Can New Employment Incentives Program Decrease Youth Unemployment in FBiH in 2016?

The House of Representatives of the Parliamentary Assembly of FBiH adopted the Budget Proposal for 2016 with 60 votes for and 26 against in December. The Provision on Employment Incentives was also adopted as a part of the Reform Agenda in the labor market, i. e. employment incentives. The Provision regulates the conditions for using and procedure for exercising the rights of the employer on subventions in the instance of employing the unemployed with no working experience, i.e. length of service in the occupation for which they were educated, and the long-term unemployed. 

The Provision manages the sources of funds, criteria for their distribution and supervision over their implementation, as well as other issues of significance for ensuring an effective and responsible disposal of assets that are allocated for this purpose from the Budget of FBiH. The Provision determines that persons from 15 to 30 who have no working experience, have been unemployed for over 30 days and have no accrued working experience longer than one year in the occupation they were educated for will be able to apply for this type of support. The planned program for financing and co-financing the first employment, employment and self-employment in amount of 50 million BAM that will include these persons is particularly interesting.

The Government of the Federation intends to cover the lowest salary in amount of 387 BAM, as well as all the obligations and taxes, with these funds. The difference is financed by the employer if the employer wishes to pay a higher amount. The only condition for the employers to be included in this program is to continue paying the employee for at least another year. For all the above, the question remains of how interesting the program will be for youth, considering the minimal payment compensation it offers and whether youth will rather seek for other opportunities that are better payed and remain on the Employment Bureau? 

The Federal budget intended 50 million BAM for employment incentives for 2016. In 2015 the amount was less and amounted to 20 million BAM. Thus, the Government is planning to employ 10,000 youth in FBiH for the period of 12 months. Jelka Mili?evi?, the Minister of Finance of FBiH predicts that the program should employ around 5,000 youth, while a part of youth should be encouraged to start their own business. Youth employment co-financing will include 2015 and 2016, so as to include one quarter of 2015 and three of 2016. The Federal Employment Bureau will perform surveillance over selecting the employers, employees as well as the usage of subventions. 


While, on the one hand, the Government of FBiH is presenting the newly adopted budget and the expected results for 2016, on the other hand, the economic analysts claim that the plan is no good and evaluate it as a “wasted investment”. Namely, the lessons from the past demonstrate, and the Auditing Office confirms, through the Report on Audit of Effect, that 33 million BAM was approved for youth employment incentives for the period 2003-2010, while only 4,000 youth participated in the program. According to the records of the Federal Employment Bureau, the number of unemployed youth in 2012 was 130,000 which indicates that in the past a very small number of youth were included in the program. The audit also indicated to other problems: insufficient planning (data on the labor market, analysis of previous experiences, cooperation with head partners), imprecisely defined program aim and criteria, lack of measurable success indicators, state on the labor market not being the criteria in allocating the funds for the cantons, lack of monitoring the employers who participated in the program and who acquired funds from more sources and had more opportunities to acquire them and recommendations for future programs. Some of the issues that the employees state as problems are: the non-transparency in awarding funds, the manner of awarding points and favoring certain companies.

It is clear that so far there has been insufficient or no monitoring and evaluation of the funds spent. In such a scenario, there is the question of whether the efficiency of 2016 program will be possible to predict, without previously determining a system of monitoring effect during the whole first year of employment and after the obligatory 12 months have ended. Thus, there are no information on the very quality of the working experience for the first year of employment and the benefits of this working experience in finding another job. What the Employment Bureau is currently monitoring is the employers applying for participating in the program, their selection, and fulfilling the listed obligations towards the Bureau, i.e. monitoring the expenditure of funds. The Federal Employment Bureau monitors the tax and contributions payment performed by the employer for every employee according to this program, and thus gathers information on the long-term employment of program users. What lacks is the monitoring and validating the actual results of the program. 

The question that is also being asked is how effective the previously implemented program was, and whether it truly set good foundations to continue working and looking for new employment, but also the potential for generating a youth entrepreneurial spirit order for youth to start their own businesses. Considering the lack of measurements, it is unclear what skills and knowledge youth acquire upon completing such a program and whether they are equipped to compete on the labor market.


It is commendable that the FBiH Government decided to increase the amount for the employment and the self-employment program from 20 million BAM to 50 million BAM in 2016, which is the greatest amount allocated for such a program so far. Still, if the conditions of realizing such a project are not placed under control during the implementation, and if there is no surveillance during the implementation and no measuring of its effects in a previously defined framework, the issue of long-term success of this project imposes itself, along with the profitability of a continuous investing of budget funds in such employment programs that, finally, do not alter the realistic image of the state of unemployment in FBiH. In order for the money to be spent in the most efficient manner possible, and in order for it to indeed improve the image of employment of youth and other vulnerable social categories, it is required to perform a continuous monitoring, as well as the evaluation of the program after the implementation. It is also required to establish cooperation with representatives of the civil society, i.e. youth associations in order to acquire information on the actual youth requirements. Planning of future programs should be performed on the basis of a detailed analysis of the labor market and learned lessons from the past in order to determine all the activities and the criteria of measurability of success in advance. Planned and controlled action should cause the future generations to the opportunity to become a part of a successful and sustainable program annually producing a generation of young and trained people ready to face the labor market. In this instance, we would have even better and more efficient employment and self-employment programs from 2017 onwards. 


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