The state of the vocational education and training (VET) system in Bosnia and Herzegovina was reviewed to identify needed changes in policy and practice. The analysis focused on the following topics: (1) existing socioeconomic conditions; (2) existing labor market policies and employment patterns, unemployment, and employability; (3) modernization of VET as lifelong learning; (4) management training; (5) VET teachers, trainers, managers, and administrators; (6) research on VET; (7) international cooperation in modernizing training; and (8) the role of the National Observatory. The analysis resulted in 23 recommendations for improving the secondary VET system and 21 recommendations for increasing employability in the labor market. Selected VET-related recommendations were as follows: (1) involve employers in creating and implementing VET reform; (2) improve links between strategic and practical implementation in schools and other training centers; (3) increase the circle of relevant partners by including the labor market and the institutes and universities that produce future teachers and politicians; (4) give schools more authority to enhance continuing learning; (5) provide more means of equipping employed teachers with relevant and updated skills, knowledge, and attitudes; (6) allocate sufficient means and time for evaluation and supervision in the introduction of modular curricula; and (7) use the best schools as regional centers for adult training. (MN)