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SARAJEVO, July 31 (FENA) – As of July 1, employers in the Federation of Bosnia and Herzegovina (FBiH) are paying lower payroll contributions. This long-anticipated measure is just the first step in a broader package of economic reforms aimed at easing the burden on businesses, raising wages, and creating new jobs, said FBiH Prime Minister Nermin Nikšić in an interview with FENA.
Nikšić also announces a new wave of fiscal relief by the end of the year, additional support for pensioners, and efforts to address challenges in the defense industry, including the production of completely new, previously unseen products in domestic factories.
Lower Taxes – More Jobs and Higher Wages
"The first step has been taken – lower contribution rates have been in effect since July 1. This sends a clear message: we want to ease the burden on employers, encourage wage growth, and create new jobs," Nikšić said.
He also called for social responsibility.
''I urge employers not to keep this benefit for themselves but to use it to improve workers' standards. This is not the end – we plan another round of contribution cuts by the end of the year,'' said FBiH Prime Minister.
He emphasized that all fiscal measures are part of a broader reform.
"Our goal is a Federation of BiH where it pays to work, invest, and stay. Without satisfied workers, there is no strong economy, and without a strong economy, no strong state,'' said Nikšić.
Support for Pensioners
While pursuing long-term reforms, the FBiH Government is also addressing the urgent needs of the most vulnerable. On August 4, pensioners in FBiH will receive a one-time financial assistance payment of KM 100 to 250, depending on the amount of their pension. These amounts are tailored to the needs of the most vulnerable, while safeguarding budget stability.
"This is over KM 70 million in direct support for our oldest citizens. It demonstrates our commitment and highlights the need to find long-term, systemic solutions," Nikšić stated.
Such solutions are planned through amendments to the Pension and Disability Insurance (PIO) Law by year’s end. The aim is to correct existing inequalities and ensure a more sustainable pension system. Key changes include introducing new pension adjustment formulas aligned with real economic conditions and pensioners’ needs, eliminating disparities between "old" and "new" retirees (which currently can be as high as 30 percent for the same base and service time), and securing more stable financing for the PIO system, reducing dependence on temporary ad-hoc interventions.
"It may not be widely known that in 2024 alone, we allocated KM 511 million from the budget to maintain the current pension level and protect pensioners' living standards," Nikšić emphasized.
Sustainable Growth of the Defense Industry
The defense industry remains a strategic priority for the FBiH Government. Support is not lacking even in times of crisis, such as with Igman from Konjic companies, which reported losses in the first half of 2025 due to inherited unfavorable contracts from the pandemic era, currency fluctuations, and unrealistically high input costs.
"Igman is undergoing internal reforms, and we are providing institutional support. At the same time, we are expanding the capacities of other defense companies in Cazin, Tuzla, and Herzegovina," the Prime Minister announced.
The defense industry is one of FBiH's key exporters and a driver of technological advancement. The plan to open new production facilities reflects the Government’s long-term vision.
The FBiH Government is the majority owner of all defense industry companies. That legal status, Nikšić stressed, brings with it responsibility and the obligation to lead development policies.
"When the defense industry was struggling, the Government invested without hesitation, helping revive those companies. Now we expect other shareholders to follow that example. We are working on formalizing the Government’s investments through the securities commission, as other shareholders did not match our contributions," Nikšić stated.
He also highlighted a significant new development.
''Production of two completely new products, never before manufactured in our factories, will begin soon. The public will be fully informed,'' he said.
In conclusion, Nikšić emphasized a key message: there are no quick fixes, but there is a clear path forward.
"Our goal is a Federation of BiH that is economically strong, socially sensitive, and fair. And we will follow through with our plan,'' Prime Minister Nikšić concluded in his interview with FENA.
(FENA) A. B.
