Why private sector in the Balkans will only boost gray economy

Why private sector in the Balkans will only boost gray economy 1200

We, as citizens, of whichever country in the world, are constantly presented with the idea that working in private sector can only be beneficial for us. However, is it always the case and why, in the countries in which private sector is flourishing, is there such a disproportion in the division of wealth? Or, better say, why is there such a gap between the rich, the middle and the poor? Because that is what private sector thrives on. Read on to learn the reasons behind such claim.

All experiences you are about to read in this piece are my own solely, although many of them, if not all, can be agreed upon from all my acquaintances who work in the private sector as well.

Although my work experience in private sector is not as vast as with public / state institutions, I have every reason to believe those several months are just enough to see both sides of the coin.

Hence, the comparisons that I am about to present are also personal. Although not all state / public institutions and private firms are the same, the way they do business is. Correct me if I am wrong about generalising – I would like to hear some positive examples from real life!

 

16 reasons why private sector devastates state economy

Before I go on with explanations for each item in the list, bear in mind that they all refer to my experience with a privately owned full digital agency that mostly deals with web and graphic design, SEO, copywriting, digital marketing and community management. I do not claim all such companies are the same, but I believe the vast majority of my reasons is well applicable to many firms in the Balkans.

 

1. Qualifications and (in)experience

All employees in my company are university educated young people, most of them even with MA degrees in their respective fields: graphic design, web design, languages, project management, etc.

When opening a position in the firm, the boss requires the highest degree possible yet always goes for the inexperienced candidates – they are easy to manipulate, that’s right. He would always contact several applicants, interview them in person, and in the end always hire the most inexperienced one. Such a person is highly likely to appreciate being accepted for the job and is less likely to complain about everything they are going to get exposed to.

Such behaviour by a boss clearly demonstrates that he does not invest into the future, nor that he is interested in providing his clients with a demonstrated quality service. Furthermore, my experience has shown me that all such people work there only if they cannot find any other steady job, and hit the road the minute they find a better position. Which always happens, sooner or later.

We’ve had several interns, but the last two were truly remarkable. Both in the field of PHP, they left the firm sooner than they started working: as it turns out, one of them is such a professional that he instantly landed a high-paid job with foreign client, and was interested in seeing how firms function because he’s been working on his own for years now. That is why this firm lost a tremendous asset due to the boss’ non-appreciation of his staff.

 

2. Inappropriate facilities

My firm has two offices. One is a registered one, as that is where the business started. Later on, as the team grew, the need for space also grew, so there came a new apartment. Yes, our offices are in residential buildings, so I have the full right to call offices apartments. And that is the catch now…

The first office is corporately designed: label at the building entrance, label at the entrance door, logo on the wall, walls painted in corporate colours, drawing boards on the wall, even a “kitchen” with a fridge and a stove to boil water. They also used to have a coffee machine, a gift by a satisfied client, but after several months the boss got sick and tired of employees actually consuming coffee and not supplying it themselves, so one day the apparatus simply disappeared.

On the other hand, the office where I am situated is not registered as a business facility, so we do not even have a fire extinguisher. Our walls are plain white, no labels at the entrance, no labels at the door, no logo on the walls, corporate identity is nowhere to be seen, and all employees there are there ILLEGALLY! That means that we are part of the gray economy, since there are no signs of us as working anywhere.

To make things even more interesting, even though our apartment is bigger than the first one, until recently there used to be less workers in it. However, the room that is supposed to be a kitchen is a storage room where the empty computer boxes are kept, while we boil water for tea and coffee in the bathroom, right above the TOILET, water closet, whatever you want to call it.

There is also another toilet in the apartment, but we rarely use it, since the light went off months ago, and the boss does not want to replace it. There are clear signs that the bathroom would soon lose the lights too, but the boss has still not replaced them and when told to do so starts nagging about us leaving the light on all the time as that is the sole reason why the bulbs went down.

This second office was only bought last year, so the electricity and water bills did not exist for the entire year. Now the boss will have both of them, and I expect them to be relatively high: after all, there are 11 computers on every day for 8-9 hours, some even longer, and at least 20 coffees and teas a day, and at least 30-40 toilet flushings (as toilet is also used to spill coffee leftovers and coffee ground). Pretty much like having 10 people at your place half a day.

Oh, yeah, there can go days without having toilet paper. In the beginning the male crew used to say to the girls crew we’d get it if us girls asked the boss for it, but we’re now the same number, so hopefully that situation will become a thing of the past.

