CONCLUSION
Application of new technologies in all aspects of business require that companies and employees continuously acquire new knowledge and skills, where building of a learning organization is the key of long-term market success. The goal of internal marketing is to focus attention of employees on internal activities that need to be developed, maintained, and promoted for the purpose of business and strengthening competitiveness of the company on the external market. In this context, implementation of
Done, Domazet 73
internal marketing aimed at continuous improvement of the quality of employees, their motivation and satisfaction is crucial to create a highly competitive and progressive companies. Therefore, internal marketing as a concept focuses on the impact and importance of human resources management, because the attraction and selection of competent personnel who are also willing to grow along with the company, is the basis of successful business. Employees are willing to take initiative and identify their goals with corporate goals if there is concern about the company's employees who are educated, motivated and progressing continuously. An organization's ability to take care of employees depends on recognizing the importance of the concept of internal marketing, but also of the level of development of emotional intelligence of managers. In fact, from the managers point of view, internal marketing influences the development of organizational competencies and improve business performance through the implementation of marketing as a philosophy focused on the external business environment, and human resources, that are the most important instrument for implementing strategy and achieving company goals. This concept includes a well-established and implemented system of education, motivation and stimulation of employees as the basis for their loyalty, without which the management of the company cannot expect optimal results after applying the concept of internal marketing.
REFERENCES
1. 2. Amitai Etzioni (2002), Monochrome Society, POLIROM, Iai Baker B.E, Huselid M.A, Pickus P.S, and Spratt M.F (1997) HR as a source of shareholders value: research and recommendation. Human Resource Management Bradley B, et al. (2004) Exploring the Linkage between Internal Marketing, Relationship Marketing and Service Quality: a Case Study of a Consulting Organizations, Rutledge, Total Quality Management, Vol. 15, No. 5-6, pp. 593-601. Domazet I. (2011), Uloga internog marketinga u unapreenju kvaliteta ljudskih resursa, tematski zbornik Aktivne mere na tritu rada i pitanja zaposlenosti, Institute of Economic Sciences, Belgrade. Domazet I, Zubovi J. (2007) CRM (Customer Relationship Management): A factor of global competitiveness improvement, in the thematic proceedings
3.
4.
5.
74 Improving the Quality of HR by Implementation of Internal Marketing book Management and marketing under globalization, Faculty of Economics, Belgrade, Serbia. 6. Domazet I. (2010)Integrisane marketing komunikacije finansijskih organizacija doctoral thesis, Beogradska Bankarska Akademija, Fakultet za bankarstvo, osiguranje i finansije, Beograd. Done I. (2000), Salary and Work Motivation, EXPERT, Bucharest Done I. (2009), Problems and economic challenges of transition, EXPERT, Bucharest Done I., Moroianu N. (2004), Comparative Economics, INDE UPG Ploieti and PARIS-XII Val de Marne, Ploieti
7. 8. 9.
10. Egan J. (2004) Relationship Marketing, PrenticeHall, Harlow. 11. Gilbert Abraham-Frois (1994), Political Economy, HUMANITAS, Bucharest 12. Gronroos, C. (2000) Service management and Marketing: A Customer Relationship Approach, 2nd edition, John Wiley&Sons, ltd. Chichester. 13. Gummesson E. (2003) Total Relationship Marketing, Burlington (MA), Oxford. 14. Jobber, D. (1995) Principles and Practice of Marketing, McGraw-Hill, Berkshire. 15. Kitchen, P. (2004) Integrated Marketing Communications, Routledge, New York. 16. Lings I, Brooks R. (1998) Implementing and Measuring the Effectiveness of Internal Marketing, Journal of Marketing Management, 4 (14). 17. Little E, Marandi E, (2003) Relationship Marketing management, Thomson Learning, London. 18. Lovreta, et al. (2010) Menadment odnosa sa kupcima, Data Status, Beograd. 19. Mack O, Mayo M and Khare A. (2005) A Strategic Approach for Successful CRM: A European Perspective, Problems and Perspectives in Management, 2/2005. 20. Payne A, Frow P. (2005) A Strategic Framework for Customer Relationship Management , Journal of Marketing Vol. 69 21. Saad M, Ahmed P, andRafiq M. (2002) Internal Marketing: Using MarketingLife Approaches to Build Business Competencies and Improve Performance in Large Malaysian Corporations, Asian Academy of Management Journal, Vol. 7, No 2, pp. 27-53. 22. Stauss, B. andHoffmann, F. (2000) Minimizing internal communication gaps by using Business Television, London/New York. 23. Trust Technology Solutions (2011) Calculating the Return on Training, available on
Done, Domazet 75 www.irisconsulting.com.au/PDF's/Calculating%20the%20Return%20on%20Tr aining.pdf , accessed on 16.2.2011 24. Wright R, (2004) Business-to-Business Marketing, PrenticeHall, Harlow 25. www.crm2day.com/library/50055.php, pristupljeno 20.8.2011. 26. Zeinthaml V.A. and Bitner M.J (2003) Services Marketing: Integrating Customer Focus across the Firm, McGraw Hill, New York. 27. Zubovi J, Bradi-Martinovi A, Dzopali M. (2010) Effective implementation of e-CRM strategy, Polish Journal of Management Studies 1(1), pp. 52-62. 28. Zubovi J, Domazet I, Bradi-Martinovi A. (2011) Educational and training model for implementation of E-CRM strategy, in thematic monograph entitled Serbia and the European Union, Facultade de economia Universidade de Coimbra, Portugal, 2011, pp. 358-382.
Chapter 4
ESPECIALLY VULNERABLE GROUPS IN EU AND SERBIAN LABOUR MARKET

Jean Andrei, Saa Stefanovic Abstract: The paper analyzes the situation of especially vulnerable groups
both in EU and in the Serbian labour market. They include Roma as particularly vulnerable ethnic minority, refugees and displaced persons from Kosovo and Metohija (IDPs) and people with disabilities. The results of the analysis indicate that the position of these groups is particularly disadvantaged since their unemployment rate in Serbia is significantly higher than among the general population. It turned out that the high unemployment and low employment activity rates are the main causes of extreme poverty among the Roma and Romani women which are particularly affected by the problem of unemployment. The population of refugees and IDPs is different than in the general population of Serbia primarily in higher participation of self-employed and lower participation of persons who share the status of unpaid family members. Unemployment rate of persons with disabilities is close to the level of average unemployment rates due to high rates of inactivity. Roma and people with disabilities belong to category of highly vulnerable population, as long as the refugees and internally displaced persons belong to moderately vulnerable population. Due to the lack of data we could have not determined a solid indicator of change in their position during the economic crisis.
Keywords: Labour Market, Especially Vulnerable Groups, Unemployment JEL classification: J78, J82
78 Especially Vulnerable Groups in EU and Serbian Labour Market
INTRODUCTION1
As defined by the International Labour Organization (ILO, 2011) vulnerable employment includes self-employment (the owners of enterprises, shops, self-employed and farmers) and helping household members. This indicator should point out the employment in insecure jobs, often in the informal sector, with low wages, low productivity, low levels of safety, poor working conditions, and it is not uncommon that these are the jobs without basic health and social security. In the context of the economic crisis emphasis, the labor market is one of the most affected elements from both of the national and European economic structure, by being the most resistant to the changes required for adapting to the new economic context and also by the nature of the structure of the relations it incorporates. Reducing the economic activity has a direct and explicit effect on the number of employees engaged in production structures, heavily contributing to lower income and therefore to the standard of living. As it was noticed in an European Commission document (COM, 2010, 682), the current economic crisis has dramatically reduced the labor employment in the European Community by up to 69%, and also significantly contributed to rising the unemployment, this phenomenon reaching by 10%. The stabilization of the labor market began in 2010, under the uncertain conditions where the employment rate was very high and after many efforts it will be expected around 75% in perspective of 2020, which means, an average increase of this rate with at least 1%. Increasing labor employment can be a viable way of reducing social exclusion for some classes of individuals if we consider that the income from work in modern economies has the highest share in family budgets. Considering this situation, figure 1 presents the projected employment levels by broad categories of occupations and education attainment level, EU-25 in 2020 perspective.
1
This paper is part of research project the Challenges and prospects of structural changes in Serbia: Strategic directions for economic development and harmonization with EU requirements (project number 179015) funded by the Ministry of Education and Science of the Republic of Serbia.
Andrei, Stefanovic 79
Figure 1 - Projected employment levels in 2020, by broad categories of occupations and education attainment level in EU-25
Low level of education attainment High level of education attainment Elementary occupations Skilled manual occupations Skilled non-manual occupations High-skilled nonmanual occupations 0 10 20 30 40 50 60 70 80 90 100 Million jobs Medium level of education attainment
Source: according to Cedefop (2008) estimations and COM(2008) 868 final
According to some forecasts (Cedefop, 2008), in terms of employment level, considering the categories of occupations and education attainment level, the situation is favorable for those with secondary education level. A low professional training and a high professional training can be the causes of exclusion in the current labor market, depends how the phenomenon is perceived. So the risk of job loss is much higher for those with a low level of training. A high professional training often generates incompatibilities with the production structures and systems. The level of professional training turns into growth factor of labor market exclusion for those who fail to adapt to the conditions of training and adaptation to production structures. According to the European Commission (COM (2008) 868 final) in the 25 EU Member States, without taking into account the new states accessed into Union in 2005, for the period 2006 -2020, the proportion of jobs involving a high level of training should grow in 2020 by at least 6%, respectively from 25.1% to 31.3% of the total. A slight increase is recorded in the case of intermediate-skilled jobs, respectively from 48.3% to 50.1%.
In absolute terms this situation describes about 38.8 respectively 52.4 million high-level and medium-level jobs. Although the number of jobs is estimated to have increased by 135% in 2020 perspective, the prospect of unemployment is quite high. If we add to these the low level of wages we get the image of a process by which current employees can easily turn into potential unemployed. Going further, the same European Commission (COM (2008) 639 final) states that for those who can work, getting a job is the safest route out of poverty, but this should be limited to issues related more to economic growth and the level of employment than to the policies promoting active inclusion in the labor market. In this sense long-term unemployment still grows up to 3% and 16% of the population is at risk of poverty and one in five people lives in poor conditions or extreme poverty. Enlightening for this situation is the analysis of the indicator in-work at-risk-of-poverty rate. According to Eurostat methodology in-work at-risk-of-poverty rate represents the share of persons who are at work and have an equivalised disposable income below the risk-of-poverty threshold, which is set at 60 % of the national median equivalised disposable income (after social transfers). Table 1 presents the evolution of this indicator at EU level in 2005-2010. The data in the table presents the incomes disparity in the case of the employees is kept constant throughout the period analyzed. Thus in the case of EU-27 it varies around 8.3%, instead for the EU-15 Member States, although this rate has registered a slight increase, the situation tends to balance. In the case of EU-12 which represents the wave of the 12 new states entering the EU, the situation is dramatic. The risk has significantly increased, over the European average, exceeding the psychological threshold of 10%. The most difficult situation is in the case of Greece, Spain, Poland, Portugal and Romania. The difficulty in finding a job and the fear of unemployment are just some of the elements which lead to a docile behavior of the employees and their compliance to personnel policies promoted by companies, which most of the times taking advantage of this situation impose on the market low levels of wages or promote employment with minimum wage. Companies are in this respect the greatest beneficiaries of this situation, frequently
promoting employment policies and staff remuneration at lower limit of the formal regulations regarding the labor market. Although the measures to combat discrimination on the labor market have increased, and the state promotes active legislative and financial measures that stimulate employment of people of 45 years old and older, of young people, retraining, provides incentives for the companies which create new jobs or employ persons with disabilities, the effects are very hard to measure and often take a long time to be put into action.
Table 1 In -work at-risk-of-poverty rate

Country /Year EU -27 EU -15 EU-12 Belgium Bulgaria Czech Rep. Denmark Germany Estonia Greece Spain France Italy Hungary Malta Austria Poland Portugal Romania Slovenia Slovakia Finland Sweden United Kingdom Norway 2005 8.2 7.3 11.7 3.9 3.5 4.9 4.8 7.5 12.9 10.4 6.1 8.8 8.8 4.8 6.7 13.9 11.9 4.6 8.9 3.7 5.5 8.3 4.6 2006 8.2 7.4 11.2 4.2 5.4 3.5 4.5 5.5 7.5 13.9 9.9 6.1 9.6 6.8 4.4 6.4 12.8 11.3 4.8 6.3 4.5 7.4 7.8 6.2 2007 8.5 7.9 10.4 4.4 5.8 3.3 4.2 7.5 7.8 14.3 10.7 6.5 9.8 5.8 4.5 6.1 11.7 9.7 18.5 4.7 4.9 5 6.5 8 5.8 2008 8.6 8.1 10.5 4.8 7.5 3.6 5.1 7.1 7.3 14.3 10.7 6.8 8.9 5.8 5 6.4 11.5 11.8 17.7 5.1 5.8 5.1 6.8 8.5 5.4 2009 8.4 7.9 10.3 4.6 7.4 3.1 5.9 6.8 8.1 13.8 11.4 6.7 10.2 6.2 5.7 5.9 11 10.3 17.9 4.8 5.2 3.7 6.9 6.7 5.6 2010 8.5 8 10.5 4.5 7.6 3.7 6.6 7.2 6.4 13.8 12.7 6.6 9.4 5.3 5.9 4.9 11.4 9.7 17.3 5.3 5.6 3.6 6.5 5.3
Source: EUROSTAT (2011)
According to Hernanz et al. (2004) the estimated levels of recourse to social assistance services in the case of countries like UK, France, Germany and the Netherlands varies between 40% and 80%. If we referring to the EU average the reality is much more difficult. Thus a study as Ecorys (2008) or Immervoll et al. (2004) claims that only 18% of the unemployed population is at risk of poverty and benefit from social assistance in these circumstances. The figure 2 presents the evolution of Gini coefficient on inequality of income distribution in EU countries, at the level of the European Community.
Figure 2 Inequality of income distribution in EU countries The evolution of Gini coefficient in 2005-2010
Source: authors own adaptation based on EUROSTAT database (2011)
The issue of poor employees is one of the most current debated in the global context of European economic relations. The salary is often the only and most important source of revenue for European households. In this context, the minimum wage does not cover through its level the value of the average monthly cost. On the other hand, the unemployment
incensement, labor migration, industrial changes are just some of the factors that significantly alter the economics of labor relations. Both in literature and in European public debate the notion of poor employee is frequently imposed, describing the situation of workers unable to earn an income that would ensure a minimum living standard and thus being in a state of economic dependence they form a social group which becomes more vulnerable to the evolution of the economic environment. In terms of determining a poor employee status we see that the term is ambiguous. If we consider the fact that poverty is defined under a double aspect, the first referring to the activity carried out for individuals employed and the second examining the household, the level of understanding the phenomenon is seriously flawed. According to the definitions provided by literature (Allgre,2008, Ponthieux,2009) and in European analysis documents (Social Protection Committee, 2011), the risk of poverty indicator under employment conditions includes in its analysis sphere all people who had a job for at least seven months of the 12 in the reference period. Thus in the chart below is presented the situation of the indicator Poverty and in work-poverty in the European Union, in 2006. The situation described in figure 3, shows a trend that can be classified at most interesting, from the perspective of the two elements considered - at risk of poverty after social transfers for people in employment and at risk of after social transfers, in the case of the EU member states. The rate of the employees at risk of poverty varies significantly from one state to another with different consequences from one state to another. According to the data presented in the chart above, Greece and Poland recorded the highest values of this indicator for workers, situation which is still present in the case of at risk poverty after social transfer, for general population, with one change of hierarchy in the case of Portugal. Thus, according to the European Commissions records (2008), at the end of 2006, approximately 16% of Europeans were at risk of poverty, and 8% of EU workers were below the minimum threshold of poverty. These values are however dispersed, ranging from 4% in the case of countries like the Czech Republic, Belgium, Denmark, Netherlands and Finland and
13-14% in Poland and Greece. Referring to the causes which created this situation, in the same report (European Commission, 2008), are mentioned the low skill level, precarious jobs, low payment, but also part-time work regime.
Figure 3 Poverty and in-work poverty in the European Union in 2006

Greece Poland Latvia Portugal Italy Luxembourg Lithuania Spain Estonia United Kingdom European Union (EU-25) Hungary Cypru Sweden Bulgaria Slovakia France Ireland Austria Malta Slovenia German Belgium Finland Netherlands Denmark Czech Republic
10
15
20
25
At-risk-of-poverty after social transfers for people in employment At-risk-of-poverty after social
Source: own author adaptation based on Eurostat database, EU-SILC and European Economic and Social Committee, SOC/336
Continuing the analysis regarding at risk of poverty situation, in figure 4 is presented a new component for the same indicator, dispersion around the at-risk-of-poverty threshold. At risk of poverty for those whose cut-off point: 40% of median equivalised income. According to the calculation methodology of EUROSTAT (2011), this indicator shows the percentage of persons with an equivalised disposable income below respectively 40%, 50%, 60% and 70% of the national median equivalised disposable income.
Figure 4 Dispersion around the at-risk-of-poverty threshold at risk of poverty rate (cut-off point: 40% of median equivalised income)
Source: own author adaptation based on Eurostat database 2011
Regarding the evolution of the average level of this indicator we can appreciate that for the period 2005-2010 this is relatively constant across the EU. If we consider the structure of the Member States, based on seniority in the EU, and for the same period, in the case of EU-27, the value of this indicator oscillates around 5.2%, 5.1% for EU-15, the disadvantage is for EU-12 new member states, where the average level of this rate is 6.99%.
Thus at the beginning of the analysis period, in 2005 the highest levels of this indicator were recorded in Poland (9.3%), Spain (7.8%), Greece (7.2%) and Italy (7.1). Levels below the EU-27 were recorded among the new EU states, such as the Czech Republic (2.8%), Hungary (3.1%) and Bulgaria (4%). Five years later, in 2010, the situation is favorable for the latter, the level of this indicator significantly diminishing. The only exception being Bulgaria which recorded a 9.2% rate (164% higher than the EU-27 average).
Figure 5 At-risk-of-poverty rate - Two adults with one dependent child (%)
Source: own author adaptation based on Eurostat database 2011
But if we consider the ability to financially support a family in the classic situation of two adults and one dependent child, the risk of social exclusion and to be below the threshold of poverty is unevenly distributed across the EU. The highest levels and above the European average in 2005 were recorded in Spain, Lithuania, Poland, Portugal and Romania with
range between 14.5% to -16.5%. The lowest levels oscillated between 4.3% in the case of Denmark and 4.4% for Sweden, countries with very well articulated systems of social protection. Five years later, in 2010, the trend is upward; the minimum level is a bit higher and is still registered by the two countries - Denmark (5.9%) and Sweden. The greatest value of this indicator is registered in Spain of 18.2%. The evolution of this indicator for 2005-2010 is shown in figure 5. In the context of the analysis regarding social exclusion analyzed by generalization of the poverty degree, in the literature are frequent references to the recorded material deprivation at the level of households. According to the European Economic and Social Committee (SOC/336/2009) the indicator measures the proportion of people living in households without at least three of the following: 1) ability to cover unexpected expenses, 2) a week of vacation per year, 3 ) ability to pay loans, 4) a meal with meat, chicken or fish at least once every two days, 5) a properly heated home, 6) a washing machine, 7) a color TV, 8) a phone, 9) a personal car. The figure 6 presents the Material deprivation in the EU Percentage of people living in households that lack at least three of the listed elements for the year 2006.
Figure 6 Material deprivation in the EU Percentage of people living in households that lack at least three of the listed elements (2006)
60 50 50 41 40 31 30 23 20 10 3 0 DE FR GR FI IE EE DK UK HU IT SE ES BE PT SI NL LU CZ CY AT SK PL LT LV 8 10 10 10 11 11 13 13 13 18 14 14 20 20 36 38 44
Source: own author adaptation based on Eurostat database, EU-SILC and European Economic and Social Committee, SOC/336
The highest levels of this indicator are recorded in countries such as Latvia (50%), Poland (44%), Lithuania (41%) and Hungary (38%), which are part of the new EU member states. We can say that the indicators level through which are considered the materials shortages, or at least their perceived level, for the former communist states is high, as a result of evolution and economic constraints to which the population was subjected over a long period of time. Some of the limitations of the indicators (ILO, 2011, p. 21-22) are:

