Declining Supply and Rising Demand for Labor – the Consequences in RS

Abstract

The aim of this research is to provide projections of the labor market in the Republic of Serbska, as a part of Bosnia and Herzegovina (RS) in the period 2017 - 2021, based on an analytical approach and precise indicators. The basic methodology in creating projections on the labor market in the Republic of Serbska (RS) is statistical extrapolation of trends in demand and supply of labor at the level of the RS. Data for this study were standard reports of statistical institutions (Statistical Yearbook, Labor Force Survey, etc.), as well as special reports generated for the specific needs of this research. The results show that in the next 6 years, the number of working-age population will shrink by a further 59,000 people with 867,000 to 808,000. Out of the total working-age population, ie the active population. labor force (the sum of employed and unemployed) is will not change greatly, while the level of the inactive population, ie. working-age population not seeking employment will drop significantly. On the other hand, our projections show that, even in terms of the decline in the working-age population, the demand for labor will continue to grow. Also, according to projections, the number of unemployed ie. the excess of supply over demand of the labor force will decrease in the period 2017-2021. All this will not be without impact on wage levels. Total average gross wages will rise by 2021, but wage growth in the manufacturing industry will be much more pronounced. Therefore, it is essential to increase productivity and added value of companies because it is the only way to compensate for this increase in wages.