 

3. Double bookkeeping

Now, there is no easy way to say this, so pay attention.

The first apartment, as the legal one, is where the legal employees work.

The second apartment is where the illegal ones work.

Once a year, towards the end of summer, all books are taken care of, all bills settled down, all clients should cover the services received, and, in short, all business aspects are taken care of properly, so the boss invites the inspection for a visit. They come, they inspect the facilities, they go through the papers, see everything is in order, and leave. No word of the other office, of the illegal employees, of the lack of hygiene, and all other joys of gray economy contribution.

That means that, for at least a year, the boss if free of inspection hassle, and can keep up the work undisturbedly.

 

4. Accountants

Sometimes, it does not even have to be the boss who is the greatest obstacle for workers to have their legal rights. In my current company, it is actually the accountant. I still do not understand how that works, because she visits us once a month or once bi-monthly, only to bring either salary or some contracts to sign. Sometimes she doesn’t even talks to us, she drops by for half an hour and then leaves.

As I already said, most employees are university educated people. That means that, legally, we are allowed to have yearly holidays lasting more than 20 days. The legal minimum for yearly holiday for any employee, no matter their education, is 20 days, but it goes higher if you have master’s degree (4 days), and in accordance with how long you work in the firm (It is a matter of an internal statute or agreement between the worker and the boss). Basically, after a year in a firm, you could be given an extra day of holidays. But, with us, it is this woman who claims there are no legal basis for any extra days, and that we are all given the legal minimum.

If you now go back to the point 1 of this piece, where I said most such firms require high education yet are reluctant to pay you accordingly or give you the legal minimum holidays, I hope you now realise one of the absurdities of privately owned firms.

 

5. Lack of promotion or advancement

One of the reasons why my colleagues hate working in this firm is there are no promotions or any advancement methods.

We are classified as a small-size firm, with only 20-ish employees, and the jobs we do are: project manager, web designer, graphic designer, frontend development, backend development, SEO specialist, copywriter and community manager. Nobody is the boss to nobody, besides the one and only boss, who is also a project manager. That way, even if you do get promoted, all your work obligations stay the same, the workload as well, only your salary going up. No climbing corporate ladders, no changing positions, nothing.

One colleague recently left the firm because he realised he had nothing more to learn at the position he worked on for five years now.

I am also getting sick and tired of the daily workload – I no longer have interest in it, as I now realise I could be stuck at the same position for the next 10 years if I wanted to, but I cannot go on like this for long.

 

6. Lack of personal and professional improvement

If you are new to any of the jobs, you will inevitably learn a lot, not necessarily from a colleague who works on the same position as you. In fact, as a copywriter and community manager, I learnt a lot more from an SEO specialist, and even developed a certain interest in off-page SEO – on-page still too much for me, as it requires the knowledge of programme languages and coding.

There are many IT conferences and gatherings around the country, but none of us has ever gone to any. If we went, we’d miss a day of work, and wouldn’t get paid for it – the luxury we cannot afford.

Actually, we were once invited for an important conference. The invitation was for copywriters, but according to the speakers’ list, SEO specialists would have benefitted from attending as well, even more than copywriters. However, who got to go instead of SEOs is the boss – who does not even speak the working language of the conference. That way, he directly prevented his employees from their professional improvement opportunity, and those who did go with him did not even get to hear all presentations: he was bored after 2 presentations, as he did not understand them, and they all left before the end.

 

7. Sick leave policy

If you are sick and you miss a day at work, you don’t get paid, plain and simple.

However, the amount of money deducted from your salary is a shady concept, so that is why you are likely to either fight with your boss (if you want to stand up for yourself, as you should), or accept what is given to you and not complain about it (which only signals to the boss he could exploit you even more next time, and they always do…).

Hence, most employees choose to come to work even when sick. Understandably, a sick body cannot produce any quality work: think of a headache, sore throat, and nausea. Any person in such condition needs to rest, lie in bed and drink teas and soups and medicaments. When forced to stay up for 8 hours and work, not only can you not work, but you torture your body double than usual.

With me, any cold starts with a simple sore throat. I sometimes even feel the moment it manifests. After two to three days, it turns into nausea, accompanied with headache. No artificial medicaments help, so I always have to go for alternatives. Sometimes, it does not even last that long – I could find myself in bed after just a couple of hours; and the moment I feel better I spring out of bed and grab my bike.

