Wednesday, 17 April 2019

Labour Minister says Pension Referendum Could Cost 45 Billion Kuna

ZAGREB, April 17, 2019 - Labour and Pension System Minister Marko Pavić said on Wednesday that a union referendum against the pension reform could cost the state 45 billion kuna in the period until 2040, which union leader Krešimir Sever described as an "indecent spin" aimed at scaring people and making the planned union campaign for the collection of signatures for a referendum on the matter fail.

Addressing reporters after a meeting in the government offices, where representatives of trade unions and employers were informed of the national reform plan, Pavić commented on a union campaign scheduled to start on April 27 and last until May 11 to collect signatures for a referendum petition whereby unions want to restore the retirement age to 65 years, reduce the penalisation of early retirement, prevent the raising of the age for age pension to 61 years, and prolong the transitional period for the equation of retirement conditions for men and women.

"According to our calculations, if the referendum succeeds, it will cost the state budget 45 billion kuna in the period until 2040, which can result in lower pensions or new borrowing that could burden our children and grandchildren, namely a 5% drop in pensions and loans in the amount of 45 billion kuna," said Pavić.

His claims were dismissed by NHS leader Krešimir Sever who described Pavić's calculations as an indecent spin.

"What we have been proposing has nothing to do with borrowing or with the collapse of the pension system, that system functioned also when workers retired at 65," the unionist said.

"Reasonable economists say that the number of years of service alone does not mean that the pension system will be sustainable, and a large number of workers will not be able to work until they are 67. They will opt for early retirement and will be penalised for that, with two fewer years of service meaning a 7.2% drop in the pension allowance," said Sever.

If a worker were to work until 67 and collect many years of service during that period, that would be rewarded with a very small increase in the pension allowance, Sever added.

Extending years of service will cause more harm to workers and pensioners than it will benefit the state. The government is trying to scare people and discourage them from supporting the referendum because it knows that it lacks arguments, said Sever.

More news about the referendum can be found in the Politics section.

Thursday, 4 April 2019

Unions Call on Citizens to Support Pension Referendum Petition

ZAGREB, April 4, 2019 - Unions called on citizens on Thursday to support their "67 is too much" campaign to call a referendum which would bring back the full retirement age to 65 as it was prior to the pension reform.

The signature collection campaign will run from April 27 to May 11. In support of the campaign, union leader Krešimir Sever said that "Croatians have a shorter life expectancy than the EU average, citizens are sicker, working conditions are harder and technology is at a lower level."

Sever was addressing a conference on the pension system organised by the Friedrich Ebert Foundation together with the three union federations that are organising the referendum petition.

Under the incumbent law, anyone who today is younger than 53 will have to work until the age of 67 unless they have a working life of 41 years. The unions want the full retirement age to be brought back to 65 without penalisation and that the Labour Act allow anyone who wishes to work beyond the age of 65 to do so, Sever explained.

"There is no reason for Croatia to raise the full retirement age from 65 to 67. The system will be more relaxed if those who can and wish to do so continue working, while, on the other hand, people who are ill and tired could retire at 65," Sever said.

The conference heard of experiences in some other European countries – Austria has retained 65 as the retirement age while Belgiium has raised that to 67, similarly to Croatia, which resulted in huge dissatisfaction in Belgian society and union protests.

Transition countries are unique in that regard. Slovakia adopted a clear decision in parliament that has cemented the retirement age at 64 while Poland raised it to 67 and then returned it, the unions claim.

More news about pension system in Croatia can be found in the Business section.

Wednesday, 20 March 2019

Government Against Retirement Age Referendum

ZAGREB, March 20, 2019 - Labour and Pension System Minister Marko Pavić on Tuesday dismissed trade unions' statement about the pension reform referendum as an attempt to score cheap political points for the forthcoming European Parliament election.

He added that it was an orchestrated attempt by the opposition and trade unions to misinform the Croatian public and destabilise the pension system.

The trade union initiative "67 is too much", which is opposed to the proposed retirement age of 67, announced on Monday that they would be gathering signatures for a referendum on this matter from April 27 to May 11. It said that the referendum question would propose restoring the statutory retirement age to 65 years.

Pavić said that not all future pensioners would have to work until 67 years of age, recalling that the option of working until 67 years was already provided in a law of 2014, and that with the comprehensive pension reform "the government is only accelerating this process to the year 2033."

The minister recalled that there was an institute of the long-term insured which enables those entering the labour market young, such as construction workers and store cashiers, to retire at the age of 60, once having completed 41 years of service. Students attending universities until the age of 24 will be able to retire at the age of 65, while those who did not manage to complete 41 years of service will retire at the age of 67.

Pavić also said that the average pensioner in Croatia had 30 years and two months of service, while the European average was 35 years.

