JOBS SERIES Issue No. 31 DIAGNOSTIC BOSNIA AND HERZEGOVINA C é lin e F e r r é , N e r m in O r u c , K e v w e P e l a , an d   E li z ab e t h R up p e r t B ulm e r Implications of Coal Transition DIAGNOSTIC BOSNIA AND HERZEGOVINA C é lin e F e r r é , N e r m in O r u c , K e v w e P e l a , an d   E li z ab e t h R up p e r t B ulm e r Implications of Coal Transition © 2023 International Bank for Reconstruction and Development / The World Bank. 1818 H Street NW, Washington, DC 20433, USA. Telephone: 202-473-1000; Internet: www.worldbank.org. Some rights reserved This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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The risk of claims resulting from such infringement rests solely with you. If you wish to re‑use a component of the work, it is your responsibility to determine whether permission is needed for that re‑use and to obtain permission from the copyright owner. Examples of components can include, but are not limited to, tables, figures, or images. All queries on rights and licenses should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e‑mail: pubrights@worldbank.org. ACKNOWLEDGMENTS This study was carried out by Elizabeth Ruppert Bulmer (Team Leader, Lead Economist), Kevwe Pela (Economist), Céline Ferré (Consultant) and Nermin Oruc (Consultant), Jobs Group, World Bank. The work was prepared as part of the World Bank’s Support to Energy Transition in Coal Regions (P171194). Strategic guidance was provided by Rachel Perks (Sr. Mining Specialist and Task Team Leader for the World Bank’s coal sector engagement in Bosnia and Herzegovina), Dzenan Malovic (Sr. Energy Specialist and co-Task Team Leader) and Ian Walker (Manager, Jobs Group), under the senior leadership of Demetrios Papathanasiou (Global Director, Energy and Extractives) and Michal Rutkowski (Global Director, Social Protection and Jobs). Financial support from the Energy Sector Management Assistance Program (ESMAP) is gratefully acknowledged. Through the World Bank Group (WBG), ESMAP works to accelerate the energy transition required to achieve Sustainable Development Goal 7 (SDG7) to ensure access to affordable, reliable, sustainable, and modern energy for all. The findings, interpretations, and conclusions expressed in this work are those of the authors, and do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. iv TABLE OF CONTENTS ACKNOWLEDGMENTS iv ABBREVIATIONS vii EXECUTIVE SUMMARY 1 1. INTRODUCTION 3 2. MACRO-STRUCTURAL CONTEXT AND DEMOGRAPHIC CHALLENGES 5 3. A DIFFICULT JOBS CONTEXT 9 3.1 EMPLOYMENT OUTCOMES OVER THE PAST DECADE 9 3.2 CHARACTERISTICS OF THE LABOR FORCE 13 4. CHARACTERIZING COAL SECTOR WORKERS 16 4.1 COMPARING COAL SECTOR SKILLS TO OTHER SECTORS 16 4.2 COAL SECTOR COMPENSATION 19 5. COAL SECTOR EMPLOYMENT, PRESENT AND FUTURE 21 5.1 SNAPSHOT OF COAL PRODUCTION IN BiH 21 5.2 DIRECT COAL SECTOR EMPLOYMENT 22 5.3 INDIRECT COAL EMPLOYMENT IN THE COAL VALUE CHAIN 24 5.4 LOCAL LABOR MARKET IMPLICATIONS OF POTENTIAL COAL SECTOR JOB LOSSES 28 6. POLICIES TO SUPPORT WORKERS’ TRANSITION AND IMPROVE LABOR MARKET OUTCOMES 32 6.1 INTERPLAY BETWEEN LABOR OUTCOMES AND THE BROADER ECONOMY 32 6.2 SHORT-TERM PLANNING AND DIAGNOSTICS 33 6.3 COMPLEMENTARY POLICIES TO IMPROVE LABOR MARKET FUNCTIONING AND OUTCOMES 35 v REFERENCES 38 ANNEX 1 40 ANNEX 2 42 ANNEX 3 56 vi ABBREVIATIONS ALMP Active Labor Market Program BiH Bosnia and Herzegovina CHP Combined Heat and Power Plant EFT Energy Financing Team EPBiH Elektroprivreda Bosne i Hercegovine ERS Elektroprivreda Republike Srpske EU European Union FBiH Federation of Bosnia and Herzegovina FGD Flue Gas Desulfurization GAWB Green Agenda for the Western Balkans GDP Gross Domestic Product GHG Greenhouse gas HCI Human Capital Index HR Human Resources ICT Information and Communication Technology IEA International Energy Agency ILO International Labour Organization ISCED International Standard Classification of Education LFS Labor Force Survey NEET Neither in Education, Employment, or Training NERP National Emission Reduction Plan NGO Nongovernmental Organization OECD Organisation for Economic Co-operation and Development PES Public Employment Services PPA Public Procurement Agency PPP Purchasing Power Parity PV Photovoltaic RiTE Rudnik i Termoelektrana RS Republika Srpska SMEs Small and Medium Enterprises SOE State-Owned Entity STEM Science, Technology, Engineering, and Mathematics TPP Thermal Power Plant TVET Technical and Vocational Education and Training WDI World Development Indicators vii EXECUTIVE SUMMARY A successful transition away from coal mining and coal-fired power generation in Bosnia and Herzegovina (BiH) is particularly important for the region’s broader climate transition. Coal accounts for over 60 percent of the country’s electricity production and is also widely used for heat generation. BiH relies on brown coal and lignite for over half its primary energy supply—among the highest shares in the world. The transition to carbon neutrality will put jobs at risk. Workers in coal and other fossil fuel sectors and carbon-intensive industries, as well as those employed in the towns and regions where coal activity is concentrated, will be the hardest hit. In addition to directly affected workers—namely, those employed in coal mines and power plants—a significant number of jobs in non-coal sectors will also be affected. Although the coal sector accounts for a modest share of overall employment in the national economy, it is a significant employer at the local level, especially around Gacko, Banovic ´i, Ugljevik, Breza, and Kakanj. These municipalities would be particularly vulnerable to economic fallout from mine closure, not only due to their dependence on the coal sector but also because of already high unemployment. In a scenario in which all coal-related jobs are eventually lost, the influx into local labor markets of job seekers displaced from coal jobs would massively increase the pool of unemployed workers and likely exacerbate existing skills mismatch. Coal sector workers may find it difficult to find jobs that are aligned with their skills, given that occupations in highest demand in the current labor market are for low-skilled workers not necessarily aligned with coal-related workers’ specializations. Moreover, most coal sector jobs are in the public sector, pay high wages, and provide good nonwage benefits; this means that most coal sector workers—especially lower-skilled coal workers—would likely struggle to find comparable compensation in other sectors. As of end-2022, 14,600 workers were directly employed in coal mines and thermal power plants (TPPs) and another 2,400 workers were employed upstream in the coal value chain in firms supplying inputs to mines and power plants. Taken together, an estimated 17,000 workers would be at risk of losing their jobs in the event of mine and power plant closures (not counting those employed in firms providing goods and services to coal sector workers and their families, that is, the local businesses in and around the coal regions). The labor market’s capacity to absorb displaced coal sector workers into alternative employment is severely limited, due in large measure to distortions related to a significant public sector presence, segmentation between good-quality public sector jobs and poor-quality private sector jobs, and disincentives to work. BiH’s high levels of registered unemployment mask extensive unreported informal employment and migration, and reflect a preference to queue for public jobs rather than accept less appealing work in the private sector. Private employment in BiH is dominated by jobs in low-productivity, low-paying sectors such as agriculture, manufacturing, transport, and wholesale and retail trade. Low labor force participation, high outmigration, high unemployment, and extensive skills mismatch and perceptions mismatch between job seekers and employers together reflect the underutilization of BiH’s human capital resources and potential labor productivity. The wide gap between workers’ preferences and employers’ skills demand impedes job matching, both across BiH and within coal regions. 1 Lessons from past coal transitions in other countries are instructive, given that BiH faces similar challenges. Many coal regions are remotely located and poorly connected to large commercial centers, and local economies are not well diversified, especially where mines or power plants are the dominant employer and crowd out other economic activity. Public ownership of mines and energy utilities and/or a strong union presence means that closing mines or power stations is politically sensitive, especially given that past closure episodes in other countries resulted in prolonged localized economic and social dislocation. One key explanation of the observed dislocation was that transition packages generally did not extend beyond direct mine employees to cover nonunion informal or contract employees of mines, workers in supporting industries, or other workers in the local economy whose livelihoods suffered following mine closures. Coal transition planning at the national, regional, and local levels needs to be coordinated across government and must consider anticipated employment effects. To design effective policies to mitigate the negative impact on workers and facilitate their transition into alternative livelihoods, it is essential to understand the magnitude and nature of these employment effects. New and/or revised policies to address existing labor market distortions should be accompanied by new programs that promote worker mobility and reskilling to facilitate labor reallocation following mine and power plant closures. Upstream diagnostics to inform advanced planning before closures get under way are important for ensuring that workers and communities are not left behind. 2 1. INTRODUCTION Under the Green Agenda for the Western Balkans (GAWB), adopted in 2020 to align with the European Union (EU) Green Deal, the governments of the Western Balkans agreed to an action plan for placing sustainable development, resource efficiency, nature protection, and climate action at the center of all economic activities. The EU, in turn, pledged financing of EUR 9 billion in grants and EUR 20 billion in investments to support implementation of the action plan.1 Accelerating the coal phaseout is a key area of agreed policy action and is essential for shifting to carbon-neutral energy production. Given that carbon dioxide is the primary contributor to greenhouse gas (GHG) emissions,2 the shift away from fossil fuels—and especially coal—is a priority. A successful transition out of coal mining and coal-fired power generation in Bosnia and Herzegovina (BiH) is particularly important for the Western Balkans’ coal phaseout and broader climate transition. Brown coal and lignite accounted for 52 percent of BiH’s primary energy supply in 2019, among the highest shares in the world (only the Democratic People’s Republic of Korea, South Africa, Mongolia, and China have higher coal dependencies).3 In 2020, BiH produced 13.56 million tonnes of brown coal and lignite, which were mostly used to generate electricity at power plants near the mines. Over 60 percent of the country’s electricity production was from coal in 2020. Coal is also widely used for heat generation. Together, coal accounts for 99 percent of all CO2 emissions from electricity and heat generation in BiH.4 The transition to carbon neutrality will put coal-related jobs at risk, especially in and around coal mines and power plant sites but also beyond. Workers in fossil fuel sectors and carbon-intensive industries, as well as those employed in the towns and regions where coal activity is concentrated, will likely be the hardest hit. This note estimates the extent of the potential employment impact in terms of the number of jobs affected, the locations of these jobs, and the types of workers in these jobs. In addition to directly affected workers—namely, those employed in the coal sector in mines and power plants—a significant number of jobs in non-coal sectors will also be affected. These indirect effects relate to workers along the coal value chain, including employees in firms that supply coal mines and power plants with a range of goods and services that are inputs to production. Other indirect effects relate to workers and firms that provide goods and services consumed by coal sector employees and their families; when coal sector workers lose their jobs, their demand for consumer goods and services would diminish, with negative consequences for the local economy. Some common challenges observed in past coal transitions in other countries are likely present in BiH as well. Many coal regions are remotely located and poorly connected to large commercial centers; as a result, local economies are not well diversified, and mines and power plants are sometimes the dominant employer. Mines and power plants in many countries are publicly owned, and the sector has a strong union presence and provides attractive compensation compared to other sectors. Coal mine closure in these settings is politically sensitive, as displaced workers may struggle to transition to alternative jobs. Past mine closures in Poland illustrate 1 The first indicative timeframe is for the harmonization with the EU Emissions Trading System by 2024. https://balkangreenenergynews.com/wp-content/uploads/2021/10/GAWB-ACTION-PLAN-Final-04.10.2021.pdf. 2 In 2019, CO2 accounted for 81.6 percent of EU GHG emissions. 3 https://www.iea.org/data-and-statistics/. 4 Ibid. 3 the potentially high economic costs (Ruppert Bulmer et al. 2021). Even when labor unions have successfully negotiated transition packages to mitigate the losses incurred by their members, transition packages typically do not cover non-union workers (such as informal or contract employees of mines) or workers in supporting industries or other affected workers in the local economy. Shifting to less labor-intensive renewable energy generation at a large scale and phasing out of coal risks precipitating major social and fiscal challenges in coal regions, which in turn can undermine the viability of local communities (Lobao et al. 2021; Ruppert Bulmer et al. 2021; World Bank 2018a). National, regional, and local economic planning, including that related to the Green Agenda, needs to consider anticipated employment effects. Policies can be designed to mitigate the negative impact on workers and facilitate their transition into alternative livelihoods, but to do this effectively, it is essential to understand the magnitude and nature of these employment effects and apply relevant lessons from international experience. This report analyzes the possible impact of future coal mine closures on coal sector workers as well as workers in other economic sectors linked to the coal value chain and the implications for local labor markets. The labor market context in which mine or plant closures occur matters because it influences the capacity of affected workers to transition to alternative employment. Using data from a variety of sources— labor force surveys (LFSs), administrative data from government agencies, employment information from mining companies and thermal power plants (TPPs), and information on mining company subcontractors—the analysis provides estimates of the magnitude and characteristics of potentially affected workers. To understand the profile of potentially affected workers, the study collected both quantitative and qualitative data from coal mining and energy conglomerates (directly affected workers) and firms in the coal value chain (indirectly affected workers).5 The analysis applies a spatial lens to identify regional differences with respect to risks and opportunities. This report concludes with an assessment of likely occupation and skills mismatch arising from future mine closures and a discussion of policy options to reduce this mismatch. Existing structural and labor market challenges make effective policy design difficult. Policy reforms to address current labor market distortions complemented by new programs to promote worker mobility and reskilling will be essential parts of the government toolkit to facilitate labor reallocation following mine closures and energy transition away from coal. Upstream diagnostics to inform advanced planning before closures get under way are important for ensuring that workers and communities are not left behind. This report ends by proposing a series of actions to fill the remaining knowledge gaps and redesign labor programs and complementary policies to facilitate labor transition that is economically and socially sustainable. 5 Additional data collection will be carried out in a future phase to deepen knowledge of the potential indirect effects on the local economies close to mines and power plants where mine closure could have negative spillover effects. 4 2. MACRO-STRUCTURAL CONTEXT AND DEMOGRAPHIC CHALLENGES BiH has experienced steady growth over the last decade, albeit at a slower pace compared to before 2009. Until the COVID-19 pandemic hit, the country was able to recover from the 2009 global financial crisis, reaching a GDP growth rate of about 3 percent in 2015—yet lagging many of its Western Balkan neighbors (Figure 1, panel a). Although BiH’s growth rate is generally higher than the EU average (Figure 1, panel b), BiH started from a low base after the dissolution of the former Yugoslavia. The Bosnia and Herzegovina war (1992–1995) hammered the country’s economy; between 1989 and 1995, the country’s output dropped by almost 80 percent. BiH’s current GDP per capita is one-third of the EU average, and at the current pace of growth, it will take about 100 years to achieve EU’s average income level (World Bank 2020a). BiH’s growth is heavily reliant on sources that are not sustainable in the long term—notably high levels of consumption. Low investment levels and export volumes—especially compared to BiH’s Western Balkan neighbors—are also slowing economic growth (Figure 2). FIGURE 1 GDP growth A. Western Balkans comparison B. Regional comparison 10 10 8 8 6 6 Annual growth (%) Annual growth (%) 4 4 2 2 0 0 –2 –2 –4 –4 –6 –6 20 1 20 2 20 3 20 4 20 5 20 6 20 7 20 8 20 9 20 0 11 20 2 20 3 20 4 20 5 20 6 20 7 20 8 19 20 1 20 2 20 3 20 4 20 5 20 6 20 7 20 8 20 9 20 0 20 1 20 2 20 3 20 4 20 5 20 6 20 7 20 8 19 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 20 20 20 Bosnia and Herzegovina Bosnia and Herzegovina Montenegro European Union North Macedonia Albania Europe and Central Asia (IDA and IBRD countries) Kosovo Serbia Europe and Central Asia Source: World Development Indicators (WDI) database. 