The rise in food prices in Bosnia and Herzegovina (BiH) is getting out of control. So much so that food prices “eat up” wage growth, instead of the other way around. Although wages are rising nominally, that growth is slower than the rise in food prices. In fact, for quite some time now inflation has been gnawing away at wages and reducing citizens’ purchasing power.
Dr. sc. Igor Zivko, full professor at the Faculty of Economics of the University of Mostar, recalls that according to data from the Agency for Statistics of BiH, the net wage for the first 10 months of last year, compared with the same period in 2024, grew in real terms by 9.3 percent.
Real decline
That growth, he notes, amounted to only 5.8 percent in agriculture, and somewhat more in hospitality and healthcare, while in the manufacturing industry the nominal wage increased by 3.6 percent, but, he says, in real terms it actually decreased by 0.3 percent; that is, a real decline in the net wage is recorded in the manufacturing sector.
“If, on the other hand, we know that we have price growth, that is, inflation growth of 4.4 percent for the first 11 months of last year compared to the same period a year earlier, that food prices rose by six percent, housing by 6.6 percent, healthcare by five percent, then it is quite clear that wage growth, that is, the real net wage received by each worker in this country, has been eaten up by inflation, or by food prices, for the majority of them,” Prof. Zivko explained.
It is clear, he adds, that not all workers in this country work in sectors that recorded much higher wage growth, just as we, of course, know that in our consumer baskets, to the greatest extent, due to the decline in living standards, food, housing, and essential services account for the largest share.
The president of the “Don” Consumer Association, Murisa Maric, points out that production in our country is at a very low level, even of food, which would at least somewhat mitigate the overall situation regarding constant price increases on the one hand and wage growth that does not keep pace on the other. She fears, she says, that we will become a country in which people live only off certain types of services.
Lack of knowledge
“How strong our purchasing power is, and the fact that people abroad have significantly lower prices than we do and significantly higher incomes, is a reflection of politics and the overall situation. When have you heard a politician comment on prices, say that something is too expensive, talk about the consumer basket that long ago exceeded the amount of 3.000 BAM and is unattainable for 90 percent of the citizens of this country? Unfortunately, here the whole story related to decision-making is tied to very unprofessional people who lack knowledge,” says Maric.
Instead of progress, she continues, we are constantly regressing, while statistics, she says, are one thing and real life quite another, when numerous products become more expensive every week, because, she reminds, we have free price formation.
“What is this a reflection of? Are we citizens, or a reflection of the policy that makes such decisions?” Maric asks.
Decision on the minimum wage
“The wage growth that we have in certain sectors should be attributed to the decision on the minimum wage adopted by the Government of the Federation of BiH (FBiH) as of January 1st, 2025, which is precisely reflected in the growth of real net wages in the hospitality sector, that is, in those services that are based on labor as a factor,” Prof. Zivko states.
