Is it possible to agree on a simple set of priority measures that would re-ignite the process of modernising the economy in Bosnia and Herzegovina?
Together with all those with an interest in the economy – institutions, civil society, international organisations, social partners, citizens and officials – we set out to answer this question at the Forum for Prosperity and Jobs for Bosnia and Herzegovina held in May 2014. It was followed by an expert seminar in Banja Luka earlier this month.
These efforts have led to the creation of a Compact for Growth and Jobs in Bosnia and Herzegovina. The Compact is a reform package which answers the question above with concrete proposals – which, if endorsed by stakeholders, can make a positive and substantial difference to life of all the citizens of Bosnia and Herzegovina.
The Compact was presented today by the European Union Special Representative in Bosnia and Herzegovina/Head of Delegation, Ambassador Peter Sorensen. Ambassador Sorensen’s message was:
“Bosnia and Herzegovina needs to reform. Otherwise the country risks falling further behind her neighbours in terms of the business environment and actions needed to spur investment and create jobs. Reform is possible – even if there are difficult tasks ahead – and the process has to start, in earnest, to improve the lives and prospects of the people of Bosnia and Herzegovina.”
The Compact outlines that to get its economy moving and create jobs, BiH should:
1. Cut governments’ spending and get a wider spread of people and organisations paying tax.
2. Make wages mainly about skills and results and less about seniority.
3. Slash the requirements for and time taken to start a business.
4. Pass an improved insolvency framework so businesses can be restructured faster.
5. Produce clear, public e-registers of procedures for licences and permits.
6. Reduce the amount of privileged pensions, and raise social assistance for those who really need it.
The Compact for Growth and Jobs specific proposals are:
1. Taxes on jobs need to be reduced towards the average for new member states of the European Union at 35 percent of total working costs.
2. Barriers to jobs need to be broken down through labour market reforms that will link wages to skills and performance (instead of seniority) and actively promote inclusion of young people in the workforce.
3. A Plan to lift the Doing Business ranking toward the regional average would include measures to:
Make it simpler to start a business (especially in the FBiH);
Expedite procedures for getting construction permits and access to public services (like electricity);
Simplify tax procedures to make adherence to the system less onerous and costly (in terms of time and money).
4. An Enterprise Recovery Programme would concentrate on improving investor protection through: better insolvency practices; streamlining risk management assessment; & credible sanctions for bad management.
5. An Anti-Corruption Agenda would have a medium-term focus on public administration reform and stronger adherence to the rule of law. And a short-term focus on increased transparency in regulations, fees and licensing procedures to cut opportunities for corruption.
6. Social Welfare Reform would put the system on a firmer financial footing and make policies more effective, efficient and equitable. Measures would include
Penalties (bonuses) for early (late) retirement
Raising assistance for those that are most in need of help
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