5 FIGURE 2 Factors in real GDP growth, 2019 (%) 6 5 4 3 Percentage 2 1 0 –1 –2 –3 Albania Bosnia and Kosovo North Montenegro Serbia WB6 Herzegovina Macedonia Consumption Net exports Investment Real GDP growth (%) Source: World Bank 2020a. The country’s slow pace of urbanization and structural transformation is linked to lower productivity and lower incomes. The country is among the most rural in Europe, with three-fifths of the population living in rural areas. The observed slow transition out of agriculture activity means that a large share of BiH workers engage in relatively low-productivity, poorly paid jobs (Figure 3); as of 2019, jobs in agriculture still accounted for nearly 18 percent of total employment—very high compared to other upper-middle-income countries—but contribute only 8 percent of the economy’s total value added. An aging population and high outmigration have limited the human capital contribution to economic growth. Whereas GDP per capita growth over the last decade was driven primarily by increased within-sector labor productivity, higher participation rates, and especially higher employment rates, the level of employment actually declined (Figure 4). The country’s population plummeted from about 3.7 million to approximately 3.3 million between 2010 and 2019 (Figure 5, panel a), and it is estimated that by 2050, the population will drop FIGURE 3 Sector breakdown of employment and value added A. Employment by sector B. Value added by sector 1,200 20,000 8 18,000 Million constant 2010 USD 1,000 6 %, annual growth rate 16,000 800 14,000 4 1,000 people 12,000 600 10,000 2 8,000 400 0 6,000 200 4,000 –2 2,000 0 0 –4 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Agriculture Industry Services Value Added Growth (RHS) Source: Jobs Group structural tool. 6 FIGURE 4 Decomposition of per capita growth and labor market trends A. Decomposition of growth B. Annual average change in key in value added/capita labor market indicators, 2011–2019 –2.8% Working Population 2011–2019 Total=3.7% –2.4% Labor force 2001–2011 –0.6% Total employment Total=3.7% –0.2% Wage, paid employment .0 .5 0 5 0 5 0 5 0 5 0 5 0 –0.1% Non-agricultural wage 0. 1. 1. 2. 2. 3. 3. 4. 4. 5. –1 –0 % Yearly Contribution to Growth employment –3.0 –2.5 –2.0 –1.5 –1.0 –0.5 0 Productivity Participation rate Employment rate Demographic change % Change Source: Jobs Group structural tool, data from LFS 2011–2019. FIGURE 5 Population dynamics A. Population projection B. Old-age dependency ratio 4,000 60 3,500 50 3,000 Population '000 Percent (%) 40 2,500 30 2,000 1,500 20 1,000 10 500 0 0 2000 2015 2020 2050 2075 Bosnia and Herzegovina 10 15 20 25 30 35 40 45 50 20 20 20 20 20 20 20 20 20 Western Balkans 0–14 15–64 65+ European Union Source: United Nations 2020. Note: Western Balkan average includes Albania, BiH, Montenegro, North Macedonia, and Serbia. No data are available for Kosovo. by another 20 percent (to about 2.7 million) (World Bank 2020a).6 The country has the highest emigration rate in the region (Figure 6). Population aging and outmigration have led to an annual shrinking of the working‑age population and the labor force by 3 percent and 2 percent, respectively, since 2011, concurrent with an increasing dependency ratio (Figure 5, panel b); these demographic trends will continue to be a core challenge for better labor market outcomes in the future, as fewer people of working age will need to support a larger number of old-age dependents and the associated fiscal costs of pension payments. 6 BiH has one of the lowest fertility rates in the world, averaging 1.3 births per woman in 2018 compared to 1.7 in the OECD (based on WDI data). 7 These growth patterns and demographic dynamics raise questions about the economy’s future prospects, especially as it faces climate change;7 understanding how jobs will be affected by the low-carbon transition is a key component of the challenge. The economy’s capacity to grow and compete on a global scale will require a more competitive mix of exports, more productive sectors at home, and more efficient and sustainable use of factors of production—labor, capital, and natural resource inputs. Agricultural production is a major driver of BiH’s rural economy but is vulnerable to climate change and potential food insecurity. Over the last two decades, BiH has experienced drought every four years on average, resulting in reduced harvests, increased food expenditures, and lower water levels that negatively affected hydropower generation. Reducing reliance on coal-based energy is strategically important, especially given the declining competitiveness of coal mining in BiH, but will require closing mines and investing in more sustainable sources of energy. The next section examines the challenging labor market context in which future job seekers—including displaced coal sector workers—will find themselves. FIGURE 6 Migration 60 ATG BiH 50 Emigrants (% of population), 2019 ALB 40 BRB JAM SYC CPV MKD ARM 30 TUV MDA FJI MNE PRT MLT SLV HRV TTO NRU BGR LTU GEO KAZ 20 FSM URY ROU CYP ABW STP CAF LSO BLZ LVA BLR EST NZL COM PLW MUS UKR LBN DOM POL EU average AFG PRY SRB BHS 10 NIC GRC SWZ MEX GNQ NPL HND JOR LKA CZE GTM BTN RUS HUN SVN AUT COL SVK GBR GMB BGD COG PHL DZA BWA PAN MYS ISR ITA BEL DEUDNK NLD EGY CRI TUR FRA BHR CAN COD TLS CHL ESP AGO MNG GAB ARG AUS TCD NGA IND IDN BRA CHN OMN JPN SAU 0 ETH IRN 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 GDP per capita, PPP, 2018 (constant 2011 international $) Source: United Nations Department of Economic and Social Affairs 2019, WDI, and World Bank staff calculations. Note: PPP = Purchasing power parity. 7 Natural disasters are estimated to cost the country about 1.4 percent of its GDP every year, the costliest in the region (OECD 2021). The flood in 2014 alone resulted in damages of roughly US$450 million (World Bank 2020a). In 2018, BiH ranked 129 out of 181 countries in Germanwatch’s Climate Risk Index, which measures fatalities and losses due to climate impact (Eckstein et al. 2019). 8 3. A DIFFICULT JOBS CONTEXT 3.1 EMPLOYMENT OUTCOMES OVER THE PAST DECADE BiH’s modest growth over the last decade failed to generate enough jobs to improve employment outcomes for much of the population. Between 2011 and 2019, BiH lost approximately 20,000 jobs, spread across many sectors (Table 1). The largest losses were in agriculture, public administration, wholesale and retail, transport, and health services, disproportionately in the public sector. Coal mining employment contracted by approximately 13 percent in this period.8 The finance / information and communication technology (ICT) / business services sector and the manufacturing sector both added many new jobs during this period, especially private sector jobs. Insufficient job creation contributes to already significant levels of poverty. Measured using the World Bank’s poverty methodology at national poverty lines of KM 205 per capita per month, 16 percent of the population in 2015 lived below the poverty line (latest available data), a slight increase from 2011 (15 percent). The rural poverty rate of 19 percent is especially high, compared to 9 percent in urban areas.9 Around half of the population live in vulnerable conditions.10 In 2020, the pandemic caused substantial upheaval in the labor market; the resulting losses in jobs and earnings likely eroded household welfare significantly. Simulations undertaken at the beginning of the pandemic estimated that with falling consumption, an additional 35,000 to 85,000 individuals could fall into poverty (World Bank 2020b). According to the National Human Development Report, 50 percent of the population suffers some form of social exclusion; the most vulnerable groups include returnees and internally displaced people, Roma, people with disabilities, the elderly, and unemployed youth (UNDP 2007). A large share of BiH’s working-age population is underutilized, whether unemployed or underemployed or outside the labor force. The country’s high unemployment levels have improved markedly but remain significant. In 2019, the unemployment rate was about 16 percent, down from 28 percent in 2011. BiH ranks third compared to its Western Balkan neighbors11 and much higher than the Europe and Central Asia regional averages (Figure 7). The country also has one of the highest rates of long-term unemployment in the world; in 2018, 82 percent of those unemployed in BiH had been out of work for more than a year, notably higher than the Western Balkan average (67 percent). A snapshot of the labor market in 2019 shows that roughly 45 percent of potential workers were inactive, and 34 percent were neither in education, employment, or training (NEET). Working-age women accounted for two-thirds of all NEETs (Figure 8). According to the World Bank (2018b, 13), the average woman in BiH loses about 35 years of productive employment over her lifetime due to reduced labor market opportunities. Overall, BiH’s labor force participation rate is the second lowest in the Western Balkans (trailing all but Kosovo) and is 16 percentage points below the EU average and 18 percentage points below the Europe and Central Asia average (Figure 9). 8 The percentage change is calculated based on administrative data on employment in coal mines, which differs from the BiH LFS data reported in Table 1. 9 Rural residents benefit from government-supported schemes targeted toward accessing transportation, education, health care, and social services. These benefits may help offset the pressure on households to migrate to urban centers. UNDP (2013). 10 Defined as being at-risk-of-poverty-or-social exclusion, a headline indicator of the Europe 2020 strategy. https://documents1.worldbank.org/curated/en/900381634670558017/pdf/Greening-the-Recovery.pdf. 11 Western Balkan neighbors include Albania, BiH, Kosovo, Montenegro, North Macedonia, and Serbia. 9 TABLE 1 Job gains / losses by sector, 2011–2019 (public and private) Net job creation Sector Employment 2011 2019 2011–2019 Agriculture Public 18,996 27,008 8,012 Private 141,030 117,205 (23,825) Coal* Public 12,049 9,868 (2,182) Private 1,306 970 (336) Other Mining Public 1,462 1,264 (198) Private 2,781 1,802 (979) Manufacturing Public 27,838 18,084 (9,755) Private 101,743 131,548 29,805 Utilities Public 6,261 9,459 3,198 Private 1,991 1,807 (184) Power Generation Public 13,542 15,165 1,623 Private 1,145 818 (327) Construction Public 7,647 6,857 (790) Private 57,934 56,958 (976) Wholesale and Retail Public 9,412 7,413 (2,000) Private 101,671 94,261 (7,410) Transport and Communications Public 22,802 10,556 (12,245) Private 22,929 27,570 4,640 Accommodation and Food Services Public 3,098 1,715 (1,383) Private 24,937 31,383 6,446 Financial, ICT, and Business Services Public 9,929 23,458 13,529 Private 27,851 38,390 10,539 Public Administration Public 63,793 48,379 (15,414) Private Education Public 44,787 35,700 (9,087) Private 3,270 6,573 3,304 Health and Social Work Public 45,098 33,618 (11,480) Private 3,270 6,915 3,645 Other Services, Unspecified Public 39,311 13,679 (25,631) Private 4,555 24,285 19,730 Total Public 326,025 262,223 (63,802) Private 496,413 540,485 44,073 Overall Total 822,437 802,708 (19,729) Source: BiH LFS 2011, 2019. Note: * LFS data do not fully capture coal sector workers, due to limits in survey coverage. Coal sector employment levels reported here differs from the administrative data reported by the mining and TPP companies, where total coal sector employment was 16,800 in 2019. 10 FIGURE 7 Unemployment rate (international comparison) 30 Unemployment rate (%) 20 10 0 Europe and Europe European Kosovo North Bosnia Montenegro Albania Serbia Central Asia and Union Macedonia and (IDA and IBRD Central Herzegovina countries) Asia 2011 2019 Source: WDI database. FIGURE 8 Snapshot of the BiH labor market in 2019 (% of working-age population, ages 15–64) Male (29%) Employed (46%) Female (18%) Labor force (55%) Male (5%) Unemployed (9%) Working-age Female (4%) population (age 15–64) 2,248,148 Male (5%) In school (10%) Female (5%) Out of labor force (45%) Male (12%) NEET (35%) Female (23%) Source: WDI and BiH LFS 2019. 11 FIGURE 9 Labor force participation is among the lowest in the region 75 Labor force participation (%) 50 25 0 Europe and Europe European Albania Montenegro North Serbia Bosnia and Kosovo Central Asia and Union Macedonia Herzegovina (IDA and IBRD Central countries) Asia 2011 2019 Source: WDI database. The BiH labor market is highly distorted by a large public sector presence, leading to segmentation between good-quality public sector jobs and poor-quality private sector jobs. The generally high unemployment rates observed in BiH and across the Western Balkans mask significant unreported informal employment and also reflect a marked preference for public sector jobs and a willingness to queue for them rather than taking a job in the private sector.12 Although diminishing in size, the public sector (including state‑owned entities (SOEs)) still accounts for one-third of total employment. Public employees are spread across different sectors. Public administration and defense account for the largest share of public sector workers, followed by education and health and social work. Men comprise three-fifths of all public sector workers. The public sector attracts a large and growing share of the most educated workers, primarily due to better salaries, benefits, and working conditions.13 A larger share of workers in the public sector are formal (89 percent of workers have social security benefits compared to 75 percent of workers in the private sector), and wages are significantly higher than in the private sector. Regression analysis of wage correlates reveals a public sector wage premium of 7 percent over the private sector, after controlling for factors such as education, gender, sector, and region, and a much higher premium for public administration jobs (around 24 percent, see Annex 1). The gap in compensation between the public and private sectors14 gives rise to queuing for public sector jobs, thus raising unemployment levels. The private sector exhibited a degree of dynamic job creation in the last decade, but mostly in low‑productivity sectors. Private employment is dominated by jobs in low-productivity, low-paying sectors such as agriculture, manufacturing, transport, and wholesale and retail. Between 2011 and 2019, the private sector added about 44,000 jobs in net terms. Whereas the high-productivity and highly paid finance, ICT, and business services sector added the most jobs—reflecting the best type of private sector growth—private manufacturing saw the second highest growth (in both level and percentage), followed by other services and accommodation and food (Table 1), all of which are characterized by low wages (Figure 10). Note that low-paying sectors continue to absorb the most workers, reflected by the large bubble sizes concentrated on the left side of Figure 10. The relatively small and shrinking coal sector, in contrast, lies at the right end of the wage spectrum. 12 A survey by the Regional Cooperation Council (2018) shows that two-fifths of respondents would prefer public sector work compared to 14 percent who prefer the private sector; World Bank (2021). 13 Public sector employee benefits (including for those working in SOEs) include holiday allowances, meal allowances, transportation cost compensation, longer paid vacations, and paid maternity leave. Benefits are usually determined through collective agreements. These benefits are rare in the private sector, in part due to the weak enforcement of the labor code. 14 In 2019, wages in the public sector averaged KM 814, compared to an average private sector wage of KM 679. 12 FIGURE 10 Job creation within sectors, 2011–2019 0.08 Finance, IT and business services 0.06 Accommodation 0.04 and food services Manufacturing Annual jobs growth (%) Public utilities 0.02 Health and social work Construction 0 600 650 700 750 800 850 900 950 1,000 1,050 –0.02 Other Coal services Education –0.04 Wholesale and retail Transportation and communication Public –0.06 administration Agriculture Other mining and quarrying –0.08 Mean wage in 2019 (KM) Source: BiH LFS 2019. Note: Bubble size denotes employment level. 3.2 CHARACTERISTICS OF THE LABOR FORCE Workers in private sector jobs tend to be informal—defined as lacking pension coverage—and hold nonpermanent contracts. In 2019, 16 percent of employed workers were self-employed, 3 percent were in unpaid work, and 12 percent were in casual wage jobs (Figure 11). Among employers and salaried workers, the vast majority had pension coverage, in stark contrast to self-employed and unpaid workers, the majority of whom are also engaged in agriculture. Younger workers in particular struggle to access high-quality, permanent jobs and are more likely to remain outside the labor force or migrate for work. Young people in BiH need on average about 60 months to find employment after graduation, which represents a very long period during which skills can degrade (based on 2019 LFS). Youths who leave school with a secondary education require relatively more time to transition into work compared to those with tertiary education. Despite an apparent excess supply of youth entering the labor market, young people are still rejecting job offers because of unattractive working conditions such as low wages (the most frequently cited reason), unacceptable working hours, and mismatch in qualifications, among others.15 Some youths opt to seek work abroad; 30 percent of those who migrated between 2015 and 2020 were between the ages of 18 and 35, suggesting that many young workers use international migration to access better labor market opportunities. According to a 2018 Gallup poll, 57 percent of youth expressed a desire to migrate. Higher education helps workers find better jobs, but as younger-age cohorts stay in school longer, more educated graduates are competing for a declining number of public jobs. Employed workers tend to be better educated than the unemployed, but educational attainment in BiH is generally low; more than half of the working-age population has less than a complete upper-secondary education (Figure 12). BiH’s low levels of human capital, particularly education and skills, constrain economic development. According to the World 15 2018 National Youth Survey in BiH (USAID 2018). 13 FIGURE 11 Decomposition of employment contracts and pension coverage 87% 13% 85% 15% 97% 6% 16% 3% 3% Employer 32% Paid employment, permanent contract 12% 97% 68% Paid employment, casual contract Non-paid employee 63% Self-employed 3% With pension Without pension Source: BiH LFS 2019. Bank’s Human Capital Index (HCI), the average child born in BiH today is projected to be only 62 percent as productive as s/he could be if s/he had access to complete education and full health status. BiH has one of the lowest HCI scores in the Europe and Central Asia region, even compared to other countries in a similar income category, such as Bulgaria (0.68), Croatia (0.72), and Serbia (0.76). The BiH labor market struggles with skills mismatch. Part of this is due to migration. People of all educational levels are migrating, including the highly skilled; one in every six doctors trained in BiH now works in Germany. A misalignment of school curricula with employers’ actual labor demand also contributes to skills mismatch. Nearly two-thirds of pupils at the secondary level are enrolled in technical and vocational schools (technical and vocational education and training (TVET)), despite the misalignment between school offerings and the needs of the labor market. Many TVET offerings are outdated and/or poorly equipped to provide the skills in demand by employers. The largest skills mismatch is observed among technicians and associate professionals (for example, construction, mechanical, and electrical workers), where only 24 percent of workers have the appropriate level of education based on International Labour Organization (ILO) classifications, and 76 percent have inadequate formal education (Figure 13). Three-quarters of those engaged in skilled agriculture, forestry, and fisheries and three-fifths of craft and related trades workers are also undereducated, according to this metric, whereas there are large numbers of overeducated workers in blue-collar occupations such as plant and machine operators and elementary occupations. Low labor force participation, high outmigration, high unemployment, and extensive skills mismatch are all symptoms of inefficient allocation of human capital. This results in suboptimal output because workers’ potential productivity is underutilized, which in turn acts as a drag on economic growth and at the same time constrains labor incomes and worker welfare. 