The population of young people in Bosnia and Herzegovina is confronted with many challenges – economic, institutional and social. The participation of young people in education drops significantly after they turn 18, while entry into the labour market happens around 20 years of age. Unemployment mostly affects people with lower education levels, such as those with a secondary school degree or qualified workers. The youth unemployment rate, the most commonly used indicator of the disadvantages faced by young people in the labour market, is very high in Bosnia and Herzegovina. The single most significant factor affecting the labour market experiences of young people is the extensive informal economy in the country. Active Labour Market Policy for young people attempts to reduce the problems faced by young people in their attempts to find decent work once they enter the labour market. They attempt to remedy failures of the educational system and to improve the efficiency of labour market matching. The percentage of unemployed youth is of great importance because the youth are in the age when the ability and motivation for work are at their peak. Any society that excludes half of its population from the sphere of work acts against public interest.