Friday, 5 June 2020

Eurostat: Croatian Unemployment Rate Reaches 8.1 Percent

As Jadranka Dozan/Poslovni Dnevnik according to a Eurostat survey, the Croatian unemployment rate has increased, with the number of registered unemployed people rising from 122,000 to 147,000.

After most European Union (EU) countries resorted to restrictions on work and movement due to the outbreak of the coronavirus pandemic back in March, unemployment and claims for unemployment benefits rose across the bloc in April.

At the same time, various measures and aid to preserve jobs were introduced by national governments to try to alleviate the economic shock caused by the pandemic, and according to Eurostat, the number of unemployed people in the EU eventually increased by 397,000 people in April, to a massive 14.08 million in total.

The seasonally adjusted unemployment rate thus rose from 6.4 percent in March to 6.6 percent, which is still slightly lower than it was back in April last year (when it stood at 6.8 percent). According to the Eurostat survey, the Croatian unemployment rate has increased from 122,000 to 147,000, reaching a concerning 8.1 percent from 6.8 percent back in March this year.

Six EU member states had higher rates in April - with Spain and Greece leading the way, followed by France, Cyprus and then by two Baltic states.

In contrast, the Czech Republic boasts the lowest unemployment rate, standing at a mere 2.1 percent (with a monthly increase in the number of unemployed of only 7,000), Poland is currently at below three percent, in Germany and the Netherlands it stands at about 3.5 percent, and in five other countries, the unemployment rate remains below five percent.

The circumstances caused by the ongoing pandemic have also led to certain discrepancies with regard to the globally used standard definition of unemployment according to the International Labour Organisation (there are unemployed people who have been actively looking for work for four weeks and can start working in the next two). In addition to government support at the EU level, this has also somewhat mitigated the increase in unemployment.

However, according to Eurostat, unemployment among young people under the age of 25 in the Union rose slightly in April.

There were 2.62 million unemployed people in the EU in March and 2.77 million of them in April, marking an increase from 14.6 to 15.4 percent. For Croatia, the latest data refers to March with 24,000 unemployed people and a youth unemployment rate of 16.2 percent.

For more on the Croatian unemployment rate, follow our lifestyle page.

Tuesday, 19 May 2020

Employment and Unemployment Rise in Croatia in April

ZAGREB, May 19, 2020 - At the end of April, there were 1.527 million employed people in Croatia, or 0.8% more than in March, and the registered unemployment rate also rose by 0.8 percentage points to 9.4%, according to figures provided by the national statistical office (DZS).

At the end of April, the number of employed Croatians rose by 1.5% compared to the end of April 2019.

The DZS says that "in April 2020, the total number of persons in paid employment in legal entities in the Republic of Croatia amounted to 1,325,632, out of which 631,442 were women."

Broken down by business activity, employment rose month on month in almost all activities, with the highest rise of 2.9% in accommodation and food service activities.

The activity section categorised as "public administration and defence; compulsory social security" saw a monthly drop in hiring of 0.4%. The only other section with fewer employees was  "Electricity, gas, steam and air conditioning supply" with a 0.3% drop.

Unemployment rate rises to 9.4% 

The total number of unemployed persons increased by 11.0% in April 2020, as compared to March 2020. The total registered unemployment rate in April 2020 was 9.4%.

Thursday, 14 May 2020

Coronavirus: Is Laying Off Staff An Answer? Croatian Economist Talks Maths

Could a shortened working week instead of laying off staff save more money and help the economy get back on its feet in the aftermath of the coronavirus crisis? As the coronavirus pandemic continues to wreak havoc with the global economy, here's an interesting look at the maths, which doesn't support the laying off of employees at all.

As Novac writes on the 13th of May, 2020, Vladimir Benic, an economist and director of the Zagreb company CareerCentar, gave a concrete calculation pointng to the idea that a shortened working week, in which we work three to four days a week only, could save jobs not only the coronavirus era, but in other crises, too. The text he wrote was first published on his LinkedIn profile.

A similar solution was introduced by the Germans, the text says, not as a result of coronavirus-induced economic issues but following the 2008 financial crisis. In order to slow down the growth of the number of unemployed people in Germany, they introduced a measure of subsidised part-time work, better known as ''kurzarbeit''. They thus retained a larger number of part-time employees, instead of laying off 20 percent of the entire German workforce.

