English language

UNEMPLOYMENT AND RECESSION (Example BIH)

Date25.05.2016.Surnameandname:Spahi
Nesiba

1.INTRODUCTION

- In Bosnia and Herzegovina, the consequences of the economic crisis are not more
expressed than in other similar countries. Currently, the trade deficit balance of payments in
Bosnia is relatively low, but it is still unknown whether Bosnia will face high deficits as it was
the case earlier. In Bosnia, the consequences of the crisis have not been more expressed than
in other similar countries. Bosnia has a huge state apparatus, and a large proportion of stateowned enterprises. Without a rapid recovery, this sector could find itself in huge problems. It
will be necessary to align costs with lower revenues, including pension and health funds.

Bosnia will also need a lot of money to cover the costs of pensions, the unemployed and the
disabled population, so, this problem needs to be solved on a creative way and by finding out
how such problems have been solved by other countries.
The theme of this seminar paper is "Unemployment and recession in

Bosnia and

Herzegovina". Through this paper, I will present unemployment and recession theoretically
and practically on the example of Bosnia and Herzegovina. The unemployed people are
among the members of society who are partially employed, or not working full time, as they
do not have enough income for the mismatch in normal lifestyle. Unemployment can be
opened and hidden. There are four major types of open unemployment: 1. Frictional or
normal unemployment of workers who change jobs or are interrupted due to lack of
materials, 2. Seasonal unemployment; as a result of inability to perform certain tasks
because they are tied to the seasons, 3. Technological unemployment; caused by diverting
production, 4. Cyclical unemployment; caused by business cycles and other similar
disorders. Open unemployment is increasing a lot in a time of crisis, recession.. Hidden
unemployment stems from the lack of exploitation of the labor force; which means a form of
unemployment resulting from insufficient exploitation of the labor force. Huge efforts of
companies to achieve a high level of employment was creating an unnecessary number of jobs
for employees.
Through this paper, I will cover the following thematic units: 1) the problem of research, 2)
the purpose and objectives of research, 3) scientific methods, 4) the structure of the work.

2. THE PURPOSE AND OBJECTIVES OF SEMINAR PAPER

The purpose of this seminar paper is the research of the object that is being analyzed,
which, in this case is research of unemployment and recession in Bosnia and
Herzegovina.

The aim of this paper is to point out the importance of employment in Bosnia and
Herzegovina.

3. MATERIALS AND METHODS

Method used to write this seminar paper is: comparative. The comparative method is a
process of comparing the same or similar facts, appereance, processes and relations and
determining their similarities and differences in their behavior and intensity -allows
investigators to obtain different ideas, or new conclusions, that enrich knowledge

4. RESULTS
Research results of this paper are presented in several parts:

The first part describes the unemployment and recession rate of post-war time and the
end of four-year long aggression.

In the second part, I presented the unemployment rate in Bosnia and Herzegovina
today.

The third part relates to the basic features of the general crisis in Bosnia and
Herzegovina.

The fourth part talks about areas of the most intense impact of world economy.

The fifth part describes the problem of global recession in Bosnia which is bigger and
longer than in other countries.

5. ECONOMIC RECONSTRUCTION
(DISCUSSION)
For every post-war time, there are three periods:

Stabilization

Reconstruction

Development

Stabilization time represents the time of the inventory, and the inventory leads to
reconstruction and development, which are conditioned by the situation and the possibility of
financial support of the international communities, especially the international financial
institutions, organizations, donor countries - primarily the World Bank. Support from
international financial institutions and donors is particularly important in the period of
reconstruction, because this period is crucial whether Bosnia and Herzegovina will develop
slower of faster in the future. After the end of almost four-year war in Bosnia, and with the
advent of peace in this region, new hopes for swift restoration and reconstruction have
appeared in Bosnia. How fast is Bosnia and Herzegovina going to be restored and when will
we achieve what we already have had , depends on the international community and financial
institutions, as well as our own forces. Some countries, which have gone through a similar
situation like ours,show us that the relatively quick recovery is not only predictable, but also
realistically possible. An example of Germany, whose economy in the first year after World
War II had a growth of 30 percent. Of course, there are countries that have failed to revive
their economy in the post-war conditions or after major internal crashes. That happened
because these countries have failed to create conditions for the implementation of the reforms
the world community suggested.
In Bosnia and Herzegovina, the key conditions are:
The creation of a stable macroeconomic environment,
Good management structure at all levels,
Adequate international support, official and private, channeled through good organization
and coordination mechanisms.
5.1 RECESSION AND UNEMPLOYMENT IN BOSNIA AND HERZEGOVINA

