| Ognjen Đukić | |
| 7. March 2010. | |
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A sustainable wage policy for B&H requires that public sector must stop setting the pace of the wage growth for the whole economy. A proposed way to do this is to bring the public wage levels in line with comparable positions in the private sector and link their further growth to the growth of private sector wages.
The period 2006 – 2008 has been marked by high growth of wages in the B&H public sector. National and local elections and favorable fiscal developments in this period have stimulated the governments to meet the requests of trade unions in this respect. Consequently, the level of average wage in the B&H public sector is today significantly higher than what it used to be in other CEE countries at the same level of development. These wage increases spilled over to the rest of the labor market driving up wages in the whole economy. Although higher wages have improved the living standard of those who are employed, they have undermined the competitive position of domestic companies and worked against the pressing need to reduce the B&H’s unemployment rate and the current account deficit. Opening up and reducing barriers to trade, the process which has been supported by B&H policymakers, implies also accepting a direct price competition where wages play a vital role.
A sustainable wage policy for B&H requires that public sector must stop setting the pace of the wage growth for the whole economy. A proposed way to do this is to bring the public wage levels in line with comparable positions in the private sector and link their further growth to the growth of private sector wages.
The main policy recommendations can be summarized as follows: