Foreign Investors Council: Minimum wage increase should have been accompanied by a decrease in contributions, jobs are at risk

(Patria) - Regarding the decision of the Government of the Federation of Bosnia and Herzegovina on the increase of the minimum wage, made on December 30, 2024, the Foreign Investors Council in BiH expressed serious concern due to the decision of the Government of the Federation of BiH which, without detailed analyses and projections, and without consultation with the business sector, increases the minimum wage in the Federation of BiH from January 1, 2025.

"Such decisions, made at the last moment, without considering the actual economic circumstances and possibilities for adaptation, not only endanger the business operations of entrepreneurs but also harm workers in the long run, especially those with the lowest incomes.

Preliminary analyses clearly show that this decision will increase costs for employers by more than 600 KM per worker. The biggest impact will be felt by industries such as textiles, wood processing, and automotive, which are already operating on the verge of sustainability. The consequences will inevitably include a reduction in the number of jobs and layoffs, plant closures, and a weakening of the economic environment in the Federation of BiH.

While employers strongly support increasing workers' wages, this must be done in an economically sustainable way. As already agreed with the Government, any wage increase must be accompanied by a decrease in contributions, so that the burden is distributed evenly. The decision in its current form unilaterally burdens employers, jeopardizing their ability to preserve jobs and continue investing.

We warn that such a measure will have negative long-term consequences precisely for those workers whose protection it allegedly ensures, as it will lead to a decrease in the number of employed persons in the most vulnerable sectors," the statement reads.

The Foreign Investors Council of BiH (FIC) supports the efforts of other employer associations to take urgent measures in cooperation with the Government and trade unions to revise and amend this harmful decision. The consequences of this decision are unforeseeable and require a prompt reaction from all involved actors to protect both workers and the economy as a whole.

As in the past 18 years, the Foreign Investors Council in BiH will continue to work on creating a better investment climate in Bosnia and Herzegovina and further fostering productive dialogue with relevant ministries and decision-makers regarding some of the most significant laws in BiH, and strengthening cooperation between the public and private sectors.