Employers' Association in FBiH: Decision on Minimum Wage Without Reform Laws Further Endangers Jobs and Business

(Patria) - The Employers' Association in FBiH held an emergency session of its expanded Management Board tonight, following today's session of the Economic-Social Council of FBiH and the session of the FBiH Government at which the FBiH Government adopted the Decision on the minimum monthly wage for workers in the amount of 1,000 KM net.

After the constituent session of the ESC held on Tuesday, 24.12.2024, the Employers' Association prepared a draft Decree on minimum earnings for workers, which was submitted to the President of the ESC, who forwarded the proposal to the delegations of the FBiH Government and trade unions within the ESC.

After the proposal of the Decree was rejected at the ESC session by the delegations of the FBiH Government and trade unions, representatives of the FBiH Government verbally announced that at today's session of the FBiH Government, a Decision on the minimum wage for 2025 in the minimum NET amount of 1,000 KM would be proposed and likely adopted. Representatives of the Government and trade unions voted in favor of such a decision, while the employers' delegation, after requesting a break and conducting internal consultations, informed those present that this proposal was unacceptable to employers, explaining certain risks if such a decision were adopted.

In the meantime, after the ESC session, a session of the FBiH Government was held at which the FBiH Government adopted the Decision on the minimum wage for 2025 in the amount of NET 1,000 KM per month, thereby increasing allocations for the payment of gross wages for workers with mandatory taxes and contributions by about 61.5%, exclusively at the expense of employers and without approval of any previously announced tax-free benefits!

The Management Board of the Employers' Association of FBiH points to serious consequences and risks of adopting such a hasty decision. Employers are indeed in favor of increasing workers' wages, but in a way that is possible and sustainable, as was announced, namely that employers increase workers' net wages, and that the authorities, through fiscal and other necessary reforms, reduce employers' obligations to the state, thereby improving the position of workers. In this regard, today's session of the Economic-Social Council is yet another missed opportunity for the economic-social partners to show responsibility and, through dialogue, consider and harmonize expected and acceptable solutions.

On the contrary, things have been set back several steps!

Today's uncoordinated decision on such important issues of the business environment, especially before the adoption of the announced set of fiscal laws, redefinition of the issue of health insurance at the expense of employers, reduction of para-fiscal burdens, harmonization of social benefits, etc., is a serious additional burden on employers and will produce very likely damage to business, reduction in the number of jobs, jeopardize the competitiveness of our companies, especially on foreign markets, which will further discourage investors in FBiH.

An increase in minimum wages necessarily entails the adjustment, i.e., increase of all other wages, and it is also well known that an increase in the minimum and average wage results in additional social benefits at all levels of government in BiH.

What is shocking for the business community is that the authorities have opted for such a large increase in workers' wages without undertaking any fiscal reforms, without the announced reforms of health insurance, para-fiscal relief, and other incentives that have been long announced!

The decision on such an extreme increase in minimum wages comes at the very end of the year, when business plans in most companies are already finalized and when it is impossible, in most cases, to factor such a drastic wage increase into business plans for the next year.

In the coming days, employers, together with economic experts and the academic community, will analyze the situation they have been placed in and take measures aimed at preserving their companies and retaining as many workers as possible in their jobs.

After the adoption of such a decision by the FBiH Government today, the Employers' Association is simply inundated with reactions from the field, in which representatives of businessmen, chambers, associations and employers, as well as the academic community, and even authorities and trade unions, express concern over such an ill-considered and uncoordinated decision by the authorities!

As early as tomorrow, the Employers' Association in FBiH will launch a series of activities to protect its companies and businesses from the damage that today's Decisions are expected to cause, unless a package of measures is urgently put in place to create the necessary balance, as previously agreed, between the need to relieve business in FBiH, increase workers' net wages, and preserve the interests of public funds in FBiH, measures that were expected and announced by the authorities in the previous period!