Wednesday, 9 March 2022

Croatian EC Request for Payment of First Tranche of €700m Still Not Sent

March the 9th, 2022 - The Croatian EC request for the payment of the first tranche of cash amounting to a massive 700 million euros still hasn't been sent, it has emerged.

As Ana Blaskovic/Poslovni Dnevnik writes, despite announcements from the government that it intended to get it sent out by the end of February, this Croatian EC request still hasn't been submitted. This cash would be paid out by the European Commission (EC) from the National Recovery and Resilience Plan.

This Croatian EC request should finally be submitted over the next few weeks, when some more technical details are polished up, but there are no major objections to be heard in regard to the first set of measures, as has since been learned from several informed sources.

The main precondition for the first Croatian EC request, a document that a member state can request the first payment of that sum with, was that the National Operational Arrangement had to be signed in early February. In essence, it is an accompanying technical document which elaborates in detail the key stages, timeline and values ​​of these individual planned measures.

In the first transitional period, Croatia undertook to complete a set of 31 reform measures and 3 investments, the successful implementation of which depends on each subsequent injection into the budget, following last year's advance.

The advance of 818 million euros, or 13 percent of the approved plan, is the only unconditional payment, and Croatia received it back at the end of September 2021. When it submits this new EC request, the European Commission should pay the money out in the next four months.

Transparency is imperative

Those familiar with the process close to the European Commission say that the details will be ironed out in the next few weeks, but that there are no major objections as yet. When asked, however, whether it means that they're satisfied with what has been presented, they're refraining from going so far as to say a resounding ''yes''. Among the details the European Commission insisted on was adapting the country's IT system.

Its base is the existing platform of EU funds, but a much higher level of transparency was required from Brussels. For example, that the name of the end user of the money can be found in the system in order to prevent potential conflicts of interest over time. Solutions in this direction are of crucial interest to the Croatian public, as the National Recovery and Resilience Plan is worth 47.5 billion kuna in total and is, at least relatively speaking, the largest in the European Union (EU).

The chance of a ''less than transparent'' way of spending this sum of money will be challenging for all member states, the Commission assures, and not only for Croatia, which is at the very bottom of the European Union in terms of corruption indicators and poorly functioning state institutions. Interlocutors also pointed out that this isn't an issue that only the European Commission insists on, but that it is also in the focus of the European Parliament.

Regular consultations on the Zagreb-Brussels route on the Recovery and Resilience Plan, which should bring with it several substantial reforms, already have some difficult topics on the agenda, such as the reorganisation of the healthcare system and greater efficiency of the judiciary.

Some details of the proposed healthcare reform, specifically the functional merging of hospitals and the transfer of authority over them to the national level, have already resulted in strong resistance at the local level.

Signals from Brussels make it clear that this is an issue that will be insisted on, arguing that there is no alternative to improving access to and efficiency of the Croatian healthcare system, cutting waiting lists, and also cutting costs such as unifying the (now dispersed) public procurement process.

The same goes for the integration of local water companies; the reform of the water utility system envisages cutting their number from 200 all the way down to a much less 43. This idea has also angered local leaders, but more than 5 billion kuna in investment totally depends on it.

Finally, Russia's invasion of Ukraine raised questions about whether the European Commission would give in and give member states a little bit of room for maneuver in order to redirect some of that money to mitigate the indirect damage from the war. The answer to that question, at least at this point, is no. The national plans set out the necessary reforms to strengthen the resilience of economies to the specific recommendations for each member state.

For more information on this Croatian EC request and much more, check out our politics section.

Thursday, 9 July 2020

European Commission: Only 2 Countries Will Have Worse GDP Drop Than Croatia

July the 8th, 2020 - The European Commission (EC) isn't very optimistic as far as Croatia's predicted GDP drop for 2020 is concerned, but is there light at the end of the tunnel for 2021, at least?

The ongoing coronavirus pandemic has been wreaking havoc with the global economy and Croatia's, which is heavily reliant on tourism and hospitality, has been far from immune to these negative trends. The Croatian economy is heavily influenced by seasons, on top of that, with a drop in unemployment usually occurring at the tail end of March as business owners seek out waiters, chefs, cleaners, bar staff and more. This trend was stopped in its tracks before it could even gain any momentum by the pandemic.

April was an absolutely dire month for Croatia in every possible economic sense as lockdown saw consumption and hiring as we know it grind to a halt. Things are improving now, and in some sectors in a better way than we could have expected, but just what does the European Commission envisage for the rest of this year?

As Novac writes, Croatia will face even more severe consequences of the COVID-19 pandemic than previously thought. According to the latest forecasts published recently by the European Commission, the decline in GDP for Croatia this year will be as much as 10.8 percent, and next year the recovery will begin and growth will be 7.5 percent.