Employees for pay may also be exposed to great uncertainty and economic risk, Unemployed are not included, although they are vulnerable, Persons who fall into the category of vulnerable employment dont need to be exposed to high economic risk and vulnerability, especially in developed countries.
Despite these limitations, it is argued, vulnerable employment can serve as an indicator of informal employment, especially in less developed countries and regions (ILO, 2010, p. 18). According to the data and estimates of the International Labour Organization (ILO, 2011) in the world, about half of total employment related to vulnerable employment (between 49.4% and 52.8% in 2009). Under the vulnerable groups in the labour market are considered the working age population groups whose position on key indicators of labour market (employment rate, unemployment rate, activity rate, the share of vulnerable employment) substantially less favorable than the corresponding average values for the total population of working age. The population groups identified as vulnerable in the labour market in Serbia (Ministry of Labour and Social Policy, 2005; Arandarenko, Nojkovi, 2007, Krstic et al., 2010; Krsti, Arandarenko, 2010) include: women, youth (15-24 years), older working-age persons (50-64 years), uneducated, and rural dwellers (especially in South Serbia and those who do not own land), and particularly vulnerable groups - Roma, refugees and internally
displaced persons (IDPs)and people with disabilities, whose position is the subject of this paper. Their characteristic is that they make a relatively small group, and their disadvantage in the labour market is closely linked to long-term or permanent state of social exclusion. This paper analyzes the vulnerability in the labour market of each of these particularly vulnerable groups using the following key indicators:

Unemployment and/or inactivity rate Employment rate Share of vulnerable employment in total employment.
Due to unavailability of more recent data the analysis of the situation of particularly vulnerable groups in the labour market will be based on the data from the Labour Force Survey (LFS) in 2009and the Living Standards Measurement Survey (LSMS) in 2007, and data from other surveys: the Living Standards Survey of internally displaced persons in Serbia (LSMSIDP) conducted by UNHCR in 2007, Research survey of refugees in 2006 conducted by the NGO Group 484, and data obtained from recent research studies in this area (Krstic et al., 2010; Krstic, Arandarenko, 2010).
POSITION OF ROMA IN SERBIAN LABOUR MARKET

Roma in Serbia are recognized as a National Minority from 2002, and in 2009 the Government of the Republic of Serbia adopted a Nation-wide strategy to improve the situation of Roma and established the Council for Advancement of Roma, which is responsible for the implementation of this strategy and the Decade of Roma Inclusion2. According to the census in 2002 in Serbia lived 108,193 people that declared themselves as Roma (1.44%), while in the same year a survey was conducted in 593 villages inhabited by 201,353 indigenous Roma people and 48,238 Roma IDPs from Kosovo and Metohija (the Ministry of
2
The Decade of Roma Inclusion 2005-2015 is an international initiative to promote social and economic status of Roma integration. Serbia has chaired this initiative in 2008/2009.
Human and Minority Rights, 2009 ). The results from the survey (Government of Serbia, 2011) note that most authors estimate total population of Roma in Serbia to be around 450,000 Roma (about 6% of the total population of Serbia). According to Statistical Office of the Republic of Serbia (LMS, 2009)3 it can be concluded that the situation of Roma in the labour market in Serbia is extremely unfavorable. All the basic labour market indicators (unemployment, employment and activities) among Roma are significantly worse than the overall population. Unemployment rate among Roma is as high as 40.7% (compared to 16.4% of total population). In a particularly disadvantaged position are women and youth members (ages 15-24) of this population, whose unemployment rate is 68.2% and 60.0% respectively. The employment rate of Roma is only 27.8%, compared to the average rate of 50.8%, and again women and youth are particularly vulnerable (the employment rate of 10.3% and 11.1%, respectively). The activity rates of 32.3% for women and 27.7% for the Roma youth are below the average for the total Roma population (46.8%) and significantly below the average total population of Serbia (60.8%). The data also point out to the disadvantage of these two groups of Roma. The picture of a very unfavorable situation of Roma in the labour market is further illustrated by the fact that the share of long-term and very longterm unemployment of Roma are above the average of the total population (74.2% and 66.3%, respectively), and that the share of unemployed with no prior work experience is almost twice as high than among total population, reaching 61%. According to data from the same source, the percentage of vulnerable Roma employment is significantly higher than the total population (46.8%
Survey does not include Roma from illegal settlements (urban slumps), categories that are certainly more vulnerable than the Roma integrated into the basic population.
vs. 28.6%) as a result of almost ten times larger share of self-employed Roma (34.3% versus 3.8% in the general population). As a further illustration of the plight of Roma serve the data from the National Employment Service (NES, 2009) and the monthly changes on the number of unemployed members of ethnic minorities in 2009, according to which 90% of registered unemployed Roma are unskilled workers and have the lowest level of education (i.e. have not completed at least the primary school). Also, broken down by sector of activity (ARS, 2009, ANS, 2007), most Roma were engaged in services and agriculture. We can see the very low percentage of full-time employees in the Roma population of 39%, well below the average for the total population of 88%. A very unfavorable position of this group is illustrates by the fact that almost half (49%) of the employed Roma work as seasonal workers or are temporarily employed (32% and 17% of total employment respectively). According to the National Employment Service (NES, 2010, Serbian Government, 2011b), among the total number of unemployed persons registered at the NES the share of Roma is 1.9%. Looking at the duration of job search, 40% of Roma actively seek for job less than one year. However, the biggest problem is the job quality of employed Roma, which is very low because it is dominated by informal employment. High number of Roma lack adequate education in order to successfully participate in the labour market. Their exclusion from the labour market and non-participation in productivity and income generation results with an annual loss of around 231 million Euros in productivity and 58 million Euros in fiscal contributions (World Bank, 2010) in Serbia. Given the demographic trends and forecasts that the share of Roma in the working population will grow, social integration and employment of Roma would have to be given special attention in the future.
REFUGEES AND INTERNALLY DISPLACED PERSONS

The large influx of refugees and internally displaced persons from former Yugoslav republics and Kosovo and Metohija lead to the mechanical increase in population of Serbia (excluding Kosovo and Metohija), which served to largely offset the natural demographic losses (due to low birth rates) and mechanical outflow of the Serbian population, which was particularly evident in the nineties. These developments resulted in the great change in the ethnic structure of population. The total number of refugees and displaced persons in 2010 amounted to 304,152, out of which 82,603 persons were with a refugee status, and 204,753 as internally displaced persons. In 2010 collective centers were home to 4791 people, out of which there were 1,044 refugees and 3,747 internally displaced. At the same time in the unofficial collective centers there were about 1,600 persons. It is estimated that in private accommodation live around 8,500 very vulnerable refugees, such as chronically sick and people with disabilities (Government of Serbia, 2011). The situation of internally displaced persons (IDPs) in the labour market is extremely unfavorable (Cveji and Babovi, 2007), given that their unemployment rate, according to LSMS-IDPs was 36% which is significantly higher compared to the main population, with unemployment of Roma is less than IDPs (30.1% compared to 36.7%). To illustrate the magnitude of the problem is the fact that 90% of unemployed IDPs (not including the Roma) who previously had jobs, waited for work for two or more years. The data (LSMS, 2007) indicate a somewhat smaller share of long-term (67.7%) and very long-term unemployed IDPs (51%) in total unemployment. Among the IDPs, women (excluding Roma) were particularly vulnerable, given that only 43.2% of women of working age were active, and 22.5% are employed, which is much lower compared with the population of Serbia. The unemployment rate of refugees by SLS was 18.1% and was significantly higher than the general population (13.9%) and significantly less than the study of refugees in 2006, which included the entire
population of refugees (30.6%). The employment rate of refugees according to the LSMS was approximately at the level of employment rate of the total population (53.6% vs. 55.3%), and also very close to the rate of employment for the entire refugee population (54.4%). The greatest risk of unemployment had wives, then persons with the lowest levels of education, and young people (15-24). These categories of refugees integrated in the basic population were significantly more vulnerable compared to the same category of the general population (Babovi, 2007). Participation of long-term unemployed and the very long term unemployed in total unemployment was extremely high, since 83.7% of the refugees sought a job a year or longer and 76.1% sought work for two years or longer. The percentage of long-term unemployed was the same for integrated refugees as well as the general refugee population (83.5%). However, the problem of long-term unemployment was more pronounced among refugees than among the overall population (83.5% vs. 75.1%). More than half of unemployed refugees seek first time employment (56.5%), slightly higher share than in the total population (45.9%). In contrast, the data of the entire population of the refugees say that about a third of the unemployed have never been employed, while 14.5% lost their jobs during the restructuring or liquidation of the company or they just got fired. According to the LSMS, the percentage of unemployed that reached that status because of the termination or liquidation of companies was 56.2% in the general population. This suggests that the refugee population was less affected by the restructuring or liquidation of companies then the general population, due to their lower involvement in markets that had been exposed to these processes. According to labour market status, refugee populations differ, according to the LFS to the general population of Serbia primarily in higher participation of self-employed and lower participation of persons who share the status of unpaid family members. Percentage of vulnerable refugees in employment was slightly higher than the general population
in Serbia (28.6% versus 25%). The data of the entire refugee population indicate a very similar structure of employees by labour market status of refugees as integrated in the basic population. Employees committed 70.2% of total employment, 27.6% self-employed and 2.2% and the integrated refugee population consisted of 71.4% employed, 28.1% selfemployed and unpaid family members were not in this example. Percentage of vulnerable employment in total employment of the entire refugee population was approximately equal to the indicator for the integrated population of refugees (29.8% vs. 28.6%). Comparing the data of unemployment and employment among the vulnerable population of refugees and integrated refugee population, as well as key indicators of vulnerability in the labour market, we can conclude that the integrated refugees were in a much better position in the labour market when it comes to unemployment, and that there were no significant difference in the position of employees, taking into account approximately the same percentage of their vulnerable employment (Arandarenko and Nojkovi, 2007). According to labour market status (Cveji and Babovi, 2007), the population of IDPs is different than in the general population of Serbia primarily in higher participation of self-employed and small businesses owners and the participation of persons with the status of unpaid family members. Percentage of vulnerable employment is slightly lower than the general population of Serbia (22.7% versus 25%). Within the IDP, there are important differences in the structure of employees by labour market status between the Roma (mostly self-employed) and other IDPs. In terms of job protection, IDPs are different than the general population of Serbia with a much smaller share of employees in full-time (58.7% vs. 77.5%), and greater participation of employees in seasonal and part-time jobs. According to the sector of activity, IDPs are different than the general population with a much higher share of employment in services (68.5% vs. 51.6%) and smaller share of employees in agriculture (3.8% versus 19.3%). Within the IDP, there is also a significant difference between the
Roma and other IDPs. Roma were the most engaged in trade, catering and repairs jobs than other IDPs (53.2% vs. 23%). The educational structure of unemployed IDPs is significantly worse than in the general population of Serbia, which makes their employment harder. Participation of persons with education below high school was 36.5%, and the general population that accounted for 21.7%. Also there is a smaller share of unemployed with secondary education compared to the general population (51% vs. 67.6%). Based on the indicators of unemployment and vulnerable employment, we can conclude that the IDP population integrated into general population were in a much better position when it comes to the unemployed in the total population of IDPs, while no significant differences in the position of employees. According to the sector of activity, the largest integrated representation of the population of refugees was in the service sector, more than in the total population (62.2% vs. 51.6%), and in industry (24.2% vs. 29.1%). According to the type of work, refugees were more likely to work part-time jobs in relation to the total population of Serbia, while the share of informal employment of refugees was slightly lower (32.5% vs. 34.9%). Of the total number of refugees registered with NES as many as one third of them are unskilled, while over a half (55% of total applicants) have completed three or four years of secondary school. This educational structure of unemployed refugees is at the level of the total unemployed population (about 30% of the total number of unemployed are without qualifications, and about 50% of them completed some high school). Somewhat more unfavorable structure of the unemployed by level of education can be found among internally displaced persons. About 40% of the total population of IDPs, recorded in the NES, are unqualified, while the largest share of this population (50%) completed secondary school. While the number of unemployed refugees decreased throughout the 2009, the number of unemployed IDPs basically follows a pattern of
movement of the total unemployed population - growth in the first half of 2009, and continued, albeit moderately, and then decline since July 2009. However, the relatively favorable trends in unemployment of refugees can be interpreted as part of a secular process of reducing the refugee population through the integration (with the resulting loss of refugee status), return, or emigration (Krsti et al., 2010).
PERSONS WITH DISABILITIES