14 FIGURE 12 Education levels and employment status A. Education levels are relatively low… B. …and the better educated are 3% more likely to find a job 100 56% 50% 32% 80 45% 60 63% 2019 52% 40 48% 43% 20 1% 2% 4% 0 Employed Unemployed Inactive No education Less than complete secondary Complete secondary and above Source: BiH LFS 2019. FIGURE 13 Match between occupation and skill levels 100% 24% 24% 80% 2% 36% 41% 50% 52% 57% 2% 62% 60% 81% 6% 40% 76% 74% 59% 30% 62% 44% 46% 34% 20% 19% 2% 4% 14% 0% ke y ke d bl ors na d ke t s ls rs ns or rke or str er or te sio an na rs rs s ls rs ke tio er em at ag W ela W re sW a sio or es s ss r pa of ian le d M y Fo an A pe es R tW es cu M ad d d O Pr ic er l of sh ra Sa n Tr an te hn oc or a an ne Pr Fi tu pp es ia ec t ry hi d cul af ic T ta Su ac Cr rv an ri en M g al Se A oc em ic nd ed er ss El ta A Cl ill an Sk Pl High-Skilled Low-Skilled High-Skilled Low-Skilled White Collar White Collar Blue Collar Blue Collar Undereducated Overeducated Rightly educated Source: BiH LFS 2019. Note: The above graphic uses ILO occupation and skill classifications. High-skilled white collar includes managers, professionals, and technician / associate professionals. Low-skilled white collar includes clerical support, services, and sales. High-skilled blue collar includes skilled agricultural work and craft and related trades. Low-skilled blue collar includes plant and machine operators and elementary occupations. A person is overeducated if the individual’s education is higher than the appropriate education for the job, undereducated if the individual’s education is lower than the appropriate education for the job, and appropriately educated if the individual’s education is appropriate for the job. According to the ILO methodology, high-skilled white-collar workers are expected to have tertiary education, low-skilled white-collar and high-skilled blue-collar workers are expected to have completed secondary education, and low-skilled blue‑collar workers are expected to have at least some secondary education. 15 4. CHARACTERIZING COAL SECTOR WORKERS The anticipated low-carbon transition—and specifically shifting away from coal-based energy and reducing coal-dependent jobs—risks exacerbating labor market conditions in an already challenging labor market environment. Displaced coal sector workers will need to find alternative employment, but will their skills be in demand? The first step to answering this question is to compare the characteristics of coal sector workers with other sectors of employment. 4.1 COMPARING COAL SECTOR SKILLS TO OTHER SECTORS The coal sector employs both lower-skilled blue-collar occupations and higher-skilled white-collar occupations. Half of coal sector employees are in low-skilled occupations, which is much higher than the national average of 21 percent and higher than other industrial sectors of activity such as construction (40 percent) and manufacturing (33 percent) (Figure 14). The coal sector also attracts high-skilled workers (such as engineers and technicians), who account for one-quarter of the coal sector workforce, slightly higher than the national average (23 percent), and much higher than other industrial sectors of activity like construction (9 percent) and manufacturing (15 percent). FIGURE 14 High-skilled and low-skilled occupations by sector 100% 2% 9% 15% 14% 2% 6% 25% 25% 23% 80% 7% 51% 8% 19% 25% 60% 44% 82% 45% 20% 72% 25% 40% 31% 30% 40% 47% 20% 33% 5% 32% 6% 21% 14% 14% 8% 0% Agriculture Construction Manu- Coal Public Other Wholesale, All facturing utilities services Retail, Accommodation Low-skilled blue collar High-skilled blue collar Low-skilled white collar High-skilled white collar Source: BiH LFS 2019. Note: LFS data on workers in the coal sector consists of about 80 (unweighted) observations. High-skilled white collar includes managers, professionals, and technician / associate professionals. Low-skilled white collar includes clerical support, services, and sales. High-skilled blue collar includes skilled agricultural work and craft and related trades. Low-skilled blue collar includes plant and machine operators and elementary occupations. 16 Employees of coal mines have low levels of education; the opposite holds for TPP employees (Figure 15). Consistent with the results from BiH LFS on the employment structure of the coal sector, administrative data obtained from the mining conglomerates show that 58 percent of their combined workforce ended their education at lower-secondary school or before. The vast majority comprises semi-specialized workers, individuals who graduated from 2–3 years of vocational school. In contrast, TPPs attract above-average educated individuals: over two-thirds graduated from upper-secondary school or postsecondary non-tertiary (equivalent to 5 years of vocational school), compared to 40 percent of the general population, and 18 percent graduated from university, compared to 10 percent in the general population (BiH LFS 2019). FIGURE 15 Most mine workers have less than secondary education, while power plant workers have more schooling A. Coal mines B. Power plants 1% 1% Primary and lower secondary 8% 6% 18% 16% 8% Vocational school (1 year) 2% 2% Vocational school (2–3 years) 26% Upper secondary school 24% Vocational school (5 years) 43% University (2 years) 7% 38% University (4 years) Source: Authors’ own elaboration using administrative data from the mining conglomerates (2022). Note: Charts exclude mining conglomerates located in Republika Srpska (RS), for which information was unavailable. Information on the employment structure in the mines is based on data from RMU Kakanj, RMU Breza, RMU Banovic ´i, RMU Kreka, RMU Đurd ¯evik, RMU Abid Lolic´, RMU Grac ˇ anica, and RMU Zenica. Information on the employment structure in the power plants is based on data from Kakanj TPP and Tuzla TPP. Miners account for the largest segment of workers employed by mining firms, especially in underground mines (Figure 16). Data from the mining conglomerates show that 58 percent of underground mines’ employees are miners. For opencast mines, 44 percent of employees are miners. Most miners left school after primary or lower-secondary education or after 1–3 years of vocational training. The second largest segment of mine employees comprises technical positions, including those requiring electrical skills (10 percent), mechanical knowledge (18 percent), and ventilation shaft skills (less than 5 percent). Those positions require upper-secondary general or vocational education. Underground mines have very few positions dedicated to supporting activities and services, most of which are carried out by a centralized administrative support unit that serves multiple extraction sites. Opencast sites exhibit a larger share of employment in maintenance and transportation activities (10 percent and 6 percent, respectively). Mine and power plant employees tend to have competencies tied to the mining and energy sector, but employees of conglomerates’ central management units tend to be generalists. Similar to mines, half of the workforce in coal-fired power plants are engaged in the core activity of power generation, and nearly one-third is made up of technicians or maintenance workers (Figure 17a). At the centralized management units, however, competencies are much more diversified, covering safety and protection, human resources (HR), legal and auditing functions, and financing, in addition to high-level technical competencies. Coal workers are mostly male, rural, and in prime age. As in other countries, most coal workers are male (90 percent), second only to construction. Four-fifths of coal sector workers live in rural locations. Similar to other traditional industrial sectors, the coal sector has a larger-than-average share of prime-age employees: 17 FIGURE 16 Coal mines employ mostly miners and technical and electrical employees A. Underground mines B. Opencast mines C. Coal processing 1% 2% 1% 1% 3% 1% 1% 4% 6% 5% 19% 10% 1% 17% 5% 1% 5% 40% 44% 2% 6% 58% 11% 19% 22% 9% 6% Unit management Mechanical Legal Transport Mining Ventilation Financial—commercial Services (admin. and tech.) Electrical General Maintenance Source: Authors’ own elaboration using administrative data from the mining conglomerates (2022). Note: Charts exclude mining conglomerates located in RS, for which information was unavailable. Information on the employment structure in underground mines is based on data from Banovic ´ i, Đurd ´ i, Kamenice, Mramor, Raspotoc ¯evik, Haljinic ˇ je, Stara Jama, and Sretno. Information on the employment structure in opencast mines is based on data from Banovic ´ , Dubrave, Grac ´ i, Abid Lolic ˇanica, ´a, and Vrtlište. Positions in the conglomerates’ management and support units and in EPBiH headquarters are not included. Šikulje, Višc FIGURE 17 Distribution of employees’ main competencies A. Power plant employees mostly work B. …but company management relies in core generation activities… on more diversified competencies 1% 4% 1% 1% 6% 6% 9% 5% 6% 15% 25% 11% 27% 48% 12% 7% 16% Office of the Director Develop and invest Company management Legal Technical General, legal, and HR Technical Financial Power generation Economic Safety and protection Internal audit Maintenance IT Development and design Other General and HR Source: Authors’ elaboration using administrative data from the mining conglomerates (2022). Note: Charts exclude mining conglomerates and TPPs located in RS, for which information was unavailable. Information on the employment structure in power plants is based on data from Kakanj TPP and Tuzla TPP. Information on the employment structure in the conglomerates’ management units is based on data from RMU Kakanj, RMU Breza, RMU Banovic ´ i, RMU Kreka, RMU Đurd¯evik, RMU ´, RMU Grac Abid Lolic ˇanica, and RMU Zenica. 18 74 percent are between the ages of 26 and 55, compared to the national average of 70 percent (Figure 18). The sector attracts a lower share of young workers (4 percent of 15–25-year-olds, versus 10 percent in the general working population). FIGURE 18 Age profile of coal sector employees compared to others A. Coal sector B. All sectors 4% 10% 22% 16% 20% 17% 25% 30% 33% 23% 15–25 26–35 36–45 46–55 56–64 Source: BiH LFS 2019. Note: LFS data on coal sector employment consists of about 80 (unweighted) observations. 4.2 COAL SECTOR COMPENSATION Employees in the coal sector are highly paid. Lower-skilled mining employees are paid an average of KM 954 per month (US$500), compared to the national average of KM 752 (US$390) for low-skilled workers (Figure 19). Higher-skilled coal sector workers earn 17 percent more than the national average for higher-skilled workers. In fact, lower-skilled employees of the coal sector are the highest paid lower-skilled workers among all sectors, and higher-skilled coal workers are the second highest paid higher-skilled workers, after employees of public administrations (BiH LFS 2019). Regression analysis confirms the existence of a high wage premium for coal sector workers, controlling for education and other factors (Annex 1). This means that coal sector workers who seek jobs in other sectors are likely to struggle to find comparable compensation. Because most coal sector jobs are in the public sector, they receive good nonwage benefits. While pension coverage is widely available to workers in general (80 percent have access to a pension), almost all coal workers have access to pension (97 percent), on par with other workers in the public sector (Figure 20). Union membership is very high within the coal sector, and compensation packages include relatively high wages, extra compensation for transportation costs, meals, hardship and performance targets, disability benefits, and severance provisions as a result of collective bargaining.16 16 One provision in the 2018 Collective Agreement for miners in Federation of Bosnia and Herzegovina (FBiH) is that when a miner dies, the mine is required to hire a family member of the deceased miner (https://rmub.ba; https://ssrrfbih.org/ kolektivni-ugovor-o-pravima-i-obavezama-poslodavaca-i-radnika-u-oblasti-rudarstva-u-federaciji-bosne-i-hercegovine/). 19 FIGURE 19 Coal sector employees earn higher-than-average wages 1,200 Net monthly wage (KM) 1,000 1,046 800 954 905 600 752 400 200 0 Coal sector All sectors Low-skilled High-skilled Source: BiH LFS 2019. Note: High skilled is defined as individuals with upper-secondary education and above (International Standard Classification of Education (ISCED) categories 3–8), whereas low skilled is defined as individuals with less than upper-secondary education (ISCED 0–2). Net monthly wages are measured in Bosnia and Herzegovina convertible marks. FIGURE 20 Employment by formality, 2019 100 90 80 70 Percentage 60 50 40 30 20 10 0 re al g g s n il ns es s e n k d al tie ce ns or ta in rin tio io fie Co t tu ic io To vi in at re fe w ili rv ci tu uc at ul er M uc ut de pe se al d ic ic ac tr ss an Ed ci gr un er ns ns ic od uf d es so bl A th an Co ,u m le an fo sin Pu d O sa m es n M an d bu co le tio ic an ho lth rv d ra d n se an an W ist ea io er at in rt H T IC th po od dm O l, ns m ia A om a nc ic Tr bl na cc Pu A Fi With pension, 2019 Without pension, 2019 Source: BiH LFS 2019. 20 5. COAL SECTOR EMPLOYMENT, PRESENT AND FUTURE 5.1 SNAPSHOT OF COAL PRODUCTION IN BIH In 2020, BiH mined 13.56 million tonnes of coal, with roughly half produced in FBiH and half in RS. The extracted coal was primarily used to generate electricity at power plants near coal mines. Most BiH coal is extracted through surface mining, in which the soil and rock covering the mineral deposits are removed (85 percent). Underground mining, in which the overlying rock is left in place and the mineral deposits are removed through shafts or tunnels, accounts for 15 percent of coal extraction (Eurostat 2021). In 2019, over 75 percent of BiH’s coal was used by coal-fired electrical power stations, and an additional 3 percent was used by either combined heat and power plants (CHPs) or heat plants (Figure 21). BiH is the second largest coal extractor in the Western Balkans and depends heavily on coal for energy. Only Serbia mines more coal than BiH in the region (about 36 million tonnes in 2021, or three times as much as BiH), while Albania, Kosovo, Montenegro, and North Macedonia extract less than 10 million tonnes a year each (Figure 22). In 2020, BiH coal generated 10,443 GWh of electricity, which corresponds to over 60 percent of the country’s energy production, with the rest produced through hydropower (IEA 2021). FIGURE 21 BiH’s coal is mostly used for electricity generation 8% 4% 8% 1% 2% Electricity plants CHP Heat plants 76% Coal transformation Energy industry own use Total final consumption Source: International Energy Agency (IEA) 2019 data (most recent). Note: Total final consumption includes industry, residential, commercial, and public services use, as well as agriculture and forestry and non-energy use. 21 FIGURE 22 Coal extraction in BiH remained stable over the past decade 40,000 Indigenous production 30,000 (Million tonnes) 20,000 10,000 0 2014 2015 2016 2017 2018 2019 2020 2021 Bosnia and Herzegovina Albania Kosovo Montenegro North Macedonia Serbia Source: Eurostat 2021; Authors’ elaboration using administrative data from the mining conglomerates (2022). Note: All countries, except for Albania, extract brown coal only. Albania only extracts hard coal. 5.2 DIRECT COAL SECTOR EMPLOYMENT The spatial distribution of coal deposits and extraction activities aligns with the location of coal-related employment in mines and TPPs. The largest lignite deposits are located in FBiH, most of them around Tuzla, or along the Zenica-Kakanj-Breza basin (Figure 23). In FBiH, a first cluster of mines is situated in the northeast, around Tuzla in the Kreka-Banovic ´i coal basin, where RMU Kreka (1,870 employees), RMU Đurd ¯evik17 (617 employees), Banovic ´i (2,708 employees), and Tuzla TPP (572 employees) are located. A second cluster of mines and TPPs is situated in the center of the country, around Zenica and Kakanj, northwest of Sarajevo, where Kakanj mine and TPP (1,278 mine employees and 524 TPP employees), RMU Zenica (915 employees), RMU Breza (922 employees), and RMU Abid Lolic ´ (312 employees) are located.18 Finally, 4,690 individuals are employed in the mines and TPPs in RS, spread over three different sites: Gacko, Ugljevik, and Stanari19. As of end-2022, 14,600 workers were employed in coal mines and TPPs: 9,900 in FBiH and 4,700 in RSS.20 Employment in mining has decreased steadily over the past decade: in FBiH, for which we have data since 2009, coal mining employment declined from 12,800 workers in 2009 to 10,300 in 2020 (Figure 24), and another 1,500 mining jobs were lost by end-2022. Power plants account for fewer jobs compared to mines but are nevertheless significant (no trend data available on TPPs). Most mines and TPPs are operated by two state-owned utility companies, EPBiH and ERS. As a consequence, the majority of coal workers are employed by the public sector (95 percent based on administrative data). 17 Note that Đurd¯evik mine is located in Živinice municipality. 18 FBiH mine and TPP employment data reported here are for end-2022. 19 Mine and TPP employment data for RS refer to end-2020. 20 Note that this is higher than estimated in the LFS. 22 FIGURE 23 Direct coal mine and TPP employment (2022) Total employment per mining conglomerate EFT EPBiH ERS FBiH Source: Authors’ elaboration using administrative data from the mining conglomerates (2022 for FBiH; 2020 for RS). Note: The size of the dots is proportional to the total number of employees in the mines and TPPs. Kakanj mine employs 1,278 workers, and Kakanj TPP employs 524 (2022 data). Stanari mine employs 750 workers, while Stanari TPP employs 200 (2020 data). Mines are grouped by conglomerates, that is, EFT = Energy Financing Team; EPBiH = Elektroprivreda Bosne i Hercegovine; ERS = Elektroprivreda Republike Srpske; and RMU Banovi´ ci is majority owned by FBiH. FIGURE 24 Employment in coal mining decreased over the past decade 18,000 16,000 Number of direct employees 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 FBiH mining—EPBiH ’ FBiH mining—Banovici FBiH TPP (EPBiH) Rep. Srpska mining and TPP (ERS) Source: Authors’ own elaboration using administrative data from the mine and power plant operators. Note: Employment data from Gacko, Ugljevik, and Stanari, all located in RS, were available only for 2020. 