Tuesday, 5 July 2022

Unions Want Croatian Public Sector Wages to Match Inflation Rate

July the 5th, 2022 - Unions want Croatian public sector wages to match the rate of ongoing inflation as the government's budget framework for the period from 2023 to 2025 brings the biggest increase in expenditures due to the increase in costs for the payment of pensions.

As Poslovni Dnevnik writes, over the next year, the government will spend a massive 50.2 billion kuna on pension payments, which is 4.2 billion kuna more than was paid out this year.

The reason is, unsurprisingly, ongoing inflation, that is, the expected record adjustment of pensions in the second half of this year, which will spill over into next year as well. The increase in the average pension of 150 kuna, with a double-digit inflation rate, will not help any pensioner much. In a country with more than 1,200,000 resident pensioners, this significantly increases the largest budget expenditure, but the situation is also being eased by the large increase in income brought to the budget by inflation.

Negotiations this September

However, the state doesn't yet know how much the second largest expense from the budget will cost, and that relates to the payment of salaries for 250,000 employees in the Croatian public sector. The four percent increase in the base rate as of May the 1st didn't even cover the previous rate of inflation, and in September, the government is expected to negotiate with the trade unions regarding an additional increase in the base rate. The negotiations that will begin immediately after the end of 2022's tourist season will destroy the government's budget framework for the next three years, but will bring very welcome changes in this year's budget.

Back in April, the unions agreed to an increase of only four percent, although they'd asked for eight percent, and they based their request on the growth of budget revenues and the fall in the price of labour in the Croatian public sector because the inflation rate was much higher than the growth of the base rate was. They agreed to give the government a break until the results of this year's tourist season could be properly seen, but the results so far that the government keeps on bragging about mean that the trade unions will also have high demands themselves.

According to Novi list, Zeljko Stipic, president of the Preporod trade union, will demand that the base be increased as early as October the 1st this year, because the four percent increase from May has long since been overtaken by increasing inflation. Trade union veteran Vilim Ribic adds that the four percent increase from May the 1st is an annual increase of 2.3 percent, which is several times lower than the expected inflation rate this year.

''We should start the negotiations during the second half of September, but I believe that we can finish them quickly enough to increase the base rate from October the 1st onwards. The government insisted that the negotiations regarding the additional increase of the base rate this year continue when they have the results from the tourist season, but by all accounts, it will be better in terms of revenue than that of 2019 and the increase of the base rates as such cannot be avoided,'' believes Stipic.

The trade unions are ready...

The trade unionists don't want to say how much they will request from the government for this year's base rate increase for Croatian public sector wages, but Stipic notes that, at a time of constant price changes and accelerating inflation, the solution could be to agree that wage growth follows the growth of inflation rates and thus avoid the need for negotiations several times a year.

''Inflation is continuing to accelerate and we still can't see an end to it. By the time we agreed to a four percent wage increase and the government's offer to talk in autumn, the inflation rates at the time had already cancelled out that growth, and the solution is to include in this new agreement that the increase in Croatian public sector wages follows the increase in living costs,'' notes Stipic, adding that this is how the issue of compensation for transportation costs is typically regulated. The ''April agreement'' increased the transport fee to 1.35 kuna per kilometre, instead of the previous one kuna, with this amount being adjusted every time fuel prices rise by ten percent.

Ribic doesn't want to reveal how much, in his opinion, Croatian public sector wages should rise in autumn either, but he says that it's no longer possible to accept things as they currently stand, and that also includes attitudes towards the public sector.

''Back in May, the salary base increased by four percent, and in the same month, inflation, compared to May 2021, stood at 10.8 percent. It's clear to everyone that this isn't even close to what the employees in the Croatian public sector should have received as a salary. This increase of four percent means an annual wage growth of 2.3 percent. Inflation will be several times higher and the work of employees in the Croatian public sector will once again be devalued, that is, the price of their work will fall. The government must compensate for this in the negotiations in September,'' warns Ribic.