According to estimates by the World Health Organization (WHO), the number of people with disabilities in Serbia is about 800,000. Status of persons with disabilities is regulated by a number of legal acts and legal procedures, as well as international conventions ratified by Serbia. Serbia has also adopted the strategy of improving the situation of persons with disabilities (Government of Serbia, 2006), which sets the targets for the period 2007-2015, and its strategic goal is the advancement of people with disabilities to positions of equal citizens enjoying all rights and responsibilities. According to the Living Standards Measurement Survey (LSMS, 2009), the unemployment rate of persons with disabilities was 13.6% and was approximately at the level of average unemployment rate to this survey (13.9%), and as the main reason for such low unemployment rate, persons with disabilities may be considered highly inactive with a rate of 69%. This can be explained by the fact that most persons with disabilities are discouraged to find work. This is indicated by a very small number of people with disabilities who are reported to the National Employment Service. The main reason for high discouragement of people with disabilities to find work is related to the prejudice of employers to recruit these people and their lack of willingness to adapt the workplace to people with disabilities. In addition, there is concern that persons with disabilities will lose the right to social protection when they find a job (Krsti and Arandarenko 2010). The activity rate of people with disabilities is extremely low (31.1% compared to 64.2% in the basic population), regarding that they are the
most inactive group. Also, just over a quarter of the population of working age (15-64 years) people with disabilities are employed. Women, uneducated and elderly persons with disabilities are significantly disadvantaged in the labour market, since their employment rates are significantly lower compared with the average of this group. Although a relatively low unemployment rate does not give a true picture of the extent of the problem of unemployment within this group, we will briefly analyze the basic characteristics of the unemployed actively seeking work (not including the category of discouraged). As with the main population, the highest unemployment rates have women, youth and persons with secondary education. Participation of long-term unemployed in total unemployment was slightly lower compared with the main population (69.1% compared to 75.1%), but still very high. Also, the share of very long-term unemployed in total unemployment is slightly higher than the overall population (64.8% compared to 60.1%). This means that the share of those jobs require between one and two years less than the basic population, and the participation of these groups in the overall employment rate of persons with disabilities is at least (4.3%). The structure of the unemployed, about 86% are persons who were already employed. The most common reasons for staying out of work vary in relation to the total population. The most common reasons for people with disabilities to get unemployed are personal reasons such as illness, education, etc., and retirement which account for 29.4%. People with disabilities stated liquidation of companies as the reason to get unemployed at a much lower percentage (49.2%), which could indicate that unemployed persons with disabilities were relatively less affected by the restructuring process because they were the less integrated part of the labour market that is subject to the restructuring, or that there was no discrimination in dismissals of employees with disabilities (Krsti et al., 2010). The share of vulnerable employment for people with disabilities is slightly higher than the total population (31.2% compared to 25%), mainly due to greater participation of farmers than the total population (16.2% compared to 7.5%). Participation of owners of companies and shops is much less than
the total population (3.6% compared to 7.2%), as was expected given the nature of work and various restrictions that brings with it the nature of disability. Observed by sectors of activities (LSMS, 2007), most people with disabilities are employed in the service sector (42.5%), and in agriculture (31.7%). People with disabilities were more represented in temporary, seasonal jobs, and were also represented in the informal economy compared to the total population (47.3% versus 34.9% respectively). And among people with disabilities there is a slightly higher percentage of unqualified persons as compared to the total population of registered unemployed. Among the unemployed, people with disabilities have the largest share of those with secondary education (50%), corresponding to the participation of education in the total number of unemployed. Encouraging employment by reducing discrimination in employment is a priority to reduce poverty and improve the living conditions of persons with disabilities. Encouraging active employment of persons with disabilities could be achieved through subsidies for equipping the workplace, wage subsidies and social security contributions.
CONCLUSION
The situation of Roma in the labour market is very unfavorable, since their rate of unemployment in Serbia more than 40% which is significantly higher than among the general population. High unemployment and low participation rates and employment are the main reasons of extreme poverty among Roma. Roma poverty is several times more widespread, and also much deeper and sharper compared with the main population. Almost half of the Roma population was poor, and almost every tenth member of the Roma population is extremely poor. Roma unemployment rates observed by some structural features suggest that Roma are particularly affected by the problem of unemployment, since more than half of active women are unemployed. This high rate of women comes on top of their greater inactivity, which fits into the
traditional pattern whereby women mostly take care of children and household, as the average number of children per household Roma is much higher than the basic population. Observed by education level and age groups, there are no significant differences in the unemployment rates. Unlike the total population, where young people are most affected by unemployment, the Roma population of this age group (15-24 years) had an unemployment rate similar to persons aged 25 to 49 years of age, while older (50-64 years) had slightly lower unemployment rates. The picture of a very unfavorable situation of Roma in the labour market is further illustrated by the fact that the share of long-term and very longterm unemployment of Roma above the average of the total population, and that the share of unemployed with no work experience almost twice higher than the total population. The unemployment rate of refugees is much higher than the permanent population of Serbia. According to labour market status, the refugee population is different than in the general population of Serbia primarily in higher participation and lower self-employment and unpaid family member status. The situation of IDPs in the labour market is extremely unfavorable, since their unemployment rate on average is far above the general population. According to labour market status, the population of IDPs is different than the general population in Serbia in the first place with a greater share of self-employed and small businesses and the participation of persons in the status of unpaid family members. Although there is no accurate data on the number of people with disabilities, it is estimated that around 800,000 people with various types of disabilities are living in Serbia. Unemployment rate of persons with disabilities is approximately at the level of average unemployment rate. The main reason for such a low unemployment rate of persons with disabilities is the high rate of inactivity. This can be explained by the fact
that most are discouraged to seek work. This is indicated by a very small number of people with disabilities who are reported to the National Employment Service. The main reason for high discouragement of people with disabilities to find work is related to the prejudice of employers to recruit these people and their lack of willingness to adapt the workplace to people with disabilities. In addition, people with disabilities fear they will lose the right to social protection when they find a job. In the category of particularly vulnerable groups, Roma and persons with disabilities have very deep vulnerability, while refugees and internally displaced persons have shallow vulnerability. Extremely deep vulnerability of Roma is primarily due to their very high unemployment rate and low rate of activity also, as the percentage of vulnerable employment is higher than the average by 5.5 percentage points. Extremely deep vulnerability of people with disabilities is the result of their significantly low rates of activity. In a way, people with disabilities are below standard "radar" of unemployment due to them being excluded, and therefore their extremely low rate of inactivity is a leading indicator of their high vulnerability. In the category of particularly vulnerable groups, due to lack of comparable data, there are no strong indicators to trace the change in the position of especially vulnerable groups during the global financial crisis. However, we can assume that the relative position of Roma in the labour market deteriorated bearing in mind that they are a very young population. Also, we can assume that the situation of persons with disabilities improved to some extent due to the effects of implementation of the Law on Vocational Rehabilitation.
REFERENCES
1. Arandarenko, M. (2009), "Efekti svetske ekonomske krize na trite rada Srbije", Kvartalni monitor ekonomskih trendova i politika u Srbiji, OctobeDecember 2008, Fond za razvoj ekonomske nauke (FREN), Belgrade.
Andrei, Stefanovic 101 2. Arandarenko, M., P. Golicin (2007), "Meunarodni akteri i razvoj socijalne politike u Srbiji od 2000. do 2006. godine", in D. Vukovi i A. ekerevac (eds), Socijalna politika u procesu evropskih integracija, Faculty of Political Sciences, Belgrade. Arandarenko, M., G. Krsti (2008), Analiza uticaja politike zapoljavanja i aktivnih mera zapoljavanja u Republici Srbiji, 2003-2007. godine, Tim potpredsednika Vlade za implementaciju Strategije za smanjenje siromatva, Serbian Government. Arandarenko, M., A. Nojkovi (2007), Pregled trita rada u Srbiji, Centar za demokratiju i pomirenje u Jugoistonoj Evropi, Solun. Babovi M. et al. (2007), Poloaj izbeglica na tritu rada i uee u aktivnim merama zapoljavanja, Grupa 484, Beograd. Bajec, J. et al. (2008), Social protection and social inclusion in the Republic of Serbia, European Commission. Cveji, S., M Babovi (2007), Drutveni i ekonomski poloaj IRL u Srbiji, Comisia Europeana (2008): Raport privind protecia social i incluziunea social 2008, available at: http://ec.europa.eu/employment_social/spsi/joint_reports_fr.htm Dimitrova, D., K. Petkov (2005),"Comparative Overview: Changing Profiles, Action and Outcomes for Organized Labour in Central and Eastern Europe", u D. Dimitrova and J. Vilrokx (eds) Trade union strategies in Central and Eastern Europe: towards decent work, ILO, Budimpeta. European Commission, An Agenda for new skills and jobs: A European contribution towards full employment, COM(2010) 682 final, Strasbourg, 23.11.2010, available at: http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0682:FIN:en:PDF, retrieved on 10.09.2011 European Commission, New Skills for New Jobs. Anticipating and matching labor market and skills needs COM(2008) 868 final, Brussels, 16.12.2008, available at: http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2008:0868:FIN:EN:PDF, retrieved on 10.09.2011 European Centre for the Development of Vocational Training (Cedefop), Skill Needs in Europe. Focus on 2020, Luxembourg: Office for Official Publications of the European Communities, available at http://www.cedefop.europa.eu/EN/Files/5191_en.pdf, retrieve on 09.07.2011 UNDP, UNHCR. European Commission (1997-2010), European Employment Strategy, http://ec.europa.eu /social/ ma in.jsp?catId=101&langId=en
3.
4. 5. 6. 7. 8.
9.
10.
11.
12.
13. 14.
102 Especially Vulnerable Groups in EU and Serbian Labour Market 15. European Economic and Social Committee (2009) Opinion on Work and poverty: towards the necessary holistic approach, Rapporteur: Ms Nicole Prud'homme, SOC/336, Brussels, 30 September 2009 16. Guillaume Allgre, Working poor in the EU: an exploratory comparative analysis, OFCE, No.2008-35, November 2008, available at http://www.ofce.sciences-po.fr/pdf/dtravail/WP2008-35.pdf, retrieved on 10.09.2011 17. Hernanz V, Malherbet F and Pellizzari M (2004), Take-up of welfare benefits in OECD Countries: a review of the evidence, OECD, Directorate For Employment, Labour And Social Affairs Employment, Labour And Social Affairs Committee DELSA/ELSA/WD/SEM(2004)2, available at: http://www.oecd.org/dataoecd/60/30/30901173.pdf, retrieve on 10.09.2011 18. ILO (2010), Global Employment Trends 2010, International Labour Office, Geneva. 19. ILO (2011), Global Employment Trends 2011: The challenge of a jobs recovery, International Labour Office, Geneva. 20. Ipsos Strategic Marketing (2009), Brza procena krize, izvetaj za Tim za socijalno ukljuivanje i smanjenje siromatva u okviru Kabineta potpredsednika Vlade za evropske integracije i za Svetsku banku. 21. Krsti, G. (2008), Poverty profile in Serbia in the period from 2002-2007 in Living Standard Measurement Survey: Serbia 2002 2007 (LSMS), Statistical Office of the Republic of Serbia, Belgrade. 22. Krsti, G. et al. (2010), Poloaj ranjivih grupa na tritu rada Srbije, Program Ujedinjenih nacija za razvoj (UNDP) Srbija - Sektor za inkluzivni razvoj, Beograd 23. Krsti, G., M. Arandarenko (2010), "Uticaj ekonomske krize na poloaj ranjivih grupa na tritu rada Srbije", Kvartalni monitor ekonomskih trendova i politika u Srbiji, januar-mart 2010, Fond za razvoj ekonomske nauke (FREN), Beograd. 24. Matkovi, G., B. Mijatovi (2009), Analiza uticaja dravne finansijske podrke siromanima, Vlada Republike Srbije, Tim potpredsednika Vlade za implementaciju Strategije za smanjenje siromatva. 25. Matkovi, G. et al. (2010), Uticaj krize na trite radne snage i ivotni standard u Srbiji, Centar za liberalno-demokratske studije, Beograd. 26. Ministarstvo za ljudska i manjinska prava (2009), Strategija za unapreivanje 27. Ministarstvo za rad i socijalnu politiku (2005), Nacionalna strategija zapoljavanja 2005-2010, Beograd. 28. Ministarstvo za rad i socijalnu politiku (2005a), Nacionalni plan akcije za zapoljavanje za period 2006-2008, Beograd.
poloaja Roma u Republici Srbiji.
Andrei, Stefanovic 103 29. Nacionalna sluba za zapoljavanje (2009), Meseni statistiki bilten (januar30. Nacionalna sluba za zapoljavanje (2010), Meseni statistiki bilten (januar-
decembar)
decembar)
31. Immervoll et al. (2004): Benefit coverage rates and household typologies: scope and limitations of tax-benefit indicators, OECD, Directorate For Employment, Labour And Social Affairs Employment, Labour And Social Affairs Committee, DELSA/ELSA/WD/SEM(2004)5, 17-Dec-2004, available at: http://www.oecd.org/dataoecd/40/20/34440014.pdf 32. OECD (2008), "Serbia: A Labour Market in Transition", OECD Reviews of LabourMarketandSocialPoliciesSerbia: A LabourMarket in Transition, Paris. 33. Penev, G. (ur.) (2006), Stanovnitvo i domainstva Srbije prema popisu 2002. Godine, Republiki zavod za statistiku, Beograd. 34. Ponthieux S (2009) Les travailleurs pauvres comme catgorie statistique. Difficults mthodologiques et exploration d'une notion de pauvret en revenu d'activit, INSEE, F0902, Mars 2009, available at: http://www.insee.fr/fr/publications-etservices/docs_doc_travail/F0902_Franais.pdf, retrieve on 10.09.2011 35. Republiki zavod za statistiku, Ankete o ivotnom standardu (AS) 2002-2007. 36. Republiki zavod za statistiku, Studija o ivotnom standardu Srbija 200237. Republiki zavod za statistiku, Ankete o radnoj snazi (ARS) 2007, 2008, 2009. 38. Republiki zavod za statistiku, Ankete o potronji domainstava (APD) 39. Stefanovi, S. (2011), Poloaj posebno ranjivih grupa na tritu rada u Srbiji, poglavlje 34 u Zubovi, J. (ur.), Aktivne mere na tritu rada i pitanja zaposlenosti, Institut ekonomskih nauka, Beograd, 2011. 40. Svetska Banka (2006), Serbia: Labour Market Assessment, Svetska banka, Vaington. 41. Svetska Banka (2010), Ekonomska cena ekskluzije Roma, Svetska banka, Vaington. 42. United Nations Development Programme (UNDP) Serbia, At Risk: The Social Vulnerability of Roma, Refugees and Internally Displaced Persons in Serbia, UNDP, Belgrade, 2006. 43. Vlada Republike Srbije (2006), Nacionalna strategija privrednog razvoja
2007.
Republike Srbije od 2006. do 2012. godine 44. Vlada Republike Srbije (2002), Nacionalna strategija za reavanje pitanja izbeglih i interno raseljenih lica. 45. Vlada Republike Srbije (2003), Strategija za smanjenje siromatva u Srbiji. 46. Vlada Republike Srbije (2006), Strategija unapreenja poloaja osoba sa invaliditetom u Republici Srbiji.
104 Especially Vulnerable Groups in EU and Serbian Labour Market 47. Vlada Republike Srbije (2011a), Odgovori na Upitnik Evropske komisije, http://www.seio.gov.rs/code/navigate.asp?Id=2 48. Vlada Republike Srbije (2011b), Prvi nacionalni izvetaj o socijalnom ukljuivanju i smanjenju siromatva u Republici Srbiji za period 2008 2010.
godine
Chapter 5
IMPORTANCE OF THE MANAGEMENT INCENTIVES FOR THE IMPROVEMENT OF COMPANYS ACTIVITIES

Slavica Stevanovic, Ivana Simeunovic Abstract: In this paper we have emphasized on the importance of the
management incentives and their impact on companys efficiency and effectiveness of corporate governance. Company owners, who regard managerial incentives as an investment rather than as a financial outlay, could expect a commitment of the managers to the interests of the company, achievement of desired results and business prosperity. At the same time, the potential conflict of interests between companys shareholders and management could be solved by allocation of appropriate management incentives. As the effectiveness of management incentives depends on their good evaluation, it is important to identify potential indicators and to measure their consistency with the value created to business owners. Moreover we have identified financial measures for managers contribution to the company operations, used as a criterion for entitlement to managers incentives. Paper ends by assessing the need to adjust the company to changing global financial envirnoment, with a special reference to the changes of incentives policy in Serbian companies, and the most important motivational factors affecting Romanian employees during the current period of global financial crisis. Key words: Management Incentives, Principal-Agent Problem, Incentive
Schemes, Company Performance
JEL classification: M12, J33, M52
106 Imporatance of the Management Incentives for Company Activities
INTRODUCTION1
Modern business conditions impose to company owners the obligation to respect the interests of employees, either to direct executives or to managers at various levels of management. Successful modern society operation comprises the effective human resources management. High quality human capital is the driving force and a prerequisite for the achievement of profitability, growth, and development of modern society. Competent employees who approach to their jobs with due professional care are an important factor of companies growth and development, while the continuous acquisition of knowledge and skills, together with employees, the organization itself has an important role. Complete employees development is necessary in order to achieve successfully corporate objectives. As an efficient management of human resources has the impact on business improvement, it is not surprising the fact that the human resources management, being enterprises development function, constantly is becoming more and more important. If the human resources management is seen as an organizational process which aim is to improve organizational performance and to meet the needs of enterprise employees, an important task of human resource management is the creation of an adequate system of motivation of employees, in order to successfully achieve set corporate objectives. The incentives are part of HRM system that is consistent with other parts of the system, simultaneously fitting into the overall human resources strategy and support skills, knowledge and values that are important to the organization. Stimulation system design allows the realization of defined human resources strategy and its implementation in practice. Companies incentive plans are comprised of various forms of stimulations and
1
This paper is a part of research projects numbers 47009 (European integrations and social and economic changes in Serbian economy on the way to the EU) and 179015 (Challenges and prospects of structural changes in Serbia: Strategic directions for economic development and harmonization with EU requirements), financed by the Ministry of Science and Technological Development of the Republic of Serbia.
Stevanovic, Simeunovic 107
rewards that are focused on the higher motivation of employees at all levels of the organizational structure. Through the provision and improvement of financial status and meeting other employees interests, the companies impact on creating a good business climate and getting closer the personal interests of employees to the organization's goals. Good business position, social status, highlighting the possibility of knowledge and skills, and adequate evaluation of the same, contribute to employee satisfaction, and ultimately, the achievement of planned business and financial performance of the company.
MANAGEMENT INCENTIVES AS INSTRUMENTS FOR SOLVING PRINCIPAL-AGENT PROBLEM

The employees represent a special interest group which consider the company as a place where can demonstrate skills and abilities, express ambition, achieve a certain status, gain new knowledge and experience, but primary as a source of their income. Every employee in the company can and should be led by common interest, but it is also possible that individual or group interests that are in conflict with the basic objectives of the company and its shareholders guide the performance of assigned activities. Potential conflicts between owner-employee and negative effects on the company activities have made that in the recent years the special attention in literature and practice is paid to manager and other employee's interests. Professor Sengi highlights that the main factor in the revolution of an organization is when the entire organization is fully delivered to the benefits of its employees (Sengi, 2007, p. 155). Managers as employees of the company, and in the same time agents of shareholders have the task of managing available capital in a way that will allow its fertilization and increase the wealth of the same principals who hire them. The various functions of management and shareholders, conditional on the specific corporate entities, result that managers have more detailed knowledge about the business and have access to more information in relation to the owners of capital. The existence of asymmetric information between managers and owners open space for the emergence of certain problems relating to corporate governance. Great
power concerning rights on management and decision-making, assigned to the company top management, and often the fear of bad business and financial performance, loss of bonuses, ratings decline, etc, may lead the management to unexpected business operations and decisions that, as rule, deviate from those that would meet the requirements of the owner. Managers who receive fixed earnings for their engagement, due to insufficient motivation to increase the companys profitability can do business in accordance with their own interests that are different from the interests of shareholders. On the other hand, insufficient motivation for the results may have less commitment to activities that can improve the performance of companies, or avoiding highly profitable investment because it would require hard work and high-risk involvement. If additionally to the foregoing, it is added the possibility of relentless use of the advantage they have in the company, including luxury offices, restaurants, and events, so called agency costs, it inevitably adversely affects the market value of the company. A number of conflict situations caused by the separation of ownership and management, raise the question of how successfully solve growing principal agent issue. The seriousness of principal agent issue, highlights the frauds in companies Enron and Tyco International, where managers were accused of using funds for personal needs (Mishkin, p. 181). By solving the principal agent problem adequately, it will be difficult to eliminate agency problems, but it is certain that after taking certain measures could be expected lower agency costs. Problem could be solved to some extent by applying current accounting and auditing regulations and efficient functioning of the internal control system. Developed internal audit and certified internal auditors, whose task is assessment of internal control system reliability, reduce the managements playing field in terms of doing business in accordance with their own goals and interests. Some measures for issue solving could be in engaging firmly the board of directors, more frequent company audits, and request for recurrent financial reporting by management, as well as some additional costs, not only in form of cash expenses, but also, in more time spent for monitoring.
Regarding the creation of possible growing costs, in addition to the uncertain resolution of principal agent issues in monitoring managers, shareholders are looking for solutions that would affect the greater management motivation to put their individual goals within the context of the general aims of the company. The reward seems to be the most effective instrument of coordination of the interests of managers and shareholders regarding monitoring. Development and continuous improvement of awareness on commitment to the company, as well as promotion of the enterprise as a common interest of all employees implies the existence of an adequate system of motivation and its effective implementation. Managers full commitment to finding a profitable and avoidance of unprofitable investments, and consequently, increase of companys market value, owners could expect only from sufficiently motivated companys management. Highlighted importance of enterprise management incentives to undertake the business, investment, and financial activities in accordance with the interests of shareholders, results in the introduction of compensation plans, which define the possibility, and the conditions under which managers and other employees can be stimulated and rewarded. The company O.M. Scot is an example where, among other, by improving incentives they recovered managers performance, which were greatly disturbed. The Company managed to increase sales by 25 percent and earnings before interest and taxes by 56 percent only by increasing the number of employees participating in bonuses, and enhancing the participation of employees in the capital of the Company (Malini, 2002, p. 308). The degree of balancing individual interests of employees and the general aims of the company and the extent to which management will effectively manage the shareholders capital, in terms of increasing value for the owners, depends on the existence and types of incentives. The fact is that the partnership reflects the behavior of managers on the performance of the company, but also that the method of stimulation chosen by the company imposes new additional costs. Therefore, it is pointed out that the level, the way of incentives and target group to which the company refers motivational plant depends of the possibilities of the company. The politics adopted by the company regarding the motivation of employees is in line with funding opportunities, as well as the estimating benefits that
implementation of the compensation plan will bring to the company. The following are types of stimuli that are present in practice, concerning that each company creates a structure of the compensation scheme in accordance with its own policy.
THE STRUCTURE OF MANAGEMENT INCENTIVE SCHEMES

