As mentioned earlier in this report, human capital is an aggregate of the knowledge, skills, talents and abilities possessed and used by individuals for economic, social and personal benefit. The value of human capital for people, economies and societies depends on how well it is developed, and on the extent to which it is then available and used.
The constitutional settlement in Bosnia and Herzegovina accords its entities and cantons full competence in the management, development and coordination of education policies. This is highly effective in promoting local ownership and control, but less so in developing an integrated state-wide human capital development system.
Due to the fragmented institutional environment, a segregated education system has developed. Different curricula are taught and the language of teaching differs according to the children's ethnic identity. The Bosnia and Herzegovina Torino Process report states that the way in which the education system is organised makes it difficult to introduce a system at state level that would include efficient infrastructure investment and overall modernisation of schooling. The system seems expensive; most of the financial resources are used to pay the education provider's salaries while a small part of the annual education budget is invested in infrastructure.
Due to the fragmentation of policy making, the systematic collection of data and the compilation of comparable statistics at all levels of education remain challenging, especially in terms of learning outcome data.
Bosnia and Herzegovina is ranked 58th on the list of 157 countries included in the World Bank's Human Capital Index, which was introduced in 2018. A child born in Bosnia and Herzegovina today will reach only 62% of its productive potential compared to children born in countries with the best education and health care. On average, children in Bosnia and Herzegovina can expect to complete 11.7 years of schooling by the age of 18. However, this is only equivalent to 8.6 years of effective education when the quality of learning is taken into account (World Bank, 2018b).
Despite spending a relatively high percentage of GDP (5%) on education, Bosnia and Herzegovina's education outcomes are among the weakest in the region. This is probably a result of the high administrative costs of a highly decentralised system and the lack of common standards for various levels of education and teacher training and performance evaluation (USAID, 2016).
Some of the key human capital indicators, as well as Bosnia and Herzegovina's performance with respect to EU benchmarks in education and training, suggest that there are challenges at all stages of this value chain. The availability of human capital is affected by the demographic trends, which gradually deplete the pool of young workers and entrepreneurs (Table 1 and Table 2, Indicator 1). The development of skills among adults, especially those with low or no qualifications, suffers from limited access to lifelong learning (Table 3).
The effectiveness and quality of human capital development in formal education and training is also challenged. The expected duration of schooling is just over 14 years and its average duration is close to 10 years. The learning-adjusted duration of schooling is on average less than 7 years (Table 2, Indicators 2 to 4).
One of the main challenges in Bosnia and Herzegovina is tackling underachievement in key competences. Recent results from the OECD Programme for International Student Assessment (PISA) show that half of students aged 15 are underachievers in reading, mathematics and science[5] Low achievers are the 15-year-olds who are failing Level 2 on the PISA scale for reading, mathematics and science. The indicator provides a measure of the youth population most at risk through a lack of foundation/basic skills. It is one of the EU targets for 2020 in education and training.
. When analysing the incidence of low achievement among students aged 15, it is worth noting that this is the typical age for entering VET in Bosnia and Herzegovina. Thus, students entering VET are at high risk as a result of a lack of foundation skills (i.e. reading, mathematics and science).
