Wednesday, 26 January 2022

Value of Bills and Receipts Issued in Croatian Tourism Sector 219% Higher

January the 26th, 2022 - The value of bills and other receipts issued in the Croatian tourism sector for 2022's maiden month of January seems to promise a good year ahead.

As Poslovni Dnevnik writes, across all economic activities registered in the fiscalisation system last week, the value of fiscalised bills and receipts increased by 16 percent compared to the same comparable week back in 2021, and by eight percent compared to the same period in 2020, according to data from the Tax Administration which was published on Monday.

From the 17th to the 23rd of January, 2022, the total value of fiscalised accounts across all industries reached 3.3 billion kuna, which is 16 percent more than was recorded back in the same period last year. At the same time, the number of bills issued in general increased by 20 percent.

The number of bills and receipts issued in the most important activity in the fiscalisation system jumped by as much as seven percent - wholesale and retail trade, the repair of motor vehicles and motorcycles, while their value was higher by 8 percent. Last week, 23.5 million bills/receipts were fiscalised in trade, reaching a grand total of 2.3 billion kuna.

When it comes to the Croatian tourism sector, more precisely the umbrella covering the fields of both catering/hospitality and tourism - activities which include the providing of accommodation and the preparing and serving of food, fiscalised bills/receipts stood at 341 percent more, with 4.8 million of them issued, and their value increased by a very encouraging 219 percent, reaching a massive 216.9 million kuna in total.

It's worth noting that in the same sense regarding the Croatian tourism sector, from the end of November 2020 and throughout January 2021, due to the severely unfavourable epidemiological situation, stricter measures were in force, including the suspension of the work of cafes, bars, pubs and restaurants.

This recent announcement from the Tax Administration also compared last week this year with the same week back in 2020, which is a month or so before the pandemic hit Croatia, 4 percent fewer bills/receipts were issued, but their value was 8 percent higher.

For more, follow our business section.

Tuesday, 25 January 2022

Croatian 2022 Season Lacks 35,000 Workers, Some Hotels May Not Open

January the 25th, 2022 - It might seem like we're far from the sweltering heat of summer and an influx of tourists at the moment, thanks to the temperatures and the weather, but the Croatian 2022 season will be here before we know it. As many as 35,000 staff are required and apparently are struggling to be found, leading some facilities such as hotels to perhaps not even bother opening their doors this summer.

As Novi list/Alenka Juricic Bukarica writes, there will be an estimated shortage of between 30,000 and 35,000 tourism employees for the Croatian 2022 season. The problem of labour shortages escalated last year when some hotels, and not only those of lower category, didn't bother to open their doors during the main summer season because there were no employees who would work the season to be found.

The tourism sector therefore calculated that around 800 million kuna more revenue could have been generated if they had been able to hire labour under more relaxed conditions.

Most of the Croatian tourism sector, with the exception of, for example, travel agencies, no longer have job preservation measures introduced in 2020 available for their employees, which is why the sector launched a series of proposals back in early autumn, immediately after the season, to alleviate the problem of staff shortages and to further facilitate employment. The sector also expects the labour market test obligation to be scrapped.

The problem of waiting for work permits for third country nationals

The 2021 Croatian census showed a sharp decline in the number of inhabitants of the country, and thus the working population, and in the conditions of the pandemic, the trend of local workers going abroad increased, meaning that the already insufficient pool of domestic labour was further emptied. As expected, the Croatian 2022 season will come with great demand for staff from other, mostly neighbouring non-EEA/EU countries, but also the Philippines, India and Ukraine.

Last year, when it came to hiring foreigners, employers ended up having to wait for several weeks to get valid work permits for their staff to that they could work legally, and waiting for even one month during the height of the busy tourist season is unrealistic.

According to the Croatian Employment Service (CES), two thousand and 463 waiters, two thousand and 101 chefs and 689 maids were registered at the bureau at the end of December. According to the same institution, a total of 235,219 workers were wanted for last year's season, of which 27,792 were seasonal workers.

Out of a total of 27,792 sought-after seasonal workers, most were in Istria, Split-Dalmatia, Primorje-Gorski Kotar and Dubrovnik-Neretva counties. When it comes to labour market tests, in 2021 - 28,838 workers were in demand. Thus, work permits were issued to more than 2,000 cleaners from abroad, about 1,700 foreign waiters, 1,300 assistant cooks, about 1,200 cooks, and about 700 hotel maids.

The highest number of requests for the labour market test was received by the Zagreb Regional Office, amount to around 8,500, while Pula is in second place with about 6,800 such requests, and Rijeka is in third place with about 5,400 requests. It's worth mentioning that back during the record-breaking year of pre-pandemic 2019, about 20,000 seasonal workers from abroad were employed in the Croatian tourism sector.

