UDC: 343.85:343.412 (497.

11)
https://doi.org/10.56461/iup_rlrc.2023.4.ch1
DOI: 10.56461/iup_rlrc.2023.4.ch1

Aleksandar MIHAJLOVIĆ*
1 Institute of Comparative Law, Belgrade

APPLICATION OF ANTI-DISCRIMINATION LAW

IN THE FIELD OF LABOR AND EMPLOYMENT
IN THE REPUBLIC OF SERBIA:
THE ECONOMIC ANALYSIS OF LAW APPROACH

The aim of this paper is to analyze the problem of labor market discrimination through
the methodology of economic analysis of law, as a special discipline, as well as the doctri-
nal approach, focusing on the legislative framework in the concrete filed in the Republic
of Serbia. The main research question is do we really need anti-discrimination law in the
field of labor and employment, or we can use only free market mechanisms to eliminate
employers who discriminate employees who are in the labor market and/or the labor force
which pretend to enter the market. Economic analysis of law starts from the premise that
employers are rational players at the market who want to maximize their profits, and the
only important thing is the productivity of employees, not their personal characteristics
which do not affect their labor performance (productivity). Although this reasoning sounds
rational, we witness that discrimination in the labor market has been persisting and gov-
ernments intervene with anti-discrimination legislation and public policies, as well as spe-
cial institutional solutions, trying to suppress it and support economic development and
social inclusion of marginalized social groups. The author’s special attention in the paper
is on the two economic models of discrimination, Becker’s Taste for Discrimination and
Statistical Discrimination Model, which will explain the necessity of anti-discrimination
law in the field of labor and employment. Concurrently, the focus will be on the Serbian
legal framework and the importance of the impact assessment, as a tool for improving the
quality of legislation and policies in the concept of respect of the principle of equality and
non-discrimination.
Keywords: Economic analysis of law, discrimination, labor market, impact assessment.

* LLM, Research Assistant, ORCID: 0000-0001-8309-7896, e-mail: [email protected]

1
 1. INTRODUCTION
The main research question of this paper is do we really need anti-discrimination legis-
lation in the field of labor and employment or the labor market mechanism will be a regu­
lator sufficient to solve this social problem. In this framework, the aim of this investigation
is to analyze the problem of labor market discrimination through the methodology of eco-
nomic analysis of law, as a special discipline, as well as the doctrinal approach, focusing on
the legislative framework in this field in the Republic of Serbia.
In the simplest way we can explain the labor discrimination as an unequal treat-
ment of equally productive workers, who possess equal qualifications, the consequence
of which is a barrier to enter the labor market or wage disparities for the same jobs and
same qualifications (when they enter the market). Economic analysis of law (herein-
after: EAL) uses the economic reasoning and tries to explain the complexity of legal
problems and institutions and to provide the best solutions for their efficient solving.
Employers have the aim of maximizing the profit and of being as much as possible com-
petitive with other employers in the same field. This approach of rational employers is
related to the concept called homo economicus, seen as a rational agent, who tends to
maximize their benefits, both economical and non-economical (Mojašević, 2021, pp.
24-25). On this reasoning there is no space for discrimination towards employees based
on their personal characteristics, because the fact that an employee is a woman, gay,
Roma, black etc. is not important and does not affect their productivity. This ideal eco-
nomic model of rational employers unfortunately does not work in practice, because we
witness different forms of discrimination in the field of labor and employment. Gov-
ernments all over the world introduce anti-discrimination legislation and public poli-
cies, trying to suppress discrimination in the labor market and support the inclusion
of marginalized social groups and economic development. The intervention does not
include only legislation, there are also different public policies, new institutional solu-
tions, such as the establishment of independent human rights institutions, using the sit-
uation testing to prove discrimination in a concrete case or in an economic field towards
the concrete social group(s), implementation of special rules for providing evidence in
anti-discrimination litigations etc. The two economic models of discrimination, Beck-
er’s Taste for Discrimination and Statistical Discrimination Model, will also be the sub-
ject of this paper, and their explanation will justify the necessity of the anti-discrimi-
nation intervention, which comes as the lack of free market mechanisms to eliminate
employers who discriminate. In an ideal economic model, an employer who discrimi-
nates, who has a “taste for discrimination”, will be eliminated from the market because
the cost of employing only selected workers is too high and the employer will lose the
“battle” in the market for a long period of time. On the other side, a rational employer,
who does not have discriminatory preferences, will employ people who are discrimi-
nated, and who will cost him/her less than when employing only selected groups which
satisfy the employer’s taste. This economic rationality will provide conditions for lower
prices of products/services in comparison to the employer-discriminator who will use
higher prices as a way to provide enough resources to cover all costs. Higher prices will