Only Italy with a drop of 11.2 percent and Spain, with a drop of 10.9 percent, will have a bigger drop than Croatia. Both of these popular Mediterranean countries which are also very tourism-oriented were hit tremendously hard by the virus. A similar category includes France, where GDP expected to fall by 10.6 percent, and Greece, the GDP of which is down by 9 percent.

From the above, it is evident that the countries for which tourism is one of the key branches will be the hardest hit. Poland, which should have a 4.6 percent drop, and Sweden, 5.3 percent, will feel the lightest of blows.

The latest report of the European Commission, along with the summer forecasts, states that the Croatian economy was more resilient before the outbreak of this crisis than it was before the global financial crisis back in 2008. The reports notes the fact that the growth of domestic demand will play the biggest role in Croatia's overall recovery next year.

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Wednesday, 10 June 2020

EC: Gradual Reopening of EU's External Borders as of July 1

ZAGREB, June 10, 2020- High Representative of the European Union for Foreign Affairs and Security Policy, Josep Borrell, said on Wednesday the Commission would recommend this week the progressive and partial reopening of the EU's external borders as of July 1.

Member States made a decision on March 17 to close external borders to non-essential travel from third countries until June 15, as part of the fight against the coronavirus pandemic.

These are decisions of member states with external borders because European institutions have no jurisdiction over the matter.

The European Commission recommended that this be done in a coordinated manner.

Last week interior ministers of member states agreed to co-ordinate progressive reopening of external borders to travellers from third countries.

The EU's internal borders should reopen by the end of June, mostly by June 15, and in the second stage, at the beginning of July, external borders should also start to reopen.

Monday, 8 June 2020

EC Approves Croatia's Support Scheme For Energy-Intensive Companies

ZAGREB, June 8, 2020 - The European Commission on Monday approved under EU State aid rules, a Croatian scheme that grants reductions to energy-intensive companies on a surcharge to finance support for renewable electricity production. 

Croatian support for renewable energy is at present financed through contributions from electricity consumers, based on their consumption.

The scheme, which will apply until 31 December 2021 and will have a provisional annual budget of €10 million, will benefit companies active in Croatia in sectors that are particularly energy-intensive (hence with higher electricity consumption) and more exposed to international trade, says the European Union on its web site.

"The beneficiaries will obtain a reduction of up to a maximum of 80% of their contribution to the financing of support to renewable energy.

"Croatia also submitted an adjustment plan to align with State aid rules the level of reductions from which a number of eligible and non-eligible companies have benefitted since 2013. The Commission assessed the measure and the adjustment plan under EU State aid rules, in particular, the Guidelines on State Aid for environmental protection and energy 2014-2020.

"The Guidelines authorise reductions – up to a certain level – in contributions levied on energy-intensive companies active in certain sectors and exposed to international trade, in order to ensure their global competitiveness.

"The Commission found that the compensation will only be granted to energy-intensive companies exposed to international trade, in line with the requirements of the Guidelines. Furthermore, the measure will promote the EU energy and climate goals and ensure the global competitiveness of energy-intensive users and industries, without unduly distorting competition. On this basis, the Commission concluded that the measure and the adjustment plan are in line with EU State aid rules."

Sunday, 28 April 2019

More Than Third of Graduates with Diplomas in Croatia Unemployed

As Mirela Lilek/Novac writes on the 27th of April, 2019, Croatia's situation still isn't good: the country is continuing to ''produce'' graduates with the third lowest employment rate in the whole of the European Union, and as a result, taxpayers pay more and more money for them. According to new data from Brussels, based on a comparative survey of youth employment among Croats with diplomas earned in the last three years, a third of highly educated people aged between 20 to 34 in Croatia have no jobs. Only Italy and Greece are worse.

Of the 28 countries EU member states, Croatia ranked 26th with a 66 percent employability rate. Four positions above Croatia lies Romania, Bulgaria is six places above, and Slovakia is nine places above. Croatia's neighbour to the north, Slovenia, is eleven places above Croatia, Poland is thirteen places above (impressively right behind Ireland and Denmark), and the Czech Republic, with an 89.9 percent employability rate which has impressed the European Commission's experts - has risen to an enviable fourth place.

Malta is in first place in Europe as an employer of its graduates with diplomas, the employment rate of Maltese students stands at a very impressive 94.5 percent, even better than Germany, which boasts a rate of 90.9 percent, followed then by the Netherlands, the Czech Republic, and then Austria. The EU average is on the rise, back in 2014 it stood at 76 percent and in 2018 it stood at 80.2 percent. Unfortunately, the Croats have been close to the bottom for years, more specifically for fifteen years, as it has a below-average rate of employability in relation to the EU. Of course, rather than attempt to fix the problem directly, the Croats are doing what the Croats always do - continuing to debate and argue over who is (more) to blame for such embarrassing conditions.

Economists see the issue as being that the Croats aren't adapting easily to the market, and that Croatia also has an old education system. At Croatia's universities, they argue that the key issue isn't Croatia's higher education institutions, but an underdeveloped labour market, low personal income, and demotivating working conditions. Experts from the European Commission have given a relatively simple answer: Investing in education will benefit everyone in Europe.

