MDG1: Eradicate Extreme Hunger and Poverty
In the period from 2000 to 2008, BiH recorded a significant economic growth with the GDP growing annually, on the average, by about 6%. Generators of this growth were the high level of exports, powerful domestic consumption and investment growth spurred by a significant growth in loans and remittances and the high price of BiH products on the world market (e.g. metal). This GDP growth was accompanied by a decrease of poverty by 4%.
However, since 2009, BiH’s economic performance has deteriorated markedly. Following the negative rate of -2.9% in 2009, GDP grows rather modestly since. The reasons are manifold. One of them, surely, was the global economic crisis. Some of the reasons are commonly shared with other transition countries, others are country specific.
Progress achieved related to MDG1 that was captured in the last MDG progress report from 2010 has since been lost, and most of the related indicators and targets set for 2015 are unlikely to be met. Every sixth household in BiH is poor, unemployment rates are increasing and inequalities between the mainstream population and vulnerable groups remain.
Annual average GDP growth of 6% up until 2007 was lost in the years after the global crisis hit reaching negative values (-3.2 in 2009 and most recently -0.5 in 2012) and with an outlook of very slow recovery over the next 3-5 years. The high unemployment rate, higher than the regional average and considerably higher than the EU27 average, remains a problem. The youth unemployment rate for the age group 15-24 reached a staggering 63.1% in 2012 compared to 22.8% in the EU27 and the benchmark rate of 34.8% back in 2000.
Some improvement is evident in terms of the relative poverty rate with a reduction in the rate of 0.3% down from 18.2% in 2007 to 17.9% in 2011. In the same period the absolute poverty rate increased from 14.4% to 15%. There is also no evidence of positive trends in relation to the share that the poorest quintile has in national consumption, the employment ratio, the proportion of the population below the minimum level of dietary energy consumption, the Gini Index or participation in the informal sector. The only target met in relation to MDG1 is the average annual inflation rate which has been kept below the target of 4% continually since 2000.
Sustainable and inclusive growth in BiH is unlikely to be realised without a holistic approach towards dealing with complex and interrelated issues. A comprehensive overhaul of the existing pension and social protection systems needs to be undertaken. In BiH the population continues to face many risks including the risks of long-term unemployment, youth unemployment, ill-health, poor education standards, domestic violence, disadvantaged children, dissatisfied youth, an ageing population with increasing need of adequate care services and the further marginalisation of disadvantaged groups such as Roma, persons with disability and refugees and returnees. Regional inequalities also need to be addressed and solutions found for a more even development process across the country in terms of infrastructure, services, economic opportunities and social support/protection.
Social policy challenges
Responsibility for legislation, planning and implementation of social protection policies is held at various levels in Bosnia’s complex system of governance: at the entity level in the case of RS, at the district level in the case of Brcko District and at the cantonal level in the case of the FBiH. The fact that competences for social protection are at the level of the entities and cantons gives rise to considerable territorial disparities and inequalities in the provision of benefits and services, depending on where a person lives. For example, child benefit rates differ greatly between the cantons in the FBiH and this creates the perception of injustice. Due to the fragmented administrative structure in BiH individuals receive different monetary compensation throughout the country, even if they are diagnosed with the same degree of disability. Additionally, the level of protection varies depending on whether the disability is related to war or to an accident, illness or has existed since birth and results in unequal and lesser protection being provided to the latter.
BiH spends roughly 24% of GDP on the total social protection programme, including social insurance and social assistance programmes but excluding unemployment benefit. The largest share of the total expenditure on social protection programmes goes to social protection programmes based on contributions i.e., health protection programmes (10.2%) and pensions (10.1%). Social assistance programmes cost 3.9% GDP, which ranks them as the most expensive programmes when compared to the EU and the other Western Balkan countries.
Employment Features and Trends
One of the prominent features of the labour market in BiH is the very high number of people of working age who are not participating in the labour market and who are therefore designated as ‘inactive’. Labour force participation in BiH is significantly below the level in the other countries of the region. Furthermore it has been stagnating for years and shows very few signs of possible recovery.
Despite a mild improvement in the economic outlook in 2011 the slow recovery of major industries coupled with only a modest rise in business activity in the private sector could not reverse the negative trends in the unemployment rate. According to data from the 2012 Labour Force Survey the unemployment rate (ILO methodology) was 28% (26.4% for males and 30.7% for females) in 2012. The rate of registered unemployment amounted to 44.5% in April 2013.The data shows that unemployment is mostly long term: half of all unemployed have been out of work for at least five years and a quarter of them for over ten years.
Lengthy unemployment leads to a loss of skills and motivation and this becomes a negative indicator for prospective employers. The evidence also shows that unemployment in BiH is structural rather than frictional, which indicates that many if not most of the unemployed are in reality no longer in the labour market. In regard to the participation of women in the labour force, the level of gender disparity in the employment rates remained high and this incongruity persisted across all age groups. Youth employment is also of concern as it shows an exceptionally low rate with unemployment reaching 60% in 2012.