The quality of managers business activities and their effects in the company are the result of their competences, being at the same time, the consequences of the current level of motivation. The connection between the compensation that managers receive for efforts made, and their behaviour is confirmed in theory and practice. Benefits based on regular salary, wage increases and premiums established in agreement; represent a legal obligation of the company as unavoidable business expenses, charged to income or earnings of the observed accounting period. It is compensation based on volume and quality of work, positions in the company, responsibilities, and skills required for performing the delegated tasks. Other managers cash income is defined by motivation plan that is tailored to the specific characteristics and capabilities of specific companies. The motivation system usually includes a combination of several forms of incentives, both of financial and non-financial nature, which aims to reward the managers who lead in achieving positive results in relation to the average achievement of other employees. Compensation Package, in addition to base salary that is determined by the value of work, expertise, and skills, includes incentives that exist in various forms of tangible and intangible nature. As a short-term incentive, awards may be used as rewards for achieving high results, payments in recognition of outstanding professional commitment, the rewards for passing the professional examination and improvement of knowledge and, bonuses. Categorization of these short-term incentives as determined by the fact that the stimulation usually paid annually, while companies annual financial performance serve as criteria for their acquisition. Bonuses are the most common form of incentives for managers and they usually are awarded when are realized the predefined exercise goals in terms of job performance and contribution to the success of the company.
By its nature, the bonuses are not part of regular salaries, but have the character of participation in enterprises profit. In spite of substantial heterogeneity across companies and industries, executive bonus plans can be categorized in terms of three basic components: performance measures, performance standards, and the structure of the pay-performance relation. Figure 1 illustrates these basic components for a typical bonus plan. Under the typical plan, no bonus is paid until a threshold performance is achieved, and a minimum bonus is paid at the threshold performance. Target bonuses are paid for achieving the performance standard, and there is typically a cap on bonuses paid. The range between the threshold and cap is labeled the "incentive zone", indicating the range of performance realizations where incremental improvement in performance corresponds to incremental improvement in bonuses (Murphy, 1999, p. 10).
Figure 1 - Components of a "Typical" Annual Incentive Plan50

Annual Bonus Bonus " Cap "
The "Incentive Zone"
Target Bonus
Pay/Performance Relation
Performance Threshold
Performance Standard
Performance Measure
Source: Murphy, 1999, p. 80
Companies compensation plan may include paid fellowships, scholarships and seminars, and various kinds of benefits such as pension and life insurance, sick leave compensation higher than the legally guaranteed.
Use of loans through the company at discounted prices, free legal and financial advices, business car, free air transportation, fitness club membership, are the examples of benefits which managers may enjoy. In addition to the aforementioned financial incentives and benefits of various non-financial nature, managers incentives to work in the interests of shareholders, and therefore in the interest of prosperity of the company in the long run, could be achieved by including managers in the companys shareholders board. Plans to encourage ownership in the company, plans on the company's stock option, plans of awarded shares with limited rights, plans of allocation of increased share value and deferred bonus plans, are examples of commonly used long-term incentive plans (Malini, 2007, p. 77). Inclusion of the managers into the company ownership, the owners of capital accept as an effective way to stimulate the management to be accustomed to the company and to closer their own interests, as much as possible, to the interests of other stakeholders. Ownership is a powerful motivating factor for the management and effective means for overcoming differences, which unifies the interests of principals and their agents. Just by becoming owners of enterprises, and on that basis exercise all ownership rights, management will present their skills and ability to focus on making quality management decisions and achievement of planned performance. Long-term stimulation contributes to the realization, not only quantitative but also qualitative goals of the company, encouraging the development of new production processes, products, and markets. The fact is that salaries, incentives, and other benefits that managers enjoy in the company can be viewed as activities that directly or indirectly result in the outflow of funds that may be considerable in relation to total cash outflows. However, if the owners of capital, the outlay of money or other form of compensation paid or awarded, consider as an investment, they can expect from their managers quality work, commitment, and achieving the desired improvement of business operations.
MEASURES OF MANAGERS CONTRIBUTION TO THE COMPANY PERFORMANCE

Some notable authors have opinion that the form of the payment, specifically the sensitivity of total compensation to the performance of the firm, is more important than the level of compensations. For example, Jensen and Murphy show that U.S. CEO (chief executive officer) pay is not very sensitive to performance, although they note that the portion of pay delivered as restricted stock and stock options creates a portfolio which increased value to the CEO is clearly related to the price performance of the firms stock. Few studies, including studies of CEO compensation, had established a clear statistical link between the structure of compensation and the performance of the firm. (Abowd, J.M. and Bognanno, M., 1995, p. 68) Abowd and Bognanno concluded that a careful international comparison of executive compensation and its relation to the compensation of ordinary employees could provide important evidence on the inter-country variation in CEO, high-level manager, and regular employee compensation. Measurement of employee performance is a relevant element of companies motivation system. Alignment of individual companies and general objectives include, inter alia, an adequate measure of individual and group contributions to the positive performance of the company, as well as the distribution of adequate incentives to comply. The fact is that the effectiveness of compensation depends based on criteria on which compensation is calculated. Only if the employee contributes to the success of the company is consistent with the established standards and value creation for owners, we can talk about effective rewards. In the opposite situation can occur that achieved poor performance are rewarded rather than sanctioned, but also that achieved high performance by employees at all levels of the organizational structure of enterprises are insufficiently rewarded. Employee performance evaluation procedure consists of a series of activities that connect organizational goals and individual work results. Measuring the achievements of employees work involves establishing criteria of success, the choice of methods and tools of measurement,
choice of sources of information on performance, and the measurement process and discusses the evaluation and determination of corrective measures (Prulj, 2007, pg. 302). Evaluation of business performance, among other, includes the identification of results, behaviors and characteristics of employees, necessary for the realization of companys achievement, while the evaluation procedure should b adopted in accordance with the type of work that employees perform. Regardless of which business effects aspects are the evaluation subject, it is important that the choice of performance appraisal criteria is reliable and objective. The best information source on employee performance often depends on the nature of assignment. It is important to choose the source or sources that provide the best possibility of observing the employees behavior and results. The frequency of conduct and results observation, concerning the realization of tasks, and to the various sources of information, on performance, could be seen in Table 1.
Table 1 - Observing frequency for different information sources

Source Self Clients Superior Colleagues Subordinate often rarely always often Behavior periodicaly Results often often periodicaly often often
Source: Noe, Hollenbeck, Gerhart, Wright, 2005, p. 303
When assessing the employees contributes to the enterprise performance, the ratings from multiple sources of information could be combined, both from internal sources presented by superiors, subordinates and colleagues, as well as by business partners and assessment comities as external, and more objective information sources. Employees performance evaluation usually involves a combination of some previously mentioned estimation, and may partly be due to so-called employees self-evaluation, in order to obtain objective access to rewarding employees. Technique called 360Degree-Feedback is often used when assessing the employees performance, and consists of the fact that assessors, like boss, colleagues, associates and customers, provide inputs for the managers employee evaluations. The main advantage of this method, used primarily in
strategic and development purposes, is that it offers a means for minimizing bias in an, otherwise, subjective assessment techniques (Noe, Hollenbeck, Gerhart, Wright, 2005, p. 303). Individual or group managers contribution to the success of the company could be measured by traditional accounting criteria, the ones based on cash flows, so-called economic benchmarks, as well as non-financial performance indicators. The selected indicator or more often, selected indicators combination determine the dynamics of compensation granted to the companies managers. In a study realized in the United States, of 177 surveyed U.S. companies, 68 used only one-performance measure in their annual compensation plans, while the rest of 109 companies combined two or more criteria, where in both cases, the highest percentage (91% of surveyed companies) were using the profit-based criteria (Murphy, 1999, p. 67). According to the companies compensation plans, as criteria for achieving employees cash bonus, could be used earnings, revenues, costs, return on total assets, return on equity, earnings per share, dividends per share, operations net cash flow, free cash flow, etc. Cost and revenue criteria are commonly used to measure the employees and managers achievements on profit and investment center level. The improvement of cost performance is reflected in finding ways to reduce costs, or at least avoid the formation of larger one, in relation to the forecasted cost plan. Sales volume increase and sales achievements results in improving revenue performance. The aforementioned accounting standards can be observed as a measure of employees contribution in creating value for shareholders, provided that the use of amounts and trends of dividends per share, the right and the amount of managers compensation tends to be directly related to the shareholders benefit in form of dividends. Bonuses based on profit are one of the most common ways of incentives provided for the managers to perform activities in accordance with the interests of shareholders. The amount of bonuses linked to profit or to performances based on income, could be determined in several ways. Retention in the realized profit is the simplest way to define the value of the bonus. By defining a certain percentage of participation in the realized
profit, only over a certain rate of return, it is avoided the payment of bonuses in the case of low profit value, and rewarding based on unsatisfactory rate of return on equity. Improvement in performance compared to the level of previous years, in relation to achievements at the level of other companies, or the average level of the industry the company belongs, can also be used as a criteria for gaining bonuses. Amount of bonus depending on the planned activities can be recommended criteria for obtaining incentives, if the planned values are based on realistic assumptions. The companies market value, economic value added, market value added, total shareholders returns are financial indicators of success that are increasingly being used as a criterion for achieving company managers compensation. Added economic value, as a difference between net operating profit after taxes and overall capital costs, indicates if the value for shareholders is realized, and to what extent the value is above the expected returns for shareholders and creditors. It could be said that only management that is able to achieve goals in an amount greater than the cost of capital in general, creates value for shareholders, so that the management compensation level is linked to the expected increase in economic value added and increased economic value added above the expected level. Marked Value Added MVA is also seen as a measure of value created for shareholders, given that the difference between market value and the amount of equity capital invested by shareholders (Fabozzi, 2006, p. 15). In theory, market value added is viewed as the present value of all expected economic value added. Total shareholders return TSR combines the yield from dividends (expressed in the form of dividends per share) and capital gains, putting the total yield in relation to the company shares market price at the beginning of the monitored period. Observed from the standpoint of shareholders, the yield determined in this way represents an increase of shareholders value, and it can be used as a measure of the management contribution to value increase. Companies compensation plans in addition to financial measures of performance may also include non-financial measures such as new product development, customer satisfaction, and increase of production capacities. Highlighting the non-financial measure of success is result of
observations that certain management activities in order to minimize losses, the avoidance of adverse developments, and reduce of harmful effects on the company can be greater success than achieving planned profitability in normal conditions of doing business. In practice, common are situations that companies in addition to sales, profit, rate of return and other traditional performances, use performance based on cash flows, as criteria for entitlement to employees compensation, such as net cash flow from operations and free cash flow (Kapi, 2009, p. 41). In that case, may be required the realization of growing performance, or may be precisely specified which growth rate of individual performance should be achieved and in what period. The use of free cash flow level, as a basis for compensation awarding, is explained by the fact that the increase in free cash flow leads to an increase in company shares market price, based on which can be confirmed an individual management contribution to the enterprises success. The use of performance-based on cash flows as measure for assessment of managers contribution to company value is a positive access to create a business environment in which management will act in interests of shareholders, in order to increase the market value of the company. The benefits of incentives granted may be relevant to both managers in person, and the company as a whole. The ability to create value for shareholders can be considered using the realized rate of return on equity. Stable growth rates of yield usually indicate efficient use of capital, which is putted at the disposal of the company owners, but should not always be a case. Motives to demonstrate the power of capital yield greater it really is are different, but the fact is that such efforts hide the dominance of management personal interests. The desire to meet the required criteria for entitlement to compensation often makes up the companys performance date presented by management. The significance of observed criteria for adequate compensation can be highlighted through the example of companies whose decision on the amount of compensation to be divided among managers of two divisions, depends on whether the only observed criteria is ROE expected rate, or it is monitored cash flow performance (Brigham, 2004, p. 99). If the level of compensation is solely determined on basis of
expected ROE, higher amounts of compensation will be attributed to the division B management, which provides a higher rate of return on its own capital. Analyzing at the same time the stability of the companys cash flows together with expected rates of return on equity as a criterion for compensation realization, the conclusion could be that the previously mentioned way of compensation creates an unequal relationship between the two division managers. Division B management boasts a higher rate of return, but unstable cash flows may be the cause of a miscarriage of expected return rate in future periods, later impossibility to pay off a financial compensation and other companys cash expenses, which all together, can affect the poorer yielding strength assessment, the financial position of the company, and its financial stability. The A Division Managers credits to obtain a higher compensation, in relation to the management of Division B, can be justified by the fact that, regardless of the lower expected rate of return of Division A, they are able to effectively manage owners capital, and to generate stable cash flows, which consequently, results that the level of cash flow risk is lower. Unequal compensation relationship between the managers, together with unreasonably high compensation, could be the result of excessive emphasis on achieving returns on capital, regardless the cash flow performance, and other targets such as business maintain or increase of market share, product development, technologies, human resources and maintenance of the companys the reputation, which in the long run may undermine the very return on equity. The fact is that the performance of companies based on profit is more often under the influence of manipulative activities in relation to ones based on cash flow performance. Yet, one should not disregard the possibility that the reported companys cash flows are subject to creative accounting practice. Overstatement of net cash flow from operations, and based on this data, the expression of free cash flows higher than real ones, is a sign that management want to send a positive signal about the companys performance to its shareholders, and on its basis to achieve some personal interests at the owners, and other enterprises stakeholders, expense. Tyco International (Mulford and Comiskey, 2005, p. 29) is an
example of the company that by compensation plan defines the right of management at higher hierarchical level on company's stock options. The eligibility criteria as an option on shares, plans to increase profit and improve net cash flow from doing business. Tyco International is also an example where management turns to the shaping on net cash from operations in direction of an unrealistic increase of its value, in order to increase market share price and compensation gaining, in the moment of option execution.
MANAGEMENT INCENTIVES IN THE ACTUAL ECONOMIC CRISIS SERBIA AND ROMANIA