 

8. No firing policy

Except for a cousin whom he argued terribly with, the boss of this company never fired anyone. However, he made poor working conditions a standard that not many people are able to stand for long.

That is why many come, work, look for other opportunities, blackmail the boss with raising their salary or they’d leave, get an increment, work some while, blackmail again, work more, and, if there’s again a need for blackmailing, there usually isn’t any, as the worker leaves as soon as he finds a better place.

 

9. Tax evasion

Before I came here, I always wondered how companies or even individuals managed evading taxes. Now I know, and I must say, it is so easy – no wonder all such companies do it!

So, in this country, if your firm’s revenue passes a threshold of a certain amount, it gets attached to your social security number, so you get into VAT system and have to pay taxes. In order to avoid this, you open a new firm, usually on the name of one of your employees, and redirect a certain amount of income into it, basically doing money laundering.

Another way to evade tax is with the unwilling help of your employees. You officially register them as minimum wage workers and pay taxes only for the official wage you supposedly pay them, while giving them the rest in cash. Unfortunately, from the 100% of the sum income, only 40% goes to the worker, while 60% is given to the country authorities in the name of tax. Accordingly, if you register a worker with a 400 dollars wage, you give the country 600 dollars. If you register them for 2000 dollars, you give the country 4500 dollars.

Hence, the registered workers officially earn the minimum wage, and receive the rest in cash.

None of these two would have been possible if there were no laws to allow it, so that is one of the most obvious reasons how each country with such laws is likely to crash its economy sooner or later.

After all, that is how our boss managed buying three apartments in the most expensive city neighbourhoods and paying them out completely, so there is no more mortgage on any…

 

10. Target market

Even though he’s not the oldest in the firm, the boss should have been almost fully fluent in English by the time some of us were born. However, he’s the worst of all of us, and when a new colleague recently joined us and another colleague and I tested her to see her level of English, he was astonished to hear she was even worse than him.

That is why our target market are mostly our nationals living abroad, as their life standard is higher than ours, and the generally low prices of our services would be seen as a piece of cake for them.

However, there are other possible scenarios.

1) Work with foreign clients and allow employees to fully communicate with them in English, in which case all employees would have access to internal service pricing, which further means that we would all know how much underpaid we are. CROSS, no.

2) Work with domestic clients, who would find the pricing too high, hence unaffordable. CROSS, no.

3) Work with ignorant domestic clients situated abroad, so they can afford the services, and take as much of their money as possible. TICK, let’s do this, uuum.

For example, we had one client who had their website designed by some Brits and paid them 10 thousand pounds, yet was dissatisfied with it – that’s why they came to us. The website was a plain 5-page presentation, with high quality images, and maybe a total of 800 words. I can make such websites all by myself in no time – no problem!

However, although it was made in WordPress, its code was custom written, instead of using pre-designed themes; hence any modification of the existing pages would cause many other backend sections of the website to crash. The client wanted exactly such a website. Had the boss wanted to, we could have taken the photos from the server and built a completely new site from scratch, only make it an automated one, further adding blog section, for much less money, which altogether would not have lasted longer than several hours top, and the end result would have been much better. However, what we ended up with was implementing blog section on the existing website, so every time we published a new post we had to modify and further readjust something: most often in CSS, sometimes even in the code itself. Such a hassle for such a low-quality website – the joys of the wrong target market!

 

11. Demanding, ignorant or impossible clients

One of the favourite conversation topics while we walk from work are the impossible clients we have. We even made a conclusion our boss chooses such low quality clients because he believes they are easier to manipulate with, but none of us reaps the benefits from it.

In fact, since we all freelance, we have clients who pay more. Our experience shows that those who pay more are usually those who know what they want. They are experts in their fields, they give clear instructions, and they have clear ideas on what they expect. You either deliver them that, or you do not, in which case you modify your product until you deliver what they expect you to deliver. That is why one colleague can ask for 1000 dollars for a logo design he could finish in a matter of hours, while at the firm his monthly salary is significantly lower than that, and he produces up to 10-15 logos a month.

Clients who pay you low amounts of money are those who do not appreciate what you do, as they know nothing about it but are reluctant to admit it, and are, furthermore, even prone to teaching you your own job, while misunderstanding your advice for criticism. You are not allowed to speak up, as the firm’s policy is not to educate its clients. I am not saying here that clients should be experts in graphic design or copywriting, but some basic knowledge on anything that has to do with IT would be a plus.