2
make him/her less competitive in the market, and the competitive pressure will squeeze
him/her out from the market. The last part of the paper investigates the anti-discrimina-
tion legal framework in the field of labor and employment in Serbia, as well as the rules
of conducting the impact assessment, focusing on the social impact and the principle of
equality in the process of drafting legislation and public policy documents. Although
there is an “umbrella” anti-discrimination act in Serbia called the Law on the Prohibi-
tion of Discrimination, there are other legal acts which norms also prohibit discrimina-
tion in the field of labor and employment. This kind of various norms in different legal
acts can cause difficulties in their implementation, and problems with measuring their
effectiveness and efficiency in practice.

2. ECONOMIC ANALYSIS OF LAW AND ITS APPLICATION

TO LEGAL INSTITUTIONS
EAL represents a scientific field which combines the knowledge of economics and
law, and tries to explain the legal institutes using the microeconomic tools and eco-
nomic reasoning. Although there is still a strong resistance among some legal scholars
to EAL and its incorporation to legal education, using the explanation that the econo-
mist’s objective of efficiency will minimize the importance of justice and fairness, it rep-
resents now an inevitable part of the legal education in Europe, the USA and worldwide
(Spurr, 2015, pp. xv-xvii). Its approach is that the legal institutes are changeable over
time, because people make different decisions (Mojašević, 2007, p. 90). The subject of
modern EAL are not only legal fields which are traditionally connected with econom-
ics, such as torts, contracts, property rights, antitrust law, there are also some non-tra-
ditional disciplines and topics very popular among ELA scholars, such as family law1,
criminal law, corruption2, marriage, family relations, domestic labor, rule of law3, drug
addiction etc. (Vrban, 2006, p. 64).
There are four basic premises used in EAL due to its application to different legal
issues: the first, the methodological individualism, which includes decisions made by an
individual. Collective behavior has to be analyzed as a system of individual decisions
which are based on different preferences. If we place this concept to the labor market
discrimination in the context of economic theories of discrimination, a conclusion is
that some employers discriminate because they have a preference for it (Becker’s Taste
for Discrimination), in another case of Statistical Discrimination Model, they do it not
because of the taste, but because due to the asymmetry of information in the labor mar-
ket in the relationship between employer and employee, and it is easier to make a decision
1
See more: Beuker, M. 2022. Benefits of a Legal-Economic Approach to Comparative Family Law. In:
Boele-Woelki, K. (ed.), Comparative Family Law Methodology. Paris: International Academy of Compara-
tive Law, pp. 99-127.
2
See more: Begović, B. 2007. Ekonomska analiza korupcije. Beograd: Centar za liberalno-demokratske
studije. Available at: http://www.clds.rs/newsite/Boris-Begovic-Ekonomska-analiza-korupcije.pdf (28. 8. 2023).
3
See more: Jovanović, A. 2019. Srbija i ekonomske implikacije vladavine prava. Zbornink radova Pravnog
fakulteta u Nišu, 85(4), pp. 55-71.

3
based on the stereotypical attitudes which are commonly known. In this situation, an
employer, who does not pretend to discriminate (does not have a taste for discrimina-
tion), can decide to employ a male worker instead of a female candidate, not because he/
she has more preference to males, but because it is common (statistically proved) that
female workers take parental leave more often than their male counterparts; the second,
individuals are rational decision makers who want to maximize their interest (both mate-
rial and non-material, for example, if someone wants to earn more money and travel to
his/her favorite destination, the other one wants to have more free time for leisure activ-
ities). This kind of predictability of human behavior in the context of rational maximi-
zation is very important for the creation of legal rules and policies which should cause
concrete changes although it is important to mention that behavioral sciences4 teach us
that the human behavior is not always rational and is driven by biases; the third, human
preferences are stable over a period of time although they are changeable throughout life,
depending on individual characteristics as well as on different social factors; the fourth,
a human interaction tends to be in a balance (Barković, 2009, pp. 120-121).
EAL puts in its heart the concept of efficiency which “[…] contains two values: a val-
uable goal and valuable means (inputs) with which that goal is achieved. Maximum effi-
ciency consists of achieving a maximum value of output from a given value of inputs”
(Stigler, 1992, p. 458). For some lawyers, like the judge Richard Posner, the common law
system is more efficient than civil law, because judges, who make rules, are in a bet-
ter position to create a norm which will figure out efficiently concrete circumstances
(Garoupa, Ligüerre & Mélon, 2017, p. 14). On the other side, the opposition to the former
view sees the law as a synonym of justice, derived from the natural law concept, where
there is no place for quantification and qualification (Devlin, 2010, p. 170). Efficiency
criteria is a part of welfare economics, where microeconomics, as a basic tool of EAL,
deals with behavior of individuals and market effects, while welfare economics evaluates
the effects of a concrete economic policy of regulation and will consider if such meas-
ures increase or decrease welfare (Mathis, 2008, p. 31). When we examine this theoreti-
cal concept in line with labor discrimination, the author’s aims are: to analyze labor dis-
crimination through the behavior of individual employers who do have and do not have
taste for discrimination (using the two economic models of discrimination), to consider
why market mechanisms are not sufficient to resolve this problem, and to evaluate exist-
ing legislation which is used as a government’s intervention in the legal framework of
the Republic of Serbia. EAL reasoning opens a space for a wider observation of labor dis-
crimination, beyond just doctrinal approach, including a public policy approach which
encompasses also administrative, social, economic and political side of a state interven-
tion (Kreis & Christensen, 2013, p. 41).

