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THE ENABLING ENVIRONMENT for SUSTAINABLE ENTERPRISES in MONTENEGRO Report CIP - Каталогизација У Публикацији Национална Библиотека Црне Горе, Цетиње

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THE ENABLING ENVIRONMENT for SUSTAINABLE ENTERPRISES in MONTENEGRO Report CIP - Каталогизација У Публикацији Национална Библиотека Црне Горе, Цетиње THE ENABLING ENVIRONMENT FOR SUSTAINABLE ENTERPRISES IN MONTENEGRO report CIP - Каталогизација у публикацији Национална библиотека Црне Горе, Цетиње ISBN 978-9940-658-01-4 COBISS.CG-ID 23756304 The enabling environment for sustainable enterprises in Montenegro - report - Podgorica, December 2013. Montenegrin Employers Federation Montenegrin Employers Federation (MEF) is an independent, non-governmental, non-political and not-for-profit organisation based on voluntary membership. MEF is founded on April 2nd 2002. On August 30th 2005 MEF was granted the status of representativity by the Ministry of Labour and Social Welfare which made them the umbrella employers’ organisation in Montenegro representing the independent voice of business on national and international level. Having signed the National Tripartite Agreement on December 28th 2006, Montenegrin Employers Federation became a social partner – an official representative of employers in relations with Government and trade unions. MEF membership comprises entrepreneurs, small and medium enterprises, large economic entities, local and sector employers’ associations as well as NGOs. MEF members make 80% of total GDP in Montenegro and employ around 65% of the workforce. MEF is recognised at national, regional and international level. MEF is a member of International Organisation of Employers, Businesseurope being one of the founders of Adriatic Region Employers Centre as well as the first organisation to sign UN Global Compact in Montenegro. MEF closely cooperate with International Labour Organisation, (the later also supported its founding) and act in accordance with its conventions and recommendations). MEF established the Association of Business Women in Montenegro and helped founding of other employers associations at local and sector level. MEF signed cooperation agreements with umbrella employers organisations in the region and wider as well as with international institutions and organisations. Montenegrin Employers Federation actively contributes to improvement of business environment and elimination of business barriers offering a wide range of services to its members. Along with representing the interests of employers in tripartite working groups and bodies at national level working on the development of legislation, strategies and action plans, MEF services comprise legal advices in all areas relevant for enterprise operations, economic studies and analyses, seminars and trainings organisation, implementation of EU funded projects and support to employers networking at national and international level. This publication has been published with the (financial) support of the (Bureau for Employers` Activities of the) International Labour Organization. The responsibility for the opinions expressed in this report rests solely with the author. The International Labour Organisation (ILO) takes no responsibility for the correctness, accuracy or reliability of any of the materials, information or opinions expressed in this report. Contents Foreword ................................................................................................................................................. 5 Abbreviations and acronyms ................................................................................................................... 6 Executive summary ................................................................................................................................. 7 Methodology ......................................................................................................................................... 10 1. Introduction ....................................................................................................................................... 11 2. Political elements .............................................................................................................................. 13 2.1. Peace and political stability ............................................................................................... 16 2.2. Good governance ............................................................................................................... 18 2.3. Social dialogue .................................................................................................................. 26 2.4. Respect for universal human rights and international labour standards ............................ 28 3. Economic elements ........................................................................................................................... 31 3.1. Sound and stable macroeconomic policy and good management of the economy ........... 36 3.2. Trade and sustainable economic integration ...................................................................... 45 3.3. Enabling legal and regulatory environment ...................................................................... 52 3.4. Rule of law and secure property rights .............................................................................. 58 3.5. Fair competition ................................................................................................................. 62 3.6. Information and communication technologies ................................................................... 69 3.7. Access to financial services .............................................................................................. 75 3.8. Physical infrastructure ....................................................................................................... 83 4. Social Elements ................................................................................................................................. 87 4.1. Entrepreneurial culture ........................................................................................................ 90 4.2. Education, training and lifelong learning ............................................................................ 93 4.3. Social justice and social inclusion ....................................................................................... 99 4.4. Adequate social protection ................................................................................................ 103 5. Environmental elements ................................................................................................................... 105 5.1. Responsible stewardship of the environment ....................................................................105 6. Assessment results and ways forward .............................................................................................. 109 Bibliography ........................................................................................................................................ 112 The enabling environment for sustainable enterprises in Montenegro Foreword . Montenegrin orientation towards entering the membership of the European Union (EU) calls for a serious review of the conditions in the country. This is especially important in regards to the business environment, visible and hidden business barriers and all other constraints at national and local levels affecting sustainability, stability and overall enterprise development. Micro, small and medium enterprises (MSME) that generate economic growth and employment are particularly important in this regard, as they represent an important precondition for overall growth in production, exports, productivity, and competition. As a small economy, Montenegro cannot influence changes in the global market, and is influenced by external shocks such as the global financial crisis specifically, which negatively impacted the Montenegrin economy. High debts, problematic debtor-creditor relations, and difficulties securing sufficient financial resources for day-to-day activities define enterprises in Montenegro. The global crisis resulted in an increase in the number of firms that went out of business and those with blocked accounts, reduced solvency of enterprises, and consequently, a decline in economic growth. Therefore, the greatest challenge for the country at this time is how to preserve business and maintain economic activity. Representing the voice of employers in Montenegro, the Montenegrin Employers Federation (MEF) continuously strives for creation of a better business environment and aims to provide an evidence base for policy reforms in this direction. This report is the result of a survey done with support from the International Labour Organization (ILO) and their methodology for enabling environment for sustainable enterprises (EESE) that analysed 17 conditions relevant to enhancement of sustainable enterprises. This has provided insight into the existing shortcomings in Montenegro’s business environment and provides recommendations for strategic solutions. MEF wishes to thank all enterprises that participated in the survey and focus group meetings, and for dedicating time and providing information, comments and suggestions that contributed to the overall quality of the document. Special thanks goes to the ILO specifically to Dr. Farid Hegazy, Global Coordinator for Enabling Environment for Sustainable Enterprises in Geneva for his research support and Mr. Dragan Radic, ACT/ EMP Senior Specialist on Employers’ Activities from the Budapest Office, for financial and technical support, as well as all information provided that guided our work and enriched our knowledge in the field. 7 The enabling environment for sustainable enterprises
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