Populism of Nikšić and Mijatović: Decree 'pays 1,000 KM minimum wage' at the expense of employers, while fiscal laws wait

By: Amra Vrabac

The Decree on payment of assistance from the employer, adopted by the FBiH Government at its session on December 12, was published in the Official Gazette of FBiH, thus beginning its application. However, this decree is not binding for employers, and that is the most important thing in the whole story.

This is clearly stated in the decree itself, which defines that "the employer may", but this does not mean that he must make any additional payment to workers. Although the FBiH Employers' Association welcomed the adoption of the Decree and called on employers to "start payments from February", there are no announcements from employers that they will do so, nor in what amount.

The decree adopted by the FBiH Government is not a relief for businesses but an additional cost. What employers themselves insisted on was a reduction in levies on wages, which would open up space for increasing workers' wages because the "savings on taxes" would go directly to workers. This way, as envisioned by the FBiH Government led by Prime Minister Nermin Nikšić, the employer retains the same obligations towards the state and workers, and the additional cost is the payment of assistance, regardless of the fact that it is tax-exempt. If a company has 50 employees, an employer who would pay workers 420 KM for six months would have to set aside an additional 126,000 KM. With a larger number of workers, the allocations are increasingly higher.

To make matters worse, both the federal prime minister and the Minister of Development, Entrepreneurship and Crafts and Vice President of the SDP, Vojin Mijatović, published a "calculation" according to which a worker with a minimum wage of 596 KM, with monthly assistance of 420 KM (the decree prescribes a maximum amount of 2,520 KM which can be divided into six tranches of 420 KM), would receive 1,016 KM. However, is this the obligation of the employer or of the FBiH Government to reduce the burden on employers through fiscal laws, which could increase workers' wages?

The same Mijatović, after being appointed minister, announced a minimum wage of 1,000 KM from January 1, 2024. However, not a single law from the set of fiscal laws was adopted. Today, he blames everyone except the FBiH Government itself. But back then, when he promised a minimum wage of 1,000 KM, he did not think about financial stability and the payment of pensions, social benefits, and other payments that are precisely possible due to the high levies on workers' wages that fill the budgets.

On the other hand, both Nikšić and Mijatović only stick to the minimum wage, which shifts the burden onto those employers who pay workers that amount to pay assistance under this decree, while reducing pressure on those employers who pay higher wages. For many employers, this decree is just an additional burden in already difficult working conditions, with increased electricity prices for the economy, which also leads to an increase in other costs, high inflation, changes in oil prices...

Although the decree itself states that the assistance from this Decree is not considered a salary or wage compensation according to the provisions of the Labor Law, for Nikšić and Mijatović it represents a "minimum wage of 1,000 KM", which is a mockery of the workers themselves.
The decree, for example, does not prescribe the minimum possible amount that an employer can pay, which is not so important because the Decree is not binding.

What remains as a justified suspicion is that the FBiH Government and the FBiH Parliament will not adopt the set of fiscal laws in the next few months either, whose application would begin in July 2024, when the application of this decree would expire.

The FBiH Government has not yet come out with a proposal for the 2024 Budget, nor is it known whether a lower inflow from wage taxes is planned if the set of fiscal laws begins to apply. Everything is still up in the air, but at least there is no shortage of populism...