Sunday, 14 August 2022

Croatian Socialist Past Responsible for Lower Wages? Analysis Says Yes

August the 14th, 2022 - Is the Croatian socialist past responsible for the big wage gap between the country and other European Union member states which were never part of Yugoslavia? One Croatian Employment Service (HZZ) analysis says an emphatic yes.

As Marija Brnic/Poslovni Dnevnik writes, the growth of wages over the last year has been mostly attributed to the chronic lack of workers in Croatia, but calls are regularly heard from the ranks of Croatian businessmen to the government to undertake tax reforms and finally reduce the high burdens due to which workers' wages are low compared to other countries, and their products are as such very uncompetitive.

In recent statements, they warned that 42% of an employee's gross salary goes straight to the state. However, an analysis of the Croatian Employment Service (HZZ) on the average gross wages in the manufacturing industry across EU member states shows that the level of wages and indeed large differences between EU countries is also determined by a number of other elements that determine labour productivity, and the most interesting conclusion they've drawn is that such differences are greatly influenced by the legacy of socialism.

The Croatian socialist past - Life behind the "Iron Curtain"

This fact can be seen at first glance from the very ranking of wages paid per hour of work by industrialists in certain other countries, because they are the highest among the older EU member states, while the countries behind the former "Iron Curtain", including Croatia, come second with gross salaries which are several times lower.

According to Eurostat data for 2021, the highest gross hourly wage is paid in Denmark (48.5 euros), while the lowest (5.8 euros) in Bulgaria is 8 and a half times less. Workers at processors in Belgium, Sweden and Germany had more than 40 euros in gross hourly wages, and almost 40 euros is paid out per hour in both Austria and France.

Among the former socialist countries, the highest gross wages are paid to employees in neighbouring Slovenia (20.3 euros), which is twice as much as in Croatia, where an hour of production costs an average of 10.3 euros. Industrial workers in the Baltic country of Latvia also have a very similar gross salary, and only salaries in Romania, along with Bulgaria, are lower than that.

This trend, although CES analysts refrain from drawing firm conclusions since the past two years we've all been operating under the conditions of a global coronavirus pandemic, shows that in most countries the price of labour in industry has increased, and this is most visible in hourly rates in Denmark and Sweden, while in some countries, slight reductions were also recorded.

Here in the Republic of Croatia back during the pre-pandemic year of 2019, the average gross hourly wage stood at 10.1 euros, a year later it stood at 9.9 euros, and last year it rose to 10.3 euros.

Due to the unreliability of the data from the time of the unprecedented situation involving the spread of the novel coronavirus, CES analysts based their further research on wage differences on 2019, i.e. data on what affected labour productivity, and thus wages, in the period from 1996 until that time. The data on the share of experts and the share of technicians in the total number of employees were also compared, and they also processed data on the extent of investments in machines and equipment during that longer period.

Impacts on productivity

It has been shown that Finland (23.8%) and Luxembourg (229%) have the largest share of experts in the total number of employees in the processing industry, while Sweden (24.8%) and France (24.6%) lead the way in terms of the share of technicians, Belgium leads in terms of industrialists (305,000 euros per worker) and Sweden (262,500) in terms of relative investment in machinery and equipment.

Former socialist countries are at the bottom again - Slovakia in terms of the share of experts (3.6), Romania in terms of the number of technicians (4.5), and Bulgaria in terms of investments in machinery and equipment (34,200 euros per worker). In Croatia, 7.6% of the employees in the industry are experts, 12.3% are technicians, and the average investment per worker was 60,000 euros.

CES analysts calculated that the share of specialists in the total number of employees, higher by one percentage point, increases wages by 3.7%, and the share of technicians by 2.7%. In the case of investments, the ratio of logarithmic values ​​shows that investments are higher by 10%, with an unchanged share of experts and technicians, associated with a higher salary level by 5.7%.

It is clear that part of today's wage differences very likely reflect the historical handicap of countries that were once socialist, and as such the Croatian socialist past should as such be taken into account. CES analysts pointed out that according to their calculations, the historical legacy of socialism reduces today's wages in the industry sector by a not at all insignificant 21% in total.

For more, make sure to check out our dedicated politics and business sections.

Monday, 11 April 2022

Zagreb's Average Monthly Wage €150 Higher Than National Average

11 April 2022 - The average take-home monthly salary paid in Zagreb in January amounted to HRK 8,528 (€1,130), which is HRK 1,150 kuna (€152) higher than the national average for January of HRK 7,378 (€978).

According to the data provided by the city's strategic planning department, average monthly pay was 5.5% higher than in January 2021.