Crisis reactions

Commenting on the situation with staff in tourism last year and this year, Marina Cvitic, the president of the Trade Union of Istria, Kvarner and Dalmatia (SIKD), pointed out that in tourism, it is more than necessary to specifically increase salaries, all the more so given the situation with inflation.

''This was the biggest mistake employers in tourism made at a time when there were staff to be hired. There were enough of them, and the employers had enough money and they could have financially increased the salaries of their employees. Now they have less money, and they give bigger increases than when they did have money. But, unfortunately, there are no staff now. It's a vicious circle. Now, salaries should be increased by at least 50 percent in order to get people to come back,'' she warned.

She added that today anyone who is healthy can find a job. It might not be a quality job, but it will be enough to get by. People don't leave Croatia because there is no work, but above all to find better jobs and more stability. Last year, she said, the staffing situation became very difficult.

''On the one hand, I understand why it was how it was. Employers couldn't plan in time because the pre-season was marked by lockdowns, and until the very beginning of summer, it was practically unknown whether there would be a tourist season at all. Then in June everything started again rather abruptly, and of course all those who weren't invited to come here to work until June, had been looking for a livelihood elsewhere. A large number of workers who would otherwise have decided to work in Croatian tourism went and did other things, usually being engaged in the construction or trade sectors. Wages in these industries increased, so tourism offered low incomes in relation to them. Therefore, without a concrete increase in salaries, I'm afraid that there will be no progress for the Croatian 2022 season and that part of the facilities will remain closed once again due to lack of staff,'' said Cvitic, adding that now is the time to negotiate the price of labour for the upcoming tourist season.

This time last year, the negotiation was to reduce, not increase wages, because there was no need for workers. During the season, through non-taxable awards and other things, they tried to compensate for that.

As for foreign workers, Cvitic revealed, they were really from everywhere, from Nepal, Brazil, Argentina, India, to the Philippines to Ukraine.

''From those countries where it is worse than it is in this country, things are easier, on top of that, Croatia is actually just a stop on their way to Western European countries. The problem is that this type of employee, when in contact with the guest, cannot provide the service that a person who lives here and who is representing this country can do. Croatian are known for their quality and professionalism, and unfortunately we're in a situation in which we educate quality staff, invest in their education and practice, and then those people go to work elsewhere. This is clearly indicated by the latest census data. Personally, I expected that there would be no decline in Istria, precisely because of the progress in tourism, however, the peninsula didn't remain immune to this negative trend,'' concluded Cvitic.

LRH: We are raising the standard for employees

Liburnia Riviera Hotels (LRH) also touched on the Croatian 2022 season staffing issues, said that this year, they will need about 600 additional employees.

''We always need waiters, cooks, receptionists, maids... We'll also need additional strength in other areas. On a smaller scale, we'll also hire staff for some specific positions such as lifeguards, gardeners or handymen, as well as people to come and work in administration. The search for new human resources has already begun. We believe that it is very important to start the search in time to find the best employees, especially given the poor market situation,'' they said.

Initial talks with potential future employees for the Croatian 2022 season, as well as negotiations with some key partners in the recruitment process (employment agencies) began late last season, they said from LRH, adding that they offer employees competitive market conditions with adequate accommodation and food, as well as working continuously and intensively to improve overall working conditions and raise standards in all aspects of employee relations.

Jadran/Adriatic: Scholarships and a stable job

''Considering the situation on the labour market, primarily starting from the ambitious plans for next year, activities related to the labour force haven't stopped for this company.

As of September the 1st last year, a total of 46 employees received indefinite contracts, and some of them had their contracts extended for another year, meaning that Jadran now has 165 full-time employees, an increase of 12 percent compared to the same period back in 2019,'' said Lucija Jukic, the director of sales and marketing of Jadran Crikvenica.

She added that, in addition to continuously advertising the need for labour force and cooperation with the CES, Jadran will also perform at the upcoming virtual job fair Sezonac.hr.

In agreement with the High School in Crikvenica, the Faculty of Hospitality and Tourism in Ika and the PAR Business School in Rijeka, Jadran applied to the programme of the Ministry of Tourism and Sport for scholarships for students studying for tourism professions for which employment approval has been obtained, adding nine new scholarship recipients into the mix.

''Unfortunately, due to technical difficulties, we had to abandon the planned, year-round operation of the Boutique Hotel Esplanade, which was to become a centre of excellence, but we're glad to announce the opening of Hotel Lisanj, which will begin working on February the 11th and will not close until the end of the year. Jadran will also employ another 450 seasonal workers during the Croatian 2022 season,'' concluded Jukic.

Valamar: Permanent job and awards

The largest tourist company in Croatia, Valamar Riviera, says that this year, according to the plan, about 7,000 employees from Istria to Dubrovnik will work in their facilities.

