Tragicomedy in Our Country: Bosnian Pensions the Swiss Way

The story of pension insurance in Bosnia and Herzegovina is essentially tragicomic. The transition of the economic system also entailed changes in two key social sectors: pension and health. Both, from a fiscal perspective, are tied to the employee and their calculated and paid salary.

The so-called tax wedge is based on the salary base or taxation of labor.

The transitional society experienced an erosion of the salary base, which is calculated using the weighted average of all employees' salaries and their number. This parameter is far below a sustainable ratio and amounts to 1 or below 1 (employee : pensioner).

Everything else, pertaining to Bosnia and Herzegovina, is statistics or, in economic terms, metrics.

Those more or less familiar with the Bosnian economy could find hundreds of reasons for this state of affairs.

All indicators, starting from the social product: GDP growth rates, number of employed in the productive sector, number of employed in the public administration sector, public enterprises and public institutions; external balance, trade exchange, public spending deficit, growth of credit indebtedness, would have indicators that would place us at the very bottom of European countries or below 30% of the average development level of all European Union countries.

The tragedy of the economic state of Bosnia and Herzegovina also manifests itself in the number and structure of pensioners and the number and structure of health service users.

A common characteristic of the social sector (health and pension) are current deficits that manifest in accumulated losses and a lack of funds in accounts (liquidity and solvency).

The government, which presents itself at all levels of the complex state structure, essentially offers a false solution.

In its incompetence and general ignorance bordering on the audacity of the greatest fraudster, it offers principles of payment and abolition of fund independence with the false solution „everyone onto the empty treasury or budget“.

The found „perpetuum mobile“ is sold according to the Swiss model of adjusted pensions every 5th of the current month for payments for the previous month on the principle of paying at a „snail's“ pace in conditions of electronic money when every transaction can be executed at the same moment the payment order is issued.

The infamous 5th of the month becomes „ennobled“ with a „Swiss“ rate that is as hollow as Swiss cheese.

The very story of decline, lasting a full decade, in order to conceal the government's incompetence alibi with the 2008 financial crisis, shows that the average GDP growth rate is below 1%, which, at the level of public expenditure growth, is insufficient to maintain the solvency of the social sector financial system (pension and health).

And as usually at the end of the whole story comes bankruptcy or, as per the saying „the emperor has no clothes“, the system of the infamous treasury is offered, which is nothing other than a single account into which funds flow and are transferred to users.

The key issue of the entire model of the ignorant government boils down to a story of a fabricated model that has no real indicators of cause and effect.

They are contained in the so-called reform of the pension and health system, which would abolish numerous privileges, starting from personnel solutions in the administration of these funds to numerous appointments of incompetent individuals based on criteria of nepotism and clientelism, to positions of heads of health institutions: health centers, hospitals, clinics.

In principle, there is a wood-burning stove just as there is a Swiss model for Bosnian pensions. It all comes down to duration.

The stove until the first fire, and the money in health and pension funds, until real bankruptcy.

Bankruptcy is the real common denominator of all funds, the price of which is paid by increasingly impoverished pension recipients and health service users.

Bankruptcy for the Bosnian financial model, when monetization of public debt through primary money issuance is not possible, is contained in the state of poverty of the people and the increasing arrogance and incompetence of those in power.