23 EPBiH has seven subsidiary coal mining companies and two power plants, at Tuzla and Kakanj.21 Coal mines situated in northeast and central Bosnia serve the Tuzla and Kakanj power plants owned and operated by EPBiH. In 2021, these two power plants generated 2,863 GWh and 1,978 GWh, respectively, of electricity, and supplied heat to nearby cities and processed steam and fly ash for nearby industries.22 New generating units are planned at both plants—the 450 MW ‘Tuzla 7’ and the 300 MW ‘Kakanj 8’—but their construction is highly uncertain. The seven coal mine subsidiaries of EPBiH employ 6,100 workers (as of end-2022). Preliminary plans to restructure indebted coal mines and switch gradually from coal to renewable energy sources would likely reduce the number of employees further. The restructuring plan agreed by the government and trade unions in May 2021 foresaw the retirement of 419 miners in 2022, and in fact even more mining jobs were lost during this period. EPBiH recently introduced new working regulations that contradict the collective bargaining agreement, in particular by cutting the miners’ basic wage from KM 850 (US$489) to KM 570 (US$328).23 ERS is a state-owned utility company, majority owned by the Government of Republika Srpska, an entity of BiH, operating the Gacko coal mine and power plant in the south of the country as well as the Ugljevik opencast mine and power plant in the east. The Gacko and Ugljevik power plants were commissioned in 1983 and 1985, respectively. In 2019, a Flue Gas Desulfurization (FGD) retrofit was completed at Ugljevik power plant. Under a national emission reduction plan (NERP) agreed with the Energy Community, FGD at the Gacko plant will be needed from 2023 onward. As of end-2020, Gacko and Ugljevik mines and TPPs employed 1,950 and 1,790 workers, respectively. RMU Banovic ´i, which is majority owned by the Government of Federation of BiH, operates two large opencast mines at Grivice and Turija and the partly mechanized Omazic ´i underground coal mine. Total employment at Banovic´i was 2,708 in 2022. Its C ˇ ubric ´ opencast mine was closed in 2011. In November 2015, RMU Banovic ´i signed an agreement to build a new power plant in Banovic ´i, but this project is not likely to materialize. The private UK-registered EFT Group operates a lignite-fired power plant at Stanari in northern BiH, which opened in 2016. It is supplied by Stanari coal mine, also operated by EFT. As of end-2021, Stanari employed 950 mine and power plant workers. 5.3 INDIRECT COAL EMPLOYMENT IN THE COAL VALUE CHAIN In addition to workers directly employed in coal mines and TPPs, a number of workers in other sectors also support coal production. These include workers employed upstream in the coal value chain, specifically in firms supplying inputs to mines and TPPs. We estimate the magnitude of workers in this category and their potential exposure to future coal mine closure using data on mine and TPP supplier contracts. Other workers who are indirectly affected by mining activity are those employed in firms providing goods and services to coal sector workers and their families, that is, small and medium enterprises (SMEs) in and around the mining regions. Estimating these potential indirect effects will be undertaken in future analysis. A simple bottom-up approach was followed to estimate the indirect impact of the coal mine closure in the coal value chain. First, data on companies contracted by mining conglomerates (including TPPs) through public tenders between 2019 and 2021 were obtained through the Public Procurement Agency.24 A total of 21 EPBiH is majority-owned by the Government of Federation of BiH, one of the two entities in BiH. EPBiH mines comprise RMU ‘Kreka’ (Šikulje and Dubrave opencast lignite mines and Mramor underground mine), RMU ‘Kakanj’ (Vrtlište opencast mine, Haljinic ´i underground mine, and Begic ´i-Bištrani underground mine which opened in July 2013), RMU ‘Zenica’ (Stara Jama, Raspotoc ´je, and Stranjani underground mines), RMU ‘Breza’ (underground mines at Sretno and Kamenice), RMU ‘Đurd ´a opencast brown coal ¯evik’ (Višc mine and Đurd ¯evik underground mine), and RMU ‘Abid Lolic ˇanica,’ which operate opencast mines. ´ ’ and RU ‘Grac 22 https://www.epbih.ba/eng/page/about-company#power-balance. 23 Radio Free Europe (2021). 24 Excludes data for privately owned Stanari. 24 1,967 firms supplied goods and/or services to mines and TPPs, through 19,364 contracts signed by 12 mines and power plants during 2019–2021. On average, each supplier had 10 contracts with mine or power plant firms, some with a single mine and others delivering to multiple mines or plants. Three-fifths of contracts were for goods and two-fifths for services. When available, data on company financials and employment were merged from the Bisnode database, and basic information on aggregate employment by sector was drawn from the Tax Authority database. In a second step, a correction factor was applied to the total number of individuals employed by supplier firms to adjust for the share working on mining contracts. It is assumed that, as a lower bound, the share of workers likely to be affected by the coal mine and power plant closure within a supplier firm is proportional to the share of firm revenue derived from mining sector contracts (see Annex 2 for more details on the methodology). Despite the large number of contracts with mine and TPP operators, contract value is concentrated among a handful of subcontractors and involves a limited workforce. In 2020, 17 subcontractors accounted for 50 percent of the contract value (Figure 25). Top subcontractors supply mostly gas (Super Petrol, ´ Kopex, Optima Grupa, and BGT) and transportation services (Remex), which explains the Hifa Petrol, Junuzovic limited employment factor generated by the size of these contracts. Other suppliers are concentrated in more labor-intensive manufacturing, construction, trade, and mining activities. FIGURE 25 Sector distribution of suppliers Remex, 8% Super Petrol, 6% Hifa Petrol, 5% ’ Junuzovic-Kopex, 4% Rest, 50% NACE Rev.2 Code / Sector Optima Grupa, 4% H / Transport BPS, 3% D / Gas Terex-Inženjering, 2% C / Manufacturing F / Construction Termograding, 2% B / Mining BGT, 2% G / Maintenance Source: Authors’ calculations using data from the Public Procurement Agency, Bisnode database, and the Tax Authority database. Note: Information for 2020. Most of the contract value is spatially concentrated close to extraction sites or in BiH’s major urban centers. Firms based in Sarajevo, the largest city of BiH (and the largest in FBiH), accounted for 33 percent of all contract value in 2020. Similarly, firms in Banja Luka, the second largest city of BiH (and the largest in RS), captured 16 percent of all contract value. Most of the remaining subcontracting activity is concentrated in the vicinity of the mines and TPPs (Figure 26). For example, 14 percent of all contract value is captured by Tuzla- based suppliers, and 4 percent by firms in Zenica. Suppliers work mainly locally, within the same canton or within the same entity (Figure 26). Each mine and power plant contracted with multiple suppliers, ranging from an average of 28 suppliers for coal mine Abid ´ Travnik-Bila, and up to 283 suppliers for Ugljevik coal mine and power plant (Annex 2, Table A2.2). The two Lolic largest urban centers supply mines and TPPs within their entity: Sarajevo-based firms mainly serve sites in FBiH, while Banja Luka has contracts almost exclusively with Ugljevik and Gacko in RS. Similarly, contractors located in municipalities with the highest contract values supply mines and TPPs located nearby. This observed localized 25 FIGURE 26 Suppliers work mainly locally (within the same entity or canton) Ugljevik Banja Luka ’ Banovici Gacko ’ Banovici Top 10 locations of mine and TPP Kakanj suppliers by size of contracts Lukavac ’ Abid Lolic Mines and TPPs Breza Kakanj Sarajevo Zenica ’ Gracanica Tuzla Kreka Tuzla Ugljevik TE Kakanj TE Tuzla ca Vogoš’ Ðurd¯evik Zenica Gacko 0 0.2 0.4 0.6 0.8 1.0 Source: Authors’ calculations using data from the Public Procurement Agency, Bisnode database, and the Tax Authority database. Note: Information for 2020. concentration of suppliers—whether in the same or neighboring municipality as the mine / power plant—can be partly explained by lower transaction costs but is also due to local business networks and political network effects. Suppliers located in the major urban centers are much less dependent on coal-related contracts than suppliers near the sites (Figure 27). Only 3 percent of suppliers based in Banja Luka and 1 percent of suppliers in Sarajevo have more than 50 percent of their activity with mines and TPPs. This contrasts sharply with suppliers in Tuzla, where 11 percent derive more than 50 percent of their revenues from mines and TPPs, and an additional 15 percent derive between 20 percent and 50 percent of their total revenues from contracts with mining conglomerates. An estimated 1,900–2,400 jobs across supplier firms are at risk in the event of universal coal mine and power plant closure. Whereas total employment in firms with at least one contract with a mining conglomerate was about 86,000 in 2020, only 1,924 jobs are estimated to be lost (using the proportional correction factor) if suppliers lose all their coal-related contracts. The number is not higher because most suppliers serve a diversified set of clients across multiple sectors. These estimates of indirectly affected jobs may be understated, however, due to two potential sources of downward bias: (a) our estimates include only upstream links in the coal value chain, that is, suppliers of goods and services to mines and TPPs, but not the downstream users of coal other than TPPs (for example, coal-fired cement and glass factories) and (b) vulnerability to layoff by the supplier depends on whether a job is related to a mining contract and how dependent the subcontractor is on the coal sector in its total portfolio of contracts. A subcontractor that derives only 5–10 percent of its revenue from the mining sector may be able to shoulder the loss of contracts following mine closure and reallocate its workers to contracts serving firms in non-coal sectors. On the other hand, a subcontractor deriving over 50 percent of 26 FIGURE 27 The share of contract value with mining conglomerates is lower in Banja Luka and Sarajevo Tuzla Bijeljina Zenica Banja Luka Sarajevo Other location 0 10 20 30 40 50 60 70 80 90 100 Percentage Less than 10% 10–20% 20–50% More than 50% Source: Authors’ calculations using data from the Public Procurement Agency, Bisnode database, and the Tax Authority database. Note: Information for 2020. its revenue from the coal sector may not be able to sustain the firm’s commercial viability, forcing it to exit and lay off its entire workforce (see Box 1 for a discussion of suppliers’ likely coping mechanisms). If we assume that firms that depend on coal for more than half their revenue ultimately go out of business, the number of at-risk jobs across supplier firms rises to 2,383. A close look at a subsample of firms that almost exclusively depend on contracts with mines and TPPs reveals that most of them are relatively small firms that contract with only 1 or 2 mines / power plants. This implies that mine closure will certainly result in firm closures, but only a small number of supplier jobs will be destroyed. This finding suggests that most of the employment impact from mine closure will be through direct job losses and the knock-on effects of lost mining wages on demand for local goods and services. 5.4 LOCAL LABOR MARKET IMPLICATIONS OF POTENTIAL COAL SECTOR JOB LOSSES Climate change is inducing countries to reduce carbon emissions, which in BiH means placing coal- related jobs at risk, especially in and around extraction sites and nearby municipalities. The effects will go beyond the coal sector, particularly in municipalities where coal activity is economically important. Coal-related jobs are geographically concentrated along two major axes: around Tuzla in northeast FBiH and along the Kakanj-Zenica-Breza mining basin. In addition, sites comprising both extraction operations and mine mouth TPPs are located in Gacko, Ugljevik and Stanari. Assuming that mine and power plant closures would also disrupt supplier contracts to these mines and plants, the total number of jobs directly and indirectly at risk of being lost is 17,000, less than 3 percent of total employment at the national level but representing a much higher share in local markets.25 25 Recall that indirect job losses are a lower bound and exclude workers downstream in the coal value chain as well as those outside the coal value chain. 27 BOX 1: SUPPLIERS’ EXPECTED COPING STRATEGIES In mid-2022, a qualitative analysis was conducted as part of this research to better understand the potential impact of coal mine closure on suppliers in the coal value chain and suppliers’ planned coping strategies in the face of future mine closures. Based on interviews with a heterogeneous sample of firms that supply goods or services to coal mines and/or power plants, we encountered a range of views as well as some common concerns. For firms with low dependency ratios—that is, firms for which less than 10 percent of firm revenue derives from contracts with coal mines or TPPs—little impact is expected, and firms expressed confidence they could replace lost revenue by diversifying their client base, and thus avoid layoffs. For firms that rely on coal-related contracts for 10–50 percent of their annual revenues, the outlook was more mixed, as many indicated they would likely downsize proportionally to the lost contracts, achieved through nonrenewal of existing employees’ term contracts. The most vulnerable occupations would be site-specific jobs in maintenance, for example, which would not transfer easily to repurposed mining lands or renewable energy activities. For suppliers that depend on coal-related clients for more than half their annual revenue, most foresee going out of business and laying off their entire workforce. Suppliers generally perceive little upstream planning taking place by the government, although they expect that they will need government help to retrain their workforce or at least to finance privately provided retraining. Many also hope for government assistance to diversify their businesses, access new markets, or buy new equipment. Whereas most of those interviewed believe that workers close to retirement age should receive interim income support as a bridge to retirement, they expect that younger displaced workers will eventually find alternative work in other sectors or municipalities. Coal-related employment is dominant in relatively few municipalities (Figure 28).26 Coal mines and TPPs act as an economic engine in several municipalities of BiH’s coal regions. This is particularly true in RS. Direct coal employment accounts for 60 percent of total employment in Gacko, with an additional 8 percent provided by subcontractors of the mining and energy sectors. In Ugljevik, 48 percent of total employment in the municipality is provided by local mines and TPPs, and an additional 3 percent is provided by subcontractors of the mining conglomerate. Around Tuzla in FBiH, Banovic ´i is highly dependent on coal-related employment: 52 percent of total employment in the municipality is in a mine or power plant, and an additional 6 percent is provided by subcontractors of RMU Banovic ´i. Further to the east in the Zenica-Kakanj-Breza basin, several municipalities are highly dependent on coal-related jobs. In the eastern-most municipality of Breza, 31 percent of total employment is in the coal value chain, and Kakanj follows with 25 percent. It is important to note that these estimates do not account for potentially large knock-on effects to local communities, both in the short term—such as the potential decline in local public transport services in Banovic ´i that are in effect subsidized by Banovic ´i mine—and in the long term, as fiscal revenues from coal dry up, pushing local governments to cut spending on local services and infrastructure. These municipalities are vulnerable to economic fallout from mine closure, not only due to their dependence on the coal sector but also because of already high unemployment. In a scenario in which all coal-related jobs are lost, the influx of additional job seekers to local labor markets would massively increase the pool of registered unemployed. In Tuzla, for example, where coal-related jobs number 3,200 (less than 10 percent of the municipality’s total employment of 37,000), 17,000 workers were already registered as unemployed in 2020. This suggests that if all of Tuzla’s coal-related jobs were destroyed, the unemployment rate could jump from 31 percent to 37 percent, assuming that displaced workers did not immediately find alternative work. When nearby Banovic ´i and Đurd ¯evik mines are added to prospective mine and TPP closures in Tuzla, the region could expect another 3,700 displaced coal sector workers, exacerbating local unemployment rates that already approach 50 percent (Table 2). Even if we assume that not all registered unemployed are in fact seeking employment, these 26 ´i, Breza, Kakanj, Gornji Vakuf-Uskoplje, Travnik, Tuzla, Zenica, and Živinice; in RS: Gacko and Ugljevik. In FBiH: Banovic 28 FIGURE 28 Coal-related employment is dominant in a few municipalities Municipalities most affected Employment in mines (direct) Employment in subcontractors (indirect) Rest of employment Registered unemployment Source: Authors’ elaboration using administrative data from the mining conglomerates (2020), own estimates of indirect employment, and administrative data on total employment and unemployment per municipality (2020). Note: Doughnut charts depict breakdown of each municipality’s labor force by work status (mine employee, coal supplier employee, employee in other sector of work, and unemployed). Stanari data are not shown. large magnitudes nevertheless point to a disproportionate influx of job seekers into a substantially constrained regional labor market where they may struggle to find alternative work that meets their minimum criteria of acceptable employment. Breza, Kakanj, and Zenica—where pre-closure unemployment rates were 36 percent, 46 percent, and 41 percent, respectively—face similar challenges, although these may be mitigated by their proximity to Sarajevo. Within RS, Gacko and Ugljevik are also vulnerable. By some measures, several coal-dependent municipalities have relatively high levels of economic development, based on a combination of indicators related to education (high secondary education prevalence), demographics (low old-age dependency and relatively low outmigration), employment, and tax revenue, which could help cushion a future coal transition shock.27 On the other hand, coal mine closure is likely to undermine the region’s economic resilience (for example, by negatively affecting employment and tax revenue) and drive down development outcomes. 27 The composite development indicator calculated by the Federal Institute for Development Programming consists of five equally weighted indicators: per capita tax revenues, employment rate, net migration (2013–2020), old-age dependency, and share of upper- secondary educated workforce. 