It is those who know not even how to log into their WP account that will ask you to change their website’s font and then ask you how to buy one; it is those who do not provide you with any photographs that will expect a high-quality product photo collage; it is those who say “copywriting” that will refer to on-page SEO keyword optimisation; it is those who own a web directory that will expect you to rank their website for about 7900 keywords without any text on their website; it is those who are not native speakers of English that will bother you the most to modify texts to comply with their imaginary perfect language; etc.

Such demanding, ignorant, impossible clients are not only time-consuming, but ungrateful as well.

 

12. Disagreements policy

I know about a saying that goes “the clients is always right,” even when they are not. Seems like our boss fully embraced this saying as the one and only modus operandi of the firm, hence he never stands up for his employees in case disagreement with clients. And there are disagreements – as a result of poor communication or the lack of knowledge in clients.

One particular problem I would remember for a long time. This demanding and ignorant client was dissatisfied with the copywriting service he was given, so every time there was a problem with something, he would call the boss to straighten things out with him, and the boss would always take his side, never protecting the employees – which was me, in that case, together with some graphic designers. No matter how many times I tried telling the boss I need to speak to the man, clarify things with him, explain myself, or whatever, it was never me who got to speak to the client. The result was we lost the client, whose fee was a source of several salaries every month, but since I could not reach him, I feel no guilt whatsoever.

Another graphic design goes nuts with another client, because they clearly do not know what they want, so after we deliver something to them, they ask us to modify it, and then still go for the first option because they dislike the second just as much. Their field is very specific, so after working with them for almost a year we’ve used all free images from the web and have no more sources, yet they demand more and more, and every time the colleague mentions it to them to maaaaybe think of paying for professional photos, they go nuts and call for the manager, i.e. the boss. The boss wants to keep them as a client as long as possible, but since he is not the one who produces either written pieces or graphic design to them, I believe he has no clear picture what position he puts us into by accepting their insane demands.

 

13. Underpaid workers

Having workers who are not paid in accordance with their education, level of expertise, work experience or just the minimum survival threshold is where the enchanted circle both starts and ends, because: low salary >>> low motivation >>> freelancing & pulling up allnighters to earn more money >>> sleep deprivation causes low quality products >>> dissatisfied clients >>> low salary >>>>> leave after a while.

Same goes for the tax evasion with registering workers in the VAT system (point 9: tax evasion).

 

14. Flow of workers / interns / trainees

My company constantly publishes ads for either work positions or traineeships, due to the amount of work and constant growth, etc.

If I was looking at such a company from an outsider’s point of view, I’d get the impression that they have like dozens, even hundreds of new clients a month, and that their list of workers is growing accordingly. I mean, if you think about it, any company opening several new positions a month must be doing a great job, and the inflow of new, young, creative minds, means the company is steadily growing, providing new jobs and boosting economy!

Wrong!

Because, in fact, the truth is: it is all a big, fat lie! There are not so many new places, because people are constantly leaving! No boost to the economy, no salaries; trainees doing full-time jobs and leaving as soon as they find an actual job to pay their bills; trainees sometimes even unable to use a computer at the level of a basic minimun. It is devastating working in such a digital agency.

Hence, be careful when any company advertises so many open positions due to demand and constant growth…

 

15. Communication

Since we are in two offices / apartments, all internal and external communication goes via Skype.

Long ago, there were suggestions to have every employee make a new Skype account and use it only at work, with the firm’s logo and strictly business appearance. However, due to who knows which reasons, the boss’ idea was for us to use our own Skype accounts. Fine with me, no problems whatsoever – I rarely used Skype anyway, but it seems highly unprofessional to me when I have to communicate with our clients via my personal Skype account. There, since it’s an account that’s connected to the OS of my phone, I have a picture of myself in training, and I tend to have meaningful quotes as my status and not change them as often. And the Skype name was a name I chose when I was a teenager, so it reflects my teenager personality, influenced by a favourite book (it still is my favourite novel, but that does not change the situation a bit!).

Secondly, we have like gazillions of internal groups on Skype, to smoothen communication in general. There are projects we work on, and there are some personal intra-office groups, jobs groups, etc. it used to be a policy for the boss to be out of the firm’s main group, but he forced us to join the group several months ago and no longer wants to leave the group. Of course, he feels left out and wants to be in touch with what’s going on in the firm, hence disables normal boss-employee distinction. And he actually particularly enjoys using the group when he’s personally bored, so he tricks people into talking (=typing), so he could see who works and who does not.