''An additional advantage of working at Valamar is the possibility of working in our hotels in Austria during the winter months. After their first season working here, employees can enter the permanent season and have a seasonal job, with year-round income. Last autumn, Valamar started with the selection and employment for the Croatian 2022 season within the Good Job at Valamar programme and invited all those interested in developing a career in tourism to apply for a job with us.

During the COVID-19 crisis, Valamar, with the support of social partners and government measures, preserved all jobs through the Pause, Restart programme, which last year enabled the realisation of a solid tourist season, and we're already intensively preparing for the season ahead. At Valamar, we offer the best working conditions and have been recognised as a top employer in tourism for many years now. We expect to fill most of the job positions this year with employees from Croatia, and we're satisfied with the interest of candidates from the immediate region,'' said Valamar.

When asked what conditions they offer, they stated that last year, they hired 400 employees for an indefinite period of time, and paid the highest awards for the season, awards for excellence and a 13th salary and Christmas bonus.

For more on how companies are preparing for the Croatian 2022 season, check out our business section.

Monday, 24 January 2022

Croatian Average Salary Can Purchase 4 Times Less Fuel Than Swiss

January the 24th, 2022 - The Croatian average salary can purchase four times less fuel than the average Swiss salary can, which is unlikely to come as much of a shock to anyone. Now that the Swiss labour market is fully open to Croatian nationals, facts such as this one are likely to only add to further demographic issues.

As Poslovni Dnevnik writes, here in Croatia, 643 litres of Eurosuper 95 petrol can be purchased at its current price for the average Croatian average salary.

At the same time, the Swiss can buy 2742 litres of fuel for their average salary, the Danes can buy 2150, the Norwegians can buy 1828, and the Germans can buy 1706 litres. The neighbouring Italians, with a slightly lower average salary of 1,752 euros and currently the eighth most expensive fuel in all of Europe (1.77 euros per litre) can purchase one thousand litres.

When you look at the price of fuel only, Croats are currently paying for the 18th most expensive petrol from as many as 44 European countries, meaning that the country's fuel prices are among the most expensive.

A litre of petrol is the most expensive in the Netherlands, amounting to 2.11 euros, followed by Norway with a price tag of 1.92 euros, the Finns with 1.89 euros, then the Icelanders and Danes, and surprisingly the Greeks with 1.78 euros per litre of fuel.

Given that the average salary in Greece stands at roughly 1,116 euros, they can purchase less fuel than the average Croatian salary can, being able to afford just 627 litres. The Portuguese are in a similar situation, where a litre of Super 95 costs 1.71 euros, or almost 13 kuna. With their average salary of 1,110 euros, they can afford just a few more litres of fuel than the Croats - 649 litres.

The bad news for Croatia is that in 17 countries across Europe with (currently) higher fuel prices than those listed in Croatia, with the exception of Greece, significantly more litres of fuel can be bought for an average salary than for the Croatian average salary. That said, it is also old news that we're following Western European countries in terms of prices, but not in terms of overall living standards.

According to the latest data, fuel in neighbouring Serbia is only slightly cheaper than it is here in Croatia, 10.7 kuna when recalculated, and in Serbia the average salary is only 550 euros, which means that only 385 litres of Super 95 can be purchased for a typical Serbian wage. The ratio is more or less the same down south in Montenegro, while in Bosnia and Herzegovina, thanks to the slightly lower price of a litre of gasoline (1.20 euros), the situation is a little more bearable.

The Hungarians, Bulgarians and Romanians, as well as the Slovaks, can currently buy slightly less petrol for their average salaries than the Croats can.

In a total of six European countries, petrol is still below the 1 euro price limit. Apart from Russia, these are Belarus, Azerbaijan, Georgia, Armenia and Ukraine, Novi list writes.

For more, check out our lifestyle section.

Sunday, 23 January 2022

Croatian Employees Shun Emigrant ''Return Incentive'' Measure

January the 23rd, 2022 - The demographic crisis in Croatia long predates the current coronavirus-induced one, although it certainly hasn't helped matters. Those Croatian employees who decided to remain in the country and not go chasing their luck abroad have some suggestions.

As Poslovni Dnevnik writes, an on online survey conducted on the posao.hr/job.hr portal on the topic "Will the incentive measure stimulate people to return or will it cause resentment among others?" brings some interesting results in which it is stated that as many as 78 percent of respondents don't support this incentive measure. Only 2 percent of respondents will encourage this incentive measure for people to return to Croatia, while 64 percent of them believe that the amount of financial incentive isn't enough to make such a big life decision.

The aim of the research was to examine the effect achieved by deciding on an incentive measure for people living and working outside of the Republic of Croatia and those who remained as Croatian working employees, living and working in their homeland.