"Annually, Croatia sets aside 40 billion kuna for pensions and is 18 billion kuna short. This figure will keep growing. We are aware that pensions are low but we also have to stabilise the system so we don't leave debts to our children and grandchildren," Pavić said.

More news on the pension system can be found in the Business section.

Monday, 18 March 2019

Unions to Collect Signatures for Pension Referendum

ZAGREB, March 18, 2019 - A union referendum initiative against retiring at the age of 67 called "67 is too much" said on Monday it would collect signatures for the referendum from April 27 to May 11 and that the question would be about lowering the retirement age back to 65.

Speaking at a press conference, union leaders Mladen Nosovel, Krešimir Sever and Vilim Ribić said the referendum would demand to amend the Pension Insurance Act.

The initiative proposes that an insured person be entitled to old age pension upon reaching 65 years of age and having completed 15 years of qualifying periods and to early age pension with 60 years of age and 35 years of qualifying periods, reducing penalisation for early retirement from 0.3% to 0.2, and delaying the equation of the required pension age for men and women.

The three leaders said that by voting in the referendum, citizens would directly repeal the pension reform pushed through by Labour and Pension System Minister Marko Pavić, against which unions announced the referendum last October.

Sever said people in Croatia could not work until they were 67, that penalisation for early retirement was too high and that the equation of the retirement age for men and women had accelerated too much.

He said Croats lived shorter on average than people elsewhere in the EU and that a healthy life in Croatia after the age of 65 was only five years, half the EU average. "We are a sick, overworked and poor nation where people are forced to work to exhaustion, after which they can work four hours also when they retire."

Ribić said the extension of the working life in Croatia was not a necessity but a consequence of political elitism. "Elite groups are to blame for the situation in the country, the outrageous emigration and demographic depression, so we ask that citizens be given back the right to decide."

Novosel said the unions had tried to dissuade the government from the "unreasonable" pension reform, but to no avail.

More news about referendum initiatives in Croatia can be found in the Politics section.

Friday, 18 January 2019

270 Million Euros Earmarked for Employment Measures

ZAGREB, January 18, 2019 - Labour and Pension System Minister Marko Pavić said in the eastern city of Osijek on Friday that the intent of the current government was to activate the domestic labour force as much as possible, and reinforced active employment policy measures had been prepared for 2019, with more than 2 billion kuna set aside for that purpose.

Opening a fair to promote employment in tourism, Pavić said that over 160,000 unemployed persons throughout Croatia had been surveyed about their plans, and 20,000 said they would like to work in the tourism industry.

Such events as this one in Osijek are meant to directly connect job-seekers with employers, and similar fairs will also be held in Zagreb and Split, said Pavić.

Tourism Ministry State Secretary Frano Matošić said that between 30,000 and 40,000 workers had been hired for seasonal jobs last year, and the Croatian tourism industry needs an additional 10,000-15,000 seasonal workers, according to some estimates.

More news on the employment situation in Croatia can be found in the Business section.

Wednesday, 2 January 2019

Pension Reform Enters into Force

ZAGREB, January 2, 2019 - The pension reform which went into force on January 1 envisages raising the retirement age to 67 as of 2033, penalising early retirement by 0.3% per month, i.e. by 18% for five years, and enabling all pensioners to work four hours a week while keeping their pensions.

Second pillar beneficiaries can choose in which system to exercise their pension - only in the first pillar with a 27% supplement for the period up to 2002, plus 20.25% for payments after that year; or from both mandatory pillars.

Between the two readings in parliament, the pension legislation package went through certain changes – penalisation for early old-age pension was cut from 0.34 to 0.3% monthly; the full retirement age is to be lowered by six months for mothers and women who adopt for every child, which will increase their pensions by about 2%.

In order to reinforce the sustainability of the pension system, the equalisation of old-age retirement for women and men is being stepped up by four months per year. Women are now required to retire with 62.4 years of age until the end of 2026.

As of 1 January 2027, both men and women will be eligible for old-age pension with 65 years of age and 15 years of service for retirement.

As of 1 January 2028, the age for both will be raised by four months per year until 1 January 2033, when both will be eligible for old-age pension with 67 years of age and at least 15 years of service for retirement.

The reform brings change also in the operation of mandatory pension funds with a view to achieving more transparency and control. The reform envisages the appointment of insuree representatives to the funds' supervisory boards as well as the obligation of the funds' management board members to step down from supervisory boards in companies in which they have ownership stakes.

Pension funds can also invest in startups and infrastructure projects, and the reforms also cuts the compensation for running them.

As of January 1, the net monthly minimum wage rises from 2,752 kuna to 3,000 kuna, by 9% in comparison with 2018. According to the government, this is the biggest one-off minimum wage rise since 2008.