4
Based on the approach that the human behavior is not always rational and is driven by biases, there
is a development of a new scientific field called Behavioral Economic Analysis of Law or Behavioral Law
and Economics. For more details, see: Jolls, C, Sunstein, R. C, & Thaler, R. 1998. A Behavioral Approach
to Law and Economics. Stanford Law Review, 50(5), pp. 1471-1550; Sunstein, R. C. 1997. Behavioral Anal-
ysis of Law. The University of Chicago Law Review, 64, pp. 1175-1195 and Zamir, E. & Teichman, D. 2018.
Behavioral Law and Economics. New York: Oxford University Press.

4
 In the context of application of EAL to labor discrimination, it is inevitable to men-
tion that all resources are limited, included also human resources in the market (Miller,
1985/86, p. 433). Every choice has its own cost which is borne by a decision maker. Mak-
ing one decision means that we miss a chance to achieve another goal because of lim-
ited resources, while our wishes are unlimited (Jovanović, 2008, p. 22). Based on the eco-
nomic language, all rare goods have a price, while goods which are unlimited are not
in the interest of economists (for instance, this is a case with air, but not also with fresh
air, which due to the global pollution, becomes a limited resource and a luxury) (Jova-
nović, 1998, p. 17). An employer who discriminates makes a risk to miss an opportunity
to employ a genius who can increase his/her profit and make him/her more competi-
tive, and there is an economic punishment in a format of a price which will be paid by
a discriminator.
EAL distinguishes two types of analysis, the positive EAL and the normative EAL. The
former is predictive, and its aim is to show how concrete legal rules work in practice (Dnes,
2018, p. 12), for instance, to what extent the anti-discrimination legislation will change the
behavior of employers who discriminate employees who are members of concrete social
groups, while the latter analysis aims to investigate if an existing mechanism or a norm
is desirable (Begović, Jovanović & Radulović, p. 13), and it can involve suggestions or rec-
ommendations how the concrete system can be improved by a more desirable solution, for
instance if a legal punishment for an employer-discriminator should be more rigorous or a
concrete public policy should be replaced by a new, more efficient one.

3. LABOR MARKET IMPERFECTIONS

AND THE NECESSITY FOR A STATE INTERVENTION
There are different definitions what the market is, and one explanation is that “A
market is a mechanism through which sellers and buyers are connected for the exchange
of goods and services.” (Nikolić & Mojašević, 2015, p. 131). Its basic assumptions are a
division of labor and a specialized production of goods and services which are a sub-
ject of exchange in the market (Božić, 2009, p. 104). The forces of supply and demand
are basics which shape the market activities and make allocation of resources to the eco-
nomic activities where the demand is greater and where the production will be higher.
The perfect labor market includes two components: the transaction cost of exchanging
goods and services is zero, and qualitative information between producers and consum-
ers; because based on precise information, both sides can make decisions which maxi-
mize their welfare.
There are four functions of the market: the first, the selective function which is related
to the competitiveness of producers in the market, the more competitive the more suc-
cessful they will be in the market. Less competitive producers will use higher prices for
selling their goods and services, and they will be “punished” by consumers who will
refuse to buy such goods and services. As a final result, this kind of producers will leave a
market and the selection will be done; the second, the informative function which shares
signals which goods and services consumers want to buy, and for producers which