Let's see how they explain their theories in some of the country's universities, starting with the largest "producers" of graduates in the entire country, the Faculty of Philosophy and Economics in Zagreb.

''We're aware of the importance of linking study programs and labour market needs. In this regard, the Faculty of Economics makes an effort to make it easier for students to access the labour market by establishing multilateral cooperation with companies and respectable institutions that enable students to perform high-quality professional practices,'' stated Sanja Sever Mališ, who deals with strategic partnerships and projects at the Faculty of Economics in Zagreb. The basic message from this particular Zagreb university is that "they connect students and employers so their best students can find work even during their studies." Therefore, there is no concern for them.

On the other hand, Vesna Vlahović-Štetić, Dean of the Faculty of Philosophy, admits that Croatia's humiliating placement at the bottom of the employability scale of graduates is still something to be very concerned about and therefore the causes of that need to be looked at.

''I assume that part of the problem lies in insufficient development and the ability of the economy and the public sector to absorb newly graduated students. On the other hand, the question is how many colleges and higher education institutions meet the needs of society with their respective programs. At the state level, in some professions there's hyper-production, and in others there is a lack of experts. Additionally, study programs should be regularly updated and developed to meet not only society's needs but also predict what competences professionals will need in the future,'' the dean says.

Data obtained through the HKO project of the Faculty of Philosophy shows that the employability of their students in the year after graduation is 75 percent. They believe this is the result of "the excellent professional and generic competences of their graduates".

"We're convinced at the Faculty of Philosophy that the study programs need to be further improved, so we have just started the study reform process and I'm sure the future employability of our students will be even better," says the university's dean.

The rector of the University of Rijeka, Snježana Prijić Samaržija, doesn't want to run away from the fact that Croatia's universities do hold a share of the responsibility for this issue but, again, she's convinced that Croatia's higher education institutions are't the key cause of the problem, but the underdeveloped labour market definitely is.

Rijeka University has eleven faculties and four departments. On their official page, they point out that they are a modern European university and a centre of excellence within the region and beyond, and that they are responsible for the social and economic development of the community. Samardžija claims that she doesn't want to relate the worrying data on the high rate of unemployed with higher education, but that "it should be borne in mind that higher education is a better job-finding guarantee, such as landing a permanent position,"

"Of course, it's possible to say that the employment rate would be higher if universities, by some automation, increased their quotas for the job-type deficit and reduced those profiles for which the employment bureaus take care of. In that sense, people often say Croatia's institutions and their enrollment policies aren't adapted to the labour market. However, the situation isn't quite that simple.

For example, the market seeks shipbuilding engineers, we have shipbuilding studies and a corresponding quota at the University of Rijeka, but there's a fall in interest for those studies. We can understand the students' fears about the situation with Croatia's shipyards, but the fact is that the need for this profession is still growing. Similarly, despite the lack of mathematics and physics teachers and the excellent studies we have, the interest doesn't match the employment opportunities,'' she explained.

The University of Rijeka decided to put seven studies ''into retirement'' this year, and isn't accepting students for them. Those are acting and media, dental hygiene, computer science in combination with professional studies of medical-lab diagnostics, mechanical engineering, shipbuilding, and electrical engineering.

On the other hand, there's a considerable level of interest in studies that don't guarantee quick and permanent employment at all, such as the arts, cultural studies, and psychology.

''Young people choose studies according to their personal interests, not just employment opportunities. They don't necessarily just want a permanent job, many of them are accustomed to gaining work experience in different institutions, at different places of work, and in different countries. More and more, they prefer to individually define the curriculum through courses and practical competences beyond their study program(s), which will make their expertise comparatively more special and desirable. In the midst of a sluggish and non-ethnological labour market, more and more students enjoy prolonged youthful relationships with their parents or rent apartments,'' says Snježana Prijić Samaržija.

"I don't want to run away from the responsibility of the university, we're constantly thinking about the jobs of the future, we're working on increasing the quota for the deficit professions and improving our students' competences to reduce the unemployment rate. However, time is needed to see the results of these measures because the higher education cycle lasts for at least five years. It should be understood that universities can't just simply increase quotas for occupations for which there's a labour market need because new employment is frozen,'' noted the Rector of the University of Rijeka.

As Croatia's paradoxical situation of having no work but plenty of jobseekers, yet plenty of work and no staff, it's hard to predict the outcome of education system reforms as the market and its needs can alter so rapidly. Will Croatian students simply continue to trickle away on the stream of a proverbial leaking tap out into Western Europe, leaving Croatia with the rather unenviable title of a country that educates its citizens for work abroad? It's likely such a scenario will continue at least for the foreseeable future. Whether or not Croatia will manage to make the necessary alterations to fix that aforementioned ''leaky tap'' in time remains to be seen.

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Click here for the original article by Mirela Lilek for Novac/Jutarnji