The growth of the base of four percent this year comes at an enormous cost of 850 million kuna, but the state will obviously not be able to avoid increasing that amount, writes Novi list.

For more, make sure to check out our dedicated business section.

Saturday, 4 June 2022

Employers to Be No Longer Required to Garnish Wages Upon Euro Adoption

ZAGREB, 4 June 2022 - The planned changeover to the euro in 2023 obliges Croatia to amend a set of laws, including the legislation regulating the enforced collection of delinquent debts, the Jutarnji List (JL) daily reported on Saturday.

Apart from changing all the laws that cite the kuna, some other laws will have to be amended, the daily newspaper says, adding that the change would further reinforce the protection of consumers against invalid contracts.

Currently, apart from the Financial Agency (FINA), the Croatian Pension Insurance Fund (HZMO) and employers are also authorized to garnish pensions and wages respectively to withhold the earnings of an individual for the payment of his or her debt in accordance with out-of-court settlements.

The employers complain about this obligation as an additional administrative burden.

Furthermore, employers are often at a loss on how to deduct money from an employee's monetary compensation so as to withhold a part of the salary subject to the enforced collection.

Therefore, the justice ministry plans to introduce a single system for the enforced collection when it comes to the wage and pension garnishment, and that only FINA should be authorized to collect delinquent debts from the income of debtors.

For more, check out our business section.

Sunday, 1 May 2022

New Labour Minister Says Will be Best Collaborator to Unions Demanding Higher Wages

ZAGREB, 1 May 2022 - During a celebration of International Workers' Day on Sunday, recently appointed Minister of Labour, Pension System, Family and Social Policy Marin Piletić said he would be one of the best collaborators of unions, which demand an average pay of €1,500 and a minimum net wage of €750 by 2026.

"I can promise that I will be one of the best collaborators in that," Piletić told reporters in Maksimir Park, adding that he would be more than fair with the unions and the happiest if those amounts were reached by 2026.

Referring to collective bargaining, which is also one of the demands unions highlighted during today's protest rally, Piletić said that groups working on Labour Act amendments would meet tomorrow already and that he would have something to say.

However, he claimed, employers are more than aware that they require quality workers and that there are many examples of collective agreements whereby employers meet employees half way and enabled collective bargaining.

He recalled that the government has decided the Labour Act amendments should head in two directions, first to implement European directives and then to draw up a new labour bill.

He told reporters that he would meet with unions this week already. "I spoke with union representatives today and congratulated them on 1 May. We said that we are here. We exchanged numbers and will be in touch constantly," Minister Piletić said.

For more, check out our politics section.

Sunday, 1 May 2022

SSSH Union Federation Protests to Demand Higher Pay, More Collective Bargaining

ZAGREB, 1 May 2022 - The SSSH union federation marked International Workers' Day in Zagreb on Sunday with a protest march down the city streets and a rally outside the Croatian Employers Association, where they pointed to the need for pay rises and collective bargaining.

The march was held under the motto "For a Croatia of happy workers," with the participants asking for "normal working hours," "higher pay" and "open-ended contracts."

The unions' central demands and messages were higher pay and more collective agreements, notably branch collective agreements in the private sector, which employs nearly one million people, and more effective oversight of their application.

Living standards and the real value of wages are jeopardised by price hikes and inflation, they said, adding that pay rises are the only solution.

They said pay rises could only be achieved by increasing the number of collective agreements in the private sector, adding that only two are in force in Croatia and that only one was expanded to all employers.

The responsibility for that is primarily on employers and their associations, most of which refuse collective bargaining, the unions said.

SSSH leader Mladen Novosel said employers and the government should realise that the low cost of labour was history.

"Today's protest is the first warning to employers that there will be more strikes and industrial actions than ever if they refuse to bargain at the sector level", he added.

Novosel said the government was not doing enough via the Labour Act and other regulations to encourage sector bargaining, and even less to ensure proper oversight of the application of the sector agreements that exist.