5
amount of goods and services should be produced. Based on this information a price can
be set; the third, the allocative function of available resources towards the most efficient
outcomes; the fourth, the distributive function which means distribution of social prod-
uct based on the factors of production (labor, land, capital) and their prices (Milošević,
2020, pp. 83-84).
When we come to the labor market, there are employers and employees. Their
exchange in the labor market and cooperation have a final aim to maximize their wel-
fare. Of course, we cannot miss consumers, who are also very important part of this
chain, because their preferences provide signals which kind of services and goods should
be produced. In this paper this part of the consumers’ role will not be analyzed. It is
important to be mentioned that in some cases consumers can have a taste for discrim-
ination towards one group of people and this can provoke their boycott of buying ser-
vices and goods produced by a concrete group of workers. In this case, an employer who
does not have a taste for discrimination can start refusing to employ such group of work-
ers who are not accepted by consumers because of economic reasons (for instance, con-
sumers do not like to buy food produced by a black cook or guests in a night club do not
like to be served by waitresses who are over 30 years old). In this situation, there are no
legal mechanisms which can change the behavior of consumers, the solution is related
to prices, when an employer starts to employ “desired” workers, he/she must increase
prices of services and goods, as a way to cover higher costs which come as a consequence
of discrimination of a concrete labor force. Higher prices can provoke changes of con-
sumers’ behavior.
Markets in general, as well as labor markets, are not perfect, they are usually imper-
fect, and a state intervention is inevitable. This comes because in some cases there is not
a fair-play game in a market, and the second reason is the asymmetry of information or
imperfect information among participants. In our explanation of labor market discrimi-
nation, we will start from the assumption that a labor market is competitive (this charac-
teristic will be very important for understanding the two theories of discrimination), but
there is asymmetry of information. In this condition an employer can make decisions
towards employees based on stereotypes and some statistical generalization regarding
some groups of people. Although we start this article with a presumption that employers
are rational in making decisions and want to maximize their profit, discrimination in
the labor market exists and consequences can be seen as different wages for the work of a
same value or barriers to enter concrete markets or jobs. Some economists, such as Gary
Becker, think labor market imperfections will be solved by a market itself and legislation
can affect the efficiency of resource allocation5, but this explanation does not work in
practice. Anti-discrimination legislation is an inevitable instrument, and there are two
main reasons why it is necessary: the first, equality and human rights approaches which
mean that all human beings are equal in their rights and dignity, and there is no reason
that someone does not have equal opportunity in the labor market only because he/she
has some personal characteristics which do not affect his/her productivity; the second,
5
See more: Epstein, A. R. 1995. The Status-Production Sideshow: Why the Antidiscrimination Laws Are
Still a Mistake. Harvard Law Review, 108, pp. 1085-1109.

6
the efficiency of allocation of resources, including the human capital (Boeri & Ours,
2013, p. 117). There is also an approach of making the difference between imperfect and
non-competitive labor markets and the role of anti-discrimination legislation. Based on
this reasoning, in competitive labor markets employers will be punished by the market’s
power, and anti-discrimination legislation and policies are not necessary (the market
is seen as a sufficient regulator), while in imperfect labor markets there are some other
conditions which can affect the persistence of discrimination, and where the legislative
intervention is inevitable (Boeri & Ours, 2013, p. 117).

4. TWO ECONOMIC MODELS OF DISCRIMINATION

IN THE LABOR MARKET
Gary Becker was a pioneer among economists who developed the theory of discrimi­
nation in the neo-classical economic tradition and who introduced “non-pecuniary
motives into economic theory” in the explanation of labor discrimination (Dex, 1979, p.
90). His approach is that some people have a preference to work with one group of work-
ers instead with another group, and these people are willing to pay for this kind of their
preference or taste (Stiglitz, 1973, p. 288). Social scientists have analyzed discrimination
from different perspectives: sociologists have included a perspective of a social distance
towards some groups of people or their disadvantaged socio-economic position in one
society which both make them more vulnerable in the labor market; psychologists place
their attention on different types of personalities; while economists, including Becker,
have changed these perspectives and included economic productivity (Becker, 1971, p.
14). In that sense, discrimination is seen as “[…] a difference in pay between two workers
of equal productivity”, and it is Becker’s definition of understanding (Guryan & Charles,
2013, p. F420).
The taste for discrimination should be understood that some employers have a taste/
preference not to employ workers who are members of concrete social groups, who have
some personal characteristics which make them less attractive for employers. In some
situations, Becker makes a distinction when an employer discriminates based on preju-
dices or based on ignorance of the efficiency of workers (for example, an employer does
not like to employ black workers – a prejudice, or because he/she thinks that they are
not very-well skilled and efficient in their performance – an ignorant approach; igno-
rance can be eliminated by a concrete action and making sure in practice that a candi-
date is efficient, while in a case of prejudices, this situation cannot be overcome very eas-
ily) (Becker, 1971, p. 16). In another cases, the taste-based discrimination comes as an
effect of employees’ or customers’ taste (England & Lewin, 1989, p. 240). For instance,
employees can pressure their employer not to hire black or female workers, and as a con-
dition for working with them, employees can ask for higher salaries as a compensation if
such workers would be employed. Customers can also have an influence to an employer
to discriminate some groups of people if they do not like to buy products or use services
provided by members of concrete communities.