Broken down by business activities, the highest average monthly salary was paid to employees in the crude oil and natural gas  production sector (HRK 13,681) and the lowest in the leather manufacturing sector HRK 4,877.

(€1 = HRK 7.543431)

Tuesday, 4 May 2021

Medjimurje County Wages No Longer Lowest in Croatia

May the 4th, 2021 - Medjimurje County is no longer the Croatian county with the lowest wages in the country, with Virovitica-Podravina County now taking ''the lead'' on that list.

As Poslovni Dnevnik writes, the last place in terms of salaries at the county level is no longer held by Medjimurje County and has now been taken by Virovitica-Podravina County, where the average salary is 300 kuna less, and amounts to 5261 kuna, writes Jutarnji list.

Bjelovar-Bilogora County is only slightly better off with an average salary of 5,364 kuna. In those two counties, wages grew by about ten percent in three years. Although these are still regions where wages are typically low, meaning well below the Croatian average, the fact remains that they have grown at different rates. The main reason for this, according to Danijel Nestic from the Institute of Economics, is of a legal-regulatory nature.

The minimum wage was increased by 20 percent in that period, in the gross amount from 3,120 kuna back in 2016 to 3,750 kuna in 2019, reports Jutarnji.

As the northern Croatian counties, primarily Medjimurje County and Varazdin County, boasted the largest number of employees in low-paid sectors in the country (textiles, clothing, footwear, leather, plastics, furniture), the increase in the minimum wage went in their favour most of all. According to Danijel Nestic, about 40 percent of employees in those two counties worked in low-paid sectors, while their share in the total number of employees in Virovitica-Podravina and Bjelovar-Bilogora counties, for example, stands at about 25 percent.

In addition to the above, as Danijel Nestic added, the unemployment rate is lower in the north of Croatia.

While in the north of Croatia, low-paid jobs predominate, in the Adriatic counties catering, hospitality and trade are of greater importance due to tourism, while in Zagreb, the public sector continues to dominate.

Employees in Zagreb have the highest average salary in Croatia, standing at 7,468 kuna, which means that it is 42 percent higher than the lowest salary in Virovitica-Podravina County.

The largest number of employees in Zagreb work in public administration, education and healthcare, about 96,000 of them, followed by trade with about 73,000 people, followed by manufacturing (41,623), information and communications (28,242) and construction (24,488).

In its latest analysis of wages in counties, the Croatian Chamber of Commerce (HGK) states that there is a significant difference in their amount by region, which entails differences in living standards in some areas, and to some extent results in pressure to dynamise both internal and external migration.

A more pronounced equalisation of wage levels by region, however, "is difficult to expect without changes in the structure of the economies of the regions towards higher value-added activities and more innovative and technologically advanced production." As they point out from the Croatian Chamber of Commerce, this requires stronger investment activity.

For more, follow our lifestyle section.

Thursday, 23 April 2020

Companies to Profit from State Compensation for 131,000 Workers on Minimum Wage

ZAGREB, April 23, 2020 - The government-designed measure to help employers to retain workers during the coronavirus crisis will actually help some companies to profit from that measure for 131,000 employees on a minimum wage, the Večernji List daily said on Thursday.

The impact of the coronavirus epidemic on monthly salaries could not be seen in the latest statistical data on wages earned in February and paid in March. In nominal terms, the average take-home pay was HRK 6,789, 4% higher than in February 2019.

The median monthly wage in February was HRK 5,705, which means that 657,000 workers in Croatia earned less than that amount.

It has been known that over 96,000 companies have to date applied for assistance under the government wage subvention scheme.

Those companies have 560,000 workers on their payroll. The state sets aside funds for 3,250 kuna as the minimum wage per employee in March, while employers are supposed to cover the difference for their real monthly wage. In April, the government aid for a salary per employee is 4,000 plus contributions.

Before the corona crisis, some 131,000 workers earned the minimum monthly salary, and 130,000 earned a monthly salary ranging between HRK 3,640 and 4,188.

Companies with average salaries ranging between those numbers will have all the obligations for their workers' wages covered by the state aid, and the companies whose workers received the minimum salary could even benefit from the state subventions, the daily explained.

More coronavirus news can be found in the Lifestyle section.

Tuesday, 18 June 2019

Romania Raises Wages by 18%, Croatia Sticks With Less Than 5%

Despite numerous moves being attempted to be made by Croatia's government and the Croatian Employers' Association (HUP), there's sadly bad press for Croatia's economy as countries like Romania put better measures in place.