EMPLOYMENT: In this group are people engaged in any kind of paid work as well as those
who have jobs, but they are absent from work due to illness, strike or holidays. Slow job
creation and low labor demand is the key problem of unemployment in Bosnia. In comparison
with neighboring countries, Macedonia has the lowest employment rate.
The labor market and employment in Bosnia and Herzegovina is facing a number of
challenges:

 Low level of active working-age population

A high number of "discouraged"
Insufficient job creation (increase in the number of jobs in the informal market)
Inconsistent education programs
The EU standards are at a higher level than in Bosnia
Employment agencies play a limited role in mediating between supply and demand.
One of the measures that helps in reducing a long-term unemployment is support for opening
private businesses and registering them. Almost a quarter of the economically active
population is unemployed: only two out of five working-age persons are employed.
Unemployment can be classified according to different viewpoints. The traditional division of
types of unemployment according to their causes usually differ:
Normal,
Cyclical
Structural unemployment
Normal

unemployment

includes

seasonal

and

frictional

unemployment.

Seasonal

unemployment is the result of strong variations of economic processes in certain sectors

caused by traditional or institutional conditions. Significant changes on the supply of labor at
certain times during the year, for example, the end of the school year, can also be a cause of
seasonal changes in the level of unemployment. Frictional unemployment occurs due to the
constant movement of people between areas and employment or through various parts of
lifecycle. Structural unemployment denotes mismatch between supply and demand of workers
in terms of occupation, education and qualifications. This mismatch may occur because the
demand for one type of work is growing while demand for another kind of work reduces the
conditions in which labor supply can quickly adapt. In economic theory, an important place
has the distinction of voluntary and involuntary unemployment. People who refused a job
offered can be called voluntarily unemployed, because they chose to seek for further job
hoping for better conditions, and also, persons who have voluntarily left the previous job can
be called voluntary unemployment.

5.2 BASIC FEATURES OF GENERAL CRISIS IN BOSNIA AND HERZEGOVINA

Unfortunately, various forms of crisis and its different intensity are present here in Bosnia
for a long time. The population here is used to the hard life, the uncertainty, low standard,
isolation, political instability, the poor quality of public services, poor infrastructure,
corruption etc. The general crisis in Bosnia is caused by several factors. Some of them are:
Political instability, poor state of the economy, the absence of the law, low efficiency of
reforms, high poverty, low level of coordination between different levels of government, low
efficiency of the institutions, the great role of the international community.
5.3 AREAS OF THE MOST INTENSE IMPACT OF GLOBAL ECONOMIC CRISIS IN
BOSNIA AND HERZEGOVINA
We still can not be certain of consequences that will be left by the global economic crisis on
Bosnia. Joint action to prevent the bad effects of the crisis does not have to be converted to
centralize the creation of new state institutions. Simply, the crisis is a phenomenon that knows
no political, national, religious, regional, and any other boundaries. It expands economic
channels, aggravating activities and spreading poverty. Harbingers of serious impact of the
global economic crisis on Bosnia are already present, although some people do not want to
accept this fact. Here in Bosnia, stock exchanges have already experienced the crash. Many
investors in the stock markets suffered heavy losses. And even though they are already high,
interest rates are increased. Interest rates on earlier borrowings are also increased.
5.4 PROBLEM OF GLOBAL RECESSION IN BOSNIA BIGGER AND LONGER
COMPARED TO OTHER COUNTRIES
The global recession brings economic downturn, lack of liquidity in the realistic sector,
problems of financing of current income, growth and development,and the enormous growth
of unemployment. Three main features of the crisis are: a drop in asset prices, the fall in
employment and production, and a decline in the real value of public debt in Bosnia, due to
the adoption of the depreciation of the labor market and the political sensitivity of the problem

