Boris Mugoša, a representative of the European Union and leader of the Social Democrats’ parliamentary group, has criticized the administrative economy’s performance since 2020. He argues that this approach, which has artificially boosted consumption without fostering economic development, has exacerbated price increases and undermined the real value of administrative wage hikes.
Mugoša’s comments address the disparity between wage growth and inflation in Montenegro. He disputes claims that wages have outpaced inflation and that living standards have improved, citing several reasons why these claims are misleading.
- “Relying on statistics that average price increases at 30% over the past four years is misleading and dismissive of the real impact on citizens. Prices for essential food items have surged by 70%, 80%, 100%, and in some cases, even more than double; costs for household products and services, including haircuts, electrical and plumbing services, restaurant meals, hotel stays and fuel, have also risen significantly,” Mugoša highlighted.
He emphasized the need for publishing median wages, which represent the point at which half of the workforce earns less and half earns more, as a more accurate indicator than the average wage. According to Mugoša, the average wage figure conceals the fact that many citizens earn modest incomes while a smaller proportion receive much higher wages.
- “I have consistently argued that wages should have been higher in the past, a point I raised while in office. However, the administrative economy since 2020 has artificially inflated consumption without advancing economic development. This has contributed, alongside imported inflation, to sharp price increases and diminished the value of administrative wage increases,” Mugoša stated.
He noted that public sector wages have significantly outpaced those in the private sector, which largely drives budget revenue. Mugoša also pointed to the growing public administration, an increase in service contracts and consulting services, and the overall rise in public spending. This situation has strained public finances, with projected debts exceeding five billion euros from 2020 to 2027, becoming increasingly costly each year.
Mugoša observed that while a substantial portion of this debt is used for repaying old debts and funding capital projects, the overall amount could be lower with more efficient public spending. Rationalizing public expenditure could allow some costs for capital projects and existing debts to be covered from current revenues.
- “Furthermore, it’s worth questioning the initiation of new capital projects over the past four years, the progress of existing projects, and the influx of new investors to Montenegro. The economy must be managed in a systematic and long-term sustainable manner (not just since 2020) rather than through short-term political and populist measures that may offer immediate benefits but ultimately undermine the already fragile Montenegrin public finance system,” Mugoša concluded.