Particular attention needs to be paid to the vulnerability of children that are growing up in poverty affected households and belong to vulnerable groups. When child poverty is assessed on the basis of income, housing, amenities, health and education deprivations more than half of the children living in BiH are exposed to these multiple dimensions of poverty. In the case of Roma children, almost 80% live in poverty.
Apart from Roma children, children with disability and children without parental care, the children most affected by poverty and social exclusion are those coming from households with the following features: households with three and more children where the youngest child is younger than five years, households with four or more adults, households with two or three elderly people, households headed by women, households where the head is unmarried or divorced, households headed by persons with no education or with only primary school completed, households with no employed members and those living in rural areas. Analyses clearly show that children living in households headed by women are far more exposed to the risk of poverty and deprivation than children living in households headed by men (23% compared to 18% respectively). The most important cause of this difference is gender related income inequality.
Young people in BiH face many challenges in various aspects of life. Three out of four young people are unemployed. Most of them are not married, have no children and have not solved their housing situation. They are often pessimistic about their future and find their living standards “mediocre” at best. An increasingly technological labour market requires skills that many young people do not possess. Compared to the general youth population, vulnerable youth groups are even more hard-pressed by everyday challenges of life in BiH. Youth (aged 15-24) comprise 16% of the BiH population. The activity rate of this population in 2012 was 29.4%, the employment rate 10.8% (compared to 16.7% in 2009) and the unemployment rate a worrisome 63.1% (compared to 48.7% in 2009, 57.1 in 2010 and 57.7 in 2011).
Persons with Disabilities
It is estimated that 10% of BiH citizens have some sort of physical, sensory, development, mental or emotional disability, while 30% of total population is directly or indirectly affected by the consequences of these disabilities, which by itself represents a risk of social exclusion.
Persons with disability constitute one of the most vulnerable and least empowered groups in BiH and they are exposed to discrimination, poverty and exclusion. They are at high risk of inequities in health, lower education attainment and higher rates of unemployment. Persons with disability receive very different benefits and have different entitlements, depending on the cause of their disability and their place of residence.
The Roma population is traditionally faced with social exclusion. The Roma Multiple Indicator Cluster Survey (2012) confirms that, for almost all indicators, the situation of Roma is significantly worse than for the general population. Enrolment of Roma children in primary education was 69%. When it came to secondary education enrolment the level of Roma children attending secondary school was particularly low with only 22.6% compared to 91.8% of non-Roma. The literacy rate for Roma women aged 15-24 was only 68.9% compared to 99.3% for other women of the same age. The average number of years of education for Roma aged 16-24 was 5.3, while for general population it was 11.1 years. Furthermore, when it came to post-secondary education (ISCED 4+) the gap between Roma and general population was evident: while 0% of Roma aged 25-64 had completed post-secondary education 10% of general population had completed post-secondary education.
The income level of Roma reflects the deep poverty of Roma in BiH and is generally due to their exclusion from the labour market and the ‘low quality’ type of work they perform. Roma children are five times more likely to be underweight and twice as prone to stunting. Begging and child labour is, to a large extent, the consequence of a lack of access, especially for Roma mothers, to public assistance (even when they are entitled to it) and the absence of quality education options for their children. These same factors also leave Roma children particularly vulnerable to trafficking. The UN is currently supporting a revision of the existing Roma Action Plan in order to better target the problems of the Roma population in BiH.
In BiH persons aged 65 and above comprise 14.19% of the total population. Expenditure on pensions is on average 10.3% of GDP and as such among the highest levels when compared to the EU and countries of the Western Balkans region. However, around 60% of people above the age of 65 are not covered by regular old-age pension benefits or any other scheme i.e., the rural population, farmers, etc. This low coverage represents a serious social problem for BiH and makes this population vulnerable to poverty and social exclusion. Another major problem is that pensions for a large share of beneficiaries are so low that they are insufficient to cover the basic living costs; almost half of all beneficiaries receive a minimum pension.
Refugees and Displaced Persons
Return continues to be one of the main challenges for the country some seventeen years after the end of the war with 103,000 displaced persons and minority returnees, including some 8,600 who still live in collective centres under very poor conditions and who are still waiting for their status to be resolved. Annex VII of the Dayton Peace Agreement aims to address the return of refugees and displaced persons. Of the hundreds of thousands who have returned home since the end of the war many tens of thousands (the estimates are unreliable) have not stayed in their homes but have either moved back to their place of displacement or moved on to a third location. Of those who have returned and remained in their homes a considerable number face poverty and hardship.
In June 2010 Council of Ministers BiH and entities governments approved a Revised Strategy for the Implementation of Annex VII, which is the key policy for BiH on how the refugee problem can be resolved. The Revised Strategy identified a comprehensive range of measures needed to deal with the remaining challenges of the refugee situation. These included the repossession and reconstruction of property, electrification of properties and tackling issues related to healthcare, social protection, education, the right to employment, safety and demining and finally addressing the right to compensation.