We are translating and transmitting his text in its entirety below:

"Figuratively speaking, laying off 200,000 workers would save a company 19 billion kuna a year due to not needing to pay out for those wages. However, once a company reaches pre-crisis levels, it's necessary to restart the recruitment process. Given the cost of hiring people and running the business in the range of 50 percent to 200 percent of the annual salary of workers, companies will thus spend a minimum of 10 billion kuna by re-employing workers. So, the net effect of the company's savings is 9 billion kuna (minus the amount of severance pay the company needed to pay out to those laid off workers).

On the other hand, if companies keep hold of all of those 200,000 workers and reduce their working hours from 40 down to 25 hours per week, that would be save 75,000 workers according to those working hours. Add a 10 percent pay cut to that, and the company would save up to 8.4 billion kuna. In this case, a company would save on the cost that needs to be invested in the re-employment process, and in addition would retain the knowledge and acquired skills of its [retained] employees.

In addition, if we look again at the German scenario, the state could, in the case of retaining workers, help business owners with certain measures to preserve those jobs. If we take into account the positive effect on the state budget in the form of reduced state expenditures for unemployment benefits, the total positive effect of the second business model is greater than 10 billion kuna.

When this image is viewed from the worker’s perspective, the calculation also goes in favour of the second model. For example, the previously mentioned 200,000 workers in a period of one year, with a reduced number of working hours, will see around 6.5 billion kuna left at their disposal.

In this way, they will continue to remain creditworthy, and will change their consumer habits to a lesser extent, which will continue to encourage the development of the economy. On the other hand, if the same number of workers lose their jobs, they will have around 5.5 billion kuna at their disposal, or one billion kuna less for consumption, which will lead to the slower recovery of the [economy of] the country.''

Make sure to follow our lifestyle page for more. Stay up to date with our dedicated section for all you need to know about the coronavirus pandemic in relation to Croatia.

Monday, 11 May 2020

Coronavirus: What Level of Unemployment Can Croatia Expect by End of 2020?

As Poslovni Dnevnik writes on the 10th of May, 2020, in Croatia, the second quarter is the one in which unemployment traditionally falls the most. With the coronavirus pandemic having thrown a spanner in the works, let's have a look at what the end of 2020 might look like in terms of unemployment.

"On the one hand, we're very happy that the health and epidemiological situation is good and that we can start working again, but on the other hand, we're very worried about the future of our business, especially with the uncertain tourist season," said Hrvoje Bujas, the president of the Voice of Entrepreneurs (Glaz Poduzetnika).

''As many as 47 percent of our members, according to the survey we conducted, will be forced to reduce the scope of their businesses if they want to survive.

This means opening a business with or fewer workers, especially fewer seasonal workers when it comes to tourism workers or those in the hospitality industry, or with lower wages for workers. Unfortunately, as many as 29 pecent of small, micro and medium-sized enterprises don't have enough funds to restart their businesses and will be forced to either close or lay people off. Instead of concentrating on the economy and letting us work, the government is making strange decisions to ban work on Sundays and preparing for elections while it still has a good rating, before the peak of the crisis and the wave of unemployment that will hit us arrives,'' stated Bujas.

As stated, here in Croatia, traditionally, the second quarter is the one in which unemployment tends to fall the most. The pre-season is a time of stronger economic activity and increased employment as employers seek out their seasonal staff and the tourist season approaches. In 2020, we can already see that such a trend in the second quarter is going to continue to simply grind to a halt, and in actual fact, that trend will be completely reversed - instead of the expected strong drop in unemployment in the second quarter, Croatia will have a strong rise in unemployment.

In March 2020, the unemployment rate broke the downward trend seen in previous years and grew by four percent, although in the first two months of 2020, it moved identically as it did in previous years. In April 2020, the situation got even worse; instead of the expected 10 percent drop in unemployment that April typically brings with it, this year, we have unemployment growth in April of over 10 percent.

"As the restrictive measures only covered half of the month of March and already generated the effect of a strong break in this trend, in April, in which the restrictive anti-coronavirus measures were fully in place for the entire month, the trend was completely reversed. The further growth of unemployment can be expected in May, which will also have measures of limited movement continuing until the middle of the month, and by the end of the month, we can expect a change in consumer behaviour, despite the lifting of the anti-coronavirus restrictions,'' said Vuk Vukovic.

