Sunday, 13 June 2021

Illegal Tobacco Market Costs Croatia €186m

ZAGREB, 13 June, 2021 - An estimated potential loss for the Croatian budget due to the illegal tobacco market in 2020 was HRK 1.4 billion, according to findings of a survey conducted by the Croatian Employers' Association (HUP) and the Ipsos pollster.

The findings of the survey, conducted on a representative sample of 1,344 households with a total of 3,299 respondents, show a marked share of untaxed cigarettes and tobacco products used by consumers.

As many as 28.1% of adult Croatians are tobacco consumers, and 17% of tobacco products consumed in a year are illegal products, with illegal cut tobacco accounting for the largest portion.

As a result, in 2020 Croatia lost 1.4 billion kuna in tax revenue due to tobacco smuggling, HUP main economist Iva Tomić said last Wednesday at the presentation of the survey's findings.

Nearly 3 in 10 Croats aged over 18 are smokers

Davor Tolić of the Ipsos pollster said that 28.1% of adult Croatians consume tobacco products and they mainly smoke cigarettes, followed by cut tobacco.

The consumption of e-cigarettes, cigars and pipe tobacco and cigarillos amounted for less than 1% of the total consumption.

(€1 = HRK 7.5)

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Sunday, 6 June 2021

Local Government Given Weak Grade by Entrepreneurs

ZAGREB, 6 June, 2021 - Entrepreneurs expect local authorities to cut costs, downsize the number of employees in the administration, reduce administrative burden and utility fees, a survey by the Croatian Employers' Association (HUP) has shown.

In May, HUP carried out a survey among its members with the aim of examining what entrepreneurs expect from representatives of local and regional government in the coming period. Nearly 200 companies from all over Croatia, which employ more than 14,000 people, have responded to the survey, HUP said on Tuesday.

In the survey, local goverment received a weak grade  (D), which indicates less than satisfactory performance.

Top three priorities for entrepreneurship recovery

HUP members also highlighted the top three priorities that the municipal/city government must deal with immediately to encourage the recovery of entrepreneurship, and scaling down the costs and the number of employees in public administration was ranked as number one priority, as said by 47% of the respondents.

The second priority is the abolition of administrative and utility fees (44%) and the third priority is the abolition or reduction of surtaxes and other fess (41%).

HUP representative also expect and encourage greater involvement and participation of entrepreneurs in the work of local government.

We propose that economic councils be formed in the offices of mayors and county prefects, which would consist of up to fifteen entrepreneurs from the private sector, education representatives and representatives of other factors important for the local economic development. The council would discuss local economic issues, business conditions, permits and education, and in this way give added value to the economy and the wider community, said HUP's Kristian Krpan.

Local government gets weak grade D

The average grade HUP's entrepreneurs assigned to city/municipal government for encouraging entrepreneurship and an entrepreneurial climate is a weak grade D, or an average of 2.3 on a 1-5 scale, HUP said.

The cities of Bjelovar, Virovitica, Sveta Nedelja and the municipality of Lokve were exceptions and received high average grades.

When it comes to counties, the two initiatives rated as most significant for launching a stronger investment cycle and creating new jobs were awarding non-repayable grants and adopting new county development plans to tap EU funds.

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Wednesday, 2 June 2021

Associations Request Urgent Meeting With PM Andrej Plenković on Regular Public Transport

ZAGREB, 2 June, 2021 - The Croatian Employers' Association (HUP) and the SSSH trade union federation have asked Prime Minister Andrej Plenković for an urgent meeting on the regulation of regular public transport, stressing that if the meeting is not held, they "will be forced to take certain joint activities".

The answer and the date of the urgent meeting are expected by Friday, 4 June, at the latest, the associations said in a letter to the prime minister.

Employers and unionists say they have been "more than active" in proposing solutions and "more than patient" over the last three years, waiting for the final implementation of European and national regulations.

The HUP and the SSSH warn that the already ready legal solutions that were a prerequisite for signing contracts for regular public passenger transport on county and inter-county lines up to 100 kilometres are not implemented due to the inactivity of state administration bodies.