29 TABLE 2 Potential impact of displaced coal workers on existing unemployment rolls Direct coal Indirect coal Total Registered Official employment employment employment unemployment unemployment Municipality (2022) (2021) (2020) (2020) rate (2020) Gacko 1,950 241 3,234 723 18% Ugljevik 1,790 129 3,751 1,435 28% Stanari 950 0 1,408 564 29% ´i Banovic 2,708 315 5,256 4,244 45% Tuzla 2,442 767 36,798 16,869 31% ˇ ivinice Z 617 24 10,916 10,679 49% Breza 922 6 2,962 1,666 36% Kakanj 1,802 132 7,098 6,097 46% Zenica 915 79 27,136 18,776 41% Gornji Vakuf-Uskoplje 160 1 2,980 2,501 46% Travnik 312 5 13,396 7,391 36% Source: Administrative data from the mining conglomerates (2020, 2022), Federal Institute for Development Programming (2021), and Public Employment Service of Republika Srpska (2021). Note: Đurd ˇanica mine is part of Gornji Vakuf-Uskoplje municipality, and Abid Lolic ¯evik mine is located in Živinice, Grac ´ mine is located in Travnik. Additional indirect coal employment is located in other municipalities and therefore not reported here. Mine and TPP employment data in FBiH municipalities are from 2022; RS mine and TPP employment data are from 2020. An influx of displaced coal workers would create additional pressure on the capacity of public employment services (PES) agencies. PES caseloads are already very high, even though a large share of unemployed workers register only to benefit from health insurance and do not search for a job. The administrative burden of monitoring benefit eligibility distracts counselors from their training and job-matching functions. The ratio of unemployed to counselor ranges between 200 and 1,300 across the different branches and entities, far above ILO’s recommended ratio of 100. Assuming that about half of the registered unemployed do not look for a job, job seekers-to-counselor ratios would still range from 100 to 650, exceeding the recommended level (World Bank 2022). The influx of laid-off coal workers will also likely exacerbate existing structural skills mismatch between labor supply and demand. In a 2020 survey of employers by the Public Employment Institute in FBiH, employers from many sectors cited challenges with finding workers with adequate work experience or the necessary knowledge or skills.28 Sectors with the largest unmet demand were ICT, construction, real estate activities, arts, and administrative and other services. A similar survey of RS-based employers conducted by the Employment Institute of RS in 2020 found comparable shortcomings regarding job-specific technical skills and work experience / life experience.29 These survey findings suggest that employers’ current labor demand is not well aligned with the professional qualifications that young people are increasingly pursuing in formal education programs. Furthermore, employers in FBiH indicated dissatisfaction with nontechnical skills such as social skills, computer skills, and foreign language ability—skills that are transversal rather than requiring a particular degree. The rapid growth of technologies, emergence of new digital tools, and enhanced collective reliance on ICT during 28 2020 Employer survey by the Public Employment Institute in FBiH. https://trzisterada.ba/wp-content/uploads/2021/07/FBiH_ SMJERNICE-ZA-KREIRANJE-OBRAZOVNIH-POLITIKA-web_compressed.pdf. 29 Employer survey of the Employment Institute of RS 2020. http://www.zzzrs.net. 30 the COVID-19 pandemic together highlight the importance of regularly updating and upgrading workers’ skills. Even before the pandemic, CREDI (2021) concluded that employers are placing more and more value on cross- cutting skills not acquired exclusively through formal education. Occupations in highest demand require relatively low skills and do not necessarily align with coal- related workers’ specializations. Whereas the majority of coal sector employees are in low-skilled blue-collar occupations, they possess less than upper-secondary education, on average, and work primarily as miners and technical and electrical employees. But the most sought-after occupations in the current labor market are salesman / trader (12 percent of all vacancies), elementary occupations (5 percent), seamstress (5 percent), tailor (5 percent), and waiter (3 percent) (Agency for Labor and Employment of Bosnia-Herzegovina 2021a). It is notable that many of these occupations experienced a high level of dismissals, suggesting high rates of staff turnover rather than growing labor demand. There are a few occupations that relate to coal workers’ skills where employers expect to hire, such as truck drivers, welders, freight vehicle drivers, joiners, mechanical technicians, and electrical technicians (Agency for Labor and Employment of Bosnia-Herzegovina 2021a). At the present level of demand, these anticipated hires would absorb only a portion of the coal workforce likely to be dismissed, and possibly at wage levels inferior to prevailing coal sector compensation. Except for construction, the sectors most likely to hire will require specializations that are not common among today’s coal workers. Three sectors stand out with the highest share of private employers planning to hire in the next 12 months: administrative and support services (61 percent of employers), information and communication (59 percent of employers), and construction (59 percent of employers) (Agency for Labor and Employment of Bosnia-Herzegovina 2021a). A recent assessment of the jobs added and destroyed during the pandemic period—disaggregated by occupation—found that in net terms, the most jobs added were delivery drivers, data entry operators, assistant workers in production, telephone or call center operators, truck drivers, IT developers, and carpenters, which together accounted for 50 percent of all net new jobs added in 2020 (Agency for Labor and Employment of Bosnia-Herzegovina 2021b). The majority of coal-related workers are ill-prepared for private sector jobs in administration and support services or in ICT, but the construction sector could absorb some of the dismissed workforce.30 Coal-related job losses at the predicted scale are likely to be extremely disruptive to local economies and the well-being of those residing in these coal towns and surrounding regions. The social costs of historical episodes of coal mine closure in other countries are well documented and provide motivation to invest in the necessary planning efforts and public financial resources for designing and implementing a set of supportive programs that mitigate the negative impacts and facilitate transition to healthier and more sustainable economies and communities. 30 Administrative data from the Tax Authority indicate the following top 10 occupations for workers employed in BiH’s coal mines: miners, drivers of heavy cargo and towing vehicles, construction machinery operators, operators of mining facilities and devices, mining engineers, elementary occupations, and security personnel. The occupations most prevalent among workers in the electricity / gas / steam / AC supply sector are electric fitters, electrical technicians, electrical engineers / mechanics, economists, legal professionals, mechanical technicians, tool makers, and mechanical engineers. 31 6. POLICIES TO SUPPORT WORKERS’ TRANSITION AND IMPROVE LABOR MARKET OUTCOMES 6.1 INTERPLAY BETWEEN LABOR OUTCOMES AND THE BROADER ECONOMY The transition to a carbon-neutral economy is likely to exacerbate existing structural and labor market challenges, which makes effective policy design difficult. The challenging jobs context prevailing in BiH has many drivers, some related to labor and social protection policy, some related to factors specific to the coal sector and national energy policy, some related to the economy’s structure, some stemming from demographic pressures, and some the result of distortions arising from a dominant public sector and inadequate investment in human capital. Policies to support affected workers’ transitions to alternative employment will be insufficient in the current labor market environment, which is itself shaped by the broader distortions present in the economy. For example, protective labor regulations and business environment obstacles contribute to labor and product market rigidities that disincentivize private sector job creation. And yet, a dynamic and growing private sector is needed to create good-quality jobs that can absorb excess job seekers. Municipal- and canton- level PES have the mandate to assist unemployed workers to access assistance and facilitate transition to new jobs, but these government agencies lack the capacity to deliver effectively in the current environment. Low labor force participation and the prevalence of single-earner households raise the stakes for facilitating viable job transitions to avoid worsening poverty. Labor market outcomes observed across BiH over the past decade highlight significant challenges that not only complicate but may impede future transition away from coal. High unemployment and extensive skills mismatch partly reflect misalignment of education and training systems with the needs of a modern economy. Misaligned perceptions of job seekers with those of employers represent an even greater obstacle. Evidence of skills mismatch reflected in hard labor statistics and employer and worker surveys tell only part of the story. Qualitative analysis together with anecdotal evidence point to more intangible factors that are integral to the observed weak labor market outcomes and limited economic diversification and stagnation of the BiH economy. The distorting role of a large public sector—throughout BiH generally but especially in the coal sector and therefore in coal-dominated regions—drives a wedge between public and private labor outcomes and public and private job quality. The resulting gap affects the preferences, expectations, and ultimately the labor supply behavior of workers. Workers who strongly prefer a public sector job or a mining job, whether due to higher pay or job security or low perceived work effort, may wait for years for a public vacancy rather than accept less-appealing work in the short run. This is especially true for workers whose skill premium in the private sector is low. When job seekers overestimate their likelihood of landing a public sector job, they forego private or informal work opportunities or additional training and remain unemployed, which not only is a drag on the economy (due to foregone labor output) but also reduces their likelihood of finding work in the future due to their declining human capital and by signaling to private employers that they lack a strong work ethic. 32 The observed excess labor supply concurrent with unmet labor demand in a context of generally declining demand results partly from bias on both the supply and demand sides. Workers’ biased perceptions reduce their willingness to train or search for less-appealing jobs in the private sector. Students and their families select into education specializations that are not in demand by employers but are perceived to be valued by the government. At the same time, employers discount job seekers who lack experience—whether recent graduates or those who have experienced long-term unemployment—or who lack particular market- oriented skills that are not widely furnished in the formal education system. There is a general perception that public sector workers have low productivity, a bias that might discourage private employers from hiring laid-off coal sector workers (for example, administrative personnel). Private employers profess to value soft skills but may not compensate them well, in part because they are difficult to observe, and may instead hire candidates based on formal qualifications despite a potential disconnect with soft skills. For graduates who possess more marketable skills, the gap between public and private salaries is smaller and may not warrant queuing for a public job. This means that more ambitious workers or those with more dire income needs or with more limited social networks take up less-appealing work in the private sector and acquire experience and on-the-job skills, which may ultimately make them more competitive than their unemployed counterparts. This perceptions mismatch exacerbates labor market segmentation, which in turn reinforces the perceptions, leading to lock-in at a low-level equilibrium. Looking ahead to coal transition, this perceptions mismatch together with significant long-term unemployment and unfilled private vacancies does not bode well for a rapid absorption of workers entering the unemployment ranks following coal mine closure. Policies for managing a just coal transition will need to consider the interplay between the labor and product markets and the role of incentives in shaping job creation in the public and private sectors, the factors that influence workers’ skill acquisition choices and job search behavior, and the impediments to more dynamic private sector growth and private job creation. There are multiple policy entry points to improve labor market efficiency and increase private labor demand, both of which are essential for facilitating the transition of displaced coal workers into alternative employment. In addition to national-level policies, geographically targeted policies for workers directly and indirectly affected by coal phaseout in their communities will be needed to stimulate local economies and facilitate worker transitions to new livelihoods. 6.2 SHORT-TERM PLANNING AND DIAGNOSTICS There are clear lessons from previous transition episodes in other countries that will be important to heed, and should shape government efforts over the next 18 months: • Upstream planning, needs assessment, and system upgrades are needed to lay the groundwork prior to mine closure. • Coordinating across government agencies on consistent and complementary policy design is important for efficient and effective programs and avoiding coverage gaps and duplication or contradictory incentives. • Understanding local context and the priorities of local stakeholders will be essential to getting buy-in to coal transition, including acceptance of the negative side effects, input on local remedies, and recognition of the opportunities. The social impact of job losses and reduced or foregone earned income from the mine closures and power plant decommissioning is bound to be substantial, particularly in the handful of mining regions where these jobs are a main driver of local economies. The jobs most at risk are spatially concentrated around extraction sites and in nearby municipalities. The local economies of Gacko, Banovic ´i, and Ugljevik will be particularly hard hit, as will the municipalities of Breza and Kakanj. The exact contours and timing of the employment challenge will depend on the pace and sequencing of coal transition plans. 33 There are essential knowledge gaps that need filling related to the profiles of coal and non-coal workers likely to be displaced and their likelihood of finding alternative work. This will depend on each worker’s skills, age, reservation wage, and preferences regarding retraining, mobility, sector of work, and so on. These knowledge gaps can be filled through the following analysis: (a) Survey the skill profiles and preferences of workers in mines and power plants, the coal sector value chain (suppliers), and local communities. This can be carried out using specially designed surveys to be given to current mine and power plant employees and to other workers in the mining regions or coal value chain. Ensuring adequate survey coverage will require multiple approaches (for example, partnering with mining firms or unions, drawing a sample of households from the latest census sampling frame, and conducting local area surveys of firms through a snowballing approach, potentially complemented by qualitative analysis). The profiling exercise could be extended to include the registered unemployed as well. (b) Forecast the number and types of jobs and skill profiles needed for mining land remediation and repurposing. These jobs are expected to last for 2–4 years, and estimates would be based on the anticipated number of person-hours required per site, which will vary by the extent of remediation needed and the repurposing activities related to renewable energy generation and/or other activities. In the case of repurposing for renewable energy generation, for example, workers will be needed for infrastructure and equipment installation in the short term, and operations and maintenance over the life of the generation asset. In addition to anticipated direct job creation, there would be new labor demand in related value chains (for example, metal parts for solar photovoltaic (PV)] installation and biomass production), giving rise to indirect job creation locally or elsewhere in BiH. These new jobs could absorb some of the workforce displaced by mine and power plant closures. Forecasts would help estimate the likely magnitudes. (c) Map out potential job transition pathways for the skill profiles identified in activity (a) including whether they can be absorbed into the new remediation / repurposing jobs identified in activity (b). This skills matching propensity score exercise should be based on an analysis of existing labor demand in BiH using the skill content of existing employment (for example, based on LFS or administrative data) and existing vacancies (for example, registered / advertised vacancies and local employer surveys). The occupations needed for remediation and repurposing range widely, some requiring low or easily acquired skills, and some requiring more specialized technical capacity. As repurposing options are designed and considered, their associated skill requirements also need to be assessed and where possible take advantage of the skill sets present among today’s mine and power plant workers. (d) Assess cantonal- and entity-level social assistance and social services / support programs and legislated severance programs that could be leveraged to support affected vulnerable households. This assessment needs to include estimates of the associated unit costs of each social assistance / severance component as input to a municipal-level costing exercise to inform budget processes well in advance. Social protection delivery capacity should also be examined with consideration of a future influx of displaced coal sector workers and other affected community members seeking social services. (e) Based on the analysis in (c) and (d), estimate the number and profiles of workers likely to need retraining or other active labor market program (ALMP) support to transition to alternative livelihoods. Given the extensive skills mismatch and perceptions mismatch in the BiH labor market generally and in the coal communities in question, new program interventions and designs will be necessary. 