22nd January 2015
Jobs, jobs and jobs
When Peter Sorensen was asked in his final press conference as the EU Special Representative what should be the priorities for the future, his reply was simple: “Jobs, jobs and jobs.” It’s difficult to disagree. Unemployment in Bosnia and Herzegovina is the highest in Europe at around 30%, with youth unemployment – according to the International Labour Organisation – the highest in the world at 59%. Job creation was a key theme in the recent elections, and President Izetbegović has set a target of 100,000 new jobs during this term of office. So where to start?
I recently visited a local company called posao.ba. The company was born during the siege of Sarajevo when its inspiring Chief Executive, Edin Mehić, managed to secure access to some donated computers. Today, Edin has grown his business to the point where he overwhelmingly dominates online business recruitment in BiH, with a market share of 97%, and has ambitious plans for expansion into the rest of Europe. He employs around 80 people directly, but he is passionate about giving others the skills and the confidence to succeed.
Edin Mehić represents what Bosnia and Herzegovina could become if its political leaders were to empower this country’s greatest asset – its people. As a country, you produce lots of bright and talented people, but all too often they have to go abroad to find the opportunities that are denied them here. If the newly-elected leaders are serious about creating jobs, they must stop the brain drain, and begin now hard work of transforming this country into a modern, dynamic economy.
I have to say that I find it depressing when I hear – from politicians, from Trade Unionists or from ordinary citizens – incessant talk about the need to attract large companies to invest here. Of course, Bosnia and Herzegovina should seek to attract foreign investment wherever it can. But the age of the car factories is over, and will not return. Nostalgia for an industrial past is not a strategy for the future. If this country is to succeed, and I believe passionately that it can, it will succeed through innovation and entrepreneurship. By creating an environment where small and medium-sized businesses can establish themselves, succeed and grow.
I know that this isn’t popular, and many people don’t want to hear it. Politicians and workers alike want the return of heavy industries that will employ thousands of people. This is understandable. The scale of the unemployment problem is measured in the hundreds of thousands. And big deals would enrich the corrupt. But the global economy has moved on. Look at what is happening to Russia because of its failure to modernise and diversify its economy. The economies that are doing best are those which are fast-moving, flexible and creative. Like Britain’s.
Britain’s economic recovery has been built upon creating jobs in the private sector, while reducing the costs of government. As a public servant, I can certainly say that it hasn’t been easy. But people in the UK understood that tough times called for tough measures. And today, Britain is the fastest growing of the major European economies, with unemployment of just 6%.
How have we done it? Amongst other things, through systematic reforms to improve the business environment, to attract foreign investment and to support new businesses. We have simplified the procedures for setting up new companies, and reduced employment taxes. And we have invested in infrastructure and innovation – such as 4G Wifi networks – to support hi-tech industries. These sort of reforms and investments work, which is why the UK is the leading European destination for foreign direct investment, and why more overseas companies have their European headquarters in the UK than in France and Germany put together.
Ok, so Britain is a very different country, with a very different economy, from Bosnia and Herzegovina. But you have advantages that we don’t – in particular, a well-educated but relatively cheap workforce. With reduced bureaucracy, lower taxes and less corruption, and with a clear strategy to attract small and medium-sized investors, I believe that you would see a dramatic increase in investment by international companies, as well as the emergence of more home-grown entrepreneurs like Edin Mehić.
The good news is that we already know what needs to be done. The EU-led Compact for Growth and Jobs provides a roadmap towards a more stable economy that is better able to create new jobs and to attract foreign investors. We have put socio-economic reforms at the heart of the new EU strategy, because without economic stability, there can be no political stability.
The challenge is cultural. It requires a change of mindset. Posao.ba’s research shows that most people in this country still want to work for the government. The legacy of the disastrous privatisations of many state-owned industries has been a dislike and distrust of the private sector. Those who do want to work in business very often want to move abroad to do it. This has to change. The bureaucracy of this country already consumes around 60% of GDP just to sustain itself. That’s a huge burden on the economy. It is the private sector that creates value. It is the private sector that will enable Bosnia and Herzegovina to pay off its debts, rather than to increase them.
I do not want to suggest that economic reforms will be easy. They won’t. According to the World Bank, Bosnia and Herzegovina is one of the most difficult countries in Europe in which to do business, and one of the worst in the world at encouraging entrepreneurship. The problems run deep. You need serious structural reforms, and these will require strong leadership from your new government. Granted, the track record of previous governments has not been encouraging, but the EU’s new strategy provides the best possible framework to promote and support such reforms. It’s time to make the first step on the path to a new and brighter future for Bosnia and Herzegovina as a modern and vibrant economy that offers real opportunities for its citizens.
