The European Training Foundation (ETF), in collaboration with Vienna's Institute for International Economic Studies (wiiw), have looked at how migration, human capital and the labour market interact in six countries in the region - Serbia, North Macedonia, Bosnia & Herzegovina, Montenegro, Kosovo and Albania. The newly published report, How migration, human capital and the labour market interact in Bosnia and Herzegovina | ETF (Europa.eu), documents how Bosnia and Herzegovina (BiH) has continuously been losing its population to emigration over the past few decades.
Emigration began in the 1960s but massively increased during the Bosnian War in 1992-1995. Although some people returned, a fresh wave of economic migration over the past decade has continued: some estimates suggest that its population has dropped from 4.1 million in 1991 to as little as 2.7 million today, with 400,000 citizens leaving between 2011-2019 alone.
Push factors - low domestic wages, poor working conditions, the disruption caused by the conflict of the 1990s, and pull factors - wages as much as five times higher abroad with better conditions, family reunion and study opportunities, remain fairly constant.
Remittances home from the large Diaspora, which accounts for half the current population - mostly found in Croatia and Serbia, as well as in Germany, Austria, Switzerland and EU countries - plays a significant part in supporting its economy. Still, the population loss is unsustainable and in the longer term BiH may need to attract immigrants to maintain economic stability, the new study finds.
Heading out
Like other Western Balkan countries, emigration from BiH predominantly involves those with medium-level vocational education (60% over the past decade), reflecting their major share of the domestic labour market. Although traditionally lower-skilled workers emigrated, in the past 40 years, the skills levels of migrants have increased, particularly during the civil war. Recent flows include around 5% of those holding Higher Education degrees with little evidence of a 'brain drain'. However, significant skills gaps, particularly in the medical sector, IT and science, are evident due to emigration.
Such has been the impact of emigration that "the size of the labour market has declined 2010-2019 from 1.2 million to 1 million [a 12% drop] along with the working age (15+) population from 2.6 million to 2.3 million." Unemployment has dropped from 27% to 16% during the same time. "There is a strong indication that contemporary emigration from BiH has contributed to this decline in the working-age population," the study notes.
Despite the high levels of emigration, there has been modest economic growth - around 3% in 2019. Moreover, the trade deficit remains high at 20%, though remittances from the Diaspora that amount to around 10% of GDP partially offset the deficit.
Institutional complexity
Institutional complexity tends to hinder cohesive approaches to addressing emigration or encouraging migrants to return home with much-needed skills and experience. The country is, the report states, "institutionally rather complex", comprising two entities, the Federation of BiH and Republika Srpska - and one district, District Brcko of BiH. As a result of the 1995 peace accord that ends the war, there are dozens of ministries and administrative bodies across the various levels of government. As a multicultural country with three dominant ethnic groups (Bosniaks, 50%; Serbs, 31% and Croats, 15%), BiH entities have agreed on a path to EU membership since its application in 2016.
Although data collected by institutions in BiH are of limited use for deeper analysis of migration, it is clear that recent emigration has been driven by short-term work visas - with some 60% of emigrants granted temporary work permits. This suggests a pattern of seasonal or circular migration that could be exploited by domestic institutions for a positive benefit to the country.
Various government sectors have recognised the challenges posed by emigration and the persistently high intentions to emigrate, but "a comprehensive policy framework directly targeting these challenges is missing," the report found.
Training reform
There is a need for a more cohesive approach to addressing migration issues and training that meets the needs of the labour market and human capital development generally: "The education and training system of BiH is not reforming quickly enough to adapt to complex challenges and
the high level of mobility of its citizens. The large emigration of vocational-educated medium-skilled workers might lead to gaps in some sectors and shortages of specific in-demand skills within quite a short time period."
There is also a "need to focus not only on job creation but also on the type of employment contracts, remuneration, quality of jobs and opportunities for career development."
The report gives a striking example of the need for a wider response beyond merely addressing unemployment/employment issues behind emigration. Interviewed in October 2020, a man in his 40s with medium-VET qualification stated he had left his job to attend a training programme for truck drivers in Slovenia because his monthly salary (€300) and position had remained unchanged for eight years, despite his being formally recognized as the best worker in the company. "My situation will be the same in eight years from now," the man said.
It is thus hardly surprising that up to a third of employers in the private sector in BiH struggle to recruit an adequate labour force.
The way forward
"BiH is losing its citizens, labour force and human capital as the result of the negative (natural) growth rate of the population combined with the negative net emigration balance." With better evidence on migration flows and stocks, policy reforms should encourage the population to stay in or return to the country. "Emigration will decrease with improvements in political stability and better governance, greater institutional efficiency and stronger economic prosperity."
Measures to attract returnees could include proactive support, such as supporting returning entrepreneurs who intend to set up businesses and create employment. Closer work with the Diaspora should be encouraged, perhaps through establishing a Ministry of the Diaspora.
Bilateral agreements to facilitating short-term movements with neighbouring countries could encourage more and safer circular migration, bringing economic benefits and skills back to BiH. Proactive migration dialogue with the EU and Germany, in particular, should be pursued.
Labour market and training reforms should aim to both reduce unemployment and create better working conditions. Emerging skills gaps should be monitored regularly with appropriate labour market mechanisms and investments made to meet demanded skills in the domestic economy.
Attached, you might find both the English and the Bosnian version of the report.
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