34 6.3 COMPLEMENTARY POLICIES TO IMPROVE LABOR MARKET FUNCTIONING AND OUTCOMES Using the results from the preceding diagnostics, the next phase of pre-closure planning and preparation will require redesigned labor policies as well as complementary measures to address fundamental labor market distortions that would otherwise work against successful labor transition. This will necessitate actions at the national level and at the entity and sub-entity levels and coordinated across several ministries because they implicate complementary areas of the economy. Labor-related policy adjustments will be needed in the areas of training, other ALMPs, and social assistance programs. • For the excess labor supply identified as likely to have difficulty transitioning directly into alternative work, appropriate ALMPs will be needed, either new or adapted from existing offerings. The observed excess labor supply (reflected by high levels of registered unemployed concurrent with unfilled vacancies) suggests that existing training programs are not effective in matching labor supply and demand. Training provision and uptake in BiH is currently low, due to low perceived value proposition by job seekers, limited ties between PES and private training providers, and limited budget. Moreover, the current network of public and private providers in BiH is not large, and evidence on training effectiveness is not systematically collected. Training and reskilling programs—whether directly provided or financed through vouchers—need to respond to specific observed labor market demand and will require outreach to and partnerships with private sector stakeholders (firms, entrepreneurs, and business associations). It will also be crucial to measure the ex post labor market outcomes of future trainees to help improve training effectiveness. • Other ALMPs for consideration include job counseling, wage subsidies, self-employment support, and mobility support. Although BiH’s wage subsidy program has had some success in the past, new program parameters are needed to fit the context of coal mine closure. Measures to increase labor mobility may be especially useful for workers in localities that are within commuting distance of BiH’s larger commercial centers (for example, in Breza, Kakanj, and Stanari). Providing job search assistance and matched employer-employee training for specific private firms in Sarajevo or Banja Luka with or without transportation subsidies could facilitate the labor transitions of geographically remote job seekers. • Some newly displaced workers may require social assistance or other interim income support during a transition period or as a bridge to retirement. Taking a holistic approach to designing and implementing integrated social and economic transition support packages tailored to the needs of affected workers will be the most effective and avoid individuals falling through the cracks. Transition support packages should be designed (and budgeted) in advance and should include referral to social services (psychological support, health support, and eligibility for social assistance benefits) and referral to and provision of ALMP support through public or private institutions. Because individual needs and preferences vary, transition packages will also vary from person to person (or by category of need / skill) and will require profiling beyond skills assessment to include assessment of workers’ household socioeconomic situation. This assessment and associated counseling—to be completed in advance of the closure announcement and first round of layoffs—will help determine the most effective avenues of support to be offered (across a menu of options). Outsourcing to nongovernmental organizations (NGOs) should be considered for the provision of social support services, and the framework to allow the outsourcing of services should be developed (together with necessary legal instruments).31 Implementation modalities will depend on local context and may vary by mine site in terms of actors and responsibilities (in-house HR services, private employment services, and public employment services). 31 BiH has experience of private provision of placement services for individuals sharing a similar set of specialized skills (given the need for networks with specific types of employers) or for more vulnerable unemployed together with performance-based pay mechanisms. This approach has been piloted since 2019 targeting hard-to-place job seekers. 35 • Additional public resources will be needed to increase government agencies’ capacity to support the necessary policy assessments, coordinate cross-ministry consultation and program design, oversee profiling and advisory services, attract private training providers, and design and implement program impact measurement. Additional budget will also be needed to finance ALMP delivery, given the currently low expenditure levels due to low coverage / take-up.32 Specific interventions to shift expectations and preferences of current and future job seekers are needed to improve labor market efficiency and better align labor policies with workers’ needs. The wide-reaching issue of skills mismatch requires fundamental reforms of the education system to achieve closer alignment of school curricula with employers’ skill needs and support the skills needed for green transition. • Increased career counseling services in schools as well as improved labor market information systems especially targeting students at the primary and secondary levels are needed. Many youth have unrealistic expectations about their career prospects. Even if they aspire to a government job, the number of public sector jobs is shrinking. In-school career counseling initiatives should be complemented by information campaigns on private sector careers in the new green economy or digital economy with the objective of influencing current and future job seekers’ perceptions and preferences in favor of pursuing more relevant opportunities in the growing segments of the economy. • Revisiting education and training curricula is essential for better aligning with private labor demand and deepening  extending instruction related to climate change, environmental /  sustainability, and innovation. This is needed at both the secondary and tertiary levels. Many youth terminate their studies at the end of secondary school,33 and despite rising enrollment in tertiary education and a proliferation of tertiary institutions, tertiary education quality is a concern. Most workers seek vocational degrees despite limited demand for the skills being taught. Employers value transversal skills not widely taught in school. Entrepreneurship and innovation are largely absent from pre-tertiary education curricula. Knowledge of climate challenges and sustainability are a prerequisite for innovation and local solutions related to adaptation and mitigation. Cooperation between higher education institutions and employers remains incipient (although many efforts are under way34) and is not yet impactful. • The government needs to adjust its compensation practices in ways that increase job seekers’ incentives to take up private work. Government hiring and compensation policies contribute to the gap in job quality between public and private jobs, which induces queuing and underemployment. Public wage freezes and reduced nonwage compensation could induce less queuing and more labor market clearing. Merit-based hiring of graduates with work experience could encourage job seekers to take up an initial job in the private sector because it would increase their chances of landing a government job. Shifting government recruiting toward applicants with qualifications in science, technology, engineering, and mathematics (STEM) and ICT may induce more students to pursue these fields. Complementary policies are needed to promote job creation in the private sector and to increase the incentives of job seekers and inactive or underemployed populations to work. 32 Budget allocation for ALMPs, and in particular training programs, is very limited, despite recent increases. More budget would need to be allocated (i) by cantonal governments to their cantonal PES for ALMPs in cantons with lower levels of resources, (ii) by the FBiH government to the Federal Employment Institute to further support ALMPs implemented across cantonal PESs, and (iii) by RS government to Employment Bureaus to complement their revenues. 33 Gross enrollment rates in tertiary education in BiH—37 percent in 2009—are the lowest among peer countries and below average for the region (61 percent in 2010) and the EU (64 percent in 2010) (World Bank 2019a). 34 Some universities have introduced internship programs in their curricula. Numerous faculties (especially technical professions) have centers to establish connections with industrial enterprises where students can pursue training programs. Some universities have career guidance centers that help students find jobs or improve their qualifications to increase their employability. Whereas graduates in mathematics and ICT fields tend to find jobs relatively easily, graduates from the life sciences (biology and environmental protection), arts, and medical sciences disciplines find it more difficult to land a job in their field (World Bank 2019a). Most universities are in the process of updating or creating new academic programs with the involvement of stakeholders from industry; however, these efforts have not yet led to strong partnership between higher education institutions and private employers. 36 • The large expected impact of mine closure on jobs in coal-dependent regions such as Gacko, Banovic ´i and Ugljevik and in municipalities with already high unemployment implies that geographically targeted interventions will be needed to help stimulate a private sector response to mitigate the impact of coal-related job losses. Interventions should include investment facilitation (such as through co-financing, business planning  regulatory support, grants, or other investment incentives, including matched /  employer-employee training for new private investments) with direct private sector participation and in conjunction with local and regional authorities and local community members themselves. Fostering investment in local economic development through essential infrastructure investments (for example, physical and digital connectivity, health, and education) could reduce the cost of doing business. Specific investments in renewable energy and energy efficiency in the public building stock—whether locally or nationally targeted—can generate new jobs in design, installation, retrofits, operations, and maintenance. Creating more and better jobs would also curb the migration of youth, especially workers with higher qualifications. A local consultative social investment platform could be created to solicit local preferences and priorities for government-financed community initiatives that improve local conditions and promote inclusion and social cohesion. • Business regulations that foster innovation, job creation, and the emergence of new green economy activities and local green solutions are key. Business environment obstacles dampen private sector growth and job creation. A number of impediments cited by employers35 could be addressed through policy reform, and streamlining and automating licensing, permitting, and tax payments, among others, which could reduce the regulatory burden on firms, reduce the opportunities for corruption, and improve economic governance. Increasing competition could reduce the advantages of SOEs and create space for smaller private actors. One important entry point is the innovation and entrepreneurship ecosystem, which could be facilitated by government policy and programs to encourage start-ups and accompany micro-entrepreneurs and small firms (complementing—but going beyond—entrepreneurship education and training). Initiatives that incentivize local sustainable solutions should be part of the new program offerings. • Rationalizing the labor tax and social benefits system will be essential for achieving effective labor transition following mine closures. BiH’s high labor taxes and distorted social benefits system may keep dismissed coal sector workers out of the labor force or in informal employment rather than facilitating viable transitions to new occupations or sectors. Because eligibility for social benefits is contingent on registering as unemployed, it reduces the incentive to work, at least in formal employment. Benefits for war veterans have a similar impact.36 Social assistance is currently withdrawn at a rate of 100 percent of any formal income—meaning that for every KM 1 earned, beneficiaries lose KM 1 in benefits. This helps explain the low levels of labor force participation in BiH and extensive unreported (informal) wages or underreported wages (for example, through the payment of envelope wages). When workers accept informal employment while collecting social benefits, the result is to keep private enterprise in the shadows, which limits productivity as well as the capacity of firms to grow and create more jobs. Reforming benefit levels and eligibility is, of course, politically contentious, but maintaining the status quo will undermine the effectiveness of any new labor transition policies. Policy makers need to be fully aware of these potential risks. Addressing BiH’s labor market challenges effectively will necessitate complementary policy dialogue and action across a number of institutions—for example, related to secondary and tertiary education systems, entrepreneurship ecosystem, social protection programs, ALMPs, and the business environment. Cross-ministry planning and coordination will be important for ensuring key complementary actions that support economic diversification and job creation as an integral part of the coal transition. 35 See the World Bank’s Enterprise Survey results (World Bank 2019b). 36 https://openknowledge.worldbank.org/bitstream/handle/10986/33870/Bosnia-and-Herzegovina-Systematic-Country-Diagnostic. pdf?sequence=1&isAllowed=y 37 REFERENCES Agency for Labor and Employment of Bosnia-Herzegovina. 2021a. "Research of Labor Market in Bosnia-Herzegovina 2020 / 2021." Agency for Labor and Employment of Bosnia-Herzegovina. 2021b. "Impact of COVID-19 on Labour Market in BiH." https://trzisterada.ba/wp-content/uploads/2021/09/Drzavni-tematski_COVID-WEB-2.pdf. CREDI. 2021. "Local Labour Market Analysis with Medium-Term Anticipation by Occupation." Centre for Development Evaluation and Social Science Research (CREDI). Eckstein, D., V. Künzel, L. Schäfer, and M. Winges. 2019. "Global Climate Risk Index 2020: Who Suffers Most from Extreme Weather Events? Weather-Related Loss Events in 2018 and 1999 to 2018." https://germanwatch.org/sites/germanwatch.org/ files/20-2-01e%20Global%20Climate%20Risk%20Index%202020_13.pdf. Federal Employment Institute. 2019. Annual Report 2019. Federal Employment Institute. 2021. Labor Market Research in the Federation of BiH 2020 / 2021. ´inama FBiH 2020." Federation Federal Institute for Development Programming. 2021. "Socioekonomski Pokazatelji po Opc of Bosnia and Herzegovina. IEA. 2021. International Energy Agency Energy Statistics Data Browser. https://www.iea.org/data-and-statistics. Lobao, L., M. Partridge, O. Hean, P. Kelly, S. Chung, and E. Ruppert Bulmer. 2021. "Socioeconomic Transition in the Appalachia Coal Region: Some Factors of Success." Produced for the World Bank, under the Global Support to Coal Regions in Transition Project. OECD (Organisation for Economic Co-operation and Development), 2021. Multi-dimensional Review of the Western Balkans: Assessing Opportunities and Constraints Paris: OECD Development Pathways, OECD Publishing. https://doi.org/10.1787/4d5cbc2a-en. Public Employment Service of Republika Srpska. 2021. "Labor Market Research in Republika Srpska 2020 / 2021." Radio Free Europe. 2021. "Thousands of Bosnian Coal Miners Protest Against Lower Wages." November 23, 2021. https://www.rferl.org/a/bosnia-coal-miners-strike/31575713.html. Regional Cooperation Council. 2018. "Balkan Barometer 2018 Public Opinion Analytical report." Accessed January 8, 2019. https://www.rcc.int/balkanbarometer/publications. Ruppert Bulmer, E., K. Pela, A. Eberhard-Ruiz, and J. Montoya. 2021. Global Perspective on Coal Jobs and Managing Labor Transition out of Coal: Key Issues and Policy Responses. Washington, DC: World Bank. https://openknowledge.worldbank. org/handle/10986/37118. UNDP (United Nations Development Programme), 2007. National Human Development Report 2007. Social Inclusion in Bosnia and Herzegovina. New York: UNDP. UNDP (United Nations Development Programme), 2013. Rural Development in Bosnia and Herzegovina: Myth and Reality. Sarajevo: UNDP. United Nations. 2020. "World Population Prospects 2019." https://population.un.org/wpp/. USAID. 2018. "National Youth Survey in Bosnia and Herzegovina 2018: Draft report." USAID Bosnia and Herzegovina Monitoring and Evaluation Support Activity (MEASURE-BiHiH). https://www.measurebih.com/national-youth-survey-in-bih. World Bank. 2018a. Managing Coal Mine Closure: Achieving a Just Transition for All. Washington, DC: World Bank. World Bank. 2018b. Seizing a Brighter Future for All: Former Yugoslav Republic of Macedonia Systematic Country Diagnostic. Washington DC: World Bank. World Bank. 2019a. Bosnia and Herzegovina Growth and Jobs: Reform Priorities for Promoting Better Private Sector Jobs. Washington, DC: World Bank. https://openknowledge.worldbank.org/handle/10986/33834. World Bank. 2019b. "Enterprise Surveys What Businesses Experience—Bosnia and Herzegovina 2019 Country Profile." World Bank, Washington, DC. www.enterprisesurveys.org. 38 World Bank. 2020a. Bosnia and Herzegovina Systematic Country Diagnostic Update. Washington, DC: World Bank. World Bank. 2020b. The Economic and Social Impact of COVID-19: Poverty and Household Welfare (English). Western Balkans Regular Economic Report, No. 17. Washington, DC: World Bank. http://documents.worldbank.org/curated/ en/236311590680555002/The-Economic-and-Social-Impact-of-COVID-19-Poverty-and-Household-Welfare. World Bank. 2021. "Governance Global Practice Bureaucracy Lab 2021 Survey presentation." World Bank (mimeo). World Bank. 2022. Social Protection Situational Analyses: Bosnia and Herzegovina. Washington, DC: World Bank. https://openknowledge.worldbank.org/handle/10986/38141 License: CC BY 3.0 IGO. 39 ANNEX 1 TABLE A1.1 OLS regressions on the correlates of real monthly wages, 2019 Variables (1) (2) (3) Age 0.0205*** 0.0185*** 0.0170** (0.00689) (0.00694) (0.00682) Age square –0.000199** –0.000183** –0.000167** (8.53e–05) (8.55e–05) (8.40e–05) Female –0.200*** –0.151*** –0.149*** (0.0238) (0.0275) (0.0272) Urban 0.0855*** 0.0786*** 0.0831*** (0.0250) (0.0253) (0.0251) Primary incomplete 0.238 0.224 0.278 (0.360) (0.358) (0.351) Primary complete 0.267 0.254 0.308 (0.346) (0.343) (0.335) Secondary incomplete 0.339 0.320 0.371 (0.340) (0.337) (0.329) Secondary complete 0.494 0.478 0.545* (0.340) (0.337) (0.329) University incomplete or 0.780** 0.756** 0.815** complete (0.343) (0.338) (0.330) Public sector 0.0653** (0.0258) Coal 0.385*** 0.319*** (0.0538) (0.0526) 40 Variables (1) (2) (3) Other Mining 0.233*** 0.231*** (0.0811) (0.0880) Manufacturing 0.0562 0.0319 (0.0523) (0.0507) Public Utilities 0.237*** 0.251*** (0.0545) (0.0529) Construction 0.200*** 0.168*** (0.0619) (0.0602) Wholesale and Retail 0.0225 0.00276 (0.0585) (0.0568) Transport and 0.175** 0.133* Communications (0.0764) (0.0751) Accommodation and Food 0.0196 0.0144 Services (0.0755) (0.0734) Financial, ICT, and Business 0.123* 0.0879 Services (0.0691) (0.0678) Public Administration 0.243*** 0.229*** (0.0567) (0.0548) Education 0.0598 0.0222 (0.0761) (0.0749) Health and Social Work 0.114 0.0937 (0.0774) (0.0758) Other Services, Unspecified –0.0989 –0.126 (0.101) (0.1000) Federation of BiH –0.199*** (0.0256) Constant 5.585*** 5.507*** 5.776*** (0.366) (0.360) (0.343) Observations 3,484 3,484 3,484 R-squared 0.076 0.092 0.112 Source: Authors’ calculations using LFS 2019 data. Notes: Table reports results for Mincer-type ordinary least squares regressions estimating the correlation of individual characteristics with log real monthly labor earnings of wage employees using data from BIH LFS 2019 dataset. Reference categories are male workers, rural location, no education and agriculture sector. Standard errors are reported in parentheses where ***, **, and * indicate significance at 1, 5, and 10 percent respectively. 