of mass long-term unemployment. In the pre-recession time, it has been repeatedly pointed
out to "slower progress of structured reforms. Unemployment rate will cause a huge pressure
on the budget of the country and the impoverishment of a lot of people. This will lead to
potential conflicts between those who have jobs and those who do not. Economic inequality
between employed and unemployed, as well as among employees, penetrate and undermine
cohesion. High inequality leads to the increase of crime, increased corruption, greater
macroeconomic instability and lower life expectancy. Sustainable development during the
crisis is particularly a complex problem, especially because the neo-liberal individualism has
destroyed social cohesion and deepened the antagonism between labor and capital. Broken
social cohesion like this has eliminated the citizens' feeling of patriotism.
5.5 PRIORITY GOALS OF EMPLOYMENT STRATEGY
The aim of the employment strategy in Bosnia is to promote full, productive and freely
employment for all. The main objective of the employment strategy in Bosnia and
Hercegovina is to increase the quantity and quality of jobs, to promote social inclusion and
fight against inequality between the sexes.
5.5.1 Priority objectives:
The main priority is the economy of Bosnia and Herzegovina. Bosnia needs to improve the
capacity to enable sustainable and strong growth in employment, to improve the quality of the
workplace, to reduce the deficit, and to offer a productive employment and decent work.
An equally important priority is to increase the relativity of education and training to build
skills, and also to develop human resources for women and men. This method is the most
important for the contribution to move to higher productivity, employment growth and income
growth.
The third priority objective would be to improve the effectiveness, efficiency and
management of policies and labor market institutions.

According to analyzes and assessments of economists from the Vienna Institute for
International Economic Studies, in relation to the countries of the region, Bosnia is the worst
because it has the lowest percentage of employees to the total working-age population and
one of the highest unemployment rates. Forecasts for the next year are even gloomier. Bosnia
will get out of the crisis in about two years, at least when it comes to the macroeconomic
indicators, but this benefit will not be experienced by all population. This year, unemployment
will, from last year's 24 percent, increase to 27 percent, regarding to analysts from Vienna.

6. CONCLUSION

At the very beginning , the topic of this seminar paper looked very simple, but, during
collecting information about this topic, I realized that this was a very complex and demanding
topic to write about. Before the war, there were companies where people worked at full
capacity, but after the war, businesses were destroyed without almost any reconstruction.

Today, in Bosnia and Herzegovina, number of uneducated people is increasing, which could
affect the development of Bosnian economy. In Bosnia, it would be preferable to invest more
in human knowledge, so that ,'tomorrow', we get the right person to lead the economy in
Bosnia.
The greatest wealth of Bosnia and Herzegovina are wide forests and clean mountain rivers.
After 1995, there was a big increase in production which led the economy and the country to
start recovering. Bosnia and Herzegovina has started accession negotiations with the
European Union in November 2005. Bosnia and Herzegovina is a country which today offers
a huge number of resources and natural beauties, attractive locations, a large number of
available production facilities, transparent legislation, low taxes, educated workforce, and
more. Also, it is an ideal place for foreign investors in Bosnia and Herzegovina who have the
same status as the citizens of Bosnia in terms of rights and obligations.
I believe in a better future for Bosnia and Herzegovina, by increasing the number of
employees, reducing recession and development of the economy in general.

7. REFERENCES
Books :

Hatuni E., Isakovi M., Ku H., Menadment i ekonomija u funkciji privrednog razvoja
BiH,Tuzla,2012.

Zuli A., Saki D., Svjetska banka Bosna i Hercegovina, Srajevo, 1998.

Dr. Toma R., Kriza i siva ekonomia u Bosni i Hercegovini, Beograd, 2010.

Zbornik radova, Internacionalna konferencija; Kako upravljati u vrijeme krize, Univerzitet

u Tuzli.

Internet :

http://www.mcp.gov.ba/zakoni_akti/strategije/Archive.aspx?langTag=bsBA&template_id=108&pageIndex=1

http://www.fes.ba/files/fes/pdf/publikationen/2013/FES%20-%20studija%20o
%20nezaposlenosti%20-%202013_11_29.pdf