"In May in the last three years, unemployment has fallen by about 11 percent each time. After the first week of May of 2020 alone, unemployment has continued to rise, albeit slightly less than back at the beginning of April. What is certain is that the effects of the coronavirus pandemic will completely nullify the effect of the three traditionally most successful months of the year when unemployment in Croatia typically declines. Moreover, unemployment will rise by about as much as it normally falls in the second quarter.

Unfortunately, this trend will continue. From the 1st of June, 2020, the Croatian Government's measures to help the domestic economy will cease and it can be expected that the unemployment curve will not escalate until later on in June, and non-working Sundays will certainly further contribute to this growth in unemployment. According to the Glas Poduzetnika association's members, between 10,000 and 15,000 people will lose their jobs by the end of the year unless this decision is changed.

The drop in demand, which will continue due to the high level of coronavirus-induced uncertainty, as well as the certainly poor tourist season for a large number of small businesses, unfortunately means additional difficulties in doing business in the coming months. Taking all of this data into account, but also the fact of the termination of the second package of Government measures, new estimates for Croatia's unemployment trends by the end of 2020 have been developed.

According to the optimistic scenario, we expect that by the end of 2020, another 160,000 people could lose their jobs. This trend would slow down somewhat in 2021, but even then, we can't expect a sharp decline in unemployment but a slight increase of an additional 15,000 people, which would mean that unemployment will reach its peak with about 315,000 people in 2021. This scenario assumes rapid economic recovery in 2021 and weaker growth in terms of the unemployment rate this year, and concrete and effective reform actions from the government aimed at economic recovery, which aren't in sight at the minute.

This pessimistic scenario assumes the continuation of the negative trend of unemployment growth throughout the year and predicts that as many as 240,000 people in Croatia could lose their jobs by the end of 2020. The effect will continue into 2021, when an additional 51,000 people can be expected to lose their jobs. That would raise the total number of unemployed people in Croatia to as many as 430,000 people in 2021 before it starts to fall again as things recover. The blackest of all of these scenario is certain in the absence of the necessary reforms, as well as due to the Croatian Government's holding of the elections and the formation of a new government in the next four to five months, which will see any economic recovery distorted and lose its pace.

The realistic scenario would move between optimistic and pessimistic: a total of 340,000 unemployed people in Croatia by the end of 2020, and a total of 370,000 unemployed in 2021 before the start of the country's economic recovery.

"All three scenarios will depend on the depth of domestic structural and institutional reforms undertaken in the wake of strengthening the entrepreneurial climate and the rule of law, the government's commitment to economic recovery, the recovery of our most important economic partners and health measures to control the coronavirus epidemic,'' stated Vukovic, concluding his analysis.

Data sources: The Central Bureau of Statistics and the Croatian Employment Service

For more on coronavirus in relation to Croatia, follow our dedicated section.

Monday, 24 February 2020

Unemployment in Croatia Drops to Record Lows, But That's Bad News

The level of unemployment in Croatia is falling to record lows, which might sound like a bit of good news for the domestic economy for once, but it isn't. The reason for the drop in unemployment in Croatia is the country's increasing need to rely on retirees: from shop assistants to doctors in surgeries.

As Poslovni Dnevnik writes on the 24th of February, 2020, with 345,000 registered unemployed people back at the end of 2013, the unemployment rate in Croatia dropped to just 128,000 at the end of 2019, writes Dalibor Dobric for DW.

While on the surface this may seem like a huge improvement, it's actually a complete and utter disaster. Back in 2017, much was written about how Croatia should be afraid of a falling unemployment rate because it is being caused by mass emigration. In three years, the situation has worsened. Although the Croatian economy has been recovering and growing since 2015, the number of employees has increased from an average of 1,391 million in 2015 to just 1,518 million in January 2020, as was recently published by the Central Bureau of Statistics. That's a mere 127,000 more employed people. The fall in the rate of unemployment in Croatia is thus much greater than the increase in the number of employed or retired people, which means that the labour market is emptying, and fast.