Table 2: Selected indicators of human capital, Bosnia and Herzegovina
Year |
Value |
||
(1) Population structure (%) |
0–24 |
2015 |
27.8 |
25–64 |
56.5 |
||
65+ |
15.7 |
||
0–24 |
2025 |
24.1 |
|
25–64 |
55.7 |
||
65+ |
20.2 |
||
(2) Average years of schooling |
2017 |
9.7 |
|
(3) Expected years of schooling |
2017 |
14.2 |
|
(4) Learning-adjusted years of schooling |
2017 |
8.6 |
|
(5) Adult literacy |
2015 |
98.5 |
|
(6) Global Innovation Index ranking (x/126) |
2018 |
77 |
|
(7) Global Competitiveness Index ranking (x/137) |
2017-18 |
103 |
|
(8) Digital Readiness Index ranking (x/118) |
2018 |
57 |
Source: ETF database
Table 3: EU benchmarks in education and training
BOSNIA AND HERZEGOVINA |
EUROPEAN UNION (2018) |
EU2020 TARGET |
||||
2010 |
2018 |
Lowest |
Average |
Highest |
2020 |
|
Early leavers (% aged 18–24) |
7.9 |
5.4u |
3.1 |
10.6 |
17.5 |
< 10 |
Tertiary attainment (% aged 30–34) |
11.8 |
23.5 |
24.9 |
40.7 |
57.6 |
≥ 40 |
Employment rate (% aged 20–64) |
42.8 |
47.7 |
57.8 |
73.1 |
81.8 |
≥ 75 |
Lifelong learning (% aged 25–64) |
2.8 |
1.9 |
1.0 |
11.1 |
29.9 |
≥ 15 |
Low achievers – reading (% aged 15) |
a |
53.7 |
13.5 |
21.7 |
40.8 |
< 15 |
Low achievers – mathematics (% aged 15) |
a |
57.6 |
10.2 |
22.4 |
46.6 |
< 15 |
Low achievers – science (% aged 15) |
a |
56.8 |
8.8 |
21.6 |
46.5 |
< 15 |
Employment rate of graduates (% aged 20–34) |
39.3 |
51 |
55.2 |
81.6 |
93.7 |
≥ 82 |
Source: Eurostat, OECD, Agency for Statistics of Bosnia and Herzegovina
ETF evidence (Key Indicators on Education, Skills and Employment, KIESE) shows that the employment rate for VET graduates is low at 46.4%. This rate improved over the course of the decade: it is up from 27.3% in 2010. Male graduates do better than females with an employment rate of 53% as against 31.3%. Women continue to enrol in VET, however, with 70% of female secondary students entering VET in 2018, up from 67.5% in 2010. Graduates from general education have rates of employment at 56.2% overall and 58.8% for males and 53.8% for females.
However, females do have a higher tertiary attainment rate: 28.8% compared to 18.4% for males. This is reflected in the educational attainment of the active population, in which the proportion of females who are highly skilled is significantly higher than males – 21.7% against 12.9%.
Overall, the employment rate has improved in recent years with the growth in the economy, rising from 42.8% in 2010 to 47.7% in 2018 for those aged between 20 and 64.
With the growth in employment, the unemployment rate fell from 27.2% in 2010 to 18.4% in 2018. This fall was matched by a drop in the youth unemployment rate from 57.5% to 38.8%, which continues to be high.
In the case of both females and males, the highest falls in overall unemployment were among the low- and medium-skilled job seekers. The incidence of vulnerable unemployment is declining, down from 21.6% in 2010 to 16.4% in 2018. Similarly, the percentage of young people not in employment, education or training (NEETs) declined from 28% in 2010 to 21.6% in 2018.
The figures suggest an improving picture in the labour market and, with the general increase in employment, long-term unemployment is also falling. It fell by 4.8% between 2016 and 2017. However, the share of long-term unemployed is very high at over 80% of the total unemployed population. This concerns in particular lower-skilled, young and older workers.
At 58.4%, overall labour force participation was low in 2018 and has not increased substantially for the 20–64 year-old age group since 2010. The labour force activity rate for males is much higher at 71.7% of the population aged 20 to 64 as against 45% for females. The employment rate for females is also low for this age group at 35.8% compared to 59.5% for males.
The low participation rates and the high unemployment rates indicate significant underutilisation of human resources.
Between 2016 and 2018, the gender employment gap for young people increased by 4 percentage points to 13.5 percentage points. During this period, overall employment was increasing and the unemployment rate was decreasing, suggesting that young males may be entering employment at a higher rate than young females. Between 2016 and 2018, the employment rate for male VET graduates increased by 13.4 percentage points. The figures for female VET graduates are not available[6] ETF, KIESE indicators, 2019.
.
Over the same period, the activity rates for young males and females were stable. However, for the 25–49 age group, activity rates for females rose slightly while they were stable for males in the same age group. The difference continues to be large, however, at 86.8% for males and 58.9% for females.
In 2018, more than half of the inactive population had at most primary education level (52.6%). This compared to 5% of this group, which had higher education and 42.4%, which had secondary education. There was no difference between males and females in the case of higher education, but in secondary education the figures were 52.1% for males as against only 36.1% for females (Agency for Statistics of Bosnia and Herzegovina, 2018e).
For both genders, however, low activity rates are associated with low levels of educational attainment and skills development.