Despite improvements in labour market indicators, young people, women, poorly educated individuals and people living in rural areas dominate the unemployment and inactivity figures.
Because of the political divisions and a rather fragmented government structure, the public administration there are multiple difficulties in implementing the necessary reforms in education and labour market policies.
Economic growth and development in Bosnia and Herzegovina is hampered by a complex constitutional, political and administrative set-up and a fragmented economic space. The fragmented administrative structure hinders the development and implementation of state-wide sectoral reform processes.
With 14 executives exercising competences in relation to human capital development, efforts need to be made to significantly strengthen the country's capacities at all levels. Some pooling of resources and capacities is needed to cope with the challenges.
There is a certain degree of tension between, on the one hand, the aim of having policy autonomy in education, as established by the constitutional settlement of Bosnia and Herzegovina, and, on the other, the aim of having a policy that applies to a relevant degree across Bosnia and Herzegovina and supports cooperation with the EU at state level.
The extent to which this tension can be resolved will impact on the efficiency and effectiveness of human capital development and its use in Bosnia and Herzegovina through labour market and education policies: efficiency because it can reduce duplication and share good practices, and effectiveness because a state-wide policy can draw more stakeholders into the process and share more of the benefits of the policies.
Since 2017, the European Commission has shifted its main form of employment assistance towards sector budget support. The budget support programme for 2019 and beyond facilitates the endorsement of a state-wide employment strategy and constitutes the interface with educational reforms.
To ensure a state-wide approach to medium-term policy planning, Bosnia and Herzegovina should establish regulatory frameworks and mechanisms for central and sectoral policy development, monitoring and budgeting at all levels. Bosnia and Herzegovina needs to improve policy making at state level. This includes the establishment of policy monitoring frameworks. Social dialogue should become an institutionalised part of the policy-making processes.
The overall conclusion is that Bosnia and Herzegovina needs to act quickly to fill these gaps, harness the full potential of its human capital and impact positively on employment and economic growth.