More news on Croatia’s pension system can be found in our Business section.

Monday, 10 December 2018

Minimum Wage Increase Not Enough, Says Opposition in Croatian Parliament

ZAGREB, December 10, 2018 - Labour and Pension System Minister Marko Pavić said on Monday that the government had made a significant step by increasing the minimum wage, bringing it to 3,000 kuna as take-home pay and that the extra money people on a minimum wage will earn will be additional funds for a decent life. The opposition however, retorted that surviving on 3,000 kuna was a "mission impossible," with the Social Democratic Party (SDP) and Let's Change Croatia party recommending that the net minimum wage be 4,000 kuna.

"The government has decided that the minimum wage in 2019 be increased to 3,000 kuna as the net amount or 3,750 kuna as the gross amount. That increase of 248 kuna is the biggest increase since the institute of the minimum wage was introduced in 2008. Before that, during the term of this government, the minimum wage was increased twice by 5% each time and with the latest amendments to the Law on the Minimum Wage, where we excluded Saturday, Sunday, public holiday and overtime work, there was an additional increase of 3.3%," Minister Pavić said presenting a bill on the minimum wage.

During the incumbent government's term, the minimum wage increased by 504 kuna or 23.9%.

"The minimum wage as of 1 January 2019 will be higher than in nine other EU countries, it already is higher than in Bulgaria, Lithuania, Romania, Latvia and Hungary and as of 1 January we will have a higher minimum wage than in the Czech Republic, Slovakia, Poland and Estonia," Pavić underscored.

The government has sent an important message with the proposed increase and that is that it wants a decent life for its citizens, 37,000 of whom receive the minimum salary. "However, this increase won't be without compensating measures to retain employment in labour intensive industries, primarily the leather, textile, timber and metal industries," he underlined.

Last year already the law defined reliefs on contributions of 50%, which will remain in force next year too.

As of 1 January, subsidies will be available for employers who retain their workers and new measures will be introduced in 2020 for employers who create new jobs, Pavić added.

A minimum wage of 3,000 kuna for a decent life. That's a 'mission impossible'. Slovenia's minimum salary is double that of Croatia's, Ivan Lovrinović (Let's Change Croatia) said. He recalled that his party recommended that the minimum wage be 4,000 kuna as the net amount.

Pavić however said that the government was trying to balance its policy, being aware of the fact that that amount isn't a lot.

Independent MP Vlaho Orepić, objected to the fact that the bill had been put on fast track to which Pavić answered that people on the minimum salary didn't have time to wait.

MP Gordan Maras (SDP) said that any change for the better is good however, SDP too recommends that the minimum salary be 4,000 kuna.

MP Branimir Bunjac (Živi Zid) suggested that Pavić write a book about how to have a decent life earning 3,000 kuna. The book could have several chapters - how to survive with 3,000 kuna if you are single, if you have a family, if you have a loan, if your bank account is blocked, he said.

More news on the minimum wage in Croatia can be found in our Politics section.

Friday, 7 December 2018

Parliament Passes Pension Reform Bills

ZAGREB, December 7, 2018 - Following a heated debate with high-pitched tones, parliament on Friday passed a set of six pension reform bills.

The bills were adopted without MOST lawmakers being in parliament. "We won't take part in this shameful trade where former SDP MPs are saving this government, and the key partners MP Milorad Pupovac of the SDSS and Darinko Dumbović (Reformists) are not present," MOST MP Nikola Grmoja said as MOST MPs walked out of parliament.

The voting continued, without Social Democratic Party MPs voting either. The majority required to adopt the laws was secured by SDP MPs who had defected to the HNS caucus and to Milan Bandić's Work and Solidarity party - MP Mario Habek, MP Milanka Opačić and MP Zdravko Ronko.

SDP MPs Arsen Bauk and Gordan Maras first called for these three MPs to be moved so that they no longer sit among SDP lawmakers. Move these MPs that "Bandić bought off," Maras said.

"I am not for sale. I didn't ask for anything from Ivica Račan, nor from Zoran Milanović, nor from Davor Bernardić. I earned my seat with more than 25,000 votes, which is something you'll never get," Opačić retorted.

The reform which enters into force as of 1 January 2019 foresees extending working life to 67 as of 2033, penalising early retirement by 0.3% for each month or 18% for five years, as well as allowing pensioners to continue working part-time for 4 hours a day and retaining their pensions.

Beneficiaries of the Second Pillar pension system will be given the option to choose which pillar to take their pension from.

The reform experienced some changes between the first and second readings in parliament, so the penalty for early retirement was reduced from the originally planned 0.34% to 0.3% as well as adding six months of working life for mothers and adopted mothers for each child, which should increase their pensions by about 2%.

The reform also brings changes to pension funds aimed at providing greater transparency and control.