Even though emigration from Croatia has slowed somewhat, there are still tens of thousands of people leaving per year. Immigration and seasonal foreign labour cannot make up for that. According to official data from the CBS, 39,515 inhabitants emigrated from Croatia in 2018, which is less than in 2017 when 47,352 emigrated according to official statistics, says Dr. Sc. Iva Tomic from the Zagreb Institute of Economics. However, what needs to be emphasised is that this wave of emigration is dominated by younger age groups, that is, almost half of Croatian emigrants are between the ages of 20 and 40, while one fifth is under the age of 20.

A third of those of working age aren't even looking for work

The rate of working population is also decreasing. According to Eurostat, as stated by Dr. Sc. Iva Tomic, in the third quarter of 2019, the ''activity rate'' for the age group 20-64 was only 71.4 percent.

In other words, "this means that in the age group between 20 and 64, almost 30 percent of people were economically inactive, and that they neither worked nor sought work," says Dr. Tomic.

On the other hand, Eurostat also stated that "Croatia, Bulgaria and Latvia are most dependent on international remittances among EU member states", emphasising that the share of transfers, ie, the money that emigrants send to relatives back home in Croatia, makes up a far larger part of Croatia's GDP than Bulgaria and Latvia (6.3 percent versus 3.6 percent). Dr. Tomic points out that Croatia even saw a surplus due to remittances from abroad.

''Compared to 730 million euros in annual inflows of private transfers from abroad in 2009, their amount in 2015 more than doubled to 1.545 million euros. In 2017, the amount increased slightly to 1,668 million euros annually, and in 2018 to 1,743 million euros. As relatively young working-age people tend to leave Croatia, macroeconomically speaking, this is a significant loss of human capital for the current and future decades,'' says Marijana Ivanov PhD from the Faculty of Economics and Business in Zagreb.

No investments or technological innovation…

''People living abroad send money to family members in Croatia, which has positive effects on current GDP through spending growth, or on the financing of the state budget through VAT revenues. However, in both cases the contribution would be much higher if their total income were acquired in Croatia through work for an employer or owing to independent business activities. The adverse effects of emigration are reflected in the financing of the health system and the first pillar from which pensions are paid to existing retirees. It's common knowledge that part of the people who have left, either directly or indirectly (through family members), continue to use the services of the Croatian health care system, and they either participate in the financing of the health system either slightly or not at all,'' warned Dr. Ivanov.

She also pointed out that the increasing labour shortage in many industries is limiting the use of existing production and service capacities, which demotivates and creates an unfavourable environment for new investments, including the necessary technological innovations to increase the productivity of the overall economy.

There is a downside to salary increases...

Her colleague from the Faculty of Economics, mag. Sc. Kresimir Ivanda, who said in an earlier interview with DW that while reducing the number of workers means a rise in wages in some sectors, this increase has its downside because it reduces competitiveness.

"A rise in wages in agriculture, for tangerine and berry pickers and the like would have a negative impact on already poorly competitive domestic agriculture, which is struggling to cope with the low prices of foreign products."

In addition, he noted the lower unemployment in Croatia and that the fight to retain workers by raising wages is only possible for those companies that do good or excellent business. "Such companies are mostly located in the more developed parts of Croatia, which would mean that those parts of the country from which most people leave will also not experience a higher wage increase. This means an even greater difference in the development of regions within Croatia,'' Ivanda said.

Croatia is the land of the retired...

''In going abroad, many people have, from a personal perspective, increased the value of their own human capital as measured by the amount of current and future income. From this point of view, and assuming that some people will sooner or later return to their homes and receive foreign pensions, Croatia's long-term socio-economic picture can be improved in part because foreign pensions will provide many with a higher standard of living than most working today in Croatia,'' says Dr. Ivanov.

"It's also not an impossible long-term scenario in which Croatia becomes an attractive location for retirees of Croatian origin from Germany, Ireland or from other EU member states. However, from today's perspective, it would be far better if Croatia were an economically attractive location for the employment of young people and the settlement of young families from other EU member states and also from other European countries outside the EU,'' he said.

For more on unemployment in Croatia. follow our lifestyle page.

Saturday, 11 November 2017

Croatia Has Third Highest Youth Unemployment Rate in the EU, Says Petir

Joblessness among the youth continues to be a major issue in Croatia.

Friday, 1 September 2017

Croatia Records Biggest Drop in Unemployment Rate in the EU in July

New Eurostat report shows that Croatia experienced the highest falls in employment rates in the EU in July this year. However, Croatia still has a double-digit unemployment rate along with four other countries in the EU.


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