On January 1, 2024, the Government of the Republic of Srpska took a decisive step by increasing the minimum wage to 900.00 BAM net. This decision was driven by the notable impact of inflationary pressure, escalating basic food prices, and rising housing costs on the financial well-being of citizens. Collaborating with the Union of Employers, the government aims to enhance the standard of living for its citizens through this pivotal adjustment.
Employers Concerns
Approximately 20,000 workers are expected to be directly affected by this wage increase. Notably, employers had previously suggested a minimum wage of 750 BAM, expressing concerns about potential job losses with a more substantial increase. In response to these concerns, the Prime Minister of the Republic of Srpska assured support for businesses facing challenges ‘who prove that they suffer damage due to the decision regarding the increase of the minimum wage.’
Government – Union of Employers: Coordinated Actions for Salary Enhancement
Over the past three years, the Government of the Republic of Srpska has consistently pursued measures to bolster salaries. This initiative includes an annual investment of 420 million KM in the economy, with a primary focus on retaining young people and improving the demographic structure. In tandem with the minimum wage hike, benefits such as hot meals for workers have been raised to 10.04 BAM net. These combined efforts, complemented by increased tax relief, significantly contribute to the overall improvement of workers’ positions.
The observed increase in the average salary in the Republic of Srpska has a broader effect on the overall wage landscape. The push for an increased minimum wage is integral to a strategy endorsed by the Union. The Union advocates for not only raising the minimum wage but also ensuring proportional increases for all employees, particularly those in the real sector.
The goal is to reduce the outflow of labor abroad, addressing the market’s prevalent labor deficit.
From the Union’s perspective, this strategic move aligns with the imperative of enhancing the standard of living for workers. The Union’s consumer basket for 2023, valued at 2,423 BAM (1,242 EUR), serves as a benchmark. Significantly, the average salary presently covers 51.83% of this basket, underlining the immense role of increased wages in meeting essential needs. The consumer basket includes expenses for food, housing, communal services, household maintenance, clothing, footwear, hygiene, health care, transport, education, and culture.
Analyzing spending patterns, families in the Republic of Srpska allocated the highest expenditures in February to food (1,083 BAM or 555 EUR), followed by housing and communal services (619 BAM or 317 EUR), transport (225 BAM or 115 EUR), and current household maintenance (130 BAM or 66 EUR). The Union expresses optimism that this wage increase will positively impact employees’ standard of living, offering a tangible improvement in their financial well-being.
Conclusions
To sum it up, the Government of the Republic of Srpska’s decision to increase the minimum wage reflects a proactive response to economic challenges, driven by inflationary pressure and rising living costs. This strategic move, in collaboration with the Union of Employers benefits workers and aligns with broader initiatives aimed at improving the overall wage landscape. As the observed increase in the average salary influences various sectors, the Union’s advocacy for proportional wage increases seeks to positively impact the standard of living for workers in the Republic of Srpska, fostering a more prosperous and resilient workforce.
For further details, kindly reach out to Eurofast office in Banja Luka, Bosnia at banjaluka@eurofast.eu
Andrea Peulić
Payroll Specialist/ Accounting Associate
Eurofast Banja Luka
banjluka@eurofast.eu