41 ANNEX 2 ESTIMATING INDIRECT IMPACT OF MINE AND POWER PLANT CLOSURES ON SUPPLIERS AND THEIR WORKFORCE Future closure of coal mines and/or power plants will not only impact workers currently employed in the affected mines and power plants; other workers and firms will also be impacted, through reduced demand for the goods and service inputs needed to produce coal and coal-fired electricity. Coal value chain suppliers contracted by the mine and power plant companies vary in size and degree of reliance on coal-related activity; some suppliers are large, some are small, some are located in mining regions, some in the entity capitals, some are highly dependent on mining companies to purchase their goods / services, while others are more diversified. The following analysis estimates the number of supplier employees at risk of job loss in the event of a demand shock stemming from mine and power plant closures. This estimation poses a measurement challenge, since the information is not directly observable in existing data sources such as labor force surveys and administrative data. We therefore rely on the following data sources: (i) database of the Public Procurement Agency (PPA) on the number and amounts of contracts recorded, by supplier and contractor; (ii) Bisnode data on financial reports of companies supplying coal mines and power plants. Note that the segment of coal value chain workers captured by this approach is only a partial measure of indirectly affected workers. Other workers that would be indirectly affected include those further upstream in the value chain (i.e., the inputs used by suppliers),37 as well as employees of firms benefiting from consumer demand by coal mine and power plant workers and their families.38 Combining the two sources of available data generates a set of 19,364 contracts signed by 12 mines and power plants in the period 2019–2021 with over 1,967 different suppliers (Table A2.1 reports basic descriptive statistics).39,40 Total employment in these suppliers was 86,453 in 2020. On average, each supplier has nearly 10 contracts with mine or power plant firms, some with a single mine, others delivering to multiple mines or plants. The average value of contracts per supplier was KM36,300, and the largest supplier (in value terms) delivered KM42 million in goods / services to mines and/or power plants. Each mine and power plant contracted c Travnik-Bila, and up to with multiple suppliers, ranging from an average of 28 suppliers for coal mine Abid Loli´ 283 suppliers for Ugljevik coal mine and power plant (Table A2.2). Three-fifths of contracts were for goods, and only a small number for works (mainly related to construction works). Only a third of contracts were awarded through a fully open and competitive process (Table A2.3). 37 These indirect linkages would require an Input-Output table to capture them fully. 38 This would require surveys of local businesses and households to ascertain their degree of reliance on coal-related wages. 39 Note that the PPA database excludes contract information for privately-owned Stanari mine and power plant. 40 Note that for 100 contracts in the PPA database, more than one supplier was listed. For the purpose of analysis, the first listed was chosen as the main supplier, as it was not possible to identify and divide the total contract amount between all suppliers listed. 42 TABLE A2.1 Summary statistics Indicator Value Number of supplier companies having contracts in 2019–2021 1,967 Average revenue of companies with ppa contracts in 2019 (KM) 10,957,394.10 Average revenue of companies with ppa contracts in 2020 (KM) 10,021,446.20 Average number of employees in companies with ppa contracts in 2019 60.23 Average number of employees in companies with ppa contracts in 2020 58.93 Total number of ppa contracts, 2019–2021 19,364 Average number of ppa contracts per supplier 9.84 Maximum number of ppa contracts per supplier 483 Total value of ppa contracts, 2019–2021 (KM) 703,289,623.12 Average value of ppa contracts per supplier (KM) 36,319.44 Maximum value of ppa contracts per supplier (KM) 42,065,533.38 Average share of ppa contracts in total supplier’s revenue, 2019 (%) 9.03 Average share of ppa contracts in total supplier’s revenue, 2020 (%) 7.80 TABLE A2.2 Number of suppliers per mine / power plant Buyer 2019 2020 2021 Average ´ Travnik-Bila Coal mine Abid Lolic 35 30 19 28.0 Coal mine and power plant Ugljevik 285 293 271 283.0 ´i Coal mine Banovic 194 183 163 180.0 Coal mine Breza 162 138 107 135.7 Coal mine Kakanj 180 150 149 159.7 Coal mine Zenica 128 125 94 115.7 ˇ anica Coal mine Grac 57 59 66 60.7 Coal mine Kreka Tuzla 214 176 96 162.0 Power plant Kakanj 145 136 120 133.7 Power plant Tuzla 167 155 150 157.3 Coal mine Đurd¯evik 210 232 222 221.3 Coal mine and Power plant Gacko 181 152 136 156.3 Total 1,958 1,829 1,593 1,793.3 43 TABLE A2.3 Number of contracts by type of contract and category of contract purpose Type of contract Works Goods Services Total Direct agreement 27 5,612 4,180 9,819 Competitive request 49 2,095 886 3,030 Limited procedure 1 1 Open procedure 156 4,152 2,408 6,716 Negotiation procedure without an announcement 11 195 220 426 Negotiation procedure with an announcement 102 3 105 Total 244 12,156 7,697 20,097 TABLE A2.4 Number of contracts per mine / power plant Buyer 2019 2020 2021 Total Coal mine Abid Lolic ´ Travnik-Bila 48 53 28 129 Coal mine and power plant Ugljevik 1,220 1,239 1,181 3,640 Coal mine Banovic ´i 964 785 622 2,371 Coal mine Breza 666 363 276 1,305 Coal mine Kakanj 771 685 494 1,950 Coal mine Zenica 257 251 175 683 Coal mine Grac ˇ anica 123 110 116 349 Coal mine Kreka Tuzla 1,612 834 279 2,725 Power plant Kakanj 339 314 263 916 Power plant Tuzla 496 363 376 1,235 Coal mine Đurd¯evik 852 903 826 2,581 Coal mine and power plant Gacko 543 506 431 1,480 Total 7,891 6,406 5,067 19,364 When comparing the total value of contracts across mine and power plant firms, the largest share of contracts belongs to Banovic´i coal mine, closely followed by coal mine and power plant Ugljevik and coal mine and power plant Gacko (Table A2.5). 44 TABLE A2.5 Value of contracts per mine / power plant Buyer 2019 2020 2021 Total 2019–2021 Coal mine Abid Lolic ´ Travnik-Bila 3,815,329 1,967,564 2,770,569 8,553,461 Coal mine and power plant Ugljevik 48,223,779 45,639,074 46,126,127 139,988,981 Coal mine Banovic ´i 59,955,839 62,429,803 35,664,815 158,050,457 Coal mine Breza 8,158,074 5,038,777 5,087,190 18,284,041 Coal mine Kakanj 12,679,798 16,782,405 12,567,406 42,029,609 Coal mine Zenica 8,781,695 6,704,664 3,824,136 19,310,495 Coal mine Grac ˇ anica 5,022,010 3,998,399 4,531,542 13,551,951 Coal mine Kreka Tuzla 33,302,396 23,254,162 15,511,441 72,067,998 Power plant Kakanj 7,139,201 6,550,346 7,220,421 20,909,968 Power plant Tuzla 13,370,332 13,118,161 14,019,216 40,507,709 Coal mine Đurd¯evik 13,174,507 9,590,030 11,665,679 34,430,217 Coal mine and power plant Gacko 40,287,234 43,016,220 52,301,284 135,604,737 Total 253,910,193 238,089,605 211,289,825 703,289,623 Suppliers tend to be geographically concentrated either close a mine or power plant, or located in the main commercial centers Sarajevo,41 Banja Luka or Tuzla. This pattern emerges when we compare the total number of contracts per municipality  canton42 (Table A2.6), the value of contracts per municipality (Table A2.7), and /  also when we map the location and value of supplier contracts for each mine and power plant (Figure A2.1 below).43 The observed localized concentration of suppliers—whether in the same or neighboring municipality as the mine / power plant—can be partly explained by lower transactions costs but is also due to local business networks and political network effects. TABLE A2.6 Number of contracts by municipality of supplier44 Location 2019 2020 2021 Tuzla 1,158 801 653 Sarajevo 747 626 555 ´i Banovic 559 526 377 Ugljevik 324 396 329 41 Especially when adjacent Vogosca region is considered. 42 Note that FBiH is divided into 10 cantons and comprises 79 municipalities. RS is divided into 64 municipalities. 43 Note that each map is interactive, with contract information per mine / power plant embedded. 44 Note that the suppliers database has a small number of missing data on supplier location. 45 Location 2019 2020 2021 Bijeljina 341 395 319 Kakanj 632 484 296 Banja Luka 301 236 265 Lukavac 709 434 250 Zenica 326 276 205 Živinice 355 286 187 Gacko 125 137 108 Visoko 177 121 104 ˇ ko Brc 109 83 98 Ilidža 181 132 90 Zvornik 75 75 73 Prijedor 80 78 58 ´a Vogošc 67 61 52 ˇ anica Grac 62 41 49 ˇe Žepc 55 49 41 Novi Travnik 55 39 40 Note: Only the top 20 municipalities are shown. TABLE A2.7 Total contract value by municipality for all mines and power plants Municipality Value of contracts in 2020 (KM) Grad Banja Luka 34,592,259 Tuzla 23,361,767 Centar, Sarajevo 19,467,084 Ugljevik 18,468,990 Zenica 12,370,977 ´a Vogošc 12,207,403 Bijeljina 11,261,719 ´i Banovic 9,973,571 Gacko 8,484,570 Lukavac 8,076,997 Note: Includes only the top 10 municipalities. 46 FIGURE A2.1 Distribution of supplier contract value across regions (2020) Total value of contracts, BAM 0 34,592,259 Source: Authors’ calculations. More detailed maps were constructed for each coal mine and power plant. In order to determine the degree to which suppliers and their employees would be affected by future mine closures, it is necessary to understand the degree of suppliers’ reliance on coal mine or power plant contracts as a source of revenue. This includes understanding whether suppliers work with a single or multiple mine / power plants, and the role of suppliers in the local economy, that is, whether they represent an important employer in the local labor market. For three-fourths of suppliers in 2020 (based on contract information available for 807 suppliers), their contracts with mine and power plants account for less than 10 percent of total firm revenues, but for 56 suppliers, they account for at least half of the firm’s total revenues (Table A2.8). Not surprisingly, the large and diversified cities of Sarajevo and Banja Luka are home to the largest number of suppliers, but for the vast majority of these, their contract values represent less than a tenth of their annual revenues. Tuzla also has a large number of suppliers, two-thirds of which depend on coal-related contracts for less than a tenth of firm revenues.45 Bijeljina—located directly northeast of Ugljevik, falls into this category as well. It is also the case that medium and large suppliers are less reliant on coal-related contracts, compared to small-sized companies (Table A2.9). But in some regions that are home to mines and/or power plants—notably Gacko, Ugljevik and Kakanj—a higher share of suppliers rely on coal-related clients for over half of their annual revenues. Suppliers in Celic, Teocak, Gacko, Ugljevik, Kresevo and Bileca are particularly heavily tied into the coal value chain, reflected by an average coal-related contract value equivalent to over 30 percent of annual revenue (Table A2.10). These high shares suggest potential vulnerability at both the firm level—in the event of a sharp drop in demand from coal mines or power plants—as well as the local level—especially if there are many suppliers co-located in the region. 45 Average coal-related contract value shares in total firm revenues are 0.05% for Sarajevo-based suppliers, 0.17% for suppliers in Banja Luka and 1.42% for suppliers in Tuzla. 47 TABLE A2.8 Number of companies in each revenue share group by location (2020 only) Location Less than 10% 10%–20% 20%–50% More than 50% Total Banja Luka 48 4 5 2 59 Banovic ´i 17 6 7 5 35 Bihac ´ 1 0 0 0 1 Bijeljina 57 3 5 5 70 Bilec ´a 2 1 0 1 4 Bosanski Novi 1 0 0 0 1 Bosanski Šamac 1 0 0 0 1 Bratunac 1 0 0 0 1 Breza 6 2 1 0 9 Brc ˇ ko 2 0 2 0 4 Brc ˇ ko Distrikt 8 0 0 0 8 Bugojno 2 0 0 0 2 Busovac ˇa 2 0 1 0 3 Cazin 1 0 0 0 1 Derventa 1 0 0 0 1 Doboj 4 1 0 0 5 Doboj Istok 1 0 0 0 1 Doboj Jug 2 0 0 0 2 Gacko 2 2 1 5 10 Goražde 1 0 0 0 1 Gornji Vakuf Uskoplje 3 0 0 0 3 Gradac ˇ ac 2 0 0 0 2 Gradiška 1 0 0 0 1 Grac ˇ anica 11 0 0 0 11 Grude 3 0 0 0 3 Hadžic ´i 3 0 0 0 3 Ilidža 19 2 2 1 24 Ilijaš 4 0 1 0 5 Istoc ˇno Sarajevo 5 0 2 0 7 Jajce 1 0 1 0 2 Kakanj 28 3 7 7 45 48 Location Less than 10% 10%–20% 20%–50% More than 50% Total Kalesija 4 3 1 0 8 Kiseljak 4 0 0 0 4 Konjic 1 0 1 0 2 Kresevo 0 0 1 0 1 Laktaši 3 0 0 0 3 Ljubuški 5 0 0 0 5 Lopare 1 0 0 0 1 Lukavac 16 2 4 1 23 Modric ˇa 2 0 0 0 2 Mostar 13 0 0 0 13 Novi Travnik 1 0 1 0 2 Novo Sarajevo 1 0 0 0 1 Odžak 1 0 0 0 1 Olovo 1 0 0 0 1 Pelagic ´evo 1 0 0 0 1 Posušje 1 0 0 0 1 Prijedor 3 2 2 0 7 Rogatica 1 0 0 0 1 Sarajevo 83 3 6 1 93 Srebrenik 6 0 1 1 8 Srebrenik 0 0 1 0 1 Teoak 0 0 0 1 1 Teslic ´ 2 0 0 0 2 Tešanj 11 0 0 0 11 Tomislavgrad 1 0 1 0 2 Travnik 1 2 0 0 3 Trebinje 5 1 1 2 9 Tuzla 67 10 16 11 104 Ugljevik 11 2 4 6 23 Vareš 1 0 0 0 1 Visoko 13 0 2 0 15 Vitez 6 1 0 0 7 Višegrad 2 0 0 0 2 49 Location Less than 10% 10%–20% 20%–50% More than 50% Total Vogošc ´a 9 0 0 1 10 Zavidovic ´i 1 0 0 0 1 Zenica 39 6 3 2 50 Zvornik 11 1 1 2 15 ˇ apljina C 1 0 0 0 1 ˇ elic C ´ 0 0 0 1 1 ˇ itluk C 2 0 0 0 2 Široki Brijeg 2 0 0 0 2 Žepc ˇe 3 1 0 0 4 Živinice 35 0 1 1 37 Total 611 58 82 56 807 Note: Of the total 1,062 supplier companies with PPA contracts in 2020, information on company revenues is unavailable for 255 of them, which are therefore excluded from this table. TABLE A2.9 Number of companies in each revenue share group by firm size (2020 only) Location Less than 10% 10%–20% 20%–50% More than 50% Total Small enterprise 464 52 76 52 644 Medium enterprise 112 5 5 3 125 Large enterprise 35 1 1 1 38 Total 611 58 82 56 807 Note: Firm size categories as follows: small firms have 1–49 employees, medium firms 50–249, and large firms 250 or more employees. TABLE A2.10 Average share of coal-related contracts in total firm revenues, by location (2020 only) Location 2019 2020 ˇ elic C ´* 49.99 336.18 ˇ ak Teoc . 67.81 Gacko 34.28 45.38 Ugljevik 25.23 37.08 Kresevo 31.81 30.73 ´a Bilec 12.03 30.05 Zvornik 14.64 28.76 50 Location 2019 2020 Tomislavgrad . 24.24 Srebrenik 11.30 22.05 ´i Banovic 59.43 21.18 Trebinje 31.54 20.20 Srebrenik 8.45 18.90 Prijedor 13.52 18.42 Kakanj 13.68 18.16 ˇa Busovac 10.95 16.83 Konjic 11.44 16.48 Tuzla 13.60 Lukavac 11.42 0 Bijeljina 22.26 2 ˇ ko Brc 17.23 0 ˇ elic´ reflects a single supplier, RESSA. * The result for C Note: There are 11 suppliers in the databases for which the calculated share of PPA contracts in the company’s total revenue exceeds 100%. Whereas this could be due to the potential allocation of a multi-firm contract to a single company, or a contract spanning multiple years, further analysis ruled out these two possible explanations. Another reason would be incorrect values in either PPA database for values of contracts or Bisnode database for values of revenues. To understand the extent to which suppliers are an engine of local growth, their level of employment matters, especially as compared to the level of coal-related employment and other non-coal employment in the municipality. Suppliers in Sarajevo, Tuzla and Banja Luka have the largest number of supplier employees—totaling 18,000, 15,000 and 8,000, respectively (Table A2.11). Zenica, Kakanj, Bijeljina, Živinice and Ugljevik also account for a large number of supplier jobs (each numbering between 2,500 and 5,500). Supplier employment is concentrated in municipalities with the largest number of companies having coal-related PPA contracts, which in turn coincides with large commercial centers or mine locations. If we assume that future closure of mines and power plants results in a reduction in suppliers’ 2020 employment proportional to the share of coal-related contracts in total supplier revenues, then an estimated 1,900 workers across BiH are at risk of losing their jobs in a post-coal world. The largest number of jobs is projected to be lost in Tuzla (521 jobs), Banovic ´i (214), Gacko (185), Banja Luka (122), Kakanj (117), Ugljevik (114) and neighboring Bijeljina (86) (Table A2.12). As a share of local employment, Gacko and Banovic ´i are most affected, as at-risk supplier employees represent 5.7 percent and 4.1 percent of local employment, respectively. And when direct coal jobs are added to at-risk supplier jobs, the potential job losses by region concentrate around Gacko and Banovic ´i, where 66 percent and 56 percent of total employment could be lost, followed by Ugljevik (51 percent), Breza (31 percent) and Kakanj (28 percent). Tuzla—home to Kreka mine and Tuzla power plant—could lose an estimated 8 percent of its total jobs in a total coal phase-out, compared to 6 percent in neighboring Živinice (home of Đurd ¯evik), 5 percent in Gornji Vakuf-Uskoplje (home of Grac ˇanica), 4 percent in Zenica and 2 percent in Travnik. 51 TABLE A2.11 Number of supplier employees by location Location 2019 2020 Sarajevo 19,307 18,484 Tuzla 15,506 15,350 Banja Luka 8,330 8,271 Zenica 5,675 5,482 Kakanj 3,379 3,405 Bijeljina 3,133 3,223 Živinice 3,065 2,944 Ugljevik 2,499 2,527 Doboj 2,482 2,293 Tešanj 2,252 2,174 Lukavac 1,537 1,518 Mostar 1,400 1,453 Breza 1,446 1,437 Derventa 1,401 1,351 ´i Banovic 1,152 1,199 ˇ anica Grac 1,209 1,187 ´a Vogošc 1,164 1,166 Vitez 833 863 Visoko 862 819 Ilidža 733 676 Total (all locations) 88,355 86,453 Note: Only the top 20 locations are shown, but the total reflects all locations. 52 TABLE A2.12 Estimated share of vulnerable employees at suppliers Share of local Location employment (2020) Tuzla 1.42% ´i Banovic 4.08% Gacko 5.71% Banja Luka 0.17% Kakanj 1.65% Ugljevik 3.04% Bijeljina 0.37% ˇ ko Brc 0.45% Zenica 0.28% Lukavac 0.62% Sarajevo 0.05% Trebinje 0.39% Prijedor 0.24% Zvornik 0.15% Živinice 0.20% Goražde 0.31% ´a Vogošc 0.27% Tomislavgrad 0.48% Kalesija 0.34% Ljubuški 0.29% Total (all locations) 0.27% Note: Top 20 locations are shown, but the total reflects all locations. Aggregate employment data for each municipality comes from the statistics agencies of FBiH and RS. It is important to acknowledge that our simplifying assumption of proportional job loss likely overstates potential job losses in large firms in big cities, and likely underestimates the job losses in firms that rely significantly on coal-related contracts. For example, if a supplier relies on coal-related contracts for 70 percent of its revenues, the remaining 30 percent of non-coal-related work may not prove sufficient to sustain the firm’s commercial viability, forcing it to exit and layoff its entire workforce, not just the 70 percent assumed under our estimates. Firms will vary in their capacity to adjust to a post-coal context by diversifying their client markets and perhaps also their products and services. Anecdotal evidence from a series of key informant interview with seven suppliers 53 and six other stakeholders (PES, ministries of labour and social policy, chambers of commerce, municipal admin- istration) reveals a range of potential outcomes, although most can be characterized as pessimistic.46 Note that different layoff scenarios can be modeled assuming different firm capacity to diversify. Under a revised assumption that supplier firms that rely on coal mine and power plants for less than 50 percent of their total revenue reduce their workforce proportional to the share of coal-related contracts in total supplier revenues, while suppliers with a 50 percent or greater share of coal-related contracts shut down operations altogether and layoff their entire workforce, an estimated 2,400 workers in supplier firms who would be at risk of losing their jobs in a post-coal world. Given that closures are likely to be phased over time, employment considerations could be factored into the Government’s planning of mine power plant closures, both with respect to direct employees as well as indirectly affected supplier employees.47 It is important to understand not only the spatial distribution of at-risk jobs, but also the spatial linkages of suppliers, which may be dependent on a single mine, or may supply multiple mines and power plants. According to the PPA database, suppliers have contracts with 1.6 mines   power plants /  on average, and many supply a large number of mines. There are 18 suppliers that do business with at least 9 different mines or power plants (Table A2.13). A close look at a subsample of firms that almost exclusively depend on contracts with mines and power plant suggests that most are relatively small firms that contract with only 1 or 2 mines  /  power plants. This implies that mine closure will certainly result in firm closures, but only a small number of jobs will be destroyed. A much larger impact will be through direct job losses. TABLE A2.13 Large suppliers that supply more than one mine or power plant, and number of contracts with each (2020 only) Total Mine or Power Plant ID#: mines/ power Total # of plants Supplier 1 2 3 4 5 6 7 8 9 10 11 12 contracts supplied Treasure D.O.O. 3 28 12 7 18 4 5 7 8 8 5 3 108 12 Teve Varnost Elektronika D.O.O. Visoko 11 36 27 45 21 1 13 6 1 12 173 11 Teknoxgroup Bh D.O.O. Sa 60 41 1 93 3 7 1 22 2 24 254 10 Enek B&E D.O.O. Sa 3 6 9 18 1 22 22 19 33 2 135 10 Inter-Com D.O.O. Zenica 1 2 10 10 2 4 22 8 16 13 88 10 Delta Petrol D.O.O. Kakanj 6 5 16 3 1 6 12 4 7 3 63 10 Ab Petrol D.O.O. 4 1 8 105 14 1 10 31 5 3 182 10 Industrija 4b D.O.O. Kakanj 10 1 9 19 10 16 11 24 5 1 106 10 Ferhem D.O.O. Lukavac 54 7 2 4 9 4 6 1 12 99 9 ´i Elektroremont D.D. Banovic 24 217 1 12 6 145 10 32 53 500 9 ´i Erax-Invest D.O.O. Banovic 1 1 130 2 12 63 7 1 96 313 9 Rudarski Institut D.D. Tuzla 4 48 6 10 7 8 20 1 27 131 9 46 Results of these key informant interviews are summarized in a background paper by Nermin Oruc and Elizabeth Ruppert Bulmer. 