He said that some Croatian workers still do not have an eight-hour workday for which workers spilt blood on the streets of Chicago in 1886.

Novosel said some workers who should not be, were working today, on a holiday, and that only Croatian workers were leaving for other EU countries while those from them were not coming to work in Croatia.

As a result, he added, there is a shortage of thousands of workers in tourism and construction "because we are at the bottom in terms of the cost of labour and the treatment of workers."

Nosovel reiterated the demand that by 2026 the average pay in Croatia should be at least €1,500 and the minimum wage €750 net.

He also criticised the unions in the Zagreb Holding conglomerate for currying favour with the employer, which he said was sacking workers instead of protecting them.

For more, make sure to check out our dedicated lifestyle section.

Thursday, 28 April 2022

Inflation Soaring, Wages Stagnant: Croatian Standard May Halve

April the 28th, 2022 - The Croatian standard could literally be slashed in half as inflation continues to soar and the average wage across the country remains more or less the same.

As Poslovni Dnevnik writes, due to the increase in the price of energy and food, the Croatian standard could literally be halved. Then comes the big worry of price increases after the introduction of the euro in 2023. On top of that, 240,000 peoples' bank accounts have already been blocked, Deutsche Welle writes.

"The Croatian standard of living will fall over the next few years due to rising energy prices, shocks in supply chains, as well as increased private borrowing, lending and the uncontrolled printing of money," said Dr. sc. Marinko Skare, a rector and professor at the Juraj Dobrila University of Pula.

The Croatian population was hit by rising gas, fuel and electricity prices even before the outbreak of the war in Ukraine and the economic consequences that naturally follow, and due to shortages on the global market, a significant rise in food prices began last year.

The Croatian Government mitigated that price shock with a package of economic measures as part of which it reduced VAT on energy and certain foodstuffs.

Skare believes that the effects of these measures will be negligible: “It's like 50 percent balances (discounts) on Trieste's Ponte Rosso in the last century. They include two t-shirts and everything else remains at its normal price. The situation is the same with VAT: sure, the prices of napkins will fall, and the prices of all necessary consumer goods that people buy will rise. Food and energy prices will rise regardless of the government package and this price increase has already been calculated into inflation and prices. We all know that food and energy will become even more expensive, in an optimistic scenario, by around 10 to 15 percent,'' said Skare.

Croatia's entry into the Eurozone

Unfortunately, he added, the Republic of Croatia is almost entirely dependent on the tourist season and not a great deal else: “A once respectable industry-based economy has turned into the Dominican Republic or the Maldives. These measures must go towards energy self-sufficiency (LNG, solar panels), with the prolongation of Croatian Eurozone entry,'' believes the Pula-based economist.

Namely, according to him, the introduction of the single currency from the beginning of 2023 will bring a further wave of inflation to Croatia, which is something nobody needs at this moment in time.

"The experiences of other countries have shown that the growth of prices on an annual basis after the introduction of the euro was on average 2 to 2.5 percentage points. Of course, this isn't the right timing for the introduction of the euro in Croatia because the only instrument you have in the fight against inflation is monetary policy,'' he explained. In his view, a single monetary and fiscal policy at the EU level is just another economic myth.

"The economies of Italy, Germany, Ireland and France have almost no similarities with the economy of Croatia. How will you solve the problem of inflation in Croatia through the ECB? In addition, the ECB is the worst of all, the ship is sinking, but the music is still playing, money is being printed, interest rates are at historically low levels, and inflation is going wild,'' stated Skare.

When he talks about the more optimistic variant, he predicts the current level of inflation to remain as it is over the next three years. However, if the war in Ukraine escalates and leads to energy and trade wars, he believes there are no limits to rising prices in the coming years, and that doesn't bode well whatsoever for the Croatian standard as we know it now.