They also said that the decision had not yet been made on the distribution of funds from the state budget to counties, even though the funds, according to the SSSH and the HUP, had already been secured, and that public service contracts between counties and private transport companies involved in regular public passenger transport had not been signed yet.

"Private bus carriers from the HUP transport association account for 80% of the public transport on county and inter-county lines up to 100 kilometres and employ over 7,000 workers who are directly affected by such irresponsible behaviour of the relevant ministries," the HUP said.

Without a public service contract, the process of collective bargaining to improve working conditions in the transport sector is at a standstill and existing jobs are in jeopardy, they noted.

The operation of most public bus lines is at risk, especially in rural areas, and workers and private public transport providers haven't been able to plan their business and their companies' prospects for three years now, the HUP and the SSSH warned.

The HUP and the SSSH think that the government should make a decision on the distribution of funds from the state budget to counties (signatories of contracts with transport companies) at its next session.

They added that it was also necessary to stop discrimination against private bus carriers and their workers in relation to carriers owned by the public sector since private companies still didn't have public service contracts, while public companies did, for the same service.

They also think that it is necessary to continue with the job-retention subsidies for all companies that continue to register a decline in business and meet the prescribed criteria.

That is especially important, they said, for passenger transport on lines in rural areas, where the number of passengers is declining sharply, also because of the end of the school year and the holidays, and cannot be sustained without state support.

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Friday, 28 May 2021

Croatian Employers Propose Keeping Economic Measures in Place Longer

May the 28th, 2021 - Croatian employers have proposed that the Croatian Government keep some economic measures, namely the job preservation measures introduced to try to combat the economic effects of the pandemic in 2020, in place for longer than planned.

As Poslovni Dnevnik/Ana Blaskovic writes, with the abolition of some of the country's epidemiological measures with even more relaxations to come in the foreseeable future, the Croatian Employers' Association (HUP) sent to the Minister of Finance Zdravko Maric proposals for a new set of economic measures.

The existing ones, this association of Croatian employers says, should be very carefully and only gradually rolled back in order to avoid a wave of bankruptcies and layoffs, and the introduction of several new ones are crucial in order to preserve liquidity and start an investment cycle.

“Maintaining liquidity isn't just a matter of a period of closure - it's necessary to provide liquidity to a company for a longer period of time, so that the business can start up again (and return to the point of coverage) at the moment when restrictions (work, movement) are removed,'' say this group of Croatian employers.

They noted that small and micro enterprises, which are the most numerous Croatian enterprise, are more at risk than others as measures expire and recovery is possible only with investment momentum.

"Although not all activities are equally affected by this crisis, for the sustainable growth of the overall economy, it's necessary to start up business again in all sectors. However, given the effect of the coronavirus pandemic, it's questionable to what extent companies are able to finance any new investment cycle on their own,'' the Croatian employers stated.

Although savings have increased, access to finance is limited, so support from the state in the form of additional measures and programmes is absolutely necessary, as are different types of grants and incentives to launch investments.

Aware of the jump in government indebtedness from the association of Croatian employers, they claim that the risk of a sudden relaxation of economic measures is significantly higher than additional (favourable) borrowing.

"The worst thing would be that after the introduction of all of those measures and everything we then endured following the suspension of those measures, that the affected companies remain in trouble and start firing people. Why would the owners of affected businesses have to bear the loss of revenue all on their own? They aren't any more to blame for the consequences of the pandemic than business owners who just happen to not be particularly affected by this particular crisis,'' they stated.

Therefore, in their range of requests addressed to the Minister of Finance, they propose to retain support for job preservation until companies achieve at least 90 percent of their respective pre-pandemic revenues.

"It is extremely important that the decision to get rid of certain measures to support the economy be introduced gradually, depending on the epidemiological situation, but also on the situation in a particular sector so as not to cause a wave of bankruptcies and layoffs," said the Croatian employers, supporting OECD and IMF recommendations, as well as those recommended by the EC.

They're also asking the government to continue covering part of companies' fixed costs, taking into account the percentage drop in revenues, ensuring easy access to liquidity and working capital loans with guarantee schemes for the SME segment and the possibility of converting loans into grants, continuing the moratorium until at least the end of 2021 and investing in Industry 4.0.

