THE PENSIONERS ARE PAYING THE PRICE OF TRANSITION

INTO THE YEAR 2000 AFTER THE REST OF THE MANKIND

AIM, SARAJEVO, November 22, 1999

In the eighties boys from the music group "Forbidden Smoking" sang "The pensioners go to the seaside in winter". Today, the B&H pensioners do not go to the seaside either in winter or in summer as they have more important problems on their mind: how to survive under "wild capitalism" without a penny in their pocket.

According to official data, the average monthly pension in the Federation of Bosnia and Herzegovina amounts to DEM 180 (the average salary being DEM 380). The amount of their pensions, which compared to the prices of goods and services are equal to charity, is not their only problem, but rather the fact that the B&H pensioners will enter the year 2000 later than the rest of mankind. Although people all over planet are busy counting down the days left till the beginning of the new millennium, for the pensioners of B&H the summer has just begun. Namely, they are supposed to get their July pensions only now and by the end of this year can hope, at best, to get September pensions.

The pensioners are among the first to foot the bill of transition into capitalism. The system of pension insurance, inherited from the old state, was based on a simple principle according to which the workers support the present pensioners so that when the current workers retire new generations of employed could finance them from contributions on their salaries. The system has been more or less functioning for the last several decades simply thanks to the fact that the number of workers who pay contributions to the Fund for Pension and Disability Insurance (PIO) was several time larger than the number of pensioners, so that three to six employees, on average, "supported" one pensioner.

The war that has left B&H and its economy totally destroyed, had even harder consequences on pension funds. The stagnating national economy is literally employing just over one half of the number of workers it employed before the war, while the percentage share of pensioners in total population has remained the same. When we reduce the number of those officially employed by the number of workers on waiting lists, who themselves do not get any wages and whose pension and health insurance contributions in most cases are not paid at all, then we get a catastrophic ratio: the number of pensioners is practically equal to the number of officially employed persons. The result is the empty Pension Fund's safe box, i.e. the little money that is collected during a month on account of contributions is not sufficient to cover one month pension bill.

More specifically, the figures for the case of the B&H PIO, which has its headquarters in Sarajevo and covers the largest number of pensioners on the territory of the B&H Federation, are the following: at best, some DEM thirty million are gathered per a month from contributions on salaries, while additional ten million German marks are necessary for the payment of pensions. This is nothing new as the situation is such since

1. During the war, the pensioners did not receive any pensions but only a symbolic sum of several German marks per a month. The state justified this with the war promising to pay out the difference once the peace comes. But, when the war ended the situation did not change much for the pensioners. The pensions became higher but were coming later and later. Pressed by pensioners' demands to fulfill its promise on paying its debt from the war period, the B&H Government came up with a miraculous solution to pay the war and post-war debt to the pensioners - not in money, but rather in privatization certificates. Naturally, the pensioners were not enthusiastic about this solution, but resigned themselves to their fate hoping for higher and more regular pensions in the future.

However, their expectations were futile as the monthly inflow into the Pension Fund was still below the required amount. Once again, the current authorities resorted to their "original" solution. A fragment of the missing ten million German marks was partly compensated from health insurance contributions charged from pensioners, which left the health sector dissatisfied. The official explanation of this practice given by high federal officials was that "the people in the health sector did not really need these several million, because it they did they would have complained long ago".

The remaining monthly "negative balance" was covered, as for example for last-year's September pensions, using a part of funds paid by the employed for October contributions. Since this minus existed from the very start, it is clear that such practice cannot solve anything. When September was over and the time came to pay October pensions there was even less money as a part of funds for October was already gone. Again, the authorities took the money earmarked for the next month and the pensioners had to wait for enough money to be collected on the PIO account so that they could get their pensions. Finally, pensioners are unaware that while they are waiting for their July pensions the money from contributions on August, September and October salaries has already been spent. That is why no one can tell when and from what funds will, for example, this November pensions be paid, least of all the current authorities whose only aim is to "somehow turn the corner and then see what happens next".

Although their pensions are months late they are required to regularly pay all their electricity and housing bills, and without any delay too. If not, their electricity is cut off and they can be sued. It is paradoxical that, although being the poorest segment in the society, the pensioners are most regular in paying their dues to the state. For that they receive verbal commendations of federal officials.

In the end the pensioners have opted for street protests, written and oral petitions addressed to the Federal Government. But, apart from words of sympathy and nebulous promises, nothing has changed for the better. That is why the pensioners of B&H most blame Federal Prime Minister Edhem Bicakcic simply demanding their money. Invoking laws and blaming the international community, Prime Minister Bicakcic persistently claims that the federal budget has nothing to do with the pensions. Thus, the time passes in mutual accusations of pensioners and federal officials while pensions keep coming later and later.

In essence, the Federal Prime Minister is right when he claims that he personally, i.e. the Federal Government and the budget have nothing to do with pension funds. The separation of state funds from pension funds and the maximum reduction of budget items are among some basic demands of the international financial institutions.

The problem lies elsewhere. There is no money in the budget, everyone knows that, same as they know that pension funds have to be replenished exclusively from contributions of the employed workers.

In long-term, pension problems can be resolved in only one way and that is by increasing the number of active labour force. There is where the main blame of the current federal authorities lies for the misery with which the pensioners are faced. "Moonlighting" has become widespread and according to estimates as much as 150 thousand workers are involved in it. This also includes people working in various international organizations who also do not pay contributions. The state has instruments for controlling it, and it can be achieved either by controls, rigorous sanctions or more stimulating policy of contributions and taxes. But, as everywhere else in the world, this must be the task of all state institutions. The authorities are closing their eyes to "moonlighting" because by tolerating illegal employment they buy the much needed social peace. Leaving the economy to its own resources, without any development strategy or investments in production there is no chance for more productive employment, but the leaders are preoccupied with more urgent problems, such as keeping the reins of power in their hands.

What the federal authorities could have done long ago, but did not, was to ensure the restitution of real estate property of enormous value to the Pension Fund, such as hotels, resorts and similar facilities built with pension monies before the war and which during and after the war, have become the "spoils of war" of the new rich who are only waiting for privatization to formally legalize the "conquest" of these facilities. These are facilities worth several dozens of millions of German marks whose sale or renting could cover at least a part of the current negative balance on the Pension Fund accounts, i.e. until the positive effect of the elimination of "moonlighting" and increased official employment could be realized. For the time being such developments are pure science fiction or, at least, a matter of very distant future.

In contrast to other socially endangered categories, pensioners have the disadvantage of being too old and feeble to be interesting to bosses as "illegal" workers so that the only thing left for them is to hope that the current authorities will answer their prayers to get only what they are entitled to by the law - a regular pension and its adjustment to the average income growth. No matter how small and logical this might seem in any normal country, for the B&H pensioners this is still an unattainable dream.

Drazen SIMIC

(AIM, Sarajevo)