Everything points to an enormous crisis

"The world has never been closer to a new Great Depression than it is now, possibly bigger than the one back in 1929. Unfortunately, all the causes of the 1929 crisis are before us: the possible collapse of the stock market (the uncontrolled printing of money) and global trade (a global pandemic and the war in Ukraine), the unadjusted policies of governments around the world and the potential decline in international lending and borrowing, future monetary contraction, bank panic and bankruptcies,'' explained Skare.

He believes that the real Croatian standard could fall by up to 30 percent, and if the Ukraine-Russia war continues as it is and the ECB's policy doesn't adapt and change, he believes that a fall of up to 50 percent in the Croatian standard is also possible. On the other hand, he says there is no room for wage and pension growth to the extent that it would mitigate the fall in the real standard due to rising prices as it would lead to hyperinflation and stagflation on an unprecedented scale.

Everything is more expensive, yet the average Croatian income is the same

Along with inflation, the number of people across the country living on the brink of poverty is growing, as is the number of those who have had their bank accounts blocked due to accumulated unpaid debts. According to the latest data from the Financial Agency (Fina), more than 240,000 people have had their bank accounts blocked due to collective overdue debts of 24.8 billion kuna, along with interest.

Kresimir Sever, the president of the Independent Croatian Trade Unions, noted that the Croatian standard was greatly endangered even before the wave of price increases that started last year.

"According to the Central Bureau of Statistics (CBS), about 27.2 percent of the monthly cost of the average Croatian household falls on food and non-alcoholic beverages, and 17.7 percent on housing costs, which includes energy bills. Since these are areas where price increases have been very much pronounced, it's clear that this is causing an extremely strong blow to a wider circle of people.

''Households in rural areas, those who are single and/or retired, those with more children, the unemployed and the sick are groups of people who are particularly at risk,” warned Sever.

"The Government doesn't have many mechanisms at its disposal"

The at-risk-of-poverty rate for the year 2020 stood at 18.3 percent in Croatia, and since these official figures are solidly late, the real situation is much worse, according to Sever. It is realistic to expect a further wave of rising prices for food, transport, housing, and consequently other goods.

"Apart from the economic measures it has taken, the government doesn't have many mechanisms at its disposal. A little more can be done in the area of ​​excise duties on fuel, the VAT on electricity can be lowered from the current 13 to 5 percent. However, when it comes to lowering VAT, for example on petroleum products, there's no guarantee that, precisely because of the freedom to set prices, they will be reduced at all. When it comes to the possible freezing of the prices of some foods, there may be shortages because the seller doesn't even want to offer these products because such prices reduce his profit,'' concluded Kresimir Sever.

For more, make sure to check out our lifestyle section.

Wednesday, 27 April 2022

Plenković Says Net Wages Have Increased by 32% Since Start of His Premiership

ZAGREB, 27 April 2022 - Prime Minister Andrej Plenković said on Wednesday that net wages had risen by 32% since 2016 when he became Prime Minister, increasing from HRK 5,642 to HRK 7,352.

Commenting on Tuesday's meeting with trade unions, Plenković emphasised the government's commitment to social dialogue and recalled that the base pay in the public sector had not been raised from 2012 to 2016.

The increase is a consistent policy of our cabinet, Plenković said during today's meeting of the government.

Thus, the base pay has been increased on several occasions during the terms of his cabinets, or 18.31% on the aggregate.

Congratulations to winners of Slovenian and French elections

PM Plenković expressed satisfaction with French President Emmanuel Macron's re-election on Sunday, and extended congratulations to the new Slovenian PM-elect, Robert Golob, expressing hope that the Croatia and Slovenia would continue developing friendly relations and partnership, noting that the cooperation with the outgoing PM Janez Janša was very good.

(€1 = HRK 7.5)

For more, make sure to check out our dedicated politics section.

