|Bosnian policemen try to hold off protesters in Sarajevo on Friday. (AFP)|
Starting in the industrial hub of Tuzla in the northeast, the protests spread this week across the country, turning into riots that left hundreds injured and government buildings in flames.
While unemployment figures range from the Central Bank’s estimate of 27.5 percent to the statistical agency’s 44 percent, the Balkan country’s unemployment rate is easily among the highest in Europe.
Joblessness of more than 25 percent among Bosnia’s young adults is a “stunning and problematic” figure, the World Bank’s director for southeastern Europe Ellen Goldstein said last month.
“High unemployment and low labor force participation continue to pose a threat and need to be addressed to ensure a peaceful and prosperous future for Bosnia,” Goldstein told a World Bank conference.
One in 5 Bosnians live below the poverty line, and at least 1 in 5 workers are thought to be engaged in the so-called grey economy.
Although macroeconomic data showed the economy made a fragile recovery of 1 percent in 2013 after shrinking 0.5 percent in 2012, Bosnia’s 3.8 million people have felt scant improvement in their everyday lives.
“More and more people live in misery and poverty. They are hungry,” said political analyst Vahid Sehic.
Bosnia’s citizens are among the poorest in Europe, with an average monthly salary of 420 euros ($570).
A shadow economy, endemic corruption and a complex post-war political structure that enables squabbling politicians to block reforms are seen as key impediments to improving the economy.
Moreover, hasty privatizations that enabled tycoons to shut down dozens of companies and make quick profits by selling their assets before declaring bankruptcy have left hundreds of people jobless and in despair.
Local media have widely reported that new owners often failed to comply with privatization contracts and failed to pay workers for up to two years.
The employers reportedly had the silent approval of the authorities eager to help them to avoid bankruptcy and keep unemployment figures down.
“People protest because they are hungry, because they don’t have jobs. We demand the government resign,” said Nihad Karac, a construction worker in his 40s who was among the protesters in Tuzla.
Social scientist Miodrag Zivanovic said the public dissatisfaction is not surprising.
“These are protests of hungry people with years of accumulated anger against all the decision-makers who have brought us here,” Zivanovic told the FENA news agency on Saturday.
Foreign investors are reluctant to come to Bosnia because of its poor infrastructure and cumbersome administrative procedures, not to mention a complex political system that requires businesses to deal with authorities at three or four levels.
After the war, power was shared among Bosnia’s three ethnic communities ― Serbs, Croats and Muslims ― and persistent inter-ethnic disputes have undermined political and economic reform efforts.
Foreign investment in 2013 totaled just 252 million euros, Central Bank governor Kemal Kozaric said.
Prime Minister Vjekoslav Bevanda however said at a recent economic summit in Istanbul that investors could be attracted to a major infrastructure project linking Hungary to the Croatian port of Ploce via Bosnia.
Construction on the road and rail project began several years ago, but of its estimated cost of 4 billion euros, around 600 million euros has been invested so far.
In the energy sector, Bevanda said Bosnia’s coal and lignite mines offered attractive investment opportunities.
The International Monetary Fund, which in September 2012 awarded Bosnia a two-year standby arrangement worth 384 million euros, approved its fifth installment last week.
But it warned that despite progress “more remains to be done to improve the business environment and the functioning of the labor market.”
“In this regard, it will be particularly critical to put in place new labor market legislation that will contribute to a lasting reduction in unemployment,” the IMF said.
Economic analyst Svetlana Cenic said political consistency and discipline would be required to resolve the crisis.
But she warned against expecting significant reforms ahead of general elections in October.
“The authorities will be occupied with electoral engineering and power-sharing issues and not with the economy,” Cenic said in a recent interview.
Bosnia started high-level accession talks with the European Union in mid-2012, trailing behind other Balkan countries. Croatia became a full member in 2013, Slovenia in 2004.