Based on extensive institutional, andempirical analysis, the report describes a static labormarket in Bosnia, unable to accommodate the economicimbalances resulting from the war, and from the legacy ofthe socialist era. Worker, and job flows have been ratherlow, lagging behind when compared with those in othertransition economies. While the restrictive employmentprotection legislation - a strong barrier to labor mobilityand job creation - was removed in the year 2000, replaced bya legislation attuned to the economy's needs, thehighly structured wage system however, is still in place,precluding mobility, and job creation in the formal sector.The report identifies several findings, indicating theformal sector workforce practically denies access to youngworkers, reflecting a low labor force participation - wherefemale labor force participation is among the lowest in theregion - with large unemployment levels. Data emphasizesthis point, showing a large informal sector, representingthirty six percent of total employment, and, the studypresents evidence of under-reported wages to avoid, orminimize social security contributions. But despite theoverall context of stagnant labor market, private firms havebeen much more dynamic in all aspects of job flows,including net employment growth. Newly privatized firmsreduced their workforces, though not dramatically, whichsuggests no negative social impact of privatization haveoccurred to date. Recommendations include a strengthenedbusiness environment, within a comprehensive approach tosocial policy, reorienting active labor programs whilecontinuing basic unemployment insurance.
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