Tourism industry at risk from the „Euro Model“: Ivančević warns companies and jobs could be at risk
Increasing wages and improving citizens’ living standards are legitimate and necessary goals, but such decisions must be made following a thorough assessment of their economic consequences. It is not enough to raise wages through an administrative decision; the conditions must also be created for the economy to finance such increases over the long term without jeopardising business operations and jobs - Dragan Purko Ivančević, a tourism industry professional and member of the Tourism and Hospitality Committee of the Chamber of Economy of Montenegro, told Portal ETV commenting on the announced wage increases under the “Euro Model”.
Ivančević drew particular attention to the situation facing the tourism industry, especially companies specialising in organised tourism. He pointed out that contracts with partners for the next tourist season had already been signed, with prices agreed in advance and business terms clearly defined.
- We cannot simply change those prices every time additional costs arise later on. If the new wage policy were to generate additional operating costs, much of that burden would fall on tourism businesses that have already assumed their obligations and agreed on their revenues for the coming season in advance - Ivančević warned.
According to him, a sudden and inadequately prepared increase in labour costs could seriously jeopardise business operations and, in some cases, even threaten the survival of numerous tourism companies.
- The consequences would not be limited to company owners. Investments, employment and jobs would also be put at risk, thereby affecting government revenues and the income of local communities - Ivančević noted.
He stressed that this did not mean he opposed wage increases. On the contrary, he believes that tourism workers must be paid adequately, but that rising incomes must form part of a broader, carefully considered economic policy.
- Wage growth must be part of a broader and carefully considered economic policy that takes into account the specific characteristics of each sector, contractual obligations and the economy’s actual capacity - Ivančević said.
MONTENEGRO CANNOT ASSESS TOURISM SOLELY BY ARRIVALS AND OVERNIGHT STAYS
Ivančević believes Montenegro must stop viewing tourism exclusively in terms of visitor arrivals and overnight stays, while conducting its economic policy one tourist season at a time.
- We need higher productivity, a higher-quality tourism product, a longer tourist season, stronger action against the informal economy and responsible destination management. Only in this way can we generate greater value, ensure more stable business operations and sustainably increase employees’ wages - he said.
He concluded that the choice should not be between decent wages and the survival of businesses. Instead, what is needed is a responsible policy that makes both possible.
- Any further increase in labour costs must be announced in a timely manner, grounded in economic considerations and accompanied by an assessment of its consequences, particularly for sectors such as organised tourism, where prices and business terms for the following year are agreed upon well in advance - Ivančević told Portal ETV.