Wednesday, 20 April 2022

Average Net Pay for February €994

ZAGREB, 20 April 2022 - The average net monthly wage for February 2022 amounted to HRK 7,452, up by 5.9% on the year in nominal terms, but down by 0.4% in real terms, the Croatian Bureau of Statistics said on Wednesday.

Month on month, the average net wage was up by 1% in nominal terms and by 0.1% in real terms.

The median net wage for February was HRK 6,151.

The highest average net wage was paid in the manufacture of basic pharmaceutical products and pharmaceutical preparations, amounting to HRK 16,787, while the lowest was in security and investigation activities at HRK 4,758.

The average gross wage was HRK 10,109, up by 6.8% in nominal terms and by 0.5% in real terms from February 2021 and up by 1.3% in nominal terms and by 0.4% in real terms from January 2022.

(€1 = HRK 7.5)

For more, check out our lifestyle section.

Wednesday, 23 March 2022

Unions say Average Wage Amounts to Two-thirds of Decent Pay

ZAGREB, 23 March 2022 - The Coalition for Decent Pay warned on Wednesday that the average pay in Croatia amounted to only two thirds of decent pay, asking the government to adopt policies that would gradually guarantee wages for all workers.

"Decent pay means that we can afford quality living standards, including the payment of regular as well as extraordinary costs and saving," said Coalition member Sandra Kasunić of the Centre for Peace Studies.

According to a calculation by the Coalition for Decent Pay, before the latest price increases, decent pay in Croatia amounted to HRK 10,428, but according to data for 2021, the average wage last year equaled to only two-thirds of that amount.

"The amounts in question show that decent pay for all in Croatia is, for the time being, a distant future," said Kasunić, recalling that decent pay was a constitutional category and basic human right recognised by Croatia.

"Even though the government has shown social sensitivity with its set of measures designed to cushion the impact of rising prices on living standards, the problem is that the package does not cover all workers", she said.

"We call on the government to expand its measures to also include workers who do not earn decent pay, and we demand that it adopt policies that will gradually guarantee the implementation of all social and economic rights," she said.

Mario Iveković of the New Trade Union said that they did not expect minimum pay to be raised to the level of decent pay in two years, but asked the government to make decent pay the ultimate goal of the minimum pay, as stated in the Constitution.

Iveković said the Coalition for Decent Pay would join a European civic initiative, which in two months will start collecting signatures to seek a "strong" social responsiblity directive from the European Commission (EC).

The EC has put forward the first draft of a directive which aims to commit corporations with more than 500 workers and annual revenue of more than €150 million to respect workers' rights.

Even though that limit for some industries, such as the textile industry, is 250 workers and a revenue of €40 million, civic initiatives want it to be lowered so that the directive could apply also to small and medium companies.

"We will insist on the payment of decent pay which is mentioned in the directive," said Iveković.

(€1 = HRK 7.572093)    

For more, check our lifestyle section.

Thursday, 10 March 2022

Business Survival in Question Without Croatian Tourism Sector Wage Increase

March the 10th, 2022 - Without an increase in Croatian tourism sector employee wages, the very existence of some companies and businesses could well be called into question, especially following two years of coronavirus-induced stagnation.

As Poslovni Dnevnik/Marija Crnjak writes, after two years of stagnation in the material rights of workers in the Croatian tourism sector, this year, all major domestic tourism companies have decided to make a significant step forward in increasing the material rights of their workers.

Valamar, Plava Laguna, Aminess, Maistra, Jadran and LRH will all pay their employees the maximum non-taxable amount as allowed by current tax regulations, and their salary increase will be from 5.5 to as much as 50 percent for certain jobs.

The main reason is the chronic shortage of workers who began to threaten the survival of this sort of business, as was pointed out by the unions in the Croatian tourism sector. Although the unions welcomed the decisions of these employers in the announcements that have been being made over recent days, they still made sure to note that they were forced to take this route, and it isn't because of some deep desire to do so.

They also noted that last year, due to the uncertain tourist season until the summer arrived, accompanied by a lack of workers, workers' rights were violated on a large scale.