The posao.hr portal conducted the aforementioned survey, in which 253 respondents participated, of which 73 percent are Croatian employees, 22 percent of them work abroad, and the rest have a foot in both rooms, being partly in Croatia and partly abroad.

There is a level of indignation from Croatian employees when it comes to these measures.

Adopting a measure that will encourage the return of young people back home to Croatia, according to the research, has had a negative effect on people who decided to stay and who are Croatian employees. As many as 61 percent of them believe that the adoption of this measure does not appreciate their decision to grit their teeth and stay in the country.

When asked whether, by that logic, Croatian employees who decided to remain here should also receive financial support to stay in the country themselves, 85 percent of them answered in the affirmative.

Only 11 percent of the respondents supported this return incentive measure, while 78 percent of them clearly said that they did not agree with the granting of this type of incentive to people simply to return to Croatia. The respondents employed abroad clearly agreed that the incentive is an insufficient reason to leave well-paid jobs they have elsewhere.

When asked whether this amount of money would encourage them to return home and leave a well-paid job abroad, 64 percent answered that the amount is too small with the comments "… is not the point of return a one-time payment, but a reasonable standard upon return instead?", "I was a craftsman in Croatia for more than 20 years. Anyone who has experience of entrepreneurship in Croatia knows that the stated incentive of 150,000 kuna would be "eaten" by the state in a single year. And then what?''

When asked whether the measure would encourage them to return, only 2 percent answered in the affirmative, which is a clear indicator of how successful this measure will be, or perhaps not.

For more, check out our lifestyle section.

Monday, 17 January 2022

Central Bank Governor: Citizens Hold Cash Amounting to HRK 36 Billion

ZAGREB, 17 Jan 2022- Croatian National Bank Governor Boris Vujčić said on Monday that inflation might be the most serious potential "cost" of introducing the euro, however, this year, that influence on the total inflation rate could be less than 10%, so he believes this isn't something to be overly bothered about.

Vujčić added that the rest of the inflation will be generated from entirely different sources, primarily the prices of energy. He expects that the first half of this year will see strong inflationary pressure whereas "deflating" is expected in the second half.

Vujčić said that the best prevention against prices increasing is competition, adding that state intervention is only justifiable where monopolies exist. In the months prior to and after introducing the euro, consumers have to avoid those who increase their prices and buy from those who don't, he said, believing that the best protection against price increases is showing prices in both kuna and euro.

With regard to losing monetary sovereignty once Croatia enters the euro area, Vujčić recalled that the central bank has been maintaining a fixed exchange rate since the 1990s.

Hence, it is not using it actively as a monetary policy instrument, considering that a 10 percent depreciation of the kuna against the euro, due to the high level of ''euro-zation'' of the economy and households, the debt for all sectors in Croatia would increase by more than HRK 50 billion whereas appreciation of the kuna would disrupt the Croatian economy's competitiveness, that is exports, said Vujčić.

He revealed that fairly reliable data indicate that citizens are holding as much as HRK 36 billion in cash. He called on citizens to deposit cash in banks which would facilitate conversion once Croatia enters the euro area.

(€1 = HRK 7.5)

For more, check out our dedicated politics section.

Monday, 17 January 2022

2021 Croatian Census: Every Third Croatian Resident Drawing Pension

January the 17th, 2022 - As if the 2021 Croatian census results weren't damning enough for the country now numbering less than four million inhabitants, now it has emerged that of those inhabitants, almost every third person is drawing their pension.

As Index/Vedran Salvia writes, here in Croatia, the number of insured persons on the 30th of November, 2021, stood at 1,583,131. The number of pension beneficiaries in that same month of November was 1,234,991. The ratio of the number of pension beneficiaries and insured persons is 1: 1.28.

In other words, if we take into account that, according to published data from the Central Bureau of Statistics, Croatia has a population of 3,888,529, this means that practically every third person in Croatia is retired and drawing their pension.

Of course, the number of those who receive their pensions abroad should also be taken into account, and according to the Mirovina.hr portal, back in October 2021 there were a total of 181 thousand of them. However, the bigger picture doesn't change that much.

The number of older employees is growing

Index contacted economic analyst Andrej Grubisic (who answered some more 2021 Croatian census questions here), who pointed to the research piece entitled "An analysis of the Croatian pension system (with proposed adjustments) and global trends in private pension savings", which was prepared by Grubisic and his partners for the Association of members of mandatory and voluntary pension funds.

Among other things, this study states that within the age structure of employees, negative changes are also visible in the form of increasing growth in the number of older employees who are expected to retire soon, while the number of younger employees (as a share of total employees) is declining.

