New ILO report

Social protection in Bosnia and Herzegovina at a crossroads: Challenges and key policy issues

The recent ILO report says that the social protection system in Bosnia and Herzegovina is facing formidable challenges stemming from insufficient investment in closing the social protection gaps, inefficient resource allocation, and persistent inequalities, particularly in terms of gender. The COVID-19 pandemic has further underscored the critical importance of building a comprehensive and resilient social protection system.

News | 03 May 2022

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BUDAPEST (ILO News) – In Bosnia and Herzegovina, a highly fragmented social protection system without effective coordination mechanisms results in considerable inefficiencies, limited risk pooling, and multiple inequalities. The labour market and social protection system in Bosnia and Herzegovina also exhibit various forms of gender inequality.

In 2019, Bosnia and Herzegovina spent 19.2 percent of GDP on social protection, which is lower than the EU countries that are spending on average 28 percent of GDP or neighbouring countries in the Western Balkans (for instance, Croatia spent 21.8 percent of GDP, Serbia 19.5 percent of GDP) (Figure). A significant number of the working age population are excluded from the social insurance system due to their work in the informal economy, long-term unemployment and non-participation in the labour market, while war veterans and civilian victims are entitled to higher benefits and privileges. There is an insufficient provision of child and family benefits and social assistance benefits as well as social care services.

Figure. Social protection expenditure, Bosnia and Herzegovina, 2019 (% of GDP)

The social protection system in Bosnia and Herzegovina partially mitigated the negative impact of the COVID-19 pandemic. However, a large number of unregistered workers and workers in non-standard forms of employment were excluded from the scope of the employment protection measures. The COVID-19 pandemic highlighted the need to extend the social protection system.

In order to reinforce the social protection system in Bosnia and Herzegovina, the ILO recommends that

  • Social insurance coverage should be extended to workers in all types of employment contracts, and formalize the informal economy and reduce undeclared work;
  • Universal access to adequate health care as well as social assistance and social services should be achieved; and
  • An effective coordination mechanism should be established between different levels of government, in particular in the Federation of Bosnia and Herzegovina.
It is crucial to strengthen the revenue structure of the social insurance schemes by restoring or maintaining their extra-budgetary status from the government budget. These measures should be accompanied by the tax reform aiming at redressing the regressive effects of flat income tax on low-income earners, and strengthening the effective tax base. Concerning the non-contributory benefits and services, the authorities in Bosnia and Herzegovina should secure fiscal space to close the remaining protection gaps and to ensure access to adequate social assistance and social services.

The social protection system in Bosnia and Herzegovina is at a critical crossroads. The current situation calls for urgent actions. To advance the reform agenda in line with the above recommendations, key stakeholders in Bosnia and Herzegovina must develop a clear vision and a political will to build a better social protection system.

Read the ILO report Issues in Social Protection in Bosnia and Herzegovina: coverage, adequacy, expenditure and financing in English  and in Bosnian