As Poslovni Dnevnik writes on the 18th of June, 2019, according to Eurostat, Slovakia is the third highest country on the list in terms of wage and salary increases (around 9 percent), with Slovenia, the Baltic countries and the Czech Republic, where salaries have risen by about 8 percent a year, gaining on it.

For the past year, Romania has increased its average salaries by as much as 16 percent to stop its own labour force from leaving the country and to try to encourage more foreigners to come, as Ljubica Gatarić reports for Večernji list.

In March this year, the average gross salary in Romania jumped a little bit up from the 1,000 euro mark (more specifically to 1062), and the country, faced with its own demographic crisis, sought out labour from countries like Pakistan.

The powers that be in the two countries are now all set to sign a special agreement that will allow tens of thousands of Pakistani nationals to work as drivers, doctors, IT engineers and construction workers in Romania.

Romanian Ambassador to Pakistan, Niculai Goa, informed the Pakistani authorities that Romania will have to import as many as a million workers from different countries in the next few years to cover the country's local workforce deficit.

Bulgarian employers are also worried about the same things. Bulgaria has seen a salary increase of about thirteen percent in one year, and as stated, according to Eurostat, Slovakia, Slovenia, the Baltic countries and the Czech Republic are doing well, with Slovakia introducing a 9 percent increase and the following countries introducing one of 8 percent. 

The hourly wage in Croatia has risen by about five percent in a year, which is less than that of comparable transitional countries that are also opening up their doors for workers from countries such as Pakistan, Vietnam, Sri Lanka, Nepal, Turkey, China, and so on.

The Croatian Chamber of Commerce and the Croatian Employers' Association (HUP) are pushing for a new model for the employment of foreigners, which will enable companies to hire a foreigner automatically if they can't find workers on the Croatian labour market. However, official statistical sources (Eurostat and CBS) point to a slowdown in the demand for a workforce in Croatia.

In the paradoxical country that is Croatia, where people can't find work despite there apparently being many jobs available, and where employers also can't manage to find staff to do that work, it's difficult to say what the next move, if any, will be to try to increase wages enough to match other countries, some of which are typically considered to be less developed than Croatia.

Make sure to follow our dedicated business page for more information on working in Croatia, doing business in Croatia and much more.

Wednesday, 7 November 2018

Men in Croatia Earning Much More Than Women

ZAGREB, November 6, 2018 – Men in Croatia annually earned as much as 11,500 kuna more on average than women in 2015, which is almost one and a half average Croatian gross monthly wage more, gender equality ombudswoman Višnja Ljubičić said in Zagreb on Tuesday while presenting the European project "Equal Rights - Equal Pay - Equal Pensions", which aims to achieve gender equality and prevent poverty in Croatia.

The average monthly gross wage in Croatia in 2015 was about 7,500 kuna (1,000 euro) for women and 8,400 kuna (1,130 euro) for men, which means that the average monthly wage for women was 88.7 percent of that for men, the ombudsman said.

She warned that the gender pay gap leads to a pension gap, as a result of which women face social exclusion, poverty and economic dependence on the husband or partner after leaving the labour market.

The project "Equal Rights - Equal Pay - Equal Pensions" aims to ensure standards and measures that will raise awareness of this problem with a view to reducing the risk of poverty for women.

The 470,000 euro project was launched on October 1 and will last until the end of September 2020. It is the fourth European project to be implemented by the gender equality ombudsman in the last five years through which a total of 2 million euro has been absorbed.

As part of the project, an in-depth study of the situation will be carried out at national level, educational programmes will be designed, workshops will be held in four cities and a national legislative framework for equal pay and pensions is expected to be drawn up. The target groups of the project include executive and legislative authorities, public- and private-sector companies, trade unions, and secondary school students.

For more on the position of women in Croatia, click here.

Wednesday, 21 March 2018

Labour Costs Rise Substantially in 4th Quarter of 2017

ZAGREB, March 21, 2018 - Labour costs in the European Union increased in the fourth quarter of 2017 almost at the same rate as in the previous quarter, while in Croatia their increase picked up, according to the EU statistical office Eurostat.

Monday, 19 March 2018

Workers in Croatia Still Earning Less than Before Crisis

ZAGREB, March 19, 2018 - Croatia is the only new European Union member state in which salaries today are lower than they were in 2010 and workers are earning less than before the crisis, the Union of Autonomous Trade Unions (SSSH) said on Monday, adding that only higher wages can stop the wave of emigration.

Thursday, 12 October 2017

Wages in Croatia Lower Than in China

Croatia is falling behind.

Thursday, 5 October 2017

Wages in Tourism Lower Than Croatian Average

If salaries were higher, then maybe employers would not have such hard time finding employees?

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