A Different Sort of Social Assistance for Veterans and Invalids: Job instead of handouts – the Story of FIS Vitez

An Op Ed by Jane Armitage

World Bank Country Director and Regional Coordinator for Southeast Europe

Published in Oslobođenje, July 10, 2009

During my recent visit to Bosnia and Herzegovina, I held meetings with many BH leaders from the state and entity governments and institutions. General message which I have received at most of those meetings was that the country is facing serious economic, financial and social challenges.

In the country where 18 percent of the population lives under the relative poverty line and where additional 30 percent live just above that line, economic earthquakes of the magnitude we have been witnessing over the past months, can have devastating effects.

Spreading poverty affects mostly those who depend on social protection, but that system too seems to have major flaws and problems. While in relative terms BH spends more than most other countries on social payments, these payments are ill-targeted and miss to really protest those who need the protection most.

As a matter of fact, ill-targeted social system partially explains BH’s high poverty rate. Less than 30 percent of all social benefit programs reach the poorest. Some 27 percent of social benefits for veterans go to the wealthiest 20 percent of the population while less than 15 percent go to the poorest 20 percent. 

While the focus of the public attention is now focused on the benefits to war veterans and invalids, I was happy to witness a different sort of program which showed huge success in assisting many of those who, in the absence of job, depended on social handouts.

In order to mitigate potential social risks through better employment services, the World Bank supported implementation of the Second Employment Support Project (SESP). This project, worth USD 12 million, was implemented through the Employment offices and Employment Institutes and in partnership with entities’ Labor Ministries.

SESP financed incentives for companies to train and/or employ the most vulnerable among the unemployed, including invalids, those over 45 years of age and those who were actively seeking job for more than two years. It also provided funds for self-employment in agriculture and small businesses, counseling services, small scale public works and other programs to assist active job seekers.

Between 2005 and 2009 this project alone helped employment of 10,692 people across the country. In three months of effective implementation in 2008 alone, the project helped employment of 169 invalids.

On my way from Sarajevo to Banja Luka, we made a brief stop in the small but blooming central Bosnian town of Vitez, in order to visit one of the companies which employed 6 invalids and few scores of other workers with the support of the SESP project.

“Financial success is not the only thing that matters. It is also important to help these people,” Fis Vitez General Director Pero Gudelj told me during the quick but extensive tour through his highly diversified and ever-growing company.

During the tour, as every proud parent or manager, Pero Gudelj told me a story of his company which grew from the first private video store in 1980’s into one of the biggest local chains of shopping centers in early 2000’s.

Yet the story of development, employment and social care for his workers did not end there. Thanks to multi-million commercial loans, FIS Vitez continued spreading to the current 16,000 square meters of highly diversified business center, which includes various production and trade lines, but also kitchen and other services for his workers.

“I don’t want my workers to eat sandwiches. We have a proper kitchen that cooks good, hot meals,” Pero said proudly.

Despite the worsening economic situation in the country and abroad, as well as sharp decline in demand for many of FIS products, the company was forced to let go only some 100 workers and maintains more than 2,600 workers on its payroll.

During my brief stay in Fis Vitez, I had a pleasure of meeting few members of this company who were employed through the SESP project.

On the furniture production line I met 30-year old Franjo Peric, who got his first job thanks to Fis Vitez and SESP project despite his invalidity.

The same cooperation helped 50-year old Ankica Kuna, a mother of three, to find a job behind a sewing machine, sewing together upholstery for the furniture produced here.

“I am really grateful for this new chance. I was looking for a job for full 16 years,” she told me.

Pero Gudelj, Franjo Peric, and all other employees whom I met during my visit to FIS Vitez, agreed that more development and employment projects, such as SESP, could significantly improve living standard of many social beneficiaries.

Yet the current social security system in BH does not allow for more such useful projects. Excessive spending on a large number of beneficiaries, as well as multiple dipping into the budget purse by different social categories, do not leave much room in the budget for those pro-active employment programs.

I hope that this too will eventually be changed in the long-needed reform of BH’s social sector. This would enable many “social cases” to work and live a richer and more dignified life, while social benefits would be focused on those who really need that sort of assistance.