7
 Becker’s idea is that in a competitive market a discriminator-employer will lose the
competition battle and will leave the market. This will come as a price of discrimination,
because this employer will have higher costs for salaries and production instead of an
employer who does not discriminate. The demand for preferred workers will be higher
in comparison to non-preferred workers, for whom demand will be lower, and the cost
of their employment will be cheaper in comparison to the first group of workers (this
means that the cost of production will be also cheaper and prices of these products/ser-
vices more competitive in comparison to discriminator-employer). In this situation, a
rational employer focused to maximize the profit will tend to employ workers who are
discriminated. Such rational employer could sell his/her products and services at lower
prices compared to an employer discriminator. In the longer market run, a discrimina-
tor loses this market game because the cost will be too much and he/she cannot cover
it. The competition pressure will squeeze out him/her from the market (just to remind
that the condition for this economic model is absolutely a free market and a fair-play
game among competitors). In other words, Becker’s model will work in practice if the
supply of entrepreneurship is elastic enough with a zero price or if there is a majority of
employers who will employ discriminated employees and make a stronger competition
pressure towards discriminators (in this cited article the author focused on black work-
ers as a discriminated group, because the model was created based on racial discrimina-
tion towards black workers, anyway, this logic can be applied in the context of every dis-
criminated group in a labor market) (Heckman, 1998, p. 112).
Statistical discrimination can be explained as one group characteristics used for the
estimation of productivity of an individual who is a member of this group (England &
Lewin, 1989, p. 241). The reason why it happens is the information cost (Sunstein, 1991,
pp. 26-27) to realize an individual’s productivity and capability to complete labor tasks.
An employer will always have less information regarding a candidate who will be at an
advantage about information which will use to present himself/herself in the best possi-
ble way. There are also limitations based on different legal norms which protect privacy
and do not allow employers to ask employees or job applicants concrete questions dur-
ing their employment or a job interview. It is important to emphasize that in this model
of discrimination an employer does not have a taste for discrimination although he/she
can have it, but a decision regarding an individual is based on average and statistically
based characteristics of members of one group of people. For instance, an employer can
refuse to employ a woman because women take parental leave more often than men,
or a Roma applicant will be refused because of statistic data that this population has
lower levels of skill and education in general in comparison to the non-Roma popula-
tion. In this example an employer has a too high cost due to the asymmetry of informa-
tion to realize concrete characteristics of these applicants (a woman and a Roma appli-
cant), and he/she will use average characteristics related to the members of these social
groups (women and Roma people). This informative aspect of statistical discrimination
can be summarized in the following way: “The more informative the signal of the indi-
vidual applicant is – the more complete the information is – the greater the weight the
employer places on that information; the less informative the signal is, the more weight
8
he places on the average productivity of other workers from the same group.” (Guryan &
Charles, 2013, p. F418). There are some views from the economic perspective that statis-
tical discrimination can increase the overall efficiency, but it has to be underlined that
“[…] it uses average valuations, rather than marginal valuations which are necessary for
efficient resource allocation” (Schwab, 2000, p. 8).
Both analyzed models of discrimination are forbidden from the legal perspective
and the anti-discrimination legislation in the field of labor and employment does not
allow them access to the labor market. This is in accordance with the stance that the act
of discrimination can be done both when a discriminator has a taste for it, and when
the subjective motive is dominant, as well as when it is not coming as a consequence
of someone’s taste, but as an objective action which is based on an average conclusion
about one group characteristics which are applied automatically to each of its members.
In other words, this is in accordance with the anti-discrimination law which prohibits
both direct and indirect discrimination, no matter if an employer wants to discriminate
(when has a taste for it) or when he/she does it not knowing about the prohibition of such
kind of behavior in general, and uses only general observations of some groups of peo-
ple which are supported by statistics.