I recently joined a company in Sarajevo that defeats all the statements that nothing can be done here, that most people want to leave this country, that it is impossible to get employment without “connections” etc. HUB387 started a year ago, we have created 80 jobs (highly paid jobs), created a business incubator where 18 talented young people were given the opportunity to have their own start ups, offices, salaries etc. and these start ups are now of great interest to VC in USA etc. We are now working on a new project called CityOS where Sarajevo will be the lab for smart city technologies that will be used in te world and people from Bosnia will have the knowhow to do this. In our process we have come across other great Bosnian based companies that are doing amazing things in the world of technology (Liva Energy, Bekto Precisa etc.). We are contacted daily from talented, successful Bosnian diaspora who have heard what we are doing and are going above and beyond to help us succeed. If we have obstacles and believe me we do, we can only look as far as ourselves, not at the government, not at who promised what, only at ourselves, because it all starts from us and ends with us.
Bravo alma.it is heartening to hear that there are people like you in Bosnia. I have visited Bihac many times and other than very few exceptions I only meet “followers” and no leaders.i see no innovation or energy to move forward.it seems they just wait for someone to tell them the next steps.is it a failure in the education system or cultural,or upbringing …I don’t know?
I would agree with the author of this text to the point where excellent strategical skills and good planning in the country of his origin have led to prosperity recently. However, there are rare examples of social communities in the world, where people created something out of nothing.
In this very case the economy of the UK and alike countries have been boosted out from centuries of invasion of other land, by using military force as one of many conquering available options or techniques. The double standard policy or even methodology created for and against allies is well known doctrine of the Westerners. For example, Kosovo vs Krimea or Falklands vs many other.
This all leaves me little ground to debate further. Great divison between the rich and poorer is an old fact, luckily in Bosnia we have 3G networks so statistically we are only a step behind of 4Gs.
Thank you very much for advertising posao.ba. Them must be excellent company, in Bosnia their raw material resources are vast, aren’t they? At the same time their privacy statements fraudulant, their virtuosity is spam production!
There is one more thing that I take my hat off to and this is expression “public servant”. In Bosnia this would sound rather offensive, but it is exactly something we are short of.
I fully agree nostalgia for an industrial past is not a strategy for the future. I also believe our society can succeed through innovation and entrepreneurship, but through very urgent and systemic reforms to improve the business environment. Even those of us citizens who are willing to invest own money into good and progressive business can not do that without a lot of bureaucratic obstacles. However, to create an environment in which SMEs can establish themselves, grow and succeed in this moment is too many ” IF ”, and time is running out. While solve at least part of the ” IF ” a lot of young people will leave the country. It is sad how little our government incentives for small and medium enterprises and family farms. My family is one of such households in which all of us are highly educated. We want to start organic farming and introduce the latest solar technology, implementing sustainable living and to share our knowledge with others. Here is even no a company that can offer such kind of solar system, no government incentives for sustainable projects like this one we want to implement, and there is still no EU subsidies available. It is clear, we need an environment where small and medium-sized businesses can establish themselves, succeed and grow. But, how long we will wait, and what will happen in the meantime with us and those to whom it is clear, but we are powerless to move from a deadlock?
I want to believe that the new EU strategy offers the best possible framework to promote and support the ongoing reforms. I want to believe that the positive changes will happen as soon as possible, so my kids and a lot of other young people tired of ” fight with the windmills’, waiting to Bosnia and Herzegovina become a modern and healthy economy, will not leave our beautiful country and bear away its advanced ideas forever.
Dr. M.Agr. Ismeta Coric
Dr Coric, thank you for your post. It’s great to hear about the entrepreneurial spirit in your family. I’m quite sure that there’s lots of potential both for organic farming and for solar energy in BiH. In fact, I believe that organic farming will be one of the key themes of the forthcoming Sarajevo Business Forum organised by Bosna Bank International. I fervently hope that the sort of measures set out in the Compact for Growth and Jobs, which are designed to help SMEs to establish themselves and to grow, will find their way into the initial Agenda for Reform under the next stage of the EU strategy. I find it so sad that so many people are leaving this country. I don’t know if it’s true, but I was told by a pretty authoritative figure last week that 67,000 people left BiH last year – that’s about the same number of people as live in Bihac. That’s a tragedy that this country can ill afford. The new government needs to end the haggling and form up quickly, so that it can take urgent steps to stop the brain drain.
Member of presidential board, Mr. Izetbegović actually changed his goal to a ten years term. What is his relation to next ten years remains a mystery, as his term is lasting for only four years. Even if he wins another election in 4 years, which he actually can’t, because he already is a member of the presidential board for his second term, it is altogether eight years. So please, Mr. ambassador, correct yourself and rephrase that Mr. Izetbegović did not “set a target” but he rather rushed to say that …