One of the most serious problems in Bosnia and Herzegovina (BiH) is unemployment. According to government statistics, almost half of the working population in the country is registered as unemployed with the public employment service. Employment is one of the preconditions for survival of minority returnees in BiH. However, resolving the unemployment problem is essential not only for minorities but also for the entire nation. This paper examines the problems around unemployment and job creation in BiH. The main findings of the research are as follows.
Massive employment losses have occurred in the last 25 years in BiH. The main reason is the destructive influence of the civil war in the early 1990s. However, the number of unemployed has increased in the postwar period. This has been partially caused by the failure of privatization programs.
According to “Labor force survey BiH,” the labor force participation rate for 2006–2014 was 52%–54%. This is nearly 20% lower than the average of advanced countries. This fact reflects the scarcity of job opportunities in BiH.
The unemployment rate is particularly high among the young. For example, the unemployment rate for those aged 15–24 years was 62% in 2014. A big problem is that thousands of young people who went into higher education and obtained qualifications have left the country for work elsewhere.
The extremely severe employment situation has encouraged the escalation of two negative phenomena in BiH. One is unregistered work. In this type of employment, employers neglect their duty to give workers social insurance. Thus, they escape from their obligation to pay contributions for social insurance. The controls on illegal employers need to be enhanced.
Another problem is nepotism, the unfair practice of those in positions of power giving jobs to their family and friends. In the public sector in BiH, a very small number of people obtain work easily through nepotism, while the rest, who have no influential connections, face great difficulty obtaining work. The solution to this problem requires corrective and preventive action against nepotism. This includes the introduction of a transparent system of recruitment.
Employment creation is indispensable to solving the unemployment problem. This requires a strategic economic development plan in which the country’s potential resources are fully utilized. It also demands the elimination of obstacles to start-ups and investment from home and abroad.