5. ANTI-DISCRIMINATION LEGISLATION IN THE FIELD

OF LABOR AND EMPLOYMENT IN THE REPUBLIC OF SERBIA
In this part of the article the author’s focus will be on the norms which prohibit dis-
crimination in the field of labor and employment based on the Law on the Prohibition
of Discrimination6 (hereinafter: LPD), which represents an “umbrella” anti-discrimina-
tion law in the Republic of Serbia. The anti-discrimination provisions which are stipu-
lated by the Labor Law are also part of the LPD, and will not be analyzed additionally.
After this the focus is on the impact assessment of regulations7 and public policy docu-
ments which aim to improve their quality in the context of implementation of the prin-
ciple of equality, focusing also on the field of labor and employment.
As we mentioned before, purposes of anti-discrimination law are to provide fairer
allocation of resources, including this among the human capital and equal opportunities
in accessing labor market, as well as to “[…] prevent employers from considering various
personal characteristics in making employment decisions” (Donohue III, 1994, p. 2586).
The LPD recognizes an open clause of personal characteristics and prohibits discrimina-
tion based on them. Some characteristics can be seen prima facie, for instance some forms
of disability, worship of some religion if a person wears symbols, race, nationality, while
others are not disclosed, e.g. sexual orientation (Reljanović, 2010, p. 75) or gender iden-
tity. Further, the LPD in Article 16 paragraph 1 stipulates that discrimination in the field
of work is prohibited, including the violation of equal opportunities for establishing an
employment relationship or the enjoyment under equal conditions of all rights in the field
of work, such as the right to work, free choice of employment, promotion in the service,
6
Law on the Prohibition of Discrimination, Official Gazette of the RS no. 22/2009 and 52/2021.
7
In this context, regulations encompass both laws and by-laws.

9
professional training and professional rehabilitation, equal compensation for work of
equal value, right to real and satisfactory working conditions, right to vacation, education
and joining a trade union, as well as protection against unemployment. It is very impor-
tant that the LPD recognizes implementation of special (affirmative) measures in Arti-
cle 14 paragraph 1 which aim is achieving full equality, protection and advancement of
persons, or groups of persons in an unequal position, and which do not constitute dis-
crimination. This kind of unequal treatment will be tolerated under the legal framework,
because its purpose is to alleviate existing inequalities among concrete social groups, e.g.
affirmative measures for employment of Roma people or persons with disabilities.
In many situations it is not very easy to provide enough evidence to prove discrim-
ination, because of the fear of victims that reporting such cases can reveal their iden-
tities and make them more vulnerable. For this purpose, the institute called situation
testing can be used as a social experiment. This means that a potential discriminator
will be put in a situation where his/her behavior will be tested. We can distinguish a
potential discriminator, experimental groups whose members pose some grounds for
discrimination, and a control group whose members are equal as members of an exper-
imental group, except concrete personal characteristics (grounds for discrimination).
For instance, Roma people, who pose all necessary qualifications for a concrete job, will
apply and go through the interview, as well as their non-Roma counterparts, who form
a control group. If all Roma candidates are refused and only non-Roma persons are
employed, this can be a clear sign of discrimination of Roma people in a labor market.
Situation testing is done in the partnership with the Commissioner for Protection of
Equality, it is used as a valid proof in litigations or procedures before the Commissioner
for the Protection of Equality, and based on the LPD Article 46 paragraph 4, the Com-
missioner has to be informed in a written format regarding the testing. Generally speak-
ing, situation testing has two main purposes: to provide a proof of evidence of discrim-
ination in a concrete case and to provide a wider picture to what extent discrimination
exists in different fields of social life, e.g. labor market, medical and dental services etc.
(Poverenik za zaštitu ravnopravnosti, 2018, p. 21).
The LPD stipulates also special provisions regarding evidence, which aim is to sup-
port victims of discrimination and provide incentives for reporting cases of discrimina-
tion. Based on the Article 46 paras 1-2, in a situation of direct discrimination, a defend-
ant cannot be released from responsibility by proving that he/she is not responsible,
while in a case when a plaintiff makes it probable that the defendant committed an act
of discrimination, the burden of proving that as a result of that act there was no viola-
tion of the principle of equality, respectively the principle of equal rights and obligations,
is borne by the defendant. These rules are applicable equally in court’s proceedings or
before the Commissioner for the Protection of Equality.
Beside the existing anti-discrimination legislation, it is very important when draft-
ing laws, by-laws and public policy documents to assess their potential effects which
they can have in practice during their implementation. This is related to protection of
human rights and the principle of equality. In general, every decision by an individual, a
family as a union, or a government has its own effects, both positive and negative. Good
10
planning and assessing different options are the best way to achieve goals with as little
as possible negative consequences.
For the first time since 2018/2019, the Law on the Planning System of the Republic of
Serbia8 (hereinafter: LPS RS) and an accompanying by-law called the Regulation on the
Methodology of Public Policy Management, Impact Analysis of Public Policies and Reg-
ulations, and the Content of Individual Public Policy Documents9 (hereinafter: Regula-
tion) regulate the planning system, including the impact assessment which is applicable
equally to laws, by-laws and public policy documents.
Based on the LPS RS, the impact assessment is seen as a part of the public policy
management system, and Article 2 paragraph 1 point 7 defines impact assessment as an
analytical process conducted during public policy and legislation planning, formulation
and adoption with a view to identifying change that should be achieved, their elements
and cause and effect relationship, and the choice of optimal measures for achieving pub-
lic policy goals (ex-ante impact assessment), during and after the implementation of
adopted policies and regulations with a view to evaluating performance, and review-
ing and improving the public policy and/or legislation (ex-post impact assessment). The
implementation of the principles of equality and non-discrimination are among the pri-
orities in the policy system management.
The Regulation in Article 9 paragraph 1 distinguishes the following steps in the pro-
cess of conducting an ex-ante impact assessment, and they are: 1) the analysis of the
existing situation and identifying the change to be achieved by implementing the pub-
lic policy measure, conditions for implementing such a change and the causal relation-
ships between such conditions; 2) establishing the goals and objectives of the public
policy, and performance indicators to be used for measuring the achievement of objec-
tives; 3) identifying options – potential measures, and/or groups of measures for achiev-
ing the objectives and resources for their implementation; 4) the analysis of the effects
of options – potential measures and risks for implementing each of the options; 5) con-
ducting the selection of the optimum option or optimum combination of the reviewed
options; 6) determining the type of a public policy document, and/or regulation they
will intervene with; 7) identifying the resources required for implementing and moni-
toring the implementation of public policies and establishing performance indicators at
the level of measures.
There are six impact analyses and assessment of public policy options and solutions
from regulations based on the Article 24 paragraph 1 of the Regulation: 1) analysis of
financial impact; 2) analysis of economic impact; 3) analysis of social impact; 4) analysis
of environmental impact; 5) analysis of governance impact; 6) risk analysis.
The analysis of social impact is very important in assessing potential positive and neg-
ative effects of public policy documents and regulations towards vulnerable social groups
and labor market. The Appendix 7 of the Regulation contains a list of questions which
answers should be used for this analysis, and the question number 4 is directly connected
8
Law on the Planning System of the Republic of Serbia, Official Gazette of the RS no. 30/2018.
9
Regulation on the Methodology of Public Policy Management, Impact Analysis of Public Policies and
Regulations, and the Content of Individual Public Policy Documents, Official Gazette of the RS no. 8/2019.

