Coronavirus: Bureaucracy-Loving Croatia Impressive in Digitisation

By 22 April 2020

Paper, stamps and photocopies of obscure documents are, alongside the sea, what Croatia is well known for. It seems the coronavirus crisis has forced Croatia into the 21st century, and not a moment too soon...

As Tomislav Pili/Poslovni Dnevnik writes on the 21st of April, 2020, the current coronavirus pandemic has proven the importance of digitising a range of economic sectors, and Croatia is, rather shockingly, quite satisfactory in this area, according to an analysis by the European Investment Bank (EIB) entitled ''Who is ready for a new digital age'', which was presented on Monday.

Croatia is ranked among the 'strong countries' on the EIBIS Digitisation Index, given that the Croatian digitisation rate is above the EU average in the construction, services and infrastructure sectors.

Croatia earned 63 points according to the index and is in the company of Slovenia, Sweden, Portugal, Estonia, Belgium, Luxembourg, Slovakia and Austria. The highest value of 84 points was taken by Denmark and the lowest - 48 points - was taken by Lithuania.

In addition, the digitalisation rate in the Croatian services sector is also higher than even the US average, which generally stands better than the European Union, let alone paper-loving-stamp-needing Croatia, in terms of digitisation.

The EIB report states that 40 percent of Croatian companies in the manufacturing and construction sectors have been partially digitised, and 18 percent in manufacturing and 15 percent in construction have been fully digitised.

In the service sector, more than half of Croatian companies are partially digitised, and if fully digitalised companies are added, the share grows to more than 70 percent. In comparison, in the European Union, 40 percent of companies in the sector are partially digitised, and in the US, just under 50 percent of them are.

Among large companies, the rate of digitisation in the service sector in Croatia stands at an impressive 80 percent, while the US average is about 65 percent and the European average is about 55 percent. As expected, small businesses - defined by the EIB's report as having fewer than 50 employees - cannot afford to make major investments in the area, so 40 percent of them in the service sector are digitised, as opposed to every other one being digitised in the European Union and over in the US.

In what segments is Croatia still falling behind?

The extent to which the digitalisation of business brings positive effects is evidenced by the fact that the share of companies who have done so have increased their number of employees in the last three years, or they've at the very least remained more stable than companies that didn't start the process at all.

Namely, the average labour productivity of digitised Croatian companies has reached a value of 11.2, while in the European Union it is above 12, and in the USA it is very close to that same figure. At the same time, the median salary in a digitised Croatian company is around 15,000 euros a year, while the median salary in such a company elsewhere in the European Union is a very different 38,000 euros.

In general, European companies are less digitised than their US competitors, and they're particularly lagging behind in the construction sector. In addition, American companies are investing more and more in improving their business processes. It seems however, that both European and US companies perceive digital infrastructure similarly.

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