Does the FBiH Government have a plan: Decrees on aid to employers and workers expire, minimum wage rises, but no new contribution reductions

By Amra Vrabac

By the beginning of 2026, the application of two Decrees adopted by the FBiH Government at the beginning of this year to mitigate the consequences of the financial shock after the increase in the minimum wage from 619 to 1,000 KM, as well as the need to increase all other wages, will expire. One decree concerned subsidies for part of the contributions for private employers, and the other decree concerned the payment of up to 450 KM, and from July 400 KM, of non-taxable aid to workers by employers.

Regarding subsidies for part of the contributions for private employers, the FBiH Government allocated 100 million KM for this purpose. As of September, 65 million KM has been spent.

Regarding the number of employers who have used the option of paying non-taxable aid, about which they are obliged to submit a report to the FBiH Tax Administration by the 7th of the month, the FBiH Government has not released this data publicly. The Association of Employers of FBiH stated that they have information that a significant portion of employers have used this option and thus increased the income of their employees, but they also did not provide data on how many employers did so and in what amount.

From July, the application of lower contribution rates for health and pension insurance began, and the FBiH Government stated that employers should now increase the wages of their employees. Although the FBiH Government announced that it would proceed with additional contribution reductions, the amendments to the law are not currently in procedure. One of the reasons is the stabilization of the Pension and Disability Insurance Fund. The FBiH Government, in case it does not adopt new decrees, remains obliged to further reduce payroll contributions borne by the employer. However, considering the ratio of employed persons to the constant growth of pensioners whose pensions are mostly paid from contributions and with the tranche from the FBiH Government, it will be a real challenge for the FBiH Ministry of Finance and the Government.

At the end of this month, the FBiH Government, in consultation with the Economic and Social Council, must make a new decision on the amount of the minimum wage for the territory of FBiH for 2026.

The Independent Union of Trade Unions of BiH has proposed differentiated minimum wage amounts, namely 1,200 KM for those with primary education, 1,400 KM for workers with secondary education, and 1,600 KM for those with higher education.

The Republika Srpska entity also has a differentiated minimum wage, so for 2026, it is planned at 1,050 KM for three-year secondary education, 1,100 KM for four-year secondary education, 1,350 KM for higher vocational education, and 1,450 KM for university education.

The FBiH Government has not yet stated how much the minimum wage might be, while after the last session of the ESC, it was said that it would be increased, but not drastically. A new session of the ESC will be held at the beginning of next week.

During 2025, workers did not really feel the increase in the minimum wage, nor other wages, given the constant rise in the cost of living, and the increase in prices for transportation, services, and utilities. The inflation rate has not yet started to decline, and global political and economic trends are not favorable to the already fragile BiH economy. The value of imports is still significantly higher than exports, and some sectors are facing market problems. During this year, there have also been disruptions in the labor market, so compared to December 2024, the number of employed persons decreased by about 4,000 by the end of October 2025. Some workers lost their jobs in the trade sector due to the non-working Sunday from November 2024.

The expiration of the Government's decrees will be a challenge for employers on how to increase wages and retain workers, especially after the new increase in the minimum wage, which inevitably leads to an increase in all other wages.

Whether the FBiH Government has an economic plan ready or if we will have another surprise factor will be known after the next session of the ESC for the territory of the Federation of BiH.