Montenegro: Milatović Asks Spajić for Analysis of the ‘Euro Model’ Pay Plan

Montenegro’s President Jakov Milatović has written to Prime Minister Milojko Spajić asking the government for a comprehensive analysis of the fiscal and economic effects of its “Euro model”, an assessment of its impact on the pension system and a restart of talks with employers and unions. The letter was made public on Monday, 2 November.

What the Euro model is

The government adopted the package of six financial laws on 17 September, and it is meant to take effect in January 2027 if parliament approves it. It would raise net minimum wages from €600 to €1,000 for workers with basic education and to €1,250 for those with secondary vocational education, and from €800 to €1,400 for those with higher education. Spajić has said the average wage would rise from about €1,000 to over €1,400. Pensions would be indexed four times a year, with the average pension expected above €600 and the minimum at €500.

The package would also abolish the remaining contributions for pension, disability and unemployment insurance leaving pensions to be financed from the budget.

Milatović’s objections

Milatović said he supports higher wages and living standards, but that the package has no publicly available fiscal impact assessment or multi-year projections for the state budget, the pension fund and municipal budgets. He noted that the Finance Ministry did not support the package, that the Fiscal Council has not issued a binding opinion, and that the model does not appear in the country’s Fiscal Strategy or Economic Reform Programme. He asked for an independent long-term actuarial study of pensions to be published before any law removes their current sources of funding.

The government’s case and the critics

The government expects to recover part of the cost through higher consumption, employment and better tax collection. Calculations cited by Nova, based on reporting by Vijesti, put the loss of revenue from abolished contributions at around €430 million a year. Economists quoted by Radio Free Europe warned of inflation and borrowing if productivity does not keep pace; employers and unions said they were not consulted. The reports we reviewed carried no response from the government to the letter.

Why Serbia is watching

As of late September, Montenegro had provisionally closed 18 of 33 EU negotiating chapters; it holds parliamentary elections in July 2027. In Serbia, where the minimum wage is far lower, the plan has prompted debate about whether a similar approach could work.