An effective enterprise policy stimulus effects on creation of positive business environment, and advancement of knowledge and values that are important to the organization. A good system of incentives requires constant evaluation and review in relation to the changed circumstances. Motivation system change by defining and implementing measures to reduce the impact of financial crisis on the company, is the expected response to changed global economic conditions in the last three years in Serbia. Measures in the field of human resources management related to the optimization of the employees cost mainly include reducing cost of salaries, travel, training, and development, organization of corporate events and employment, as well as freezing the growth of these costs. The companies prefer to resort to short-term measures, while a smaller number of companies are prepared to implement major changes ob business process and motivational system. Concerning short-time incentives, enterprises in Serbia implement a number of quantitative changes, such as reducing bonuses and other forms of incentives, while the change in reward system and redefining the relation between performance and reward system, as well as the relationship of base salary and other compensation are of far lesser presence in 2009. When analyzing the employee benefits, companies turn to limiting and controlling the use of companys car, mobile and fix telephones, taxi services, etc.2
The above mentioned measures, as well as the data given below, represent results of survey called HR Barometer, published by PwC in 2009. PricewaterhouseCoopers has
Table 2 - The measures implemented in the domain of short-term incentives in Serbia in 2009.
The companies that were planning ... Decrease Growth freeze Increase Total sum Total budget for shortterm incentives The number of % companies 15 58% 11 42% 0 0% 26 100% Target bonus levels The number of companies 9 10 1 20 % 45% 50% 5% 100%
Source: www.pwc.com/rs
Observing the results of the mentioned survey, among the total number of surveyed companies introducing changes in the overall budget for shortterm incentives, there are no companies that decided to increase fund, 58 percent determined to reduce the total budget for short-term incentives, and slightly smaller percentage of 42 percent, have adopted to freeze the growth of the budget for these purposes. Comparing this and PwC previous research in Serbia, it can be concluded that the companies were optimistic in early 2009, and had planned to increase this budget. When analyzing the specific benefits available to the employees, the changes are registered with membership in fitness clubs and the use of soft loans through the company. The total amount and method of allocating bonuses for employees can be defined in advance in accordance with the enterprise policies concerning staffs incentives. Employees may be rewarded by the principle of discretion, when after completed current fiscal year are carried out a detailed analysis of business performance, companys financial resources, the impact of incentives on business climate, in accordance with existing state decisions, on the amount and methods of incentives allocation to
launched a survey series among fifty domestic and foreign companies operating in Serbia. Detailed results of its survey are available at www.pwc.com/rs.
employees. Defining so-called target level bonus is one way of regulating the amount and distribution of bonuses to employees. The target bonus is awarded after achieving target company performance, and usually ranges from 20-30 percent below by 20-30 percent above the companys target performance. Height of bonuses target level and factor of success that are used as the target performance criteria, depend on decisions adopted by particular company, and are in accordance with the existing bonus plan and current business conditions. Payouts from bonus plans are determined in a variety of different ways, but the most common payout method (for all but financial companies) is the 80/120 plan. Under a strict 80/120 plan, no bonus is paid unless performance exceeds 80% of the performance standard, and bonuses are capped once performance exceeds 120% of the performance standard. Murphy shows in his research that 42% of industrial companies and 39% of utility companies adopt 80/120-type bonus plans, and overall, 67 of the 177 (38%) sample firms report using the 80-120 approach (Murphy, 1999, p. 13). It is hard to expect that during downturns, companies decide to increase target bonus level, therefore, the largest number of companies in Serbia analyzed in the aforementioned study have implemented the reduced level of target bonuses or had freeze their growth. The results of survey show that the average decrease in target bonus levels is 30%. Of the total number of the companies that responded to the question on changing target bonus level, 50 percent opted for growth reduce, 45 percent for growth freeze, while only one company decided to increase the level of target bonus. Compensation plans implies the existence of enterprise scale for awarding bonuses to employees. Regardless of whether the credit or ranking procedure in determining the scale is applied, it is real to expect a change and improvement of calculation methods and ranking bonuses in accordance with the changing business conditions and anticipated future business actions. The negative effects of financial crisis on the companys operations have led to the larger number of companies to refrain from changes in the way of determining bonus, provided that among the group of companies, subject of research, there are companies planning or have
already implemented changes previously mentioned. Al together, it comprises 23 percent of the companies, which have declared their actions. The corporate governance framework should provide timely and accurate disclosure on all material matters related to business enterprises, including issues related to employees. One of the provisions of current Serbian law on companies stipulates that meeting of shareholders decide on the award and expenditure policies on remuneration basis for directors and board members through the share issuance, warrants, and other financial and non-financial benefits. It is an important provision, since the capital owners should be informed in the process of defining the amount and distribution of compensation for companies managers. The complex and very important issue of regulating the system of motivation and the definition of compensation plan requires a well-placed regulatory basis, which in our case means better regulation procedures. Quality legislation and its adequate use are the prerequisite for a quality employees incentive system. The fact that in practice are the companies, which adopt subjective approach to determining bonuses and other forms of stimulation, indicates that there are weaknesses in the current legal framework, together with disadvantages in terms of respect of fundamental ethical principles of conduct. In the current crisis, many Romanian are in search for a job, which will offer them an income and job security. Therefore, the job stability occupies the first place in employee preferences, followed by job type and wage offer. The vocational development and the job enrichment are also important for the Romanian employees (Casuneanu, 2011, p. 931). The results of the Casuneanu' study3 do confirm the assumption that money is not everything in terms of work motivation, suggesting that managers need to focus more on non-financial incentives to better motivate employees. At the question what is the additional amount for which the employees would change its job? 8.7 percent of respondents have confirThe Casuneanu' study analyze the main characteristics of employee motivation system in the Romanian companies using data collected from 402 individual employees. The target population of the study was employees who have managers position (general manager, manager, department manager, and supervisor) and who have at least 5 subordinates. The study was performed in the period 11-22 June 2009.
3
med the fact that they would change it for other benefits, but no for more money. These benefits are flexible schedule, paid holidays, working climate and inter-human relations, bonuses and primes, training courses. An attractive benefit package include seasonal tickets or access to sport clubs or beauty centers, medical insurances, facilities for nursery school, facilities for a housing acquisition credit, personal courses financed by the company as well as holidays paid by the company. As regards the main incentives received by employees in order to increase their motivation level, on the first place are situated performance related bonuses, followed by the bonuses unrelated to performance and the short-term training courses. This study reveal that the most important motivating factors from the point of view of Romanian employee are job authority, responsibility and autonomy, job stability and professional development. Due to the economic crisis, the stability has become the main motivating factor in this period and the people turn to the lower level needs, safety becoming primordial in the top of preoccupations. It looks that the employees like their jobs more than before the crisis. If two years ago, it could be summarized as, I want more now this phrases has been transformed into I want a job (Casuneanu, 2011, p. 935).
CONCLUSION
Principal agent problem in the modern enterprise may result in disruption of operations continuity and threatening the survival of the company. Monitoring the companys management and an adequate level of motivation, are in function of company goals realization, and mitigation of conflicts between management and shareholders. The existence of adequate managers motivation system and its effective implementation strengthens the awareness of belonging to the organization, and promotion of joint, non-personal interests. Incentives and rewards are an effective instrument of coordination of employees and shareholders interests. Investment in human capital becomes the main form of investment creating the competitive advantage. Therefore, the building of
a quality system of motivation may increase companys competitive advantage and its market value. The primary criterion for managers participation in the allocation of bonuses and other forms of stimulation should be the result of an individual or group contribution to the positive performance of the company. Regardless the fact, whether the contribution to the company's success is measured by applying traditional accounting criteria based on profit, the ones based on cash flows, so-called economic measures or nonfinancial performance indicators, it is important that compensations reflect the proper managers contribution quantum realized in the companys performance. The structure of compensation packages, considering the type of incentives and methods of its distribution, an issue of individual company policy, which has to be consistent with the financial opportunities and benefits that company estimates to achieve by implementing this compensation plan. Quality regulations and ethical principles of conduct are relevant support for installation and operation of an effective employee incentive. Assuming that in the future period it will be developed improvement in legislation, and that it will be respected the standards and values of business conduct, both by managers, other employees, and shareholders, it could be expected more efficient functioning of motivational systems in the companies in Serbia. Some of the companies short-term measures of adaptation to existing crisis business conditions could be optimizing the employees cost, the quantitative changes in terms of reducing or freezing the incentives, restriction and the control of benefits which Serbian companies employees enjoy. According to the mentioned study, the most important motivational factors in term of motivation of Romanian employees are job stability, a proper potential salary, opportunities to promotion, an attractive benefit package, an appropriate logistic package, premiums and bonuses, job attractiveness, job authority responsibility and autonomy, professional development and job comfort. The importance of job stability in the context of the actual economic crisis has been wholly understood by the Romanian employees. The Romanian employee is in the situation of reevaluating what he already possesses and is not willing to change very
often the job. However, there are employees who choose to change a job for other benefits, but no for more money.
REFERENCES
1. Abowd, J.M. and Bognanno, M. (1995) International Differences in Executive and Managerial Compensation, chapter title in the book Differences and Changes in Wage Structures, University of Chicago Press, http://www.nber.org/chapters/c7853. Brigham, E., Houston, J. (2004) Fundamental of Financial Management, Thomson, South-Western. Casuneanu, C. (2011) The Romanian employee motivation system: an empirical analysis, International journal of mathematical models and methods in applied sciences, Issue 5, Volume 5, p. 931-938. Fabozzi, F., Peterson, P. (2006) Analysis of Financial Statements, John Wiley & Sons, Inc. Hoboken, New Jersey. Kapi, J. (2009) Cash flow statements, Economic Analysis, Vol. 42, No. 3-4, Institute of economic sciences, Belgrade. Malini, D. (2007) Kompenzacione eme za menadere, Zbornik radova: Korporativno i javno upravljanje u funkciji razvoja konkurentnosti, Miloerski ekonomski forum, Savez ekonomista Srbije, Beograd. Malini, D. (2002) Politika dobiti korporativnog preduzea, Ekonomski fakultet, Beograd. Mishkin, F. (2006) Monetarna ekonomija, bankarstvo i finansijska trita, Data status, Beograd. Mulford, C., Comiskey, E. (2005) Creative Cash Flow Reporting: Uncovering Sustainable Financial Performance, John Wiley & Sons, Inc. Hoboken, New Jersey. Murphy, K.J. (1999) Executive Compensation, http://windbichler.rewi.huberlin.de. Noe, R.A., Hollenbeck, J.R., Gerhart, B., Wright, P.M. (2005) Menadment ljudskih potencijala-postizanje konkurentske prednosti, Mate, Zagreb. Prulj . (2007) Menadment ljudskih resursa, Fakultet za trgovinu i bankarstvo Janiije i Danica Kari, Beograd. Sengi. M.P. (2007) Peta disciplina-umee i praksa organizacije koja ui, Asee, Novi Sad. Stevanovi, N., Malini, D. i Milievi, V. (2009) Upravljako raunovodstvo, Ekonomski fakultet, Beograd.
2. 3.
4. 5. 6.
7. 8. 9.
10. 11. 12. 13. 14.
126 Imporatance of the Management Incentives for Company Activities 15. Vujovi, S. (2010) Uticaj emocionalnog rukovoenja na stavove zaposlenih, asopis Ekonomske teme, broj 4, 591-605. 16. Zakon o privrednim drutvima, Slubeni glasnik RS, broj 125/2004. 17. www.pwc.com/rs/sr/publications/hr-barometer.jhtml.
Chapter 6
ECONOMIC CRISIS AND ITS CONSEQUENCES ON THE LIVING STANDARD AND DEVELOPMENT OF THE AGRICULTURE IN SERBIA
Marko Jelocnik, Lana Nastic Abstract: The economic crisis had transferred to Serbia at the end of 2008,
causing the economic growth slowdown and macroeconomic stability endangerment. Agriculture, the strategic branch of national economy was affected as well, and despite favourable climatic, natural, human and technicaltechnological potentials, it had influenced reduction of agricultural development far below the real possibilities. Prior to the crisis potentials for agriculturual development in Serbia were unused. Comprehensive and more intensive institutional support lacked, along with growing necessity for the concept based on profitability, market orientation and competitiveness of national agriculture. All segments of agriculture would have to be harmonized with the policies of agrarian and rural development of EU, mainly in terms of agri-food safety, and economic, social and ecological efficiency of agriculture. Due to decrease in living standard in most of the housholds in Serbia various survival strategies models have been created, in which the great part of personal consumption is being used for purchase of agri-food products. Changes in local populations daily food consumption are reflected not as much in the reduction of quantities used as in the quality of used nutrients. That leads to a conclusion that to food production in Serbia should be paid greater attention, especially during the period of economic crisis.
Keywords: Republic of Serbia, agriculture, food security, economic crisis, employment JEL classification: J43, Q11, E21
128 Economic Crisis and its Consequences on the Living Standard ...
INTRODUCTION1
Agriculture takes an important place in the economic system of the Republic of Serbia. As all world countries pay great attention to agriculture, at the current level of socio-economic development of Serbia, with due right it can be assigned the title of strategic branch of economy. Rather, if it is known that even countries which do not have adequate conditions for agricultural production development are trying to provide to themselves a certain level of self-sufficiency in elementary agricultural products (Subi, 2010). Compliance of Serbia with EU accession requirements considers the realization of the National Program for Economic Recovery goals, as well as redefining of the Strategy for long-term development of national agriculture2. This approach inevitably perceives both external and internal conditions that impact agricultural and rural development, and according to the aforementioned, there is a need for model which would promote new concept of agriculture and rural development sustainability which would in short time, eliminate all effects of economic crisis in Serbia. Agricultural production is the branch of the economy characterized by some specificities that largely impact the forming of product prices, such production seasonality, non-harmonized production and demand, as well as variation of achieved yields due to weather conditions. In Serbia on prices forming the largest influence have weather conditions, or yield height, considering that small amounts of agricultural products are stored in modern way. Influence of prices on living standard is expressed both in producers, as in consumers. Achieving for his product certain price, producer also accomplished a certain income that is intended for personal consumption
1
Paper is a part of research project III 46006 - Sustainable agriculture and rural development in the function of strategic goals achievement within Danube region, financed by the Ministry of Global goals of agrarian and rural development in EU are food security, economic, social
Education and Science of Republic of Serbia, project period 2011-2014.

2
and ecological effectiveness.
Jelocnik, Nastic 129
and which affects his standard of living. However, from the consumers point of view, increase of prices means a decrease of their living standards. So it could be said that the price of agricultural product on market is a factor that affects both the living standards of producers and consumers (Hodi et al, 2009). In relation to EU enlargement and implied perspectives for Serbia, it is evident that future development of domestic agriculture will be focused on production factors. Unfortunately, current level of national agriculture development is below actual possibilities given by the climate, land fund, human resources, science, etc.
MATERIALS AND RESEARCH METHOD

Research is based on all available data sources: statistical publications of National Statistical Office and FAO3, scientific papers and electronic data basis. Impact of world economic crisis and life standard decline in Serbia on situation in agro-complex are analysed through the following criteria: 1. food security and level of agro-food products consumption; 2. agro-food products price level; 3. employment rate and salary level in agriculture. According to research goal and available data sources, research was based on desk top research and comparative analysis method, which enables real perceiving of situation regarding selected parameters within serbian agriculture (with short retrospective view on former sfry republics, some EU countries, USA and Japan). Research included both, period prior to global economic crisis and period from its start until current date. Analysed parameters are presented by tables, in absolute and relative numbers.
It is important to note that national and FAO statistical publications often are not adequately updated, nor methodologically and valuably harmonized with other relevant data sources. That might be the reason of some potential valuable data variation.
RESULTS AND DISSCUSION

Food Security and Agro-Food Products Consumption Main function of agriculture, in any place on Earth, is food production and food safety, and precisely because of alimentation needs of all people, there is a need for sustainable development and modernization of entire agriculture. Some economists consider that agriculture is the backbone of one nation, a vital sector, or framework for rural areas development, while in France it is considered as a green oil of the nation (Zahiu, 2009). The concept of food security was established after World War II and then formulated within the framework of FAO discussions. Over the years, this concept was developed and promoted in order to find adequate solutions that would be acceptable at the national, regional and global level, in order to fight against poverty and food shortage. Accordingly, FAO defines food security as "direct accesses to needed food for all population" (Zahiu and Dachin, 2001). Presentation of actual situation regarding food security in Serbia required food consumption analysis both in national and in regional level (countries within region, some EU countries, USA and Japan). Wherever it was possible, five years period prior to economy crisis (2003-2007), was used which reflected food consumption characteristics in Serbia and mentioned countries. Within observed period, the average consumption of basic food products in Serbia relatively differs from consumption in certain EU countries. The biggest differences are in terms of consumption of cereals, grape, milk, eggs and animal fats, while the smallest differences are at the consumption of meat, vegetables and vegetable oils (Table 1.).
Table 1 - Average consumption of basic food products in Serbia and selected EUcountries (in kg/capita/year)
Product Year Serbia1
81,50 80,60 80,60 77,60 69,60 38,00 47,90 48,00 44,40 36,40 106,00 128,10 123,20 124,50 103,70 115,60 118,40 71,20 100,70 108,50 20,90 21,20 13,30 18,20 15,70 82,20 79,20 82,00 74,10 82,30 2,90 4,80 4,50 160,50 159,30 162,00
France
116,90 118,80 119,60 123,20 118,50 64,70 66,90 64,10 62,70 64,90 108,00 113,40 104,40 97,90 98,20 96,00 106,20 114,30 111,40 116,80 2,40 2,30 2,60 1,90 3,90 98,10 93,30 90,90 86,10 88,80 34,00 33,40 35,20 35,00 34,80 272,20 266,50 261,90
Country Germany Poland

