We are writing to ask for your attention and support regarding a large-scale problem that has recently occurred in our country. If unaddressed, this problem may have far-reaching and economically devastating consequences for tens of thousands of workers in Serbia’s gig economy.
As you may know, Serbia ranks 11th in the world and 4th in Europe based on its market share in the global digital workforce (Oxford Internet Institute’s Online Labour Index). Our Prime Minister Ana Brnabic has acknowledged this fact more than once. Despite these figures, no laws, acts or regulations had so much as mentioned us until December 2019, when the Law on Pension and Disability Insurance was amended with a single-sentence clause about “individuals who are performing work for a non-resident employer”.
As of this writing, there is no mention of digital workers in the Law on Labour and most other relevant acts. Getting health insurance coverage is also questionable at the time, as there are many discrepancies between how governing laws treat freelance workers, their contracts, or their frail continuity of employment. Many of the rights guaranteed to workers under the Serbian Constitution are unenforceable for freelance workers due to them not being recognised under the Law on Labour and other laws covering this type of work. There is no freedom of forming or joining a labour union as we are not considered employees; no right to decent work, sick pay, maternity leave, and other labour rights and privileges. We are aware that many self-employed digital workers elsewhere may not have some of those rights either. But the problem at hand is that we are not recognised as self-employed or employees. In other words, we are next to non-existent in the Serbian legal system. The one amendment made to the Pension and Disability Law, in December 2019, unfortunately didn’t offer a complete solution for enforcement of the digital workers’ rights.
This systemic negligence didn’t stop the Government’s Tax Administration from issuing a brief online notice on October 13th, calling all digital workers working for non-resident employers to submit reports stating all of their income earned from 2015 onwards, by way of self-taxation. According to the very broad and outdated Law on Personal Income Tax written in 2001, we are to pay 20% tax (as opposed to 10% for regular employees), 25,5% for social contributions, as well as 10,3% for health insurance coverage. As if that was not enough, the Tax Administration has added five years of accrued negative interest, that ranges from 11.5% to a whopping 40%. It means that freelancers are expected to pay up to 80% of their total income earned over the past five years.
For example, if a person was earning 500 EUR per month over the past five years, they are now supposed to pay at least 13,000 EUR, plus interest. All of that in a single instalment, and on a 15-day deadline. To put things into context, this is happening in a country with “high youth unemployment, high inactivity of this age group, and generally low employment rates,” “significant percentage of informal employment,” and a “high percentage of the population being at the risk of poverty and social exclusion” (ILO, 2019). This is also happening in a country that has signed the Convention on Mutual Administrative Assistance in Tax Matters (Council of Europe and OECD). One of the stipulations of this Convention is the respect of the taxpayers’ fundamental rights.
The notice that was issued at the onset of a new COVID-19 surge was the first of its kind. The Tax Administration has never before issued any such warnings, nor has it seen fit to inform or educate this category of citizens as to how they can pay their taxes and contributions. Over the years, many of us have made inquiries about our tax obligations, only to hear that there is no way of submitting the tax form and enforcing the rights that stem therefrom. In its notice, the Tax Administration claims that only 0,34% of all digital workers who were subject to control actually paid their taxes. If this is so, such a low percentage implies that the fault does not lie with the freelance workers solely, but that it is heavily rooted in a legal system that expects workers to pay all the contributions while not being able to exercise any of the rights that they are paying for.
Since then, we have formed the Association of Internet Workers (Serbian: Udruženje radnika na internetu). We have formally filed an appeal to the Tax Administration, its governing Ministry of Finance, as well as the Prime Minister herself, to put a stop to this inhumane process that would definitely result in pushing the majority of already precarious Serbian digital workforce into poverty, unemployment and homelessness. We also asked for the opening of a social dialogue that is long overdue, so that the Serbian freelancers could finally get their rightful place in the legal system and, through joining forces with the lawmakers, help clearly define their rights and obligations. So far, there was no direct answer. Our Minister of Finance arrogantly said to the media that he received “some initiative”, which he didn’t even read.
We agree that taxes must be paid. However, the current rates are not only unjust but downright prohibitive. The state expects us to pay for social privileges while denying us the means to exercise them. We are not tax evaders or criminals as our country would have the public believe. Most of us are university educated young or middle-aged workers who resorted to online work due to unavailability or scarcity of “traditional” jobs. We are teachers, professors, programmers, journalists, translators, administrative workers, designers, writers, students, under- or postgraduates. In our midst we have both senior citizens and young mothers. Some of us are ill or disabled people who have had no right to the supposedly universal health care, just because we are working digitally in a country that is so heavily inert that it hasn’t even tried to define our status and provide a viable legal framework for us to operate in.
Within just three weeks, we have gained support from two of Serbia’s largest trade unions associations (UGS Nezavisnost and Savez samostalnih sindikata Srbije). We are now asking for international support and/or counsel from fellow workers who have probably had to fight this battle in their own countries, as well as organisations and media that might be willing to help spread the word.