Hungry for Labour: Croatian Employment Rate Above Pre-Crisis Levels

By 9 November 2021

November the 9th, 2021 - We're now in the part of the year when the classic seasonal slump in terms of the Croatian employment rate usually happens, but owing to the pandemic and some of the trends it has created, things are looking a bit different.

As Poslovni Dnevnik/Jadranka Dozan writes, due to slow but steady domestic economic recovery, the total Croatian employment rate exceeded the situation before the pandemic-induced crisis. The recovery in employment and demand for workers is currently being overshadowed by a parallel process of increasing the number of voluntary liquidations and initiating bankruptcies of companies who no longer see a prospect for their businesses to continue operating, which has been going on since the second quarter of the year.

Likewise, in contrast to Croatian employment, which has improved compared to pre-pandemic figures, the number of unemployed people is even higher than it was back during comparable levels from the year before last, analysts at the Croatian National Bank pointed out in a new review of economic trends.

This, they say, points to the increasing employment of workers from countries outside of Croatia and the EU in order to partially offset the growth in demand for labour.

The growing demand for labour is also suggested by the value of the index by which the Zagreb Institute of Economics monitors its current situation through online job vacancies, and the EIZ accompanied it with the title "looking for more workers" and commenting that the data "still offer reasons for optimism".

This is the OVI index (Online Vacancy Index), which was developed by the Institute in cooperation with the MojPosao (MyJob) portal and which, back in October, indicated a higher demand for work compared to last year, but also compared to that of the level of 2019. Demand for work measured by this index is, they say, around 39 percent higher than it was back October 2020 and about 9 percent higher than the pre-pandemic October of 2019.

Last month was the sixth in a row in which the demand for labour in Croatia exceeded the pre-pandemic months, and during October this year, retail workers, waiters, teachers, chefs and warehouse workers were most in demand, the OVI index commented. Almost half of the advertised jobs were related to a fixed-term contract, as well as an increase in the number of advertisements in which the possibility of working from home is explicitly mentioned.

Over more recent days, the employment campaign of Novigrad Laguna, which manages 13 hotels, 4 camps, a settlement of 80 villas, as well as 92 apartments in Novigrad, on Krk and Korcula and the Peljesac peninsula, has attracted special attention. As part of the started preparatory activities for the next tourist season, Aminess hotels and camps have launched a campaign to attract as many as a thousand employees, offering them stimulating monthly rewards, Christmas bonuses, accommodation in a modern hotel for employees, a hot meal, as well as education programmes in which, in 2022, they intend to invest almost one million kuna.

In the business community, so much demand for workers in Aminess hotels and camps is partly related to unofficial information that the company is on its way to acquire a new hotel in Makarska.

Zrinka Bokulic, President of the Management Board, neither confirms nor denies this information. She says the campaign reflects several main things, from expanding the business (in terms of existing capacities) and potential new acquisitions to raising service quality standards, most notably in Orebic and Korcula, which have only recently come under the company's auspices. The new level of service standards, in addition to education, includes a larger number of employees.

After this year's pre-season, a good summer season seemed unlikely, so part of the accommodation capacities opened a little later, and Valamar has already turned to preparations for 2022. Fifteen days ago, they announced that they intend to hire about 400 key seasonal workers indefinitely this autumn, and will provide them with a stable income and year-round work in tourism.

While the leading companies on the Croatian tourism scene are doing everything to ensure the highest quality service for next year, the problem of lack of skilled labour is one of the reasons for the decline in business expectations in the October survey conducted by the Croatian Nationl Bank.

Across all industries, the index of trust and optimism of business entities last month was below the average from the previous three months. In terms of construction and industry, the problem of the labour shortage is most often emphasised, while in the Croatian National Bank's survey, respondents from service industries are primarily afraid of a lack of demand.

If the domestic labour market as a whole is observed, at the end of September this year, 1.6 million insured persons were registered with the Croatian Pension Fund. This is a slight decrease compared to the month before, but at the annual level of 51 thousand or 3.3 percent more, and it also exceeded the number of insured persons recorded back in pre-pandemic September 2019, by more than 14.7 thousand or slightly less than one percent .

While the manufacturing industry and trade as the activities with the largest number of employees recorded an increase compared to last year, but not up to pre-crisis figures, the construction and IT sector (Information and Communication category) has already exceeded them. Croatian IT companies are also exposed to more pronounced pressures on wage growth and according to the latest available data from the CBS, they are the ones leading the growth of average salaries.

Despite the general trend of wage growth, demand for workers and a larger number of employees when compared to pre-pandemic figures, Croatian National Bank surveys of citizens in October showed a decline in consumer optimism. The acceleration of inflation and the epidemiological situation obviously raise concerns about further developments in the labour market.

For more on Croatian employment, make sure to check out our dedicated business section.