For more on the pension system in Croatia, click here.

Wednesday, 5 December 2018

Government Presents Pension Reform, Opposition Not Supportive

ZAGREB, December 5, 2018 - Labour and Pension System Minister Marko Pavić said in parliament on Tuesday that the pension reform was aimed at increasing pensions, securing the system's long-term sustainability and to redress the imbalance between generations, however, during the debate in parliament, opposition lawmakers said that the reform was prepared without taking into consideration any demographic analysis and that a lot more should have been done, adding that this was the worst possible Christmas present for citizens.

"By the end of 2020, 3,000 women will retire and will receive a pension 600 kuna to 700 kuna lower than current pension recipients and we know that their pensions are not high. That problem inspired us to resolve the problem and we did with the supplement of 27% and then we turned to fully improve the entire pension system," Pavić explained.

Parliament was debating a pension package comprising three laws in second reading.

The reforms are geared toward current pensioners, Minister Pavić explained and added that it has secured an increase for 248,000 people who had the lowest pensions and current pensioners with the lowest pensions can expect an increase of more than 6% next year and all pensioners have been provided with the opportunity for part-time work in addition to their pensions.

Pavić said that the average pensioner in Croatia has a working life of 30 years and added that the intention is to increase pensions for current pensioners but without jeopardising state finances.

The pension reform which is expected to enter into force as of 1 January 2019 foresees increasing working life to 67 as of 2033, penalising early retirement by a rate of 0.3% each month or 18% for five years. He reiterated that pensioners would be allowed to continue working 4 hours a day while keeping their pensions.

Beneficiaries of the second pillar pensions system will be given the option to choose which pillar to take their pension from.

"Do more because it's your obligation to save pensioners from poverty, and there are 90% of them. Adjust trends for the average pension to be in line with the average monthly pay, because now they are a mere 39% of the average wage, and we are almost the worst in the EU in that regard," MP Ivan Lovrinović of the opposition Let's Change Croatia party.

"We've increased the average pension to 2,700 kuna, which is 43% of the average pay. And we are pleased to say that people with a 40-year working life have an average pension of 4,600 kuna which is 70% of the average pay," Minister Pavić retorted.

The Social Democratic Party (SDP) is opposed to this type of reform because it is aimed exclusively at decreasing pensions for future pensioners and to make a saving on them. According to the proposal, citizens will work longer, receive less and have a much harder life in retirement, SDP leader Davor Bernardić said, criticising the government for not having the decency to even consult with unions.

He called out the government claiming that it is forcing people to work outside Croatia and that during this government's term, more than 100,000 people had emigrated. He added that raising the retirement age to 67 was unacceptable.

Bernardić said Labour Minister Marko Pavić's proposal was bad, dangerous, destructive and socially irresponsible. The proposed reform is showing pensioners that the future can be even worse than the present, Bernardić said.

It's illusionary to discuss whether the pension age will be 63, 65 or 67 while our demographic picture is as it is, MP Nikola Grmoja (MOST) said.

MP Anka Mrak Taritaš (GLAS) referred to the pension reform as something "so-called," and that there actually hasn't been any reforms during this government's term.

Parliamentary groups forming the ruling majority commended the government's proposal saying that it was necessary to take into account the circumstances in which the reform is being adopted.

For more on the pension system in Croatia, click here.

Friday, 23 November 2018

Government and Unions Negotiate Ahead of Public Sector Strike

ZAGREB, November 22, 2018 - After meeting on Thursday, Labour and Pension System Minister Marko Pavić and public sector union representatives said that the conciliation process would continue on Monday. "We agreed that this was the first round of conciliation. We absolutely conducted it in good faith, with a good exchange of arguments. We agreed that we would not release any details until the final meeting on Monday, when we will meet and see whether we can resolve this dispute," Pavić told reporters. Several days ago, the unions said they would organise a public sector strike.

Pavić added that it was obvious that both the unions and the government were interested in ending the process.

We didn't complete the conciliation, hence we cannot release any details, the president of the secondary school unions, Branimir Mihalinec, said. "The government proposed that we should continue with the conciliation on Monday, when it will have a final answer. We accepted that and consider it to be reasonable and we will try and see if we can find a final solution to the dispute on Monday," said Mihalinec.

He added that union activity would continue as planned and that only a good proposal by the government would make the unions cancel the planned protest.

Neither Pavić nor the unionists wanted to say whether any new offer had been put on the table.

Public sector unions are seeking a 5.8% increase in the base pay in 2019, yet the government is offering an increase of 3%, claiming that that's the maximum it can provide considering the budget.

The unions have rejected that offer and announced a public sector strike, which is scheduled to start on November 28 and will be held one day every week until their demands are met.

For more on trade unions in Croatia, click here.

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