I have so many problems with that, but I cannot complain, nor do I have any desire to create yet another group with the entire team, only to leave him out of it. I do not intend staying there for long anyway, so it does not even matter that much either way.

Even though the firm is open for about 7 or 8 years, it was only recently that all employees received headphones. Before that, Skype conversations with clients were virtually impossible, as we’d go around looking for one pair of available headphones per office, or use our own.

And, as a colleague pointed out, it’s so humiliating working in an IT firm in which we have no web cameras, so when clients call on Skype, we have to make up excuses: my camera is broken at the moment, or, I think we’re experiencing some technical difficulties – everything is in order, but there is no signal from my camera.

One of the reasons for another colleague’s departure from the firm was the way of accepting the projects, modifying the product so much that it no longer resembled the initial idea, which is what graphic and web designers are highly dissatisfied with.

Basically, sometimes we just wonder what is it that the boss actually does, as all communication with clients is left to us, and when we do something wrong (in client’s opinion), we deal we the consequences. While we tend to openly enlist all issues and explanations and dilemmas and ask the clients for feedback, he enjoys writing in bureaucratic language, saying nothing, manipulating the clients and calming them down when we mess something up.

It somehow feels as if we’re left out with all the dirty work, while the boss is there to collect the fee and enjoy the perks. In fact, even when the client is particularly satisfied with the work you do for them and gives something like the 13th salary, it is the boss who keeps it in full, not giving the workers a penny.

 

16. Language abilities

We recently hired a German-speaking project manager, as the boss is planning real hard for more than a year now a breakthrough on German market.

While the majority of the web pages on our website were translated by a person who used to live in Germany and Austria more than a decade and a half and went to schools there, the person left as was inadequately paid for the workload, even though he was praised by German clients for the level of his language.

Besides this new employee, no other employee speaks a work of German.

We have a client from Germany, for whom we are redisigning their website and copywriting its entire content. Mind you, once again, none of us speaks a word of German.

The first round of texts was written by a court interpreter, aged over 50, who’s never worked in the creative industry field. Understandibly, the client was enraged. To calm him down, the boss told him the texts sound much better in our mother tongue and even convinced him we could continue copywriting – in our mother tongue, so once they approve of the texts can they be translated into German. The idiot accepted. We’re still waiting for the response.

The client disliked the texts translated by the court interpreter, and the new girl, claiming they sound as unnatural as if translated in Google Translate.

The web designer cannot insert the text properly as he understands nothing, nor can he split any sentences, which is required by the design theme.

So far, we’ve spent more money on translation and more time than necessary on waiting for others to do their job, yet the boss has still not realised that his investment in the project will be higher than his gain in the end. The website and the copywriting should have been finished about three months ago – but we are still about half way through. The client is unsatisfied, the workers are frustrated, the boss is annoyed, and he still can’t let it go while there is still the chance of keeping at least some dignity.

Second proof. Several weeks ago, the boss came to our office and gave the phone to my colleague in panic, claiming the woman spoke German. She spoke English, and was trying to sell us printers and cartridges. He could not even differentiate between English and German.

Nowadays, I translate for him emails similar to this one:

“Dear SOMEBODY,
you will find attached to this email my money transfer confirmation.
Please inform me of the following steps in the procedure.
I am sure we will have many projects for you.
I look forward to cooperating successfully with you in the future.
Kind regards,”

And, if you look at my boss’s Xing profile, he has a “good knowledge of German” (B2, I guess, in CEFR), and is “fluent in English” (C1 level, I presume).

Should I laugh or cry?

 

Summary

For those of you who finally reached the end of this extensive, thorough, in-depth piece on how private sector in the Balkans, instead of boosting the country’s economy, is actually boosting gray economy, the summary says it is because of hiring university educated yet inexperienced workers, by underpaying them, by keeping them in inappropriate facilities, forcing them to work while sick and never firing them (forcing them to leave instead), by double book keeping and not giving the workers their legal rights, by not providing them with improvement or promotion options, by evading taxes, by choosing the wrong target marker, always represented by clients from hell, by never supporting their employees, and by limiting their communication in the work place. All that happens perfectly perfidiously – that is why it is so dangerous!

~ ~ ~

I would be more than willing to hear experiences different from mine, so feel free to share in the comments section below!

 

 

In case you missed my previous articles on business blogging, make sure to check them out:
Those of you interested in SEO might find useful the articles on SEO ranking in Google:
I have also written on some other topics, so here are those pieces:
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