11
to the labor market: Would the selected option affect the labor market and employment, as
well as the working conditions (e.g. changes in employment rates, dismissal of redundant
workers, eliminated or newly-formed jobs, existing rights and obligations of workers, needs
for requalification or additional training imposed by the labor market, gender equality, vul-
nerable groups and forms of their employment, etc.) and how? Beside this question, other
questions10 from this Appendix contribute to the implementation of the concept called
human rights impact assessment which aim is to prevent violations of human rights which
can come as a consequence of concrete government’s measures and legislations.
The last amendments to the LPD from 2021 in Article 14 paragraph 4 stipulates an obli-
gation not only for the central authorities, but also for the local authorities, that they should
conduct an ex-ante impact assessment of regulations or public policy documents in the
context of their compliance with the principle of equality in a case when a regulation or a
public policy is important for the realization of the rights of socio-economically disadvan-
taged persons or groups of persons.11 This article emphasizes also that vulnerable social
groups in the labor market have to be in a special focus when an assessment is done. This
novelty is important because the ex-ante impact assessment has been recognized as obli-
gation for local authorities, and not only for central, the human rights impact assessment
through the respect of the principle of equality has been recognized by the main anti-dis-
crimination law in the Republic of Serbia, and the labor market context is in the focus.
The implementation of the human rights impact assessment by the Republic of Ser-
bia authorities has been recognized as of a special importance by the UN Committee on
Economic, Social and Cultural Rights which recommended to the Serbian authorities
10
The full list of key questions from the Appendix 7 of the Regulation which are used for the social impact
assessment: 1) What costs and benefits (material and non-material) will the selected option cause for the citi-
zens? 2) Will the effects of the implementation of the selected option have a harmful effect on a specific group
of the population and will this negatively affect the successful implementation of this option, and what meas-
ures need to be undertaken to minimize such risk? 3) What social groups, particularly what vulnerable social
groups would be affected by the measures of the selected option and what would this impact be reflected in
(primarily persons in poverty and socially excluded individuals and groups, such as persons with disabilities,
children, youth, women, persons aged 65 and over, members of the Roma national minority, undereducated
persons, unemployed persons, refugees and internally displaced persons and the population of rural areas
and other vulnerable social groups)? 4) Would the selected option affect the labor market and employment,
as well as the working conditions (e.g. changes in employment rates, dismissal of redundant workers, elimi-
nated or newly-formed jobs, existing rights and obligations of workers, needs for requalification or additional
training imposed by the labor market, gender equality, vulnerable groups and forms of their employment,
etc.) and how? 5) Do the selected options provide for an equal treatment, or lead to direct or indirect discrim-
ination of various categories of persons (e.g. based on national affiliation, ethnic origin, language, sex, gen-
der identity, disability, age, sexual orientation, marital status or other personal characteristics)? 6) Could the
selected option affect the price of goods and services and the living standard of the population, how and to
what extent? 7) Would the realization of the selected options positively affect changes in the social situation
in a given region or county and how? 8) Would the realization of the selected option affect changes in the
financing, quality or availability of the social welfare system, healthcare system, or educational system, par-
ticularly regarding equal access to services and rights of vulnerable groups and how?
11
For more details about the application of this provision, see: Mihajlović, A. 2023. Application of the
principle of equality in the process of impact assessment of regulations and public policy documents in
the Republic of Serbia. In: Čelić, D. & Miljković, S. (eds.), Law between the Ideal and the Reality. Kosovska
Mitrovica/Belgrade: University of Priština, Faculty of Law and Institute of Comparative Law, pp. 213-226.

