According to the latest study by the European Bank for Reconstruction Development (EBRD) and the International Labour Organisation (ILO) published on Wednesday, Bosnia is at risk of losing 245,000 jobs in micro, small and medium-sized businesses, most of which are occupied by youths unless the economic situation improves.

Nearly “245,000 workers are at immediate risk because of the characteristics of their jobs”, according to a new joint study by the ILO and the EBRD. This equals almost 20 percent of the workforce as at the end of 2020, the study said.
It identified 14 sectors as particularly vulnerable to the impact of the pandemic, including wholesale and retail trade, transport, crop and animal production, accommodation and food services. These sectors largely overlap in Bosnia’s Republika Srpska and the Federation entities, the EBRD said.

The EBRD and ILO also concluded that of the 245,000 jobs at risk just under half (114,000) are in micro-enterprises with up to 10 workers. The large share of young people employed in exposed sectors may have an even larger impact on jobs, the study warns.

The assessment of the two institutions is based on how Covid-19 has affected the economy in Bosnia and Herzegovina to date. The study finds that during the third quarter of 2020 the decline in working hours caused by lay-offs and other temporary reductions in working time was equivalent to the loss of 170,000 full-time jobs. During the second and the third quarters of 2020, Bosnia and Herzegovina registered losses higher than the average in the six Western Balkans economies by 3 and 4 percentage points, respectively.

The study also highlights how hard the crisis has hit local enterprises financially. Almost 70 per cent of micro-enterprises and around 60 per cent of small and medium-sized enterprises reported cash flow challenges. Around 70 per cent of micro-enterprises suffered considerable revenue losses of 50 per cent or higher in April 2020. Both entities attempted to compensate all enterprises for their losses, regardless of their sectors.

To address the challenges ahead, the study has developed five policy recommendations:

• formulate comprehensive employment policies at the entity level;

• decouple health insurance from registration as unemployed;

• improve interoperability of databases and information exchange among various levels of government and across institutions;

• consider additional job retention schemes; and

• reconsider some of the design features of employment retention schemes, if they are reintroduced.

Manuela Naessl, EBRD Head of Bosnia and Herzegovina, said: “This report is very timely. Given the difficulties persistent in the labour market in Bosnia and Herzegovina even before the crisis, the central government and the entities could focus further efforts on improving the quality and quantity of jobs, fight emigration, decreasing labour force participation and informality, better the coordination of and increase the number of targeted support schemes, reducing and even harmonising labour costs.”

Barbara Rambousek, EBRD Director, Gender and Economic Inclusion, highlighted the need to provide targeted support for vulnerable and disadvantaged people outside of employment, as well as young people who are among the most affected, as they mostly hold less secure, less well-paid and often high-contact jobs. She stressed that the EBRD will continue to work on the inclusion of young people, skills and strengthening the private sector in Bosnia and Herzegovina.

The joint ILO/EBRD report follows previous examinations of the impact of the coronavirus pandemic in Serbia and North Macedonia. The papers also include policy recommendations to address immediate challenges and long-term consequences. In addition to engaging in policy dialogue, the EBRD is a major investor in the Western Balkans with €1.3 billion of new investments in 2020 alone.