"The existing macroeconomic and demographic foundations don't indicate the possibility of a significant improvement in the ratio of insured persons and beneficiaries in the next 5-10 years," the research states.

These changes in the decline in population and working capacity, with currently extremely low levels of activity and employment compared to other European countries and low GDP "per capita" indicate an additional burden on the existing pension system in the form of limited potential for significant growth in contributions to the coverage of current pensions, and in particular, it all has a negative impact on the possibility of a significant increase in the pensions of existing retirees in terms of real purchasing power,'' the study said.

Reduce contributions for the first pillar...

The research also proposes adjustments to the existing system, ie it is stated that from the year 2024, contributions made to the first pillar should be gradually reduced until in 20 years they fall from the existing 15 percent of a person's gross salary down to 5 percent of it. It also states that allocations for private pension savings should be increased. This is so that the allocations from 2024 would increase from the existing 5 percent of gross salary in a period of 20 years to 15 percent.

The proposals also imply that members of mandatory pension funds should have financial resources at their disposal, but also that those financial assets should be inherited after the death of the beneficiary.

For more on the 2021 Croatian census results, make sure to check out our lifestyle section.

Sunday, 16 January 2022

Economic Analyst Andrej Grubisic Discusses Croatian Public Sector

January the 16th, 2022 - Economic analyst Andrej Grubisic has spoken among a series of others to state his feelings about the recently released official Croatian 2021 Census data, noting an uncomfortable truth about just how many people are employed in the country's public sector.

As Poslovni Dnevnik writes, economic analyst Andrej Grubisic was a recent guest of N1 on which he commented on the repercussions of a smaller number of residents of the country on the sustainability of the pension system. He says fewer people in the country means that they will see the greatest repercussions of pressure on the pension system from a long-term perspective.

"In my opinion, these are the biggest challenges. We undertook an analysis that showed that about 100 and something thousand people experienced a negative natural increase. What the data shows is that for one million and 240 thousand pension beneficiaries, when you have 2.5 million able-bodied residents, we have about 50 percent of pension beneficiaries for every single able-bodied resident,'' explained Andrej Grubisic.

The pension system, he says, is sustainable, but it will not be able to produce higher pensions in real terms. "The question is what reasonable adjustments would be made, given the facts we're dealing with. A solution is likely to be sought by force in a few things. One is the opening of the borders, I think that Croatia will have to liberalise the import of labour,'' said Amdrej Grubisic.

He also spoke about what he considers to be one of the sources of that desired labour.

"I think that one of the sources that is not often talked about in public space is that there are a significant number of quite frankly redundant people working in the public sector. In the Croatian public sector, in the broadest sense of the word, with four hundred thousand people who are tied to the central budget, local budgets and public companies... If you start from the fact that 10 percent of that workforce is redundant, that’s equal to 40,000 people.

That's an extremely significant pool of people. If they ended up in the labour market, some of them would be forced to take up jobs in the private sector. We have relatively young retirees, who are retired but are still very much able to work. The work of pensioners needs to be liberalised. All barriers need to be broken down in order for people to work if they want to. There can be no progress if there aren't enough of us, with a special emphasis on job productivity,'' Andrej Grubisic concluded.

For more, check out our dedicated politics section.

Saturday, 8 January 2022

Richest Croatian Municipalities All Located in Beautiful Istria

January the 8th, 2022 - The richest Croatian municipalities enjoy incomes as high as the 24 poorest in the country put together, which means there's some seriously huge wage disparity in Croatia. Rather unsurprisingly, they're all located in Istria.

As Poslovni Dnevnik writes, a new analysis undertaken by the Institute of Public Finance shows that back in pandemic-dominated 2020, the Istrian municipality of Medulin was the richest municipality in all of the Republic of Croatia. It generated the highest total revenues, totalling 77 million kuna, which is equal to the sum of the total revenues of the 24 poorest municipalities put together.

Interestingly, the total revenues of the ten richest Croatian municipalities, 530 million kuna, are equal to the sum of the total revenues of one quarter of all of the country's quite numerous municipalities. Among the Croatian municipalities with per capita income of more than 10,000 kuna, as many as 17 of them 29 are located close to the coast.

''We're really far ahead of other Croatian municipalities in terms of budget realisation. Since we're mostly a tourist destination, surviving the pandemic-dominated year of 2020 was a challenge, and recovering the level of income we once had is even greater,'' Medulin Mayor Ivan Kirac told local portal Glas Istre.

''Despite everything, I expect a significant increase in revenue this year. In the future, we're planning to base all of our strategies on income diversification, so I hope that we will create an even more resilient system to such troubles,'' explained Kirac.

The Croatian municipalities with the largest budget per capita include the Istrian municipalities of Kastelir-Labinci (2,700 kuna) and Oprtalj (2,600 kuna), which are in third and fourth place on a national level.