12
the following: the Republic of Serbia has to systematize the application of impact assess-
ment through the dimension of human rights in the process of preparing regulations
and public policy documents in the field of economic, social and cultural rights12 (eco-
nomic rights are related to the labor rights and labor market); expression of concern
about the lack of systematic collection and processing of desegregated data that would
enable an accurate assessment of the fulfillment of economic, social and cultural rights
in the Republic of Serbia, and recommends the use of appropriate indicators that can be
used to monitor the level of enjoyment of economic, social and cultural rights.13 The UN
Committee recommended the application of the methodology14 for the development of
indicators, which was prepared by the Office of the United Nations High Commissioner
for Human Rights.

6. CONCLUSION
Economic analysis of law approach was used in this paper to explain two models of
discrimination in the labor market, Becker’s Taste for Discrimination and Statistical
Discrimination Model. Becker’s Taste for Discrimination Model means that an employer
has a taste to discriminate concrete groups of people in the labor market and is ready to
pay a price for this kind of preference. Becker also explained that in the longer period of
time, a discriminator will be eliminated from the market because the price of discrim-
ination would be too high that he/she can cover such costs. The second model, Statisti-
cal Discrimination comes because an employer does not have always enough informa-
tion about candidates in the labor market and his/her decision regarding one individual
will be based on some statistical/average characteristics of a group whose member is an
individual. In this model, an employer does not have a taste for discrimination although
in some cases it can be a combination of a taste and not accurate information about con-
crete candidates.
Due to the market imperfections in general, including the labor market, it cannot be
seen as a regulator which will eliminate employers-discriminators and establish a market
equilibrium. The normative intervention in a format of anti-discrimination law is inevita-
ble for two reasons: this is a question of respect of human rights and the principle of equal-
ity, as well as a mechanism which will allocate resources, including labor force as a human
capital, where they are necessary and where their engagement will provide the highest level
of utility. The Law on the Prohibition of Discrimination was in a focus in this paper as a
main anti-discrimination legal act in the Republic of Serbia which prohibits different forms
of discrimination in different fields, including a labor market, based on different grounds/
12
Concluding observations on the third periodic report of Serbia, Committee on Economic, Social and
Cultural Rights E/C.12/SRB/CO/3, 06/04/2022, paragraph 7.
13
Concluding observations on the second periodic report of Serbia, Committee on Economic, Social and
Cultural Rights E/C.12/SRB/CO/2, 10/07/2014, paragraph 7.
14
United Nations Human Rights Office of the High Commissioner, 2012. Human Rights Indicators – A
Guide to Measurement and Implementation. HR/PUB/12/5. New York/Geneva: United Nations Human
Rights Office of the High Commissioner.

13
personal characteristics. A special attention was also on the impact assessment of regula-
tions and public policy documents in a context of implementation of the principle of equal-
ity in the process of legislative drafting or formulation of public policy documents, and
their potential implications to the labor market and employees. This has been regulated by
the Law on the Planning System of the Republic of Serbia and the Regulation on the Meth-
odology of Public Policy Management, Impact Analysis of Public Policies and Regulations,
and the Content of Individual Public Policy Documents. The last amendments of the Law
on the Prohibition of Discrimination have concretized the application of the principle of
equality in the process of drafting legislation and public policy documents, especially in the
field of labor. This novelty also recognized a wider circle of subjects who are responsible for
their implementation, beside central authorities, there are also local authorities.

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