108,60 110,60 114,80 115,50 114,30 71,70 79,90 76,30 68,80 69,50 90,80 93,10 87,90 89,60 94,50 98,80 90,50 99,10 85,50 88,00 12,30 7,00 11,20 9,70 10,70 84,50 84,30 83,80 84,10 87,90 14,30 13,80 14,80 14,80 14,80 255,10 240,90 247,20 151,30 148,60 151,40 148,60 150,30 128,60 128,20 126,20 132,30 122,90 107,40 119,90 114,90 113,00 130,30 47,40 49,30 51,20 51,70 50,00 3,20 3,40 4,00 3,90 3,90 74,50 72,90 72,90 76,20 76,60 8,70 9,60 9,50 9,50 9,50 195,20 180,10 176,10
Romania
185,60 190,10 186,30 182,10 180,60 98,30 98,70 99,00 99,00 98,00 195,30 199,70 185,30 193,10 151,40 69,70 71,50 75,90 70,10 58,80 5,30 5,80 2,10 3,40 4,50 60,50 54,30 63,90 63,10 63,20 3,90 4,20 5,20 5,20 5,30 229,80 246,60 248,80
2003 2004 Cereals (total)* 2005 2006 2007 2003 2004 Potatoes 2005 2006 2007 2003 2004 Vegetables (total) 2005 2006 2007 2003 2004 Fruits (total)** 2005 2006 2007 2003 2004 Grapes 2005 2006 2007 2003 2004 Meat (total) 2005 2006 2007 2003 2004 Fish (total)*** 2005 2006 2007 2003 Milk (total)**** 2004 2005
132 Economic Crisis and its Consequences on the Living Standard ... Country Germany Poland
Product
Year
Serbia1
France
Romania
2006 151,50 260,00 242,30 188,80 259,40 2007 154,90 260,50 247,20 198,50 266,20 15,20 12,10 11,60 13,50 2003 7,00 2004 7,50 14,50 12,10 11,60 14,30 Eggs (total) 2005 7,10 14,40 11,80 11,70 14,30 2006 7,00 14,00 12,30 11,30 14,90 2007 6,70 14,70 12,00 11,60 12,80 2003 0,30 0,50 1,20 0,10 0,40 2004 0,40 0,50 1,10 0,10 0,50 Honey 2005 0,40 0,50 1,10 0,10 0,60 2006 0,40 0,50 1,10 0,10 0,40 2007 0,30 0,60 1,10 0,10 0,50 2003 12,10 18,00 16,70 11,60 13,00 2004 10,70 17,40 17,00 12,00 11,90 Vegetable oils 2005 13,10 19,50 16,30 12,50 14,00 (total) 2006 14,50 21,20 17,40 11,90 14,80 2007 12,00 20,30 17,30 11,20 13,30 2003 10,40 17,30 21,90 14,50 3,90 2004 10,40 17,20 20,10 14,50 3,10 Animal fats (total) 2005 10,90 16,20 20,60 14,30 3,80 2006 8,80 17,40 21,30 14,30 3,90 2007 9,80 18,80 20,30 14,60 3,70 2003 30,70 40,70 49,20 45,60 27,40 2004 29,10 41,60 50,20 44,50 28,60 Sugar (total)***** 2005 33,80 42,10 51,80 43,60 30,70 2006 31,30 38,30 50,10 44,50 32,20 2007 33,30 37,40 51,20 43,70 28,70 2003 73,10 90,90 140,50 87,10 86,90 2004 69,50 93,00 136,20 91,30 94,90 Alcoholic 2005 61,00 92,80 133,40 96,20 91,20 beverages 2006 78,90 92,20 140,40 102,70 106,00 2007 80,20 91,30 136,60 105,80 119,80 *without brewers barley; **without wine grape; ***including seafood;****without butter; *****including sweeteners; data from period 2003-2005 refer to Serbia and Montenegro.
1
Source: http://faostat.fao.org/site/368/default.aspx#ancor
Average food consumption in Serbia is uneven, with significant oscillations caused by present situation at domestic market and in foreign trade. National consumer basket is generally characterised by: low consumption level of cereals, potato, milk, eggs, honey, animal fat, plant oils and alcoholic beverages;
high consumption level of fruits and vegetables; and satisfying situation regarding meat and sugar consumption. Current alimentation condition of local population is in greatly reflected by production parameters of agricultural and food products (quantity, quality and continuity), as well as relation between supply and demand in domestic market, so purchasing power often does not meet basic nutritional needs. In regard to the former republics of Yugoslavia, the consumption of basic agrofood products in Serbia reflects the visible differences in terms of average consumption of potatoes, fruits, eggs, honey, vegetable oils and animal fats. In particular the differences are noticeable in average consumption of cereals, vegetables, meat, milk and alcoholic beverages (table 2). Presented deviations are mostly supported by tradition and culture of nutrition, confessional norms, as well as by different levels of living standard of the population within observed region.
Table 2 - Average consumption of basic food products in countries former republics of Yugoslavia (in kg/capita/year)
Product Year
2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 2003 2004
Country Slovenia
137,50 130,00 138,20 136,70 141,00 55,90 62,00 61,60 62,20 64,20 77,20 83,80 87,30 87,80 77,40 140,80 163,10
Croatia
117,70 122,10 123,40 125,40 119,40 105,90 77,50 68,60 65,30 68,60 104,70 80,20 72,50 88,50 92,30 90,40 69,20
B&H
188,50 178,90 174,70 170,80 169,30 82,40 93,60 91,00 80,40 77,40 179,50 206,30 204,50 212,30 197,30 60,50 111,40
Montenegro*
81,50 80,60 80,60 67,00 67,40 38,00 47,90 48,00 191,60 178,20 106,00 128,10 123,20 173,80 163,10 115,60 118,40
Macedonia
131,30 136,30 138,80 135,30 135,20 48,40 58,00 57,50 51,90 53,50 159,50 149,20 141,70 143,20 157,50 92,40 102,50
Cereals (total)**
Potatoes
Vegetables (total) Fruits (total)***
134 Economic Crisis and its Consequences on the Living Standard ... Country Slovenia
155,50 135,60 120,50 38,40 45,00 44,40 36,00 34,00 92,70 88,40 90,60 86,30 83,90 8,30 9,50 9,40 9,40 9,40 233,60 248,70 242,80 241,40 246,40 6,90 5,50 6,00 6,50 8,90 0,90 1,20 1,00 1,40 0,90 13,30 14,10 12,80 12,80 12,70 15,20 17,90
Product
Year
2005 2006 2007 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 2003 2004
Croatia
73,80 95,20 101,50 18,50 9,50 19,70 19,40 22,90 41,90 44,30 39,90 47,30 50,10 14,40 13,50 15,30 15,30 15,30 179,50 189,30 201,50 216,30 217,50 11,00 10,20 10,50 10,80 10,80 0,10 0,50 0,60 0,40 0,40 15,50 15,20 16,60 17,10 15,90 3,20 5,00
B&H
105,70 92,40 92,40 3,20 5,30 6,70 7,00 5,70 19,60 19,70 21,70 20,10 21,30 5,80 6,80 7,50 6,80 6,80 161,50 171,30 183,50 183,20 196,70 4,50 4,20 5,10 4,60 5,30 0,40 0,70 0,70 0,90 0,80 7,40 7,70 8,80 9,00 6,60 1,70 2,10
Montenegro*
71,20 70,00 71,70 20,90 21,20 13,30 20,40 15,10 82,20 79,20 82,00 32,10 46,50 2,90 4,80 4,50 160,50 159,30 162,00 304,90 305,90 7,00 7,50 7,10 3,60 5,80 0,30 0,40 0,40 0,80 0,80 12,10 10,70 13,10 1,60 2,20 10,40 10,40
Macedonia
96,80 107,60 99,70 36,70 28,80 29,90 5,30 8,20 37,80 40,20 37,90 38,00 50,60 5,00 5,40 4,80 4,80 4,80 111,00 122,40 119,90 128,40 137,10 7,40 9,20 8,90 9,10 8,40 0,50 0,40 0,50 0,40 0,50 14,10 16,30 15,70 17,80 18,10 7,00 7,20
Grapes
Meat (total)
Fish (total)****
Milk (total)*****
Eggs (total)
Honey
Vegetable oils (total) Animal fats (total)
Jelocnik, Nastic 135 Country Slovenia Croatia B&H Montenegro* Macedonia
Product
Year
2005 16,10 4,40 2,00 10,90 7,60 2006 16,30 5,40 1,80 0,80 9,70 2007 16,70 6,40 1,70 0,80 10,90 2003 20,30 62,40 15,40 30,70 37,30 2004 22,70 64,20 16,60 29,10 38,90 Sugar 2005 23,80 69,00 17,40 33,80 35,10 (total)****** 2006 23,00 55,70 19,60 41,70 36,00 2007 24,10 43,30 25,60 36,20 36,40 127,50 57,90 73,10 43,10 2003 81,50 2004 96,90 125,60 63,50 69,50 45,10 Alcoholic 2005 103,60 111,20 66,40 61,00 43,10 beverages 2006 97,40 103,10 78,60 45,20 38,40 2007 103,80 113,50 81,30 34,30 37,10 *Data from period 2003-2005 refer to Serbia and Montenegro; **without brewers barley; *** without wine grape; ****including sea fruits; *****without butter; ******including sweeteners;
As developed countries pay great attention to ensuring food security, allocating accordingly significant budgetary assets for supporting the development and promotion of agriculture, is presented also food consumption in the EU, USA and japan (table 3.).
Table 3 - Average consumption of basic food products in EU, USA and Japan (in kg/capita/year)
Product Year
2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 2003
EU
125,30 125,50 126,30 125,80 125,10 80,20 81,50 78,90 76,60 76,50 121,50
Country USA
109,90 108,40 109,00 110,50 111,60 65,20 63,60 58,30 56,10 55,60 121,00
Japan
117,80 117,10 117,60 115,40 115,10 22,10 22,50 22,00 21,10 22,60 107,50
Cereals (total)*
Potatoes
Vegetables (total)
136 Economic Crisis and its Consequences on the Living Standard ... Country USA
124,70 117,60 122,30 127,60 112,80 114,50 110,00 108,10 111,00 7,20 6,10 8,90 8,20 8,50 121,50 124,10 123,60 123,90 122,80 23,70 24,30 23,80 24,60 24,10 257,40 253,50 254,00 249,70 253,80 14,50 14,60 14,50 14,50 14,30 0,60 0,50 0,60 0,60 0,50 26,20
Product
Year
2004 2005 2006 2007 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 2003
EU
128,20 121,30 116,90 117,30 101,80 104,90 108,70 108,50 104,40 9,30 8,00 8,50 8,60 9,50 86,20 85,20 84,80 84,60 86,20 21,80 21,60 22,20 22,10 22,00 240,00 235,90 239,90 239,00 241,40 12,30 12,70 12,20 12,30 12,40 0,60 0,60 0,70 0,70 0,60 18,20
Japan
105,30 107,80 106,20 106,20 55,40 57,80 60,60 55,60 58,20 2,30 2,30 2,30 2,30 2,40 44,70 44,10 46,50 45,70 46,10 65,20 62,10 60,80 60,80 60,80 78,70 78,80 77,70 75,30 76,40 19,20 18,90 19,10 19,00 19,60 0,40 0,40 0,40 0,30 0,30 14,90
Fruits (total)**
Grapes
Meat (total)
Fish (total)***
Milk (total)****
Eggs (total)
Honey
Vegetable oils (total)
Jelocnik, Nastic 137 Country USA
Product
Year
EU
Japan
15,80 15,80 15,80 15,60 1,80 1,70 1,80 1,80 1,80 29,90 29,90 28,60 27,80 30,10 47,50 46,70 43,90 44,20 47,10 butter;
2004 2005 2006 2007 2003 2004 2005 Animal fats (total) 2006 2007 2003 2004 2005 Sugar (total)**** 2006 2007 2003 2004 2005 Alcoholic beverages 2006 2007 *without brewers barley; **without wine grape; *****including sweeteners.
18,60 26,80 18,80 29,70 19,80 29,50 19,40 29,10 13,30 5,60 12,80 5,50 12,90 5,80 13,10 5,70 13,30 5,70 40,80 69,10 41,30 69,80 40,80 69,30 38,10 68,80 39,20 67,60 109,30 99,80 109,10 100,00 108,40 99,90 110,10 99,90 109,10 98,30 ***including seafood;****without
In previous case, the criterion is not living standard and purchasing power of the local population, as consumer habits, geographical distribution, food tradition and culture. It could be seen that the consumption of basic agro-food products in Serbia is significantly lower than in the EU (cereals, grape, milk, eggs and animal fats) and USA (cereals, meat, milk, eggs, vegetable oils and sugar). On the other hand, Japan is traditionally great consumer of fish and seafood. In todays circumstances, provoked by effects of the global economic crisis, consumption of basic agro-food products in Serbia is below the EU average. Decline in living standard significantly contributed to the decrease in trade and consumption of agricultural and food products, which could be best seen through the current meat consumption (per capita). Serbian average is 43,3 kg (from which beef 4 kg, pork 16 kg, lamb 1,3 kg, poultry 17,4 kg and other types
of meat 4,6 kg). The annual consumption of cow's milk (without processed products) in average is 56,50 l/capita, while the average consumption of fruits is on the level of 62,1 kg/capita and vegetables, 136,1 kg/capita. It is certain that the future of humanity is closely linked to the food security, where its basic elements are contained in the provision of necessary food per capita (expressed in calories and proteins), as to the financial strength of the population for obtaining it. That induces necessity of nutrition and agricultural policies harmonization (the main goal would be in covering quantitative and qualitative nutritional needs of all population, by food that is accessible to all social categories).
Table 4 - Energetic value of average food consumption in Serbia and selected EU countries
Element Year
2003 Food supply (kcal*/capita/day) 2004 2005 2006 2007 2003 Protein supply (g/capita/day) 2004 2005 2006 2007 2003 Fat supply (g/capita/day) 2004 2005 2006 2007
Country Serbia
2.694* 2.700* 2.703* 2.748 2.710 74,40* 77,50* 75,90* 74,40 74,70 118,00* 111,90* 121,50* 119,80 119,50
France
3.599 3.569 3.586 3.541 3.532 117,20 115,10 113,80 112,30 112,90 168,40 161,80 163,90 163,20 164,70
Germany
3.495 3.496 3.524 3.519 3.547 100,10 98,60 98,70 98,60 101,00 143,70 142,00 140,60 143,50 144,30
Poland
3.384 3.354 3.377 3.394 3.421 100,00 99,10 99,70 101,20 102,70 112,90 111,80 113,30 113,70 113,90
Romania
3.425 3.419 3.514 3.562 3.455 108,20 108,50 111,20 111,50 109,90 103,70 97,30 107,70 112,10 107,60
*1kcal = 4.184 j; ** data for Serbia and Montenegro;
According to FAO, the needed energy for average adult person is, at least 2.200 kcal/day, while the critical point of hunger is in the range of 1.460-1.620
kcal/day. During the last decade, energy value of daily meal on the world level was 2.699 kcal/day (3.236 kcal/capita/day in developed countries, or 2.412 kcal/capita/day in developing countries). Following table shows the average (daily) energy value of food consumed in Serbia and some EU countries. Serbia significantly lags behind certain eu member states in daily consumption of calories and proteins, while at fat consumption it somewhat follows their standards (Poland and Romania). Compared to former Yugoslav republics, except Slovenia, Serbia is below Croatia, Bosnia and Herzegovina and Macedonia, while the average energy level of daily meal is higher than in Montenegro (table5.).
Table 5 - Energy value of average food intake in former sfry republics

Element Year
2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007
Slovenia
3.106 3.182 3.226 3.212 3.223 99,70 98,80 101,80 101,20 101,30 120,00 123,80 120,00 121,60 121,60
Croatia
2.885 2.970 2.992 2.978 2.990 75,50 75,30 75,90 79,50 80,10 94,30 100,30 103,10 108,50 110,50
Country Bosnia and Montenegro Herzegovina

2.944 3.076 3.091 3.082 3.078 83,90 88,10 88,60 87,40 88,20 62,70 70,00 75,10 75,00 70,20 2.694** 2.700** 2.703** 2.443 2.447 74,40** 77,50** 75,90** 70,20 74,40 118,00** 111,90** 121,50** 63,7 70,3
Macedonia
2.823 2.971 2.869 2.974 3.105 72,90 76,60 73,70 74,70 79,00 96,20 105,30 103,10 114,40 125,50
Food supply (kcal*/capita/day)
Protein supply (g/capita/day)
Fat supply (g/capita/day)
*1kcal = 4.184 j; ** data for Serbia and Montenegro;
The complete picture could be seen by an overview of energy and nutritional value of average (daily) meal in some developed world economies (table 6).
Table 6 - Energetic value of average food consumption in EU, USA and Japan
Element Year 2003 2004 Food supply (kcal*/capita/day) 2005 2006 2007 2003 2004 Protein supply (g/capita/day) 2005 2006 2007 2003 2004 Fat supply (g/capita/day) 2005 2006 2007 *1kcal = 4.184 j; Country EU 3.455 3.465 3.466 3.455 3.466 105,60 105,20 105,10 104,90 105,60 140,40 139,90 141,00 143,60 143,70 USA 3.751 3.785 3.796 3.766 3.748 113,60 114,70 114,30 113,70 113,60 157,10 160,20 162,90 160,20 160,20 Japan 2.827 2.831 2.821 2.786 2.812 93,70 91,50 92,10 91,40 91,80 87,80 89,80 90,50 89,80 89,60
Apart from presented, it would be good to give a short overview of the structure (origin) of consumed calories and proteins daily in observed countries. In fact, despite some deviations from the standpoint of tradition, food culture and religion, rule of the thumb is that the daily meal in more developed economies is richer in energy and proteins from animal products (Table 7.). Also, it is expected that with decrease in living standard, structure of consumed calories and proteins daily will generally shift to toward calories and proteins obtained from vegetable products, or from cheaper animal products substitutes. Indisputable determination of Serbia for EU approaching imposes the need for harmonization of national nutritional meal value with the Community average.
Table 7 - Origin of energy and proteins in daily nutrition (in %, 2007)

Element Energy Serbia Veget. 64,6 Proteins Element Energy Proteins Element Energy Proteins Veget. 41,4 Romania Veget. 74,2 Veget. 49,6 Veget. 66,1 Veget. 40,1 Anim. 25,8 Anim. 50,4 Anim. 33,9 Anim. 59,9 Anim. 35,4 Anim. 58,6 Eu Veget. 70,4 Veget. 41,2 Slovenia Veget. 71,2 Veget. 43,5 Veget. 77,0 Veget. 55,7 Anim. 28,8 Anim. 56,5 Anim. 23,0 Anim. 44,3 Anim. 29,6 Anim. 58,8 Germany Veget. 69,6 Veget. 39,7 Croatia Veget. 75,3 Veget. 46,9 Usa Veget. 72,6 Veget. 35,6 Anim. 27,3 Anim. 64,4 Anim. 24,7 Anim. 53,1 Anim. 30,4 Anim. 60,3 France Veget. 65,0 Veget. 35,2 B and h Veget. 83,7 Veget. 65,6 Japan Veget. 79,2 Veget. 43,3 Anim. 20,8 Anim. 56,7 Anim. 16,3 Anim. 34,4 Anim. 35,0 Anim. 64,8
Montenegro
Macedonia
Agri-food products price levels An unwritten rule is that during the crisis period used quantities of basic agrofood products are not subject to greater changes as they meet the basic life needs of the population. The necessity of buying these stresses the importance of their prices trend, as well as their impact on households budgets. The important elements during the agricultural products price determination are height of input prices and achieved yields. By analysis of average prices of basic agro-food products in 2008, 2009 and 2010, it can be said that the prices in 2010 were at the same, or in some cases slightly below level, compared to the previous years (Table 8). On the other hand, if observed is just a trend of average prices during 2010, prices of many products had a growing tendency (sunflower oil, pork meat, refined sugar, semi-white bread, fresh milk, etc.), where the highest price-jump has been seen in vegetable oil. According to
producers, processors and retailers further growth of elementary agro-food products prices in following period could be expected.
Table 8 - Average retail prices (in RSD)