For large Croatian companies, they propose support for investments by increasing support in the Investment Incentives Act and additional support to companies for co-financing a project from EU funds.

Among the proposals are the possibility of compensating receivables between companies for preventing chain illiquidity, speeding up the determination of bad loans, speeding up bankruptcies and the liquidations of companies, additional (non) tax relief or their abolition, and more tax relief for investments.

"We believe that the government measures introduced as a result of the coronavirus crisis should continue as long as we have enterprises who cannot function and preserve jobs on their own without assistance measures," the association of Croatian employers concluded in their request to the Finance Ministry.

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Tuesday, 25 May 2021

Employers Propose Continuation of Government COVID Subsidies

ZAGREB, 25 May, 2021 - The Croatian Employers' Association (HUP) has proposed measures for maintaining liquidity and launching private investments which include retaining jobkeeping measures and covering a portion of fixed costs, ensuring favourable loans and prolonging loan maturity.

In expectation of COVID measures and lockdown of businesses being lifted, HUP addressed Finance Minister Zdravko Marić and underscored that maintaining liquidity is not only relevant during the lockdown period but should be extended for a longer period, and that recovery can only be possible if investments are boosted.

HUP proposes that jobkeeping measures be extended even after busines restrictions are lifted until such time that  all enterprises generate at least 90% of their pre-pandemic revenue in 2019. HUP believes that abolishing support measures for the economy should be gradual, depending on the epidemiological situation, but also on the circumstances in each individual sector so that Croatia is not faced with a wave of bankruptcies and layoffs.

HUP also calls for a portion of fixed costs to continue to be covered, taking account of the percentage revenue has decreased, and for facilitating access to loans for liquidity and working capital, including guarantee schemes for micro, small and medium-sized enterprises.

HUP advocates possibly transforming a portion of loans into grants and for the moratorium on loan maturities to be extended for existing loans, along with state guarantees, at least until the end of this year and longer if need be, based on transparent criteria.

HUP proposes additional support loans for exporters and enterprises investing in the 4.0 industry, and support for investments by large companies through increased support for EU co-funded projects.

It also recommends the possibility of deleveraging debts between companies to prevent a chain reaction, and for non-recoverable loans to be identified faster, as well as speeding up bankruptcy procedures, and introducing additional tax cuts.

"We believe that government subsidies to cover the disrupted economic activities due to the COVID crisis should continue until such time that enterprises can do business normally and save jobs without that support," HUP said.

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Friday, 5 March 2021

No Restrictions on Aid to Enterprises, Says Daily Paper Jutarnji List

ZAGREB, 5 March, 2021 - Brussels will leave it to Zagreb to decide on how to distribute money from the EU Recovery Fund, the Friday issue of the Jutarnji List daily reports, noting that there are no restrictions on aid to enterprises. 

There are no strict limits in drafting the national recovery and resilience plan, through which around HRK 45 billion of EU funds will be made available to Croatia to help it recover from the crisis caused by the coronavirus pandemic, in terms of how much funds can be allocated for public investments and how much for private investments, as there is no such distinction in EU regulations.

This conclusion is based on a reply from the European Commission, after the Croatian Employers' Association asked that at least 50% of the available money be disbursed in direct grants for investments by the private sector, instead of spending most of the HRK 45 billion on investments in the public sector.

According to an interpretation presented earlier by Croatian negotiators and published by Jutarnji List, entrepreneurs would have access, through the National Recovery and Resilience Plan, to direct grants and loan subsidies and guarantees in the maximum amount of HRK 4.5 billion, or only 10% of the available amount. In citing the amount, Croatian negotiators referred to restrictions imposed by the EC.

Zvonimir Savić, PM Andrej Plenković's advisor and national coordinator for the National Recovery and Resilience Plan, has nonetheless said that around 30% of the HRK 45 billion could end up in the private sector, if one takes into account the involvement of businesses in planned public projects, from research and development, energy transition and development of innovative tourism to stronger food supply chains, the daily says.

Thursday, 25 February 2021

Croatian Employers Association Wants EU Funds Sum Directed to Private Sector

February the 25th, 2021 - The Croatian Employers Association (HUP) want more European Union cash to be directed towards the private sector, with employers doing their best to urge the government to amend a certain document to ensure this happens.

