When price increases, layoffs and demands for salary increases begin, Mijatović will step aside, and the responsibility will fall on Nikšić

By Amra Vrabac

"We will also have the lowest burden on labor or salary in the amount of 28.5 percent, which will be a big message to domestic and foreign investors, as well as everyone else in the region. This way we will become very attractive for foreign investment. There is a clear economic calculation that it is feasible to have a minimum wage of 1,000 marks and a burden on salaries of only 28.5 percent, while maintaining the fiscal stability of the Federation of Bosnia and Herzegovina. Of course, the method of calculation will first be changed to the so-called 'gross 2', in order to ensure that the relief on contributions goes to workers' salaries, and not to the extra earnings of certain businessmen," said the Federal Deputy Prime Minister and Minister of Development, Entrepreneurship and Crafts Vojin Mijatović in November 2023, announcing a set of fiscal laws and a reduction in contributions and a minimum wage of 1,000 KM from January 1, 2024.

From then until now, neither the contributions have been reduced, nor was the minimum wage 1,000 KM in 2024, but rather 619 KM. However, what they could not do in the parliamentary procedure, the Government chaired by Mijatović in the absence of Prime Minister Nermin Nikšić, but obviously with his approval, made a hasty decision in a tight quorum that from January 1, the minimum wage will be 1,000 KM. No aid, no decree on the non-taxable part, no relief for employers, no reduction in contributions, but only an obligation to increase workers' minimum wages.

Employers were the first to react to the Government's decision, as expected. Both domestic and foreign. While he called the domestic ones malicious, Prime Minister Nikšić told foreign investors that they could leave BiH.

Some employers have already announced layoffs, closure of companies, or relocation to other countries to the Employers' Association of FBiH.

Let's be clear, a minimum wage of 1,000 KM should have been in effect long ago, but with relief for the economy and tax breaks. This was also the employers' proposal not to shy away from increasing the minimum wage, but with such high contributions, it is not possible. In this case, as imposed by the authorities, a counter-effect is created because it is not just about an increase of 381 KM for workers on the minimum wage, but also about additional taxes on that increase. The calculation says that for a minimum wage of 1,000 KM, the employer is obliged to pay 1,736 KM, of which the worker receives 1,000 KM. The rest goes to pension, health, unemployment, and other levies that the state has placed on employers and the economy.

On the other hand, as the minimum wage increases, other wages should also increase proportionally, and price increases and rising living costs are already being announced. Therefore, even those who employ workers with higher salaries than the minimum wage or who previously had a basic salary of 1,000 KM will face the challenge from tomorrow on how to increase workers' salaries because there will certainly be such demands. And many employers are not able to do this without reducing contributions.

What could follow is similar to what happened in stores after the introduction of a non-working Sunday. Due to the redistribution of work, some workers in large shopping centers became surplus, and a similar situation occurred in smaller stores where at least one worker was left unassigned.

Therefore, the decision made "under the influence" in the truest sense of the word, is the product of a small group of people gathered around Nikšić. And all the consequences that arise should be billed to Nikšić and Mijatović.

As confirmed to Patria, the federal Minister of Finance Toni Kraljević was not consulted on this decision, nor did he have any knowledge of it. Especially since everything up to that session was reduced to talk about a secret decree on aid due to increased living costs.

The Government had to make a decision on the minimum wage on the second to last day of 2024, but it jumped from 700 KM, which was discussed, to 1,000 KM overnight. Such a jump has not been recorded in FBiH. Although workers and trade unions welcome such a decision, it will not be long before we see the counter-effects of this decision.

Although Nikšić and Mijatović announce subsidies for crafts, small and medium-sized enterprises, it will not be enough when the chain reaction starts, and even workers with higher salaries submit demands to their employers for salary increases. Anyone who currently has a salary of 1,000 KM will ask for an increase.

Economic experts believe that the decision was made hastily, when budgets were already calculated, and even the FBiH Government itself is not capable of implementing its own decision.

Social benefits, disability benefits, and pensions should be increased proportionally to the increase in the cost of living. However, the government has announced exclusively an increase in compensation for parent caregivers.

We will see the real effects, i.e., consequences, as early as the beginning of February in the data from the Tax Administration of the Federation of Bosnia and Herzegovina.