2008 57,64 70,28 51,97 34,66 187,96 39,91 64,44 469,56 743,23 420,57 541,47 207,81 9,49 56,61 231,19 612,07 92,32 127,03 187,51 58,65 589,80 27,30 774,19
Products Bread - wheat flour type 850, kg Semi-white bread, kg Bread - wheat flour type 500, kg Wheat flour type 500, kg Potato, kg Beans, kg Onion, kg Apples, kg Beef - boneless, kg Veal meat - boneless, kg Pork meat - boneless, kg Lamb meat, kg Chicken meat, kg Eggs - chicken, pcs Milk fresh, Cheese white soft, kg Butter, kg Seam, kg Sunflower oil, Margarine, kg Sugar refined, kg Coffee, kg Salt, kg Milk chocolate, kg
Year 2009 57,33 70,61 47,18 31,10 201,81 38,66 57,89 547,77 853,50 458,16 599,17 210,73 10,49 52,57 254,24 615,67 140,18 107,14 198,59 61,40 696,13 30,05 869,52
2010 54,88 42,04 37,53 195,92 60,52 56,18 419,79 366,11 198,13 9,47 55,60 260,37 670,34 137,26 104,20 205,24 68,37 728,54 31,35 770,62
Source: Statistical yearbook 2009, RZS, Belgrade, 2009; Statistical yearbook 2010, RZS, Belgrade, 2010; Monthly statistical review, January - December 2010, RZS, Belgrade, 2010, 2011.
Statistical office of the Republic of Serbia defines the Consumer price index (CPI) as the average change in retail prices of goods and services in personal consumption. According to them, in 2010 retail prices were increased in average for 6.5% in compare to previous year. With January 2011 prices are higher for 1.4% compared to previous month.
Table 9 - Available assets and personal consumption, monthly average per member of household (in 2008, 2009 and 2010)
Element Available assets total Households income in cash Households income in kind Personal consumption total Food and non-alcoholic beverages Alcoholic beverages and tobacco Available assets total Households income in cash Households income in kind Personal consumption total Food and non-alcoholic beverages Alcoholic beverages and tobacco Available assets total Households income in cash Households income in kind Personal consumption total Food and non-alcoholic beverages Alcoholic beverages and tobacco 2008 2009 % 100,00 94,60 5,40 100,00 41,20 4,50 100,00 99,00 1,00 100,00 39,80 4,10 100,00 87,30 12,70 100,00 43,50 5,10 RSD % RSD All households 14.315 100,00 15.880 13.562 94,70 15.027 753 5,30 853 13.191 5.451 589 100,00 41,30 4,50 14.183 5.856 633 2010 RSD % 16.114 15.238 876 14.438 5.934 641 16.730 16.569 161 15.120 6.023 600 15.226 13.325 1.901 13.460 5.805 701 100,00 94,60 5,40 100,00 41,10 4,40 100,00 99,00 1,00 100,00 39,80 4,00 100,00 87,50 12,50 100,00 43,10 5,20
Urban area 15.780 100,00 17.474 15.641 99,10 17.306 139 0,90 168 14.263 5.702 592 100,00 40,00 4,10 15.444 6.164 626
Other areas 12.280 100,00 13.813 10.695 87,10 12.064 1.585 12,90 1.749 11.771 5.114 584 100,00 43,60 5,00 12.549 5.457 644
Source: Statistical yearbook for 2009 and 2010, RZS, Belgrade 2009, 2010. Statement no. 79, Questionnaire of households consumption, RZS, Belgrade, March 2011;
Importance and impact of food prices on households budget is best illustrated by the fact that per average household member, during the period 2008-2010, within the structure of personal consumption, expenditures for food and non-alcoholic beverages dominated with 41% (Table 9.). Apart from that, in observed period, average household received more than 94% of income in cash. The share of food and non-alcoholic beverages in personal consumption in urban areas is on slightly lower level (39.8% in 2009 and 2010, or 40,0% in 2008) compared to other areas (share varied in the interval from 43,1% to 43,6%). Also, the available assets per household member are much higher in urban areas, in which household incomes in cash are around 99% in structure.
EMPLOYMENT AND SALARIES IN AGRICULTURE

Currently, the number of agricultural population and size of labour contingent within national agriculture can only be a result of estimations based on Census of population, households and residences in 2002. According to this document, agricultural population is 817.052 inhabitants (around 11% of total population in Serbia), with 529.236 inhabitants being economically active4. It should be said that in last few years, influenced by transitional processes and effects of economic crisis, many people looked for additional income in agriculture, or after quitting some economic activities; they have found a primary income in agro complex. Dominant part of Serbian territory has characteristics of rural areas, where over 40% of total population lives. Most of these areas are either in phase of dying (senility) or demographic evacuation (expressed migratory processes). Based on estimations, currently less than 750.000 agricultural households exist, from which around 490.000 households are with registered husbandry. Unfortunately, small number of them is market oriented (for example, in 2009, approximately 80.000 husbandries have realized a right to use subsidies for agriculture).
4
Among dependants (287.816) most of persons are in different ways involved in accomplishing of agricultural activities within their family husbandries.
General characteristics of present labour contingent in rural areas are: expressed migrations, senility, bad educational structure and insufficient level of professional skills, and they are primary cause to extensive production, aggravating breakthrough of innovations, variable quality of products, low productivity, bad production structure, absence of cooperation, etc. Strategic orientation of Serbia for agriculture development opens the question of commercial husbandries' position strengthening, considering that they have on disposal the most of production potentials. Mentioned issue, before all, have in focus a necessary support from competent institutions, with main goal to habilitate them to achieve full profitability, as well as in segment of construction of missing rural and market infrastructure. The effects of the global economic crisis that led to reduction of budgetary assets for the Ministry of Agriculture, certainly didn't contribute to to above. In 2009 and 2010 it was around 25.6 billion RSD (3.4% of total budgetary expenses), while by the Law on budget for 2011 the agriculture is granted around 32.6 milliard RSD. The agrarian budget was characterized as developmentally limited, since agriculture, as strategic economy branch, with significant share in total GDP and positive foreign trade balance deserves much higher assets during the crisis period (current agricultural budget is twice smaller than the budget 2008). Human resources in agriculture means labour linked to execution of agricultural activities, technical coordination, organization and management of resources in function. Table 10 gives an overview of the municipalities with maximal and minimal participation of active agricultural population in total agricultural population in 2009, in order to perceive areas that use the best available human potential in agriculture. According to presented indicator, the leadership position has Svrljig municipality, while the last one is Kula municipality. Shown indicators for selected municipalities are either significantly above, or below the republic average. Individual farmers dominate in the structure of active agricultural population.
Table 10 - Municipalities in Serbia with the highest/lowest participation of active agricultural population in total agricultural population (in 2009.)
Territorial unit Serbia Svrljig Bor Trgovite Gadin Han Majdanpek Kula Preevo Srbobran Bujanovac Vrbas Agricult. population 817.052 3.702 2.098 1.270 1.458 2.112 3.429 6.223 3.088 8.267 2.030 Active agri. Population 529.236 3.161 1.774 1.048 1.159 1.673 1.593 2.913 1.546 4.220 1.047 Individual agriculturalists 487.703 3.122 1.694 1.028 1.148 1.567 1.106 2.877 1.159 4.108 639 Share of active agri. pop. in total agri. pop. 64,8 85,40 84,60 82,50 79,50 79,20 46,40 46,80 50,00 51,00 51,60
Municipalities with highest participation
Municipalities with lowest participation
Source: Statistical yearbook Municipalities in Serbia 2010, RZS, Belgrade, 2010.
It might be interesting to present an overview of employees within agriculture sector in legal entities enterprises, institutions, cooperative farms, organizations and small companies (up to 50 employees) during the period 2008-2010, selected by territorial units (Table 11). At the republic level, participation of employees from the enterprises within agriculture sector in the total number of employees, in analysed period had ranged from 3.2-3.5%. In all three observed years, the leadership position, with the highest number of employees in agriculture sector, had Palilula municipality (around 2.700 employees, or 6.0% of totally employed persons in companies and cooperatives of national agriculture), as a result of position of PKB concern on mentioned territory. Among shown municipalities, Baka Topola is a territorial unit with the highest share of employees from the observed sector within totally employed persons in companies and cooperatives on its territory (in observed period, participation was ranged from 24,3-27,3%). As on the territory of Vojvodina dominant part of
high quality agricultural potentials is located, it seems logical that the municipalities from this area have the most of employees in agrarian sector (within business entities).
Table 11 - Territorial units with the highest number of employees in enterprises and collective farms within the sector of agriculture (period 20082010.)
Territorial unit Total 1.428.457 45.192 102.135 16.713 26.069 7.064 1.396.792 45.074 100.080 15.811 24.136 6.619 1.354.637 43.154 98.567 5.991 24.679 15.103 Employees Agriculture, forestry, water management and fishery 49.528 2.672 2.365 1.960 1.857 1.718 46.429 2.678 2.320 1.715 1.652 1.634 43.384 2.738 2.348 1.637 1.538 1.524
2008.
Serbia Palilula Novi Sad Sombor Panevo Baka Topola
2009.
Serbia Palilula Novi Sad Sombor Panevo Baka Topola
2010.
Serbia Palilula Novi Sad Baka Topola Sombor Zrenjanin
Source: Statistical yearbook Municipalities in Serbia 2009 and 2010, RZS, Belgrade, 2009, 2010; employed persons in Republic of Serbia in 2010, RZS, Statement no. 19, January 2011.
Also, the observed period is characterized by constant negative trend of employed persons in agricultural enterprises within the territory of Serbia (decrease for over 6 thousand workers, i.e. 14%), the most often as a
consequence of unfinished or badly conducted privatization of agricultural enterprises, as well as effect of the global economic crisis (lack of financial and material assets for agriculture and slow development of enterprises). Unfortunately, in following period further decrease of employees in agricultural enterprises and cooperative farms could be expected.
Table 12 - Average gross salary per employee in Serbia (period 2008-2011, in RSD)
Element Total Economic Non-economic Total Economic Non-economic Total Economic Non-economic Total Element Total Economic Non-economic Total Economic Non-economic Total Economic Non-economic Total Year 2008 2008 2008 2009 2009 2009 2010 2010 2010 2011 Year 2008 2008 2008 2009 2009 2009 2010 2010 2010 2011 Jan. 39.331 38.209 41.453 40.245 38.153 44.844 41.651 40.635 43.741 47.382 July 46.115 43.504 50.934 45.307 42.055 52.238 48.394 45.965 53.169 54.164 Feb. 43.218 40.680 47.985 43.353 39.562 51.485 44.871 41.488 51.828 49.394 Aug. 46.222 43.927 50.458 43.597 40.074 51.265 47.190 44.577 52.455 53.285 March 42.873 40.135 47.992 42.213 38.032 51.624 46.457 43.337 52.731 49.633 Sep. 46.015 43.837 50.007 43.577 40.114 51.069 48.016 45.604 52.814 April 45.355 42.747 50.128 45.304 41.526 53.295 48.525 45.857 53.850 54.532 Oct. 47.883 44.826 53.412 44.147 40.637 51.641 47.822 45.448 52.552 May 44.835 41.915 50.233 43.183 39.628 51.010 46.454 43.950 51.552 49.064 Nov. 46.944 44.177 51.910 43.895 40.400 51.256 47.877 45.440 52.666 June 45.608 43.332 49.806 44.246 40.684 51.828 47.486 45.033 52.355 54.616 Dec. 53.876 49.191 62.232 51.115 46.539 60.422 54.948 51.165 62.327 -
Source: www.cekos.rs
The rural areas of Serbia provide real possibilities for employment of fairly large number of employees, regarding that those are the territories in which maximal employment effects with minimal investments could be achieved (e.g. multi-functionality of current agriculture provisions the use of available resources, not only to food production, but also to energy production, grow of medicinal herbs, hunting, fishery, etc.). Guided by this, employment would initiate development of certain rural areas, as well as more balanced development of all areas within Serbia, and parallel with development of agriculture development of other economic activities will occur (tourism, transportation, trade, catering, etc.). However, existing limitations of human capital and business entities in agrarian sector require appropriate activities that will support their development, such as: permanent education, scientific-technological transfers, introduction of quality system, standardization, tax exemptions that will encourage the work of SMEs in rural areas, etc. Throughout analysed period gross salary per employee in non-economic activities were at higher level than salaries achieved in economic activities (Table 12). For a long time, employees in the sector of financial intermediation, energy production, mining and public administration, generate the highest salaries in the Republic. Employees in agriculture, forestry, water management, fishery, processing industry, trade, construction and hotel management are in much unfavourable situation. In Table 13, the average salaries per employee in Serbia (after tax deductions net salaries) are shown, expressed as the average salaries for all economic activities, or achieved in sector of agriculture, forestry and fishery. Much lower level of salaries earned in agriculture compared to the average salary from all economic activities (for 22.7% in 2008, or 15% in 2009) is noticeable. Also, presented is the overview of municipalities with highest and lowest net salary in agriculture, forestry and water management in observed period.
Table 13 - Municipalities in Serbia where the highest and the lowest net salaries per employee in sector of agriculture are achieved (in 2008 and 2009, in RSD)
Territorial unit Serbia Stara Pazova Despotovac Sremska Mitrovica Uice Palilula Bojnik Vladiin Han Svilajnac abari Bosilegrad 2009 Serbia Velika Plana Stara Pazova Despotovac Uice Palilula Knjaevac Sjenica Medvea Ljig Sremski Karlovci 2010. 31.733 27.582 43.231 40.933 39.660 38.919 38.874 5.889 6.322 6.506 7.779 9.035 Net income per employee Agriculture, forestry and All activities - average water management 2008 32.746 26.696 31.799 29.667 32.629 31.697 40.971 15.502 14.945 27.983 27.619 22.668 42.796 40.052 38.456 37.938 37.656 5.015 6.021 7.644 7.902 8.730
Highest net salary per employee in the sector of agriculture
Lowest net salary per employee in the sector of agriculture
Highest net salary per employee in the sector of agriculture

26.958 25.166 29.981 30.542 41.783 18.977 25.104 24.396 23.282 28.832
Lowest net salary per employee in the sector of agriculture
Source: Statistical yearbook Municipalities in Serbia - 2009, 2010; RZS, Belgrade, 2009,
Net salaries in top five municipalities with the highest salaries in the sector of
agriculture are significantly above republican level for this branch of
economy5. Similarly, net salaries in top five municipalities with the lowest salaries in the sector of agriculture are much lower than the republican average for agriculture. Maximal salaries are usually achieved within the municipalities where larger farmers and enterprises from food processing industry are concentrated. Minimal salaries were earned in municipalities where, in spite of the existence of favourable conditions for the organization of agricultural production, this activity was marginalized. Ratio between maximal and minimal salary achieved in agriculture during 2008 was 1:8.6, and in 2009, 1:7.3.
CONCLUSION
From the aspect of food security, it can be concluded that the average consumption of basic agro-food products in serbia (per capita) has the decreasing trend and still significantly lags behind, in terms of volume and energy, consumption in developed world economies (EU, USA, Japan). In spite of the given overview, which does not show the satisfactory image about the average food consumption in serbia, it should not be forgotten that national statistics does not include all realized food and alcoholic beverages consumption at family husbandries (natural consumption), and consequently, there is enough space for excepting unofficial claim that most countries in the region can envy us on the food and beverages consumption. The impact on the stability and price level of agricultural and agro food products are of special importance during the crisis period. Price analysis of certain agricultural and agro food products, during the period 2008-2010, shows their relative stability. On the other hand, in the observed period in serbia in the structure of total personal consumption of husbandries, food and beverages expenses participated with 40% in average.
Previous period was characterized by constant decrease of the number of persons included in the realization of agricultural activities (as
Some Belgrade municipalities, where high average net salary in agriculture is reported, but where small number of employees work, are excluded, as their inclusion would significantly affect the possible conclusions.
5
employed in enterprises and cooperatives, as well as individual producers). Besides that, average salaries achieved in sector of agriculture, forestry, water management and fishery are at lower level compared to salaries earned in most of economic or non-economic branches. Mentioned is mostly the consequence of: unfinished or badly conducted privatisation of agricultural enterprises, obsolete and slow development of material base in agriculture and negative impacts of global economic crisis (lack of investment assets necessary for national agriculture). It is reasonable to expect that in the following period number of involved persons and level of achieved salaries in the sector of agriculture will still decrease. REFERENCES
1. Bogdanov, N. (2008): Small rural households in Serbia and rural non-farm economy. UNDP, DAES, Belgrade, Serbia. 2. Census of population, households and residences in 2002 - Agriculture, book 2.
SORS, 2003, Belgrade, Serbia.
3. Cvijanovi D., Vlahovi B., Mili D. (2007): Zapoljavanje u ruralnim podrujima Srbije - inilac poveanja proizvodnje i izvoza hrane. Economics of Agriculture, no.
1/2007, IAE, Belgrade, Serbia.
4. Employed persons in Republic of Serbia in 2010, Statement no. 19, SORS, January
2011. Hodi K., ejvanovi F., Kapi R., Tati K. (2009): Teorija trita i cijena. IAE Belgrade, Serbia, Faculty for business management Mostar, BiH. Jelonik M., Arsi Slavica, Potrebi V. (2008): Estimation of agricultural situation in a typical municipality of the Kolubara district, Republic of Serbia. Scientific Papers (Series Management, Economic Engineering in Agriculture and Rural development), Vol. 8/2008, Bucharest, Romania. Jelonik M., Cvijanovi D., Cicea C. (2007): Importance of transportation and
5.
6.
telecommunications infrastructure for rural development of Serbia in the context of European integrations, Scientific Papers (Series Management, Economic
Engineering in Agriculture and Rural development), Vol. 7/2007, Bucharest, Romania. Jelonik M., Ivanovi Lana, Subi J. (2011): How strong is Serbian agriculture
7.
comparative analysis of few agricultural indicators of Serbia and Romania.
Jelocnik, Nastic 153 Monograph - Serbia and the European Union: economic lessons from the new member states. University of Coimbra, Portugal. Jelonik, M. (2009): Karakteristike organizacionih oblika subjekata u poljoprivredi. Master Tesis. Faculty of agriculture Novi Sad, Serbia. Macroeconomic analysis and prognosis. Vol. 1, no. 1-2, 2010, IES, Belgrade, Serbia. Monthly statistical overview for period January-December 2010. SORS, Belgrade, Serbia, 2010, 2011. Municipalities in Serbia 2009, 2010. SORS, 2010, Belgrade, Serbia. Novkovi N. (2007): Podsticanje unapreenja agrobiznisa i zaposlenosti u ruralnim sredinama. Economics of Agriculture, no. 1/2007, IAE, Belgrade, Serbia. evarli M., Nikoli M. (2007): Metodoloka pitanja posedovne i socio-ekonomske strukture farmerskih domainstava u EU. Monograph International experiences in transition of agro-sector and rural areas. DAES, Faculty of Agriculture, Belgrade, Serbia. Statement no. 79, Questionnaire of households consumption. SORS, Belgrade, Serbia, LXI, March 2011. Statistical yearbook 2009. SORS, Serbia, Belgrade, 2009. Statistical yearbook 2010. SORS, Serbia, Belgrade, 2010. Subi J. (2005): Radna snaga u poljoprivredi Srbije. Industrija, no. 3/2005, Economics Institute Belgrade, Serbia. Subi J. (2010): Specifinosti procesa investiranja u poljoprivredi. Monograph. IAE, Belgrade, Serbia. Subi J., Jelonik M., Ivanovi L. (2011): Uticaj krize i pada ivotnog standarda u Srbiji na poljoprivredu. Monograph Active measures on the labour market and employment issues, IES, Belgrade. Zahiu L. (2009): Management agricol. Ed. Economic, Bucureti, Romania. Zahiu L., Dachin A. (2001): Politici agroalimentare comparate. Ed. Economic, Bucureti, Romania. http://faostat.fao.org/site/368/default.aspx#ancor http://webrzs.stat.gov.rs/WebSite/public/PublicationView.aspx?pKey=41&pLeve l=1&pubType=2&pubKey=428 http://www.naslovi.net/rd/1696485 www.cekos.rs www.euractiv.rs www.stips.minpolj.gov.rs/node/951
8. 9. 10. 11. 12. 13.
14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27.
ABOUT THE AUTHORS