As Novac/Gordana Grgas writes, at least 50 percent of European Union money is set to be available to Croatia in the next period, which is a total of about 24 billion euros. The Croatian Employers Association believes that around half of that massive amount should be made available to the private sector through calls for grants.

Employers are also urging the Croatian Government to properly amend the draft National Recovery and Resilience Plan (NPOO), the first version of which it has already sent to the European Commission (EC), and to further strengthen the role of the private sector in it.

Although the draft itself hasn't yet been published, and has only recently been roughly presented to the Croatian Employers Association, it appears that most of the 6 billion euros in grants from the NPOO, to be funded by the European Recovery and Resilience Mechanism as a result of the ongoing coronavirus crisis, could end up in reform-related public sector projects. As announced by the Croatian Employers Association at a recently held press conference, they plan to urgently send their remarks and suggestions to the European Commission itself. The final draft, they say, should be ready and sent to Brussels in April.

So far, a quarter of the money available to Croatia from EU funds has gone to the private sector, warned the Croatian Employers Association's Damir Zoric. The rest ended up going to public investments and public infrastructure, and Croatia needs larger investments in production for the development of the economy. Boris Drilo, President of the aforementioned associations's ICT Association explained that previous investments in the private sector have been shown to have a significant impact on economic growth.

"It's a minute until midnight for all of us, after which we can turn into either a princess or a pumpkin," he said in a rather picturesque manner. He also stressed that investments in private sector projects lead to sustainable employment for high-value jobs.

In February, the Croatian Employers Association conducted a survey among 1,700 enterprise owners, which showed that more than two thirds of them have prepared projects or investment plans for the next financial period in the amount of more than 21 billion kuna. As many as 94 percent of them would exclusively utilise EU grants, so there is extremely little interest in these so-called financial instruments, such as loans, and 30 percent say they will not be able to invest if these grants aren't enough.

On top of that, 28 percent of enterprise owners say they will not survive the ongoing pandemic crisis without better co-financing. Most of them stated that they would invest in capacity expansion and modernisation if they could be more certain, and the projects they have in those areas are the ones which are the most ready to be realised.

Drilo explained that, in general, the investment potential of available European Union money is significantly higher if it is directed to private investments, and it is also less burdensome for the state budget. Namely, a private company from the EU receives 40 to 70 percent of the investment amount as support, and the rest is financed by itself. The public sector, on the other hand, receives 85 percent of the money from the EU for the project, and the rest is added from public sources, which is less favourable.

Answering a question related to the National Recovery and Resilience Plan, the Croatian Employers Association said that the state should be prevented from competing with the private sector with its projects.

Ana Fresl, president of the Croatian Employers Association's Association of Professionals for EU Funds confirmed that the draft plan presented to them, in which only state bodies participated, exceeded the available six billion euros, and there has not been any feedback on which parts of the plan will remain and which will be discarded. In their belief, what was presented to them under the name "economy", the first version of the plan envisages a series of projects that have nothing to do with entrepreneurship whatsoever.

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Thursday, 26 November 2020

Hospitality Sector Proposes Compensation Measures to Survive Lockdown

ZAGREB, November 26, 2020 - Bar and restaurant owners on Thursday proposed two sets of measures that could help them survive the new lockdown, saying at a conference organised by the Croatian Employers Associations that many would go bankrupt otherwise.

The president of the national association of bar and restaurant owners, Marin Medak, said the first model envisaged long-term compensation by slashing VAT to 5% for three years and to 13% in the long term, and providing job-retention aid until April 2021, i.e. HRK 4,000 per employee and writing off taxes and contributions until 1 May 2021.

They also propose compensation of €10 per square metre of their establishment, COVID loans to ensure liquidity for three years and a moratorium on loan payments for businesses which are not allowed to work.

The second model envisages ensuring revenue for entrepreneurs in the amount of 50% of their turnover at the same time a year ago as a direct grant which would also be used for salaries, including a contribution write-off.

This model also envisages exemption from all fixed liabilities for the duration of the lockdown, including rent and utilities. Bar and restaurant owners also propose exemption from parafiscal levies.