The Institute of Public Finance says that when interpreting the financial situation of Croatian municipalities and cities, one should be careful because many municipalities and cities have a high share of state and/or EU aid in total operating revenues in a given year, which doesn't typically apply to those located by the sea.

According to the Institute of Public Finance, Medulin maintained its leading position throughout 2020, when the coronavirus pandemic negatively affected the budgets of local governmental units and resulted in a decline in average total revenues and an increase in average deficits.

The Institute of Public Finance says that their analysis should encourage the public to further study the databases of the Ministry of Finance and its local governmental units, and get more detailed information on collecting and spending money from local budgets, Glas Istre writes.

For more, check out our dedicated lifestyle section.

Tuesday, 4 January 2022

Croatia 2021 Marked by Vaccines, Rimac, Tourism's Return and GDP Growth

January the 4th, 2022 - What made ''Croatia 2021'' be what it was? From the arrival of the long awaited coronavirus vaccines to Mate Rimac's continued business successes to the recovery of the tourism industry with an unexpectedly remarkable summer season, the list is extensive.

As Poslovni Dnevnik/Karlo Vajdic writes, as we draw the line under the previous twelve months, we need to look at both the good and the bad and make assessments and plans for the future. Let's go back in time to Croatia 2021 and try to highlight the events that stood out for the domestic economy, and also provide some sort of general assessment of the state of the Croatian economy last year.

Business is still less than free, it's true to say this is somewhat less than what experienced in 2020, but costs continued to rise in 2021, and there is no sector that isn't desperately craving a full recovery, although at least some of them are finding doing business easier than they did in 2020.

All this was reflected in the numbers. After the shocking events which dominated 2020, the domestic economy experienced a strong jump in the second and third quarters of last year. Gross domestic product (GDP) was more than promising. Back in mid-December 2021, the central bank published forecasts estimating that GDP growth in 2021 would total 10.8 percent.

The year before, in 2020, there was a decline of 8.1 percent, but for 2022, growth of around 4 percent is expected once again, so it seems that we will successfully return to our own average. The Crobex index jumped nearly 20 percent from the end of 2020, but turnover is lower. Throughout the whole of 2020, it amounted to 3.13 billion kuna, and last year, it totalled 2.54 billion.

In general, the question can be asked whether the economic year for Croatia 2021 should be compared with 2020 or with pre-pandemic 2019 in order to have a somewhat more realistic assessment of the state of the domestic economy? In the search for an answer to this question, let's recall some of the key events that marked the economic year of 2021.

In business, the most high-profile event of the year was undoubtedly the merger of Rimac automobili and the legendary luxury vehicle manufacturer - Bugatti. The Bugatti Rimac company is jointly owned by the Rimac Group (55%) and the German giant Porsche (45%), and the company is headed by Livno-born entrepreneur Mate Rimac. The transaction turned into a true spectacle, and the company was even visited by the President of the European Commission (EC) Ursula von der Leyen during her stay in Zagreb back in July.

Political meddling with business didn't stop at mere courteous visits, but the decision to allow Rimac's company to build a new production and development campus in Sveta Nedelja on preferential terms raised a lot of hope for the public. This was followed by the allocation of 200 million euros from the European aid package for economic reconstruction to Rimac's plan for the development of an autonomous vehicle and taxi service in Zagreb by the year 2024. Last year, Rimac continued to be plastered all of the newspapers, hailed a hero.

Another high-profile event in the same category was the sale of Zagreb's Ledo frozen food factory and its subsidiaries. Fortenova (formerly Agrokor) announced in late September that the sale of Ledo to the British corporation Nomad Foods had been concluded, and the transaction itself was worth a massive 615 million euros. In addition to these two major transactions, last year was marked a number of smaller ones, including the sale of the Sunce hotel chain by entrepreneur Jako Andabak, who sold his 11 hotels to the Eagle Hills investment group. The sale of the Croatian manufacturer of glass pharmaceutical packaging, Piramida, to the Japanese conglomerate Nipro was also interesting.

The third high-profile event which marked last year came from the category of stock market listings, and that was the initial public offering of Span shares and their listing on the Zagreb Stock Exchange. The well-known domestic IT company eventually sold its shares at the maximum anticipated price, 175 kuna, and in the meantime their value jumped by an additional 33 percent.

Unlike Span's listing on the stock exchange, the delisting of shares of PBZ, Dukat and Magma, once very happy to trade on the domestic market, went in the opposite direction While Span's listing as a modern Croatian IT company is a laudable illustration of recent, much more digital times, Croatia 2021 didn't disappoint in terms of events related to companies such as the proverbial anchor wrapped around the legs of the Croatian economy and of the local political scene.

