Employers’ Association FBiH: Withdraw the decision on the minimum wage, it could cause mass dismissals

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The Association of Employers in FBiH would like to thank all organizations, chambers, institutions, the academic community, experts and the media who provided support in preserving the business environment and improving the working conditions of workers and businessmen. They also thanked all the employers who actively participated in appearances in the media in order to draw attention to the serious consequences of the recent Decision of the Government of the Federation of Bosnia and Herzegovina on the minimum wage for 2025, which threatens the survival of a large number of companies and jobs.

– Although, as an Association of Employers and social partners, we are always open to a constructive dialogue with the Government and trade unions, the adopted Decision on the minimum wage, as well as the introduction of new burdens, are not the result of dialogue nor were they adopted in a transparent manner. The decision was not on the agenda of the Economic and Social Council of the FBiH, but was suddenly put under the miscellaneous item of the first working session, without a written proposal and analysis, and adopted without prior consultation with social partners, which causes serious concerns in social dialogue and the formal legality of this decision.

As an Employers’ Association, we had a clear intention to help workers and support an increase in the minimum wage. Our proposal for the Regulation on minimum incomes, which we submitted in writing to the session and which was the conclusion of the Management Board of the Association, was to determine the amount of 1000 KM minimum incomes, of which 650 KM would be taxable, while the rest would be non-taxable. This proposal was based on the earlier views of the social partners that we all give up part of our interest in favor of the net income of the workers and that the workers receive the desired amount of the minimum wage, while the state would maintain the stability of contributions with a slight increase in income. Unfortunately, this proposal was rejected, which clearly indicates to us that there was no will for a constructive dialogue or for finding a sustainable solution. This rejected proposal indicates that the Government has decided to focus exclusively on contribution income and the budget, instead of realistic support for workers and job preservation. We remind you that the minimum wage was announced as the third step, after the adoption of the Law on Income Tax and the Law on Contributions!

An increase in the minimum wage of 61.5% will result in an increase in other wages in companies, which will mean significantly higher payments for contributions, i.e. filling the budget, and again at the expense of subcontractors. This jump in costs will not be able to be borne by a large number of companies, which could result in a reduction in the number of jobs. Although there is talk, as some analysts state, of a possible increase in budget revenues from 800 to 900 million KM, the question is how it will affect the real sector, which is already facing major challenges. In the end, it is clear that the government’s focus is not on workers and salary increases, but on increasing the budget.

The government refers to the success of the economy in the Federation of Bosnia and Herzegovina with the argument that it made a profit of five billion KM, a part of which should be shared with the workers, but ignores the fact that the economy of the FBiH is not one company in which this is evenly distributed, but the economy consists of 26,000 economic entities from which ten percent make at least 80% of that profit, and that the vast majority, which employ the largest number of workers, do not have the space to cover these costs from the profit, which could eventually result in a huge number of terminations of employment contracts, it says Avaz.

This decision, instead of encouraging growth and development, may cause counterproductive effects, including mass layoffs, a reduction in the number of new jobs, a decrease in the competitiveness of the domestic economy, the absence of an already small number of foreign investors, as well as additional pressures on an already overburdened business community. Given the current situation, the number of employers considering downsizing or shutting down may increase significantly, which would have disastrous consequences for the overall economy. The Association of Employers in FBiH continues to fight for the stability of the economy, using all legal and legal means, in order to ensure that this measure is abolished. We call on the Government to reconsider its decision and to withdraw it as soon as possible in order to preserve the stability of the economy and jobs – the Association of Employers of the FBiH states.