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Informal economy in BiH costs annually 8.6 billion KM. Confederation of Independent Trade unions of BiH (SSSBiH) in the fight against grey economy

15 April 2015: Sarajevo, 8 April 2015. National round table under the title “Tackling taxation, informal economy, and corruption in the Western Balkans – towards better governance and democratic processes, with a special emphasis on grey economy” was held on 8 April 2015 in Sarajevo. SSSBiH organized this Round table within the regional project and support to the trade unions in the Western Balkans by the International Trade Union Confederation (ITUC), Pan-European Regional Council (PERC), and the Norwegian trade unions LO Norway.

The Round table was attended by the representatives of the Ministry of Labor, president of the Union of employers in FBiH, Pension and disability Fund FBiH, Healthcare Fund in FBiH, Federation Ministry of Finance, director of the FBiH Tax Administration, H.E. Deputy Ambassador of Norway to BiH, several representatives of media, representatives of Confederation of Trade Unions of Republika Srpska, representative of branch trade unions, SSSBiH leadership and experts, Project Coordinators from LON and ITUC/PERC Regional Office for Southeastern Europe in Sarajevo, as well as EU expert Martin Hutsebaut, who, throughout the Project, provided professional assistance to the Western Balkan trade unions.

Project results were presented, and the link between the taxation policies and informal economy and corruption was highlighted, followed by a very active discussions, and finally concluded that it is important that all social partners should engage in fighting various forms of informal/grey economy, due to which large quantities of money end up in grey flows of money circulation that results in losses for all – workers, state, and employers.

According to the data from 2014, the employers in the Federation of Bosnia and Herzegovina do not pay contributions for around 85,000 formally employed workers. This is by one third more than in 2013, when contributions were not paid for 66,123 workers.

Unregistered work in a part of informal economy, and it costs BiH annually around 8.6 billion KM. This is our money that has to be directed towards opening new jobs, renovation and building of hospitals, schools, infrastructure – representatives of Confederation of Independent Trade Unions highlighted.

Legal expert in the Project from BiH, Fatima Fazlić stated that the employers pay, for minimum 100,000 formally employed workers, contributions for a minimum salary and also that the “number of such workers constantly increases, whereas the contributions for minimal salary per workers constantly decreases”.

In 2014, average contribution for a minimal monthly salary per worker amounted to 95 KM (121 KM in 2013), whereas the minimal contribution for “non-minimal” monthly salary of a worker was 569 KM (590 KM in 2013).

The question is as to what will be the pension for a minimum of 185,000 workers for whom the contributions are not paid or they are paid for a minimal salary. Percentage of workers who receive minimum salaries in FBiH, compared to those who have mandatory pension insurance, is around 23 percent, and it is among the biggest in Europe, and it is immediately after Ukraine and most probably Montenegro (25 percent) – Fazlić says.

Official registered unemployment rate in BiH in January 2015 was 43.6 percent, or number of those registered in the Institutes and Services for employment was 551,167 working active individuals. Number of unemployed in January 2015 only, compared to December 2014, was bigger by 4,033 persons or 0.74 percent.
Unemployment rate, according to ILO methodology – Labor Force Survey for 2014 amounted to 27.5 percent, which may mean that more than 15 percent of working active population works in the informal economy. In such a situation, informal economy constitutes the best “social program” as it often is the only way of survival – this is a statement from the document drafted by the Confederation of Independent Trade Unions of BiH.

Confederation president Ismet Bajramović, believes that the solution lies in the preventive and restrictive measures, believing that the former should be stimulating for those working in the informal economy to finally move to the formal economy, while the restrictive measures should, for example, include full enforcement of the Law on misdemeanor, Criminal code, and other laws.

ITUC / PERC SEE Office, Sarajevo

this article has been tagged

South-East Europe , Informal economy, shadow economy , Decent Work , Communication policies , Bosnia-Herzegovina , corruption , employment policies , fiscal policies , KSBIH
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