The agonies experienced by the enfeebled shipyards (3. Maj and Uljanik) continued, and the troubles faced by the Brodarski Institute in Zagreb ended with a political decision.

With a payment of 45 million euros, the Slovak Tatravagonka took over production in Zagreb's Gredelj and thus concluded the company's long-term bankruptcy proceedings. Just before the end of the year, Djuro Djakovic got another chance to survive when the European Commission (EC) approved Croatia to grant Djakovic, which was restructuring support in the amount of 57.4 million euros.

The planned recapitalisation of Jadroplov failed, the Turkish corporation Yildrim showed interest in the Kutina-based Petrokemija, and the financial restructuring and recapitalisation of Dalekovod became even more complicated.

On the other hand, there was some good news from the blossoming domestic IT sector, traditionally ignored in political debates and games, probably because the vultures in politics don't really understand it all that well. That's for the best, it seems.

Vodnjan's incredible Infobip announced their takeover of the American company Peerless Network and the Irish company Anam Technologies. That same Istrian company also announced its listing on the American stock exchange. At the end of the year, Konzum announced that it was starting to accept Bitcoin as a means of payment in its online stores, thus joining the Tifon fuel station chain, which enabled customers to do the same back at the beginning of the year.

Croatian enterprises and their leaders, despite the pandemic, haven't completely lost heart. Nasice's NEXE announced an investment of 123 million kuna in modernisation and new products, and BAT announced an investment of 200 million kuna in their factory in Rovinj. A similar amount of investments in capacity growth was announced by the Medjimurje-based packaging manufacturer Muraplast, and an investment of as much as 200 million euros in the construction of a laminate factory in Ogulin was also announced.

From last year's high-profile personnel transfers, it is worth mentioning the arrival of former Minister Martina Dalic to the helm of Podravka, a position to which she was appointed at the beginning of February. In the very same sector, and at about the same time, Nenad Klepac was appointed head of Vindija, succeeding the late long-time owner Dragutin Drko. The first man of the Croatian Chamber of Commerce (HGK), Luka Burilovic, also won a third term at that institution back in October.

Some important news related to the Chamber of Commerce itself, and that was the much anticipated passing of a law abolishing the mandatory payment of membership fees for small businesses. Also related to the Croatian Chamber of Commerce is some news from the margins of economics and politics published just before the end of the year, that former longtime head of the chamber Nadan Vidosevic was found guilty of withdrawing money from the Croatian Chamber of Commerce and was sentenced to eight years in prison with the obligation to return 35.5 million kuna to the Chamber.

From the same marginal economic and political position, it is impossible not to mention the death of Milan Bandic, the former mayor and long-time master of Zagreb's local economy, which accounts for a third of Croatia's GDP. Bandic died prematurely and suddenly from what was then cited as a massive heart attack, although many questions surrounding his death remain, even from his widow, Vesna.

The new mayor, Tomislav Tomasevic of Mozemo! (We can!), and the new Zagreb administration have inherited the fight against Bandic's legacy with that they claim to be a ''devastating situation'' in terms of the capital's finances. These issues were only heightened by the earthquake of March 2020.

The post-earthquake reconstruction of Zagreb and Banovina, which is still ongoing and moving at a shameful snail's pace, is the subject of a story about the role of Croatian politics in the domestic economy, which has been repeated for the third consecutive decade. The fiasco with the reconstruction of Zagreb and Banovina is reminiscent of the reconstruction of almost the whole of Croatia after the war in the 1990s.

While back then, issues were due to bad politics and politicians, the opportunity was missed to rebuild the Croatian economy at the same time from the remnants of socialism and the remnants of war, now a similar story is being repeated, only with an indiscriminate natural disaster at play.

The difference is that two and a half decades ago, politicians were unable to create a framework in which to exploit Croatia's potential, then expressed in the number of unemployed people that occasionally approached the level of 400,000, while today politicians are unable to create a framework in which to used the potential of financial assistance provided by the European Union. That said, Prime Minister Andrej Plenkovic and the rest of the political elite have repeatedly tried to gild the role of the Government in Croatia's economic rust over the past year. Among them, we can single out two moments for this occasion.

The first is the development of the famous National Recovery and Resilience Plan. A comprehensive document of more than 1,200 pages was drafted by the government as a justification for withdrawing money from the EU's Recovery and Resilience Mechanism. This is a document that acts as if no one has even ever read it in its entirety and is quickly being seen as just another pile of projects, wishes and empty phrases like countless other unimplemented strategies and plans written and shelved over the last twenty years.

The second bright moment for Croatian politics came back in mid-November when the credit rating agency Fitch Ratings announced that it had raised Croatia's rating to BBB. Prime Minister Plenkovic and Minister of Finance Zdravko Maric hurried to welcome the good news in front of the public, which included the euphoric remark that this is the highest rating for Croatia in history.