Medak said they acknowledged the extent of the pandemic crisis and were unanimous that the most important thing was to keep their businesses going and prevent layoffs which would ensue without adequate lockdown compensation measures.

The government decided today that as of Saturday, bars and restaurants will be closed until before Christmas.

Monday, 25 May 2020

Daily Says 5,000 To Be Laid Off Because Of Non-Working Sundays

ZAGREB, May 25, 2020 - Five thousand people will be laid off because of non-working Sundays, Jutarnji List daily said on Monday, adding that the figure was confirmed even by those advocating the ban

Although Economy Minister Darko Horvat is saying he has reached "a high consensus phase" on a Sunday work ban with the government's social partners, this is not the case with employers, the paper said.

Employers are divided on the matter, as conceded by Martin Evacic, president of the Croatian Employers Association's retail division, "but there are a few more of those who are for regulating the matter, based on the revenue they make and the number of workers they employ, than retailers who are against it."

No one has seen yet a bill of amendments with 14 working Sundays a year nor any study on which the minister should base his decision.

His bill might soon become public because Jutarnji List learned from the COVID-19 crisis management team, the next Sunday will probably be the last non-working Sunday imposed because of epidemiological restrictions, after which, as Horvat has announced, the bill will be put to public consultation.

Evacic says "everyone has their own story" concerning Sunday work, depending on the type, size, and location of their shop as well as the number of workers per square meter. Horvat's decision will affect shopping malls more than grocery stores.

Evacic says he is for regulating Sunday work because of the business results of his NTL and not his world view. He also cites "strong resistance to Sunday work among unions and workers themselves."

Jutarnji List said the Konzum, Tommy, KTC, NTL, Ultra and Lonia retail chains were for regulating Sunday work, and that Spar, Lidl, Kaufland, and Plodine were against.

Monday, 18 May 2020

Croatian Traders Express Dissatisfaction With Ban on Work on Sundays

The ban on the work of shops on Sundays has been a talking point for quite some time now. With some being firmly for the idea of keeping Sunday a free day on which shops don't operate, and others, primarily Croatian traders, being entirely against it.

Many Croatian traders are constantly claiming that such a move further damages an already less than ideal economic situation and that this will only become exacerbated in the uncertain times we're currently living in owing to the coronavirus pandemic.

The Croatian economy, much like every other economy across the globe, has been suffering the blows of the coronavirus crisis. Many argue that forcing shops to shut their doors on Sundays will do absolutely nothing to help get the economy back on its feet again, and Croatian traders are growing more and more frustrated.

As Novac/Ivanka Toma writes on the 16th of May, 2020, the Croatian Employers' Association (HUP) and the Trade Association addressed the Ministry of Economy and the Ministry of the Interior with a proposal to relax the measures which are still in place in attempt to slow down the spread of the new coronavirus, COVID-19.

Specifically, this group of Croatian traders demanded that the ban on the operation of shops on Sundays and non-working days be lifted, and that what is known as the ''disinfection break'' also be lifted.

These Croatian traders pointed out that banning work on Sundays isn't an adequate anti-epidemic measure because restricting work on Sundays only works to significantly burden other working days, especially Mondays, Saturdays and Fridays, and creates the potential for much larger crowds of customers on the other days of the week.

They also pointed out that due to inaction, a smaller number of working hours are actually being realised in total due to the ban of shops operating on Sundays, which will have the consequence that traders will need to start firing their staff.

They also stated that the one-hour break required to disinfect the store has no effect because after that break, queues get formed outside of the shop doors and the level of pressure on staff working at cash registers increases. They also warned that such measures don't apply to those in the caterering and hospitality industry, to hotels, or to those carrying out other personal services. However, this group of Croatian traders believe that it is more than likely that nothing will come of their proposal.

''We've already communicated with the public and employers about why Sunday has been set up as a non-working day. By extending our working hours during the week, we got more working hours and two shifts, we wanted to relax certain economic activities on the other side of the scale, and on the other hand, we wanted to prevent the spread of the virus. Every day we're looking at the measures and the situation and the possibilities we have for balancing that scale,'' said the director of the CNIPH, Krunoslav Capak, in response to the question about the proposals of Croatian traders.

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