The unions and the inspections were biting their nails often because that year was difficult for everyone, but this year there will be no procrastination, Marina Cvitic, president of the Trade Unions of Istria, Kvarner and Dalmatia, explained.

"We do need to be honest and say that this increase in wages is primarily the result of the situation on the labour market. From 2010 to 2019, salaries increased from 2 to a maximum of 4 percent. At that time, all companies operating within the Croatian tourism sector achieved very good results with a profit of millions, acquisitions were made, investments were made in facilities, there was money for everything except the employees. As such, there was no major employment for an indefinite period, on the contrary, the number of permanently employed workers only decreased as the elderly retired,'' recalled Marina Cvitic.

All this drove these workers out of Croatia, not only seasonal workers, but also permanent, very high quality workers. At the time when the migration of workers within the EU was made possible, many workers emigrated.

"At the end of last year alone, it could be sensed that employers intended to be much more generous this year compared to the years before the pandemic. So today we have a situation in which companies within the Croatian tourism sector have poorer results than they did before the pandemic, and yet employee salary increases and other material rights are much higher. The attitude towards workers in most companies has changed significantly. Back at the end of 2021, the number of workers on permanent contracts increased significantly. The number of permanent seasonal workers who are allowed to have an employment relationship and certain incomes throughout the year has also increased.

As a rule, a contract is no longer concluded with seasonal workers for a month or two, but for a longer period of time. One-time non-taxable awards are usually given in the most intense seasonal months,'' explained Cvitic.

The union attributes a significant role to itself in creating this wage policy, including an initiative to provide free meals to local workers, and to make adjustments to transportation fees. However, violations of workers' rights are still almost normal among small employers.

For more, check out our business section.

Sunday, 21 November 2021

Average Take-Home Pay €948 in Croatia, 1 in 10 Workers Earns Below €514

ZAGREB, 21 Nov, 2021 - The average net wage earned in Croatia in September amounted to HRK 7,108 (€948), and over the period of one year, the average take-home pay has risen by 361 kuna (€48), however, the latest monthly average pay decreased by 10 kuna (€1.3) on the month, the Večernji List daily reported on Sunday.

According to DZS data, the median net pay in September was HRK 6,017, which means that half of the people employed earned wages below that amount and half earned wages above that amount.

Also, an estimated 136,000 workers, that is 10% of all employees in the legal entities, earned less than 3,854 kuna (€514), reported the daily newspaper.

Rise in wages in the IT and hospitality sectors

Broken down by the sectors, the biggest rise (+9%) in the average monthly salaries over the last year was seen in the IT sector and the tourism and hospitality industry.

In the public sector, salaries in the healthcare sector increased 6.5%. The daily reports that the average monthly wage in Croatian hospitals is HRK 9,600 (€1,280).

In the social welfare sector, the average monthly wage is HRK 6,100, and in primary schools, HRK 7,800, while the average monthly wage for employees in secondary schools is HRK 7,900, and the average salary paid by universities is HRK 11,000.

The average net salary in the state administration is below HRK 8,200.

The average wage in the manufacturing sector has risen by about hundred kuna to HRK 6,572.

Low tax ethics

A survey conducted by researchers Josip Franić and Stanislaw Cichocki show that every one in four employees in Croatia (27%) actually receive  higher amounts of monthly wage than the salary reported to the relevant institutions.

The survey conducted in September 2019 shows that every one in seven employees in the European Union has nothing against the cheating in the reporting a lower tax base so that they can get actually a higher monthly pay off-the-books.

"One in seven fully declared EU workers would have nothing against receiving one part of their wages off-the-books," according to the research.

For instance, in Croatia 17.6% of the respondents said they had nothing against receiving one part of their wages off-the-books, and in the Netherlands, this percentage stood at 25%, whereas Portugal had the lowest number of workers who are willing to opt for wage under-reporting.

(€1 = HRK 7.5)

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