Jean ANDREI is PhD candidate in economics at the National Institute of Economics Research - Romanian Academy of Sciences. He is currently teaching assistant at Petroleum and Gas University of Ploiesti, Department of Economics, Marketing and Business Administration and, also, Educational Director. He holds a B.S. degree in Administrative Sciences (2005) and in Banks and Finances (2007) from the Petroleum and Gas University of Ploiesti. He has a M.S. degree in Economics, Administrative and Business Management (2007) earned at the same university. Jean Andrei is Editor-in-Chief of International Journal of Sustainable Economies Management (USA) and International Journal of Young Researchers in Business Economics (India), scientific reviewer for International Business Information Management Association Conferences IBIMA (the 15th, the 16th and the 17th), and the World Scientific and Engineering Academy and Society (WSEAS). He is member of scientific organizations like: The Econometric Society (January, 2011), European Association of Agricultural Economists (December, 2008), The Balkan Scientific Association of Agrarian Economists, Serbia, (December 2008) and General Assembly of the Romanian Economists (March 2010). Particularly issues like business investments process, economic efficiency and valuing economic and human potential are among his research and scientific interests, where he has published articles and two books. Aleksandra BRADIC-MARTINOVIC is currently pursuing her Ph.D. degree in economics at the Union University, Belgrade Banking Academy Faculty for banking, insurance and finance. She is a research associate at Institute of Economic Sciences in Belgrade and teaching assistant at Belgrade Banking Academy. From 1991-2006 she worked at the Faculty of Economics, Belgrade on the following positions: Programmer at Computer Centre, Technical Manager of Centre for Securities, Associate at the Centre for Publishing Activities, Associate at the Scientific and Research Centre and Chief Executive at Computing Centre. Shi is also authorized examiner in ECDL system. In April 2009, she had a study visit at the Faculty of Management in Turin (SAA) within the TEMPUS project Business University of the New Age in Serbia (BUONA), and in May 2010
156 About the authors
stayed in France at Universit Nice Sophia Antipolis (UNS) in Nice, within TEMPUS project Master d'tudes europennes double diplomation en Serbie. She has published many articles and one monograph on prediction techniques of share prices. From January 2012 she will be a participant in FP7 Project Support for Establishment of National/Regional Social Science Data Archives (SERSCIDA). Ivana DOMAZET is a Research Fellow in the Institute of Economic Sciences in Belgrade, and Assistant Professor at the Belgrade Banking Academy on Marketing Principles and Marketing Management. She obtained MA degree in 2001 (Management Department, average mark 10,00) and PhD degree in 2010. From 1998 to 2003 she has worked at the Institute for market research. Since 2003 she has been employed at the Institute of Economic Sciences. Ioan DONE is Full professor and Head of Economics, Marketing and Business Administration Department, Faculty of Economic Science from Petroleum and Gas University of Ploiesti since 2004. In 1998-2004 he was vice dean of Economic Sciences Faculty. He graduated Academy of Economic Studies Bucharest in 1974, with a BA in general economics. He holds a PhD in economics (1999) granted by the same academic institution. He is Executive Editor of Petroleum and Gas University Bulletin - Economics Sciences Series, member in board of trustee for International Journal of Sustainable Economies Management (USA) and Regional President of General Assembly of the Romanian Economists (Prahova County) since 2000 and also member in scientific organizations like: European Association of Agricultural Economists (December, 2008), The Balkan Scientific Association of Agrarian Economists, Serbia, (December 2008). His professional and research interests include: business economics, labor market policies, trust capital, cultural models and their implication in economic activity, where he published 6 books and over 50 journal papers. Dorel DUSMANESCU (born in 3 of December 1964 in Mizil Town) is associate professor at Department of Economic Analysis, Mathematics and Economic Informatics, Faculty of Economic Sciences from Petroleum and Gas University of Ploiesti. Currently he is Chancellor of Economic
About the authors 157
Sciences Faculty since 2007. Concerning his education, he holds a PhD in Automation grated by Petroleum & Gas University of Ploiesti in 2001, and currently he is perusing his second PhD in economics at National Institute of Economic Research, Romanian Academy of Sciences. Also, he has a MA in Management at Petroleum & Gas University of Ploiesti (2009). He took his BS the in petroleum engineering at Faculty for Petroleum and Petrochemical Installations from Petroleum and Gas University of Ploiesti in 1989. He is Editor-in-Chief of International Journal of Sustainable Economies Management (USA) and International Journal of Young Researchers in Business Economics (India), scientific reviewer for International Business Information Management Association Conferences IBIMA and the World Scientific and Engineering Academy and Society (WSEAS). His area of expertise is business informatics and system where he published books (7), journal articles (over 40) and conferences presentations. Marko JELOCNIK is currently pursuing his Ph.D. degree in agroeconomics at the Faculty of Agriculture, University of Novi Sad. He is researcher assistant at the Institute of Agricultural Economics Belgrade. He holds a B.S. degree in Agro-economics (2006) from the Faculty of Agriculture, University of Belgrade and M.S. degree in Agro-economics (2009) at the Faculty of Agriculture, University of Novi Sad. He is a participant in over 10 scientific research projects, Associate Editor of International Journal of Sustainable Economies Management (USA), member of the European Association of Agricultural Economists (E.A.A.E.) and the Scientific Balkan Association of Agricultural Economists (S.B.A.A.E.). He has published many articles on sustainable development and investments. Lana NASTIC is currently pursuing her Ph.D. degree in agro-economics at the Faculty of Agriculture, University of Novi Sad. She is researcher assistant at the Institute of Agricultural Economics Belgrade. She holds a B.S. degree in Agro-economics (2002) from the Faculty of Agriculture, University of Belgrade and M.S. degree in Agro-economics (2009) at the Faculty of Agriculture, University of Novi Sad. She is a participant in over 10 scientific research projects, as well as member of the European Association of Agricultural Economists (E.A.A.E.) and the Scientific Balkan
Association of Agricultural Economists (S.B.A.A.E.). She has published many articles on finance and investments. Ivana SIMEUNOVIC is an Assistant Professor at the Belgrade Banking Academy on the courses: Financial Mathematics, Financial Statistics, Actuarial Mathematics and Science of Management. She is a manager and trainer of actuarial training courses in Belgrade Banking Academy; and of Financial and Actuarial Mathematics and Life Insurance in National Bank of Serbia Academy for Banking and Finance. She has published a number of research papers in the field of applied mathematics and statistics. Jonel SUBIC is Research Associate and Assistant Director at the Institute of Agricultural Economics Belgrade and Asisstant Professor at the Faculty of Economics and Political Science, University Alfa Belgrade. He is doctor in Economics since 2003 from the Faculty of Management, Academy of Economic Studies of Bucharest, Romania. He is Expertevaluator (2005 and 2010) for research projects submitted to the Ministry of Sciences and Technological Development of the Republic of Serbia; project manager of four scientific contracts; participant in over 20 scientific research projects; Associate Editor of International Journal of Sustainable Economies Management (USA) and International Journal of Young Researchers in Business Economics (India); Member of Series Scientific Board of Petroleum Gas University of Ploe ti, Bulletin, Economic Sciences Series (RO); Member of Advisory council of Journal of economics and politics of transition (BIH); Member of Editorial Council of Economics of Agriculture (SRB) and Economics (SRB). Also, he is member of the European Association of Agricultural Economists (E.A.A.E.); The Scientific Balkan Association of Agricultural Economists (S.B.A.A.E.); The Balkan Environmental Association (B.EN.A.) and The Serbian Association of Agricultural Economists (S.A.A.E.). He has published many articles and seven books on sustainable development and investment sector. Sasa STEFANOVIC has obtained MSc degree in 2008 at the Faculty of Economics, University of Belgrade. As a teaching assistant he has been engaged in many faculties in the field of financial markets, financial management and management. He has published a monograph on
About the authors 159
mortgage market and several papers in scientific journals and also participated in elaboration of a great number of studies which the Institute of Economic Sciences realized independently or in cooperation with other institutions. Currently he is Deputy Director for Investment and Development at GMS International in Belgrade. Slavica STEVANOVIC is currently pursuing her Ph.D degree in economics at the Union University, Belgrade Banking Academy Faculty for banking, insurance and finance. She is a research associate at Institute of Economic Sciences in Belgrade and teaching assistant at Belgrade Banking Academy as of 2002. Since 2005 she has worked at the Faculty of Economics, as an Assistant on the courses Financial accounting and Banking accounting. She has published several articles and took part in many scientific projects. Jovan ZUBOVIC has obtained PhD degree in 2009 since when is a Research Fellow in the Institute of Economic Sciences in Belgrade, and Assistant Professor at the Belgrade Banking Academy on Microeconomics and Macroeconomics. He has published a monograph on development of human resources in financial sectors, several papers in scientific journals in the field of labour economics and applied econometrics, and edited 3 proceedings books in different fields of economics. He is member of the editorial boards of International Journal of Sustainable Economies Management (USA) and International Journal of Young Researchers in Business Economics (India), Economic Analysis (Serbia).
Index 161
INDEX
A ALMP, 1, 2, 3, 4, 6, 7, 8, 9, 10, 11, 12, 13, 15, 16, 17, 18, 19, 20, 23 Andrei, vi, ix, x, 25 Arandarenko, 88, 89, 94, 96, 100, 101, 102 B Betcherman, 4, 5, 15, 18, 21 Bradic-Martinovic, x, 25 C Calmfors, 5, 12, 14, 16, 21 communication, 26, 29, 32, 40, 50, 51, 55, 56, 57, 58, 59, 60, 61, 62, 63, 68, 70, 74 consumption, 127, 128, 129, 130, 131, 132, 133, 135, 137, 138, 139, 140, 142, 143, 144, 151, 153 Customers, 70 Cvijanovi, vi, x, 152 D Domazet, ix, x, 24, 47, 52, 55, 67, 73, 74, 75 Done, ix, x, 47 Dusmanescu, ix, x, 77 E economic, vii, 2, 3, 4, 5, 9, 12, 15, 17, 18, 19, 20, 22, 26, 48, 77, 78, 88, 89, 106, 115, 116, 119, 123, 124, 125, 127, 128, 129, 137, 144, 145, 148, 149, 152, 153 empirical, iii, vii, 15, 125 employment, 1, 3, 4, 5, 6, 7, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 22, 23, 24, 26, 33, 36, 77, 78, 88, 89, 90, 91, 92, 93, 94, 95, 97, 98, 99, 100, 119, 127, 129, 149, 153 European Commission, 6, 10, 21, 22, 101 evaluation, iii, vii, 1, 2, 11, 12, 13, 14, 17, 18, 22, 33, 35, 42, 105, 107, 113, 114, 119 evaluations, 1, 2, 3, 12, 13, 14, 15, 16, 17, 18, 19, 20, 23, 114 H HR, 26, 27, 28, 29, 31, 32, 33, 35, 36, 37, 38, 39, 40, 42, 43, 44, 45, 73, 119 HRM, 26, 27, 28, 30, 32, 33, 40, 43, 46, 106 Human Resources, ix, 25, 47, 70 J Jelocnik, ix, x, 127

K Kluve, 16, 19, 23 L Labor, 2, 3, 6, 7, 20, 21, 22, 23, 24, 77, 78, 88, 89, 103 Labour, iii, vii, 1, 2, 3, 4, 5, 6, 7, 10, 11, 12, 14, 15, 16, 17, 20, 21, 22, 23, 26, 28, 33, 40, 44, 47, 48, 51, 53, 54, 77, 88, 89, 90, 91, 92, 93, 94, 97, 98, 99, 100, 144, 145, 153 Labour market, iii, vii, 1, 2, 3, 5, 6, 7, 10, 11, 12, 14, 15, 16, 17, 20, 21, 22, 23, 28, 33, 54, 77, 88, 89, 90, 91, 92, 93, 94, 97, 98, 99, 100, 153 M management, vii, 6, 25, 26, 27, 28, 29, 31, 34, 35, 36, 37, 38, 40, 41, 42, 44, 45, 47, 48, 49, 51, 52, 53, 57, 58, 59, 60, 61, 62, 63, 64, 66, 67, 70, 73, 74, 105, 106, 107, 108, 109, 112, 116, 117, 118, 119, 123, 145, 147, 149, 150, 152 market, 3, 5, 6, 7, 10, 11, 12, 22, 23, 26, 35, 43, 47, 49, 50, 51, 54, 59, 60, 66, 67, 68, 72, 88, 89, 90, 91, 93, 94, 99, 108, 109, 116, 117, 118, 119, 124, 127, 129, 132, 133, 144, 145 marketing, vii, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 62, 63, 66, 67, 72, 74 N Nastic, ix, x, 127 NES, 91, 95 O OECD, 1, 5, 6, 7, 8, 11, 13, 17, 21, 22, 23, 24, 103 organization, 25, 27, 32, 36, 40, 45, 49, 51, 52, 53, 54, 57, 59, 61, 62, 64, 66, 67, 72, 106, 107, 119, 123, 145, 151 R Romania, v, vi, x, 9, 23, 72, 80, 81, 86, 131, 138, 139, 141, 152, 153, 158 S school, 91, 95, 123 Serbia, iii, vi, vii, ix, x, 2, 10, 21, 23, 24, 25, 26, 27, 42, 43, 48, 74, 75, 77, 78, 88, 89, 90, 91, 92, 93, 94, 95, 96, 98, 99, 101, 102, 103, 106, 119, 120, 121, 124, 127, 128, 129, 130, 131, 132, 133, 135, 137, 138, 139, 140, 141, 142, 144, 145, 146, 147, 148, 149, 150, 152, 153 Simeunovic, ix, x, 105 statistics, 22, 26, 33, 151 Stefanovic, ix, x, 77 Stevanovic, ix, x, 105 Subic, ix, x, 1 Subi. See
Index 163
U unemployment, vii, 1, 2, 3, 4, 5, 7, 10, 11, 14, 16, 19, 20, 23, 77, 88, 89, 90, 92, 93, 94, 95, 96, 97, 98, 99, 100 Z Zubovi, vi, ix, x, 1, 7, 24, 67, 70, 73, 75, 103
CIP
XXXXXXXXXXXX XXXXXXXXXXXX XXXXXXXXXXXX XXXXXXXXXXXX XXXXXXXXXXXX XXXXXXXXXXXX XXXXXXXXXXXX XXXXXXXXXXXX XXXXXXXXXXXX XXXXXXXXXXXX XXXXXXXXXXXX XXXXXXXXXXXX

LM and HRM

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

LM and HRM

Uploaded by

Copyright:

Available Formats

RESEARCH MONOGRAPH ON

Ploiesti, Belgrade Editors

Dr Jovan Zubovic, Dr Jonel Subic

Dr Dorel Dusmanescu, Mr Aleksandra Bradi-Martinovic

Dr Ioan Done, Dr Ivana Domazet

IV Especially Voulnerable Groups in the Serbian Labour Market

Mr Jean Andrei , Mr Saa Stefanovic

Mr Slavica Stevanovic, Dr Ivana Simeunovic

Mr Marko Jelocnik, Mr Lana Nastic

2 Reviewing Development of ALMP and the Evaluation Techniques

THE BRIEF HISTORY OF ALMP

4 Reviewing Development of ALMP and the Evaluation Techniques

6 Reviewing Development of ALMP and the Evaluation Techniques

Type of program Public employment services Labour market training

8 Reviewing Development of ALMP and the Evaluation Techniques

Table 2 - Expenditures on ALMP in OECD member states (% of GDP)

Source: addopted on OECD (2011)

Table 3 Expenditure on ALMP in transitional countries of EU (% of GDP)

* Transitional countries of EU are 10 countries of Eastern Block

Source: Eurostat (2011)

10 Reviewing Development of ALMP and the Evaluation Techniques

Table 4 Expenditures on ALMP in Serbia

Share in GDP 0,04 0,07 0,10 0,11 0,12 0,12 0,17

Table 5 Distrubution of funds among types of measures (million RSD)

1.495,00 2.095,00 700,00 900,00 1.300,00 700,00 3.500,00 3.700,00

Source: MERR (2011)

PRINCIPLES ON ALMP EVALUATIONS

12 Reviewing Development of ALMP and the Evaluation Techniques

14 Reviewing Development of ALMP and the Evaluation Techniques

REVIEW OF EVALUATIONS AND META-ANALYSES

16 Reviewing Development of ALMP and the Evaluation Techniques

18 Reviewing Development of ALMP and the Evaluation Techniques

20 Reviewing Development of ALMP and the Evaluation Techniques

sustainable and inclusive growth -

using regional data, ERSA conference papers ersa02p225, European Regional

THE ROLE OF INFORMATION SYSTEMS IN HUMAN RESOURCE MANAGEMENT

26 The Role of Information Systems in HRM

28 The Role of Information Systems in HRM

HRIS SISTEMS DEFINITION AND EVOLUTION

30 The Role of Information Systems in HRM

Figure 1 Parallel functions development of HRM and HRIS

Source: Authors own research

Figure 2 Three levels of HRIS systems

Source: Authors own research

32 The Role of Information Systems in HRM

THE STRUCTURE OF HRIS SYSTEMS

34 The Role of Information Systems in HRM

36 The Role of Information Systems in HRM

ADVANTAGES OF USING HRIS

The HR department also has a numerous benefits for HRIS:

38 The Role of Information Systems in HRM

INTRODUCTION AND REPLACEMENT OF HRIS

40 The Role of Information Systems in HRM

42 The Role of Information Systems in HRM

44 The Role of Information Systems in HRM

IMPROVING THE QUALITY OF HUMAN RESOURCES BY IMPLEMENTATION OF INTERNAL MARKETING

48 Improving the Quality of HR by Implementation of Internal Marketing

THE CONCEPT AND SEGMENTATION OF INTERNAL MARKETING

50 Improving the Quality of HR by Implementation of Internal Marketing

Figure 1 - Internal marketing

Internal marketing segmentation

Source: Jobber, 1995

THE ELEMENTS OF INTERNAL MARKETING MIX

52 Improving the Quality of HR by Implementation of Internal Marketing