The lowest Salary in the Federation of BiH has to be 1,000 BAM

Having in mind the fact that in the last days in the media, but also in the public, there is speculation about the data related to the lowest salary published on EUROSTAT, in order to accurately inform the entire public, the Federation of Independent Trade Unions of Bosnia and Herzegovina wrote on their page that BiH does not have a legally defined minimum wage, which the Union has been warning about since 2018.

”There is no “lowest guaranteed salary” of 406 BAM in the Federation. There is the lowest hourly wage of 2.31 BAM net with income tax, which for 176 hours per month gives the amount of “minimum” of 406.56 BAM net with income tax. The legal minimum hourly wage in the FBiH, when converted to the level of the minimum wage, means that this is the amount that the worker receives on hand. There is no guarantee that a worker in the economic sector will also receive a hot meal, because it can be used through an insured meal, so that a hot meal cannot be counted in the “minimum income”. If the worker has no dependent family members, he has a personal deduction of 300 BAM and the state takes 10 percent of the tax from the amount above 300 BAM, in this case 10.65 BAM. So, he has some 396 KM left,” it was announced from the Alliance.

The lowest salary, which Prime Minister Novalic said in 2015 was a “socially dangerous increase” in the minimum wage, according to the union, does not formally exist, because it was part of the General Collective Agreement which the FBiH Employers’ Association canceled in February 2018.

”When it comes to the payment of hot meals and transportation fees, it is important to emphasize that these are not legal categories. Namely, if there is no collective agreement (domestic, branch), and thanks to the new Labor Law there are very few of them, the employer does not have to pay this compensation, which a large number do not. The logical question is, “Then why are these fees paid, where they are paid?” The answer is simple. They are paid exclusively because they are currently non-taxable, a hot meal up to 1 percent of the average net salary in FBiH per day, and transportation in the amount of the monthly ticket price, which is regulated by the Ordinance on the application of the Income Tax Act. In this way, the employer pays the employee part of the income without paying mandatory taxes and contributions, which is cheaper. However, if the laws mentioned as a salvation for workers are adopted, all benefits will become taxable, including hot meals and transportation fees, ie they will be equal to the salary in the tax sense,” the union states.

Poor socio-economic status of workers Instructed by previous experiences, the Union is sure that a large number of employers will simply stop paying them.

”One of the reasons for the mass emigration in recent years is the poor socio-economic status of workers. In order to improve the status, it is necessary to reduce the tax burden on salaries, which would increase the minimum wage, which should be defined, and abolish the taxation of wages to the amount of 1,000 BAM, which is the lower limit for leading a normal life. The calculation of salaries in contracts should be defined in the gross amount, because in that way any reduction of contributions will be directly directed towards the salary of workers,” they conclude from the Trade Union.