Photo credit: Hs-portal
When government regulation creates artificial barriers to hiring and firing employees, markets stagnate and job opportunities disappear — hurting the very labor force that such regulations are ostensibly intended to protect. That’s why Atlas Network partner Multi (Udruzenje Gradana), a think tank in Bosnia and Herzegovina, waged a successful campaign in recent weeks for liberalization of the nation’s labor laws.
“In the past month Multi led an extraordinary campaign for adoption of new (liberal) Labour Law that would reduce the impact of collective agreements and unions in the country,” Multi’s founder and director, Admir Čavalić, said. “The unions, the public and opposition politicians were against the adoption of these amendments, while government and international organizations supported the changes.”
Photo credit: Campus Europe
Primary problems with Bosnia and Herzegovina’s economy include its sprawling public sector, which includes more than 50 percent of the nation’s GDP, and its chronically low rankings in international measures of economic freedom. Together with a labor tax rate of 72 percent and labor laws that protect entrenched union interests at the expense of labor mobility and productivity, left over from the old communist regime, these factors have led to Bosnia and Herzegovina’s unemployment rate of more than 40 percent — and about 58 percent unemployment among the nation’s young workers.
“Although our representatives received some warnings, we had the opportunity to publish very influential articles, then, appear on major TV channels and radio services, openly opposing the views of union leaders,” Čavalić, said. “In February we met with the prime minister of the Federation of Bosnia and Herzegovina, a person who started with this reform. Then he promised us that he will go with the liberalization of the economy.”
Although many trade unions in Bosnia and Herzegovina are protesting the new law, complaining that it weakens worker protections, a key component of a thriving economy is the ability to mobilize labor, creating jobs in new and productive areas of the economy while cutting jobs from unproductive and stagnant ventures. When labor can’t flow between jobs and sectors of an economy in response to the profit and loss signals of market activity, existing employers become far more cautious about hiring new employees that they may be stuck with for the long term, and entrepreneurs have little incentive to start new enterprises. Together, these factors destroy economic opportunity for everybody.
Multi has had a widespread presence in the media leading up to the adoption of the new labor law. Most of the links below are to articles and videos in Bosnian and Croatian.