47 Note that many other workers will be indirectly affected, especially in regions where coal-related jobs account for the majority, but these effects cannot be measured without new data collection. 54 Total Mine or Power Plant ID#: mines/ power Total # of plants Supplier 1 2 3 4 5 6 7 8 9 10 11 12 contracts supplied Tvornica Transportnih Ured¯aja Energetik 1 53 1 2 2 37 2 3 5 106 9 D.O.O. Tuzla ˇe Jasmin M D.O.O. Žepc 9 71 5 10 10 13 1 10 5 134 9 Real-Kem D.O.O. 6 1 40 30 1 2 1 11 92 9 Bnt Holding D.D. 2 21 6 5 12 16 28 11 24 125 9 Orao A.D. 9 1 2 1 4 3 11 3 3 37 9 Inving Invest Inžinjering D.O.O. Prijedor 1 4 25 15 1 11 1 10 2 70 9 Nexen 2 2 11 1 1 4 6 14 7 48 9 Note: Mine and power plant ID numbers as follows: 1: Coal mine Abid Lolic ´ Travnik-Bila; 2: Coal mine and power plant Ugljevik; 3: Coal mine Banovic´i; 4: Coal mine Breza; 5: Coal mine Kakanj; 6: Coal mine Zenica; 7: Coal mine Grac ˇ anica; 8: Coal mine Kreka Tuzla; 9: Power plant Kakanj; 10: Power plant Tuzla; 11: Coal mine Đurd ¯evik; 12: Coal mine and power plant Gacko. Mine and power plant closure schedules should be coordinated and aligned with the roll-out of transition support programs in local jurisdictions. Transition support comprises multiple instruments, each targeting different segments of the affected local labor force. Additional information on the characteristics of suppliers’ employees (occupation, skill set, wages) will be needed to design appropriate labor transition policies to assist displaced workers to find alternative work. Further analysis and data collection through surveys would be required to collect the necessary data. 55 ANNEX 3 Below we present the details per each active labour market measure implemented by public employment services in 2020 and 2021. Information sourced from Federal Employment Institute (2019), Federal Employment Institute (2021), Federal Institute for Development Programming (2021). TABLE A3.1 Overview of active employment policies in the Federation of BiH for 2021 Number of Number of Number of beneficiary Target beneficiary beneficiary female Name of the measure The aim of the measure group companies Budget employees employees Your chance 2021— The aim of this sub-measure is to enable as Young 120 1,429,857 253 165 The first work many young people as possible to be trained unemployed experience for young for work in the profession and gain their first people up to 30 unemployed people work experience in the profession for which years under the age of 30 they were educated, through employment and thus improve their competitiveness and integration in the labor market. Your chance 2021 The aim of this sub-measure is to enable Persons with 78 427,263.30 96 47 —Co-financing the as many people from the target group as work experience employment of possible to integrate more efficiently into the / experience up people with work labor market. to 35 years experience / experience, age up to 35 years Employment of The aim of this measure is to facilitate Unemployed 326 1,840,152 517 517 women 2021 the integration of unemployed women in women the labor market and prevent long‑term unemployment, and contribute to increasing the employment rate of women. Opportunity for all The aim of this measure is to facilitate Unemployed 746 5,499,418.60 1.435 592 2021—the possibility the integration of the unemployed in persons of extended the labor market and prevent long-term co-financing unemployment with the possibility of providing support to the employer in the form of extended co-financing of employment, and contribute to increasing the overall employment rate. 56 Number of Number of Number of beneficiary Target beneficiary beneficiary female Name of the measure The aim of the measure group companies Budget employees employees Contribution The aim of this measure is to facilitate Unemployed 12 40,200 12 3 500–2021 the integration of the unemployed in persons the labor market and prevent long‑term unemployment by encouraging employers to provide higher wages to the unemployed person / worker, which includes support to the employer in the private and public health sector. COVID‑19 has a shortage of staff, through a refund of the amount of paid mandatory contributions in the amount of 500 KM. Recruitment of demo- The measure implies co-financing the Demobilized 21 92,092.50 20 bilized veterans 2021 employment of persons in accordance Veterans and with Article 2 of the Law on the Rights Demobilized of Demobilized Veterans and Members of Veterans Their Families (Official Gazette of FBiH, No. Volunteers 54/19), as follows: demobilized veterans Registered and demobilized volunteer veterans, in the FBiH registered as unemployed in FBiH, as would Unemployment facilitate integration into the labor market Register and prevent long-term unemployment, and contribute to increasing the employment rate of this category of unemployed persons. Periodic / seasonal The aim of this measure is to facilitate Unemployed 123 841,215.70 322 126 employment 2021 the integration of the unemployed in persons the labor market and prevent long-term unemployment, and to provide employers with a workforce in accordance with their needs. New opportunity The aim of this measure is to facilitate the Unemployed 200 1,325,502.40 297 168 2021 integration of unemployed people who are persons over 40 in an extremely poor situation on the labor years of age market and to end long-term unemployment in accordance with their needs. The focus is on persons aged 40+, persons registered in the unemployment register for more than 12 months and persons with lower qualifications or without qualifications (NSS, NK, PK). Public works 2021 The aim of this measure is to mitigate the Unemployed 9 27,692 15 3 social consequences of unemployment, persons and the integration of people from the target group in the labor market through time-limited work engagement, whose engagement contributes to socially useful work and providing services to people in need. 57 Number of Number of Number of beneficiary Target beneficiary beneficiary female Name of the measure The aim of the measure group companies Budget employees employees Help needed in 2021 The aim of this measure is to mitigate the People in a state 5 31,480 6 4 social consequences of unemployment, of social need and the integration of people from the target group in the labor market through time-limited work engagement, whose engagement contributes to socially useful work and providing services to people in need. I am looking for an The aim of this measure, which is focused Unemployed 739 4,473,796.51 780 476 employer 2021 on the unemployed, is to facilitate the persons integration of the unemployed in the labor market and prevent long-term unemployment, and to increase their motivation to actively look for work. Service in coopera- The measure includes employment and train- Unemployed 853 7,972,356 1.388 tion with employers ing to increase competencies and acquire persons 2021 additional knowledge and skills of persons regardless of work experience, gender, age and level of education, registered as unem- ployed in FBiH, through cooperation of the employment service with the employer and/ or other legal entities. Self-employment The goal of this program is to encourage Unemployed 1,349 8,791,316.00 1580 co-financing program persons from the unemployment register persons Start up 2021 in the FBiH to self-employment, starting activities for a period of 12 months, as well as to employ other persons from the unemployment register for a period of six (6) months. The following measures have been implemented within this program: • Youth Entrepreneurship 2021 • Entrepreneurship for Women 2021 • Entrepreneurship for all 2021 • Entrepreneurship for Demobilized Veterans 2021 • Second chance 2021 Training and Work Training and employment co-financing Unemployed 18 640,658.40 158 2021 Program program implemented directly by the persons Federal Employment Agency with employers. The program is implemented with the aim of increasing the competitiveness of unemployed persons through training with a well-known employer, as well as providing employment opportunities. 58 Number of Number of Number of beneficiary Target beneficiary beneficiary female Name of the measure The aim of the measure group companies Budget employees employees Financing joint Within this program, cooperation was Unemployed projects with other established between the Federal Bureau, persons organizations and cantonal employment services, the Ministry institutions of Education, public universities in the Federation of BiH, as well as the Ministries of Education, public universities in FBiH and the Ministries of Veterans Affairs, for the implementation of the following projects: • Co-financing the employment of children of martyrs and fallen soldiers / veterans • Co-financing the employment of appropriate professional staff for children with disabilities in primary education in regular classes in the FBiH • Co-financing the employment of assistants and senior assistants in public universities • Co-financing of employment in social protection institutions • Joint projects with other organizations and institutions TABLE A3.2 Active employment policies in the Federation of BiH for 2021 specifically for start-ups Number of Number of beneficiary beneficiary Period of financing in Measure companies Budget employees months Entrepreneurship for youth 2021 270 1,999,891.67 335 6–9 Entrepreneurship for women 2021 238 1,546,006.06 272 6–9 Entrepreneurship for all 2021 487 2,986,078.93 572 6–9 Entrepreneurship for war veterans 2021 44 294,534.00 54 6–9 Second chance 2021 310 1,964,805.00 347 6–9 59 TABLE A3.3 Additional programs implemented in partnership with other public institutions Number of Number of beneficiary beneficiary Contribution by FBiH employees— employees— Program Number of projects PES employment training Support of employment of children of 3 400,000 61 0 passed war veterans Support of employment of assistants to 10 1,000,000 190 0 children with special needs in primary schools Support of employment of teaching 6 1,172,000 assistants at universities Support of employment at social 4 360,000 48 0 protection offices Other joint projects 27 1,000,000 165 104 TABLE A3.4 Programs and measures of cantonal employment services Number of Number of beneficiary beneficiary Name of employees— employees— Canton measure / program Target group Budget employment training Tuzla canton Employment incentive Young Roma, family 226,825 34 10 program members in which no member is employed, persons without work experience Program for co-financing VSS persons from the 582,084 0 151 professional training veteran population and without employment / members of their families volunteer experience, without work experience veterans and members of in the profession their families Central Bosnia Hiring appropriate Unemployed persons 103,217 25 0 Canton professional staff for children with disabilities Herzegovina‑Neretva Program for co-financing Children of war invalids 117,600 14 0 Canton the employment of children of war invalids Sarajevo Canton A job for everyone Unemployed persons 960,000 197 0 Gold badge Gold badges 76,800 8 0 Training, upskilling and Unemployed persons 15,115 0 9 reskilling Public works Unemployed persons 439,734 247 0 60 Number of Number of beneficiary beneficiary Name of employees— employees— Canton measure / program Target group Budget employment training Employment of persons Unemployed persons who 28,800 1 0 who have left the public have left the public care care system system Employment of members Unemployed members of 835,200 85 0 of martyrdom families and martyrdom families families of fallen veterans Public works PLUS Unemployed persons 180,378 102 0 Employment in public Unemployed medical staff 1,048,800 87 0 health institutions and institutions in the field of social protection Employment of demobilized Unemployed demobilized 681,600 71 0 fighters in the public war veterans economy Self-employment of martyr Unemployed members of 90,000 9 0 families and families of martyrdom families fallen veterans TABLE A3.5 Overview of active employment policies in RS for 2021 Persons Name of the measure The aim of the measure Target group Budget employed Together in finding Program for co-financing the Children of killed Republika Srpska 13,320,000.00 1274 employment employment and self-employment fighters, demobilized fighters and of children of fallen soldiers of the VRS war invalids Republika Srpska, demobilized fighters and war invalids of the VRS in 2020. The goal of the program is the integration into the labor market of persons from the target group of the Program with regard to long-term unemployment and social exclusion. Program to support Young people with a university 6,321,295.65 866 the acquisition of degree and a high school diploma in work experience of the status of trainees young people with higher education and secondary education in the status of trainees 61 Persons Name of the measure The aim of the measure Target group Budget employed Employment and The goal of the program is to Unemployed people at a 4,500,000.00 1,043 self-employment of encourage employment in the disadvantage target categories in the economy of the Republic of Srpska economy of unemployed persons in a disadvantaged position. This program reduces the number of unemployed persons from the register and creates a socially more favorable environment by economically empowering vulnerable groups. Support to Roma Employment of persons from the Roma 131,000.00 13 employment in target group through incentives for Republika Srpska business and creating conditions for employment of unemployed Roma, men and women equally in accordance with the expressed needs, especially appreciating their social and other vulnerabilities, to strengthen their competitiveness in the labor market and prevent long- term unemployment. Training, reskilling and 9,000.00 2 upskilling program Program to support 175,000.00 78 partnership in the implementation of active employment and self-employment policies with local communities, pooling of funds for employment A program to support The goal of the program is to Unemployed 5,000,000.00 2,255 the economy through maintain the existing level of refunds of taxes and employment and new employment in contributions for new the economy by providing financial employment of workers support to economic entities through the payment of incentives in the amount of paid personal income taxes and contributions for newly employed workers. Employment of young The goal of the program is to train Young people—children of killed 763.889,28 43 people - children of young people, children of killed fighters with a university degree killed fighters with a fighters with a university degree from from the register of unemployed in university degree in the the register of the unemployed to the status of trainees status of trainees take the internship exam and work independently in the profession. 62 TABLE A3.6 ˇko District for 2020 Overview of active employment policies in Brc Budget imple- Number of Imple- Name of the mented in beneficiary mentation measure The aim of the measure Target group 2021 employees period Preparing for the It is realized through courses from various fields in which Unemployed 28,999.10 86 labor market unemployed people express interest. persons Labor market The goal of the Program for the Harmonization of the Labor Young 300 and education Market and the Education System—career guidance and unemployed system counseling is to create conditions to help young people people harmonization choose a better and more competitive education that will program— enable them to find employment more easily; assistance career guidance to employers in selecting quality staff, establishing better and counseling communication and cooperation with employers in order to obtain timely information on employers' needs for workers of certain profiles, establishing better communication and cooperation with the education sector to educate staff needed for the labor market, reducing the number of long- term unemployed records of the Employment Bureau of the Brcˇ ko District, reduction of the total number of unemployed persons from the records of the Employment Bureau of the Brcˇ ko District and providing young people with opportunities for faster employment. Employment The program was created as a result of recognizing Harder to 998,400.00 130 program for the problems in the labor market in terms of employment of employ unemployed hard-to-employ target groups and as such is planned by categories from the the Institute's work program and the funds are intended for category of the following target groups: long-term unemployed, with hard-to-employ disabilities, children of fallen combatants and RVIs, civilian victims of war and children of civilian victims of war. Roma This Program aims to increase the employment of Roma 42,000.00 employment unemployed Roma. Self-employment The program implemented in cooperation with the Unemployed 474,500.00 42 24 months program in the Government of Brc ˇ ko District of BiH refers to co-financing persons ˇ ko District of Brc the start of own business for persons of active records of BiH in 2019 the Institute, all levels of education, whose business plans will be assessed as those which will, in addition to reducing the number of unemployed persons economic situation in the District. Self-employment The program of the Government of the Brcko District related Unemployed 515,000.00 Ongoing 24 months program in to self-employment in agriculture aims to develop agriculture persons (planned) agriculture in the by creating conditions for self-employment of persons who starting or ˇ ko District of Brc are on the records of the Employment Bureau of the Brcko starting BiH in 2019 District of BiH through financial support for persons starting agricultural or starting agricultural production. production The program of the Government of the Brcko District related to self-employment in agriculture aims to develop agriculture by creating conditions for self-employment of persons who are on the records of the Employment Bureau of the Brcko District of BiH through financial support for persons starting or starting agricultural production. 63 Address: 17 76 G S t NW, Washington, DC 20006 Website: ht tp://w w w.worldbank .org/en/topic/jobsanddevelopment Twit ter : @W BG_ Jobs Blog: ht tp://blogs.worldbank .org/jobs