Lubishtani said that both sides of the debate have legitimate concerns, though he supports an additional withdrawal from the Trust out of concern that the government has not provided long-term measures to help people cope with current economic hardships.

“If the government had been more active earlier, the circumstances that make it appear as if ‘Trust money is coming’ would not have been created,” Lubishtani said, adding that in the long run this initiative is not good policy.

According to Lubishtani, who served as an advisor in the Ministry of Finance during the LDK government in 2020, enabling the withdrawal of 10% in 2020 was the only possible measure to help Kosovars recover from pandemic-related economic hardships, even though he didn’t see it as a good policy even then.

Meanwhile, social policy researcher Artan Mustafa has opposed the Trust withdrawals, both in 2020 and now. He said that the government’s decision to oppose the withdrawal was the right choice and that any further withdrawals would be an economically regressive measure.

“If the law were to pass in the form it did the first time, it would be up to the government to take from the poor and give to the middle and upper classes, the social classes that have significant savings to withdraw,” Mustafa said. The 2020 preliminary withdrawals called for the reimbursement of these funds from the state budget, which is mainly covered by consumption taxes, which, Mustafa said, the lower classes contribute to more.

If the initiative to withdraw up to 30% of contributions is permitted, the total value of savings would fall and the Trust would have fewer funds to invest. Consequently, the potential for savings to provide an adequate retirement income for pensioners would be reduced.

In the case of pensioners with low savings, Mustafa said, “the government would be under increasing pressure to come to a solution through general taxes.” Kosovars could, for example, call for an increase to their basic pension or other mitigation measures, which would be financed from the state budget.

Lubishtani, on the other hand, said that one of the long-term measures that the government could take is to ensure the timely functioning of the Competition Authority Commission, which would prevent price manipulation by traders through secret agreements, as happened in March this year.

Just two weeks after Russia invaded Ukraine on February 24 and a new disruption of the global supply chain was predicted, there were confirmations that traders in Kosovo were conducting secret price fixing deals that increased the prices of some products by up to 100%. The price of oil rose from 2.10 to 3.49 euros. Although authorities intervened and restored oil to its unmanipulated price, the price fixing was possible in the first place because the Competition Authority Commission was not functioning. The commission became operational this June, a year after the previous Commission’s term expired.

Another passive measure that could be taken, according to Lubishtani, is the abolition or reduction of VAT on everyday products and oil — as countries in the region have done. Oil is experiencing one of the highest price increases for products in the region. These measures would lower the final price of oil and other products.

Opposition parties have joined this call. But the government has objected on the grounds that such an action “would only thicken the profits of traders on the one hand and limit the state’s ability to support families in need on the other,” as such measures would reduce budget revenues.

In April, the Kurti government decided to give all public and private sector workers, pensioners and students a one-off payment of 100 euros. This measure came as part of a package to help citizens. This decision was criticized because it was a short-term measure and because there was no distinction made between those earning a salary of 999 euros and those receiving around 400 euros, which is the average salary in the public and private sector.

One decision that was welcomed is the approval of the increase of the minimum wage from 170 euros (or 130 euros for those under the age of 35) to 264 euros in June. The minimum wage had not changed since 2011.

Old age is (not) far away

Plans for a second withdrawal from the pension savings fund.

What is the Trust?

Gentiana Paçarizi

Old age is (not) far away

Plans for a second withdrawal from the pension savings fund.

What is the Trust?

Gentiana Paçarizi