What was left out of these celebrations was the fact that that rating was only one level higher than the BBB- rating that Croatia had when it first received a rating way back in 1997 - just two years after the Homeland War secured the nation its independence and saw the collapse of Yugoslavia. At this rate, we'll reach the highest AAA category in a mere 192 years!

Is that why everything is still bleak and everyone is still busy lining cafes and complaining over three hour long coffees? No, Croatia 2021 also gave us some excellent news. For a start, the tourist season was more or less successful, unexpectedly and quite remarkably. Data from the Central Bureau of Statistics shows that from the beginning of July to the end of September last year there were 9.36 million tourist arrivals and that guests realised 57.3 million overnight stays. The arrival of the coronavirus vaccine had a lot to do with this, and visitors saw Croatia as an epidemiologically safe country, especially when compared with its Mediterranean competition.

Compared to the pre-pandemic year of 2019, this is a ten percent lower number of overnight stays and 16.5 percent fewer guests. For yet another pandemic-dominated year, Croatia 2021 did very, very well in this regard.

Export results for Croatia 2021 are even better. In the first ten months of last year, merchandise exports exceeded 15.1 billion euros. There is no doubt that by the end of the year that amount was exceeded and if there is one thing that can make us happy, it is the success of the exporters who suffered terribly as a result of the pandemic. These are mostly small and medium-sized companies that aren't very widely heard about, but which, despite their policies, continue to invest in their capacities and modernisation in order to take full advantage of what it means to have EU membership.

This, in addition to the promising domestic IT sector, is making an apparently clean break from at least one part of the domestic economy, which is the tradition of inefficient, lethargic, economic mastodons who are lost in time and space, giving hope for a brighter future as we walk into 2022 and beyond.

For more, check out our dedicated lifestyle and business sections.

Saturday, 11 December 2021

Jasmin Bajic Says Croatia Airlines Ready for Croatian Economic Recovery

December the 11th, 2021 - Croatia Airlines' main man Jasmin Bajic has stated that the national carrier is more than ready for Croatian economic recovery as hopes to finally put the horrendous coronavirus pandemic behind us grow.

As Poslovni Dnevnik/Jasmin Bajic writes, the global health crisis is having an extremely devastating effect on the world's air transport industry, which is among the most affected economic activities, and the coronavirus pandemic will continue to be the biggest immediate threat to the airline and travel business next year.

Forecasts of the most relevant international aviation associations and organisations say that this is the longest and worst crisis and it is predicted that the recovery of air traffic will take longer than it did during previous crises, and it is believed that a full return to pre-crisis levels can be expected only in 2024.

In particular, according to the International Air Transport Association (IATA), airlines globally made a historically record loss in 2020 of $137.7 billion, with an average loss per passenger of $76.2 billion.

For the year 2021, IATA estimates total airline losses to stand at $51.8 billion, and in 2022, the projected losses seem that they'll be reduced to $11.6 billion. The pace of recovery will be determined by the implementation of vaccination programmes and the complete lifting of border restrictions, which, together with uncertainty and complex regulations on passenger traffic, are hampering international travel to this day.

In the implementation of the risk management process of Croatia Airlines, the most important risks were identified according to the possible impact on the company's operations, the monitoring of which should ensure mitigation of possible negative consequences and transformation of risks into opportunities, wherever possible. Reduced demand for air transport services is a significant additional risk, which imposes the need for the continuous and up-to-date adjustment of capacity supply and constant optimisation of flight schedules.

Regular traffic planning will continue to depend on external factors beyond the company's control, such as travel and border restrictions, bans and other measures issued by the National Civil Protection Directorate, which directly affect the ability to travel in both domestic and international regular traffic.

Accordingly, Jasmin Bajic says, Croatia Airlines will continue to focus on the flexible planning of their flight network with a forecast of demand for certain types of travel, and they will strive to achieve optimal occupancy and the average tariff in traffic conditions with reduced capacity.

However, a certain optimism we're witnessing is based on the latest forecast of the International Monetary Fund, which in 2022 predicts the continuation of the recovery of the Croatian economy, ie growth of 5.8 percent. In this context, Croatia Airlines says its focus in 2022 will primarily be placed on cost rationalisation and the implementation of the company's now well defined post-covid strategy.

Jasmin Bajic stated that the company continue to take all measures of active liquidity management and business optimisation, as well as the further application of rigorous austerity measures. During this year, the company worked with the leading international strategic consulting company BCG to develop a good post-covid strategy to define strategic initiatives, the implementation of which, with the prior consent of the majority owner of the Government of the Republic of Croatia, will last three years and enable sustainable business.

For more, check out our dedicated business section.

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