Saturday, 9 November 2019

Croatian Tourism Sector Still Dissatisfied Despite Quota Abolition Decision

While the Croatian Government has decided on the total abolition of foreign employment quotas, which should boost the economy by providing easier access to the Croatian labour market for third country (non-EU) nationals, and take effect in early 2020, it seems that the Croatian economy will still spend some time proverbially biting its nails as certain key industries struggle until then.

As Novac/Dora Koretic writes on the 9th of November, 2019, Jutarnji list is in possession of the first unofficial version of the 2020 quota decision, which was delivered to all stakeholders in the negotiation process for foreign workers last week. And it has, again unofficially, caused a considerable level of dissatisfaction with a good part of the sector.

The dissatisfaction is being felt primarily by the tourist sector, which is Croatia's strongest economic branch. According to the first (still unofficial) version of next year's quota decision, a mere 20,000 of the total 81,600 proposed quotas have been allocated to the tourism sector, mainly new employment and seasonal workers.

The reason for dissatisfaction lies in the fact that the aforementioned figure is almost identical to the quotas available to the sector this year, but also in the fact that from 2020 onwards, Croatia will face new circumstances that will see it require a significantly larger number of foreigners.

"We in tourism expect that we'll need between 30 and 35 thousand foreigners in total if we want to cover all our needs," said the director of the Croatian Tourism Association, Veljko Ostojić.

Ostojić pointed out that the increase in quotas is necessary because, as of January the 1st, 2020, the Austrian labour market will finally open its doors to Croatian citizens, meaning they will no longer require work permits and will be treated the same as other EU nationals. This means that an even larger proportion of seasonal workers will be employed by companies from outside of Croatia, and will move across the border.

“We're already getting information from larger hotel companies that some seasonal workers have announced that they're going to Austria, which is relatively nearby, and they can then can earn higher wages from next year on. Our suggestion, therefore, is to reach the figure of 30 thousand quotas plus an additional five thousand which could be activated at the minister's discretion. We don't want to start having petty arguments about the numbers like we did last year,'' said Ostojić, emphasising the fact that hoteliers must start recruiting all available manpower already.

"That's why [the figures] were sent to all the addresses to give people from the sector a chance to voice all of their comments and suggestions, only then will a final proposal be drafted for adoption,'' an informed source assured Novac. In addition, the source noted that a quota of 20,000 tourism workers has been set in order to bridge the period until quotas are completely abolished, which, according to the updated Law on Foreigners, is expected in spring 2020.

The subject of foreign workers for Croatian tourism was also touched on by Tourism Minister Gari Cappelli at the London Tourism Fair over recent days. However, the ministry didn't want to comment specifically on the first unofficial, much-lower-than-expected (and apparently disappointing) quota proposal.

Make sure to follow our dedicated business page for more.

Monday, 14 October 2019

Only 13 Percent of Croatian Employers Gave Jobs to Disabled in 2018

As Novac/Kristina Turcin writes on the 13th of October, 2019, only 13 percent of Croatian employers, or one in eight of them, fulfilled their legal obligation last year and employed a number of people with disabilities, according to the annual report on the work of the Institute for Expertise, Vocational Rehabilitation and Employment of Persons with Disabilities for 2018.

According to the law on the matter, an employer who is subject to what is known as quota employment of persons with disabilities with twenty or more employees is obliged to employee one person with a proven disability of some sort. As such, at least three percent of the total number of employees working for these employers should be persons with disabilities, employed in a suitable workplace and with the appropriate working conditions.

According to the Croatian Employment Service, last year, there were 9,435 such employers in Croatia: 2,670 operating in the public sector, 6,659 in the private sector, 106 among civil society organisations, and 364 new employers for whom the prescribed 24-month deadline during which they have to fully comply with the law has not yet expired.

Out of a total of 9,435 taxpayers, only 1,266, or 13.41 percent, completely fulfilled this obligation, 14.42 percent fulfilled their obligation partially, and 6,179 or 65.5 percent did not employ any persons with disabilities at all.

Since the law prescribes penalties, or perhaps better to say mandatory fees, that employers who do not meet this particular quota for employment must pay into the state budget, it seems that for two thirds of employers, paying a penalty is a more acceptable option than employing people with disabilities.

Two conclusions can be drawn from this: either the prescribed fine is too low and employers really aren'y bothered about trying to fulfill the obligation to employ persons with disabilities, or for too many of them the “appropriate workplace and appropriate working conditions” they have to prepare for persons with disabilities are far too strictly prescribed.

According to the legal provisions, every Croatian employer who is bound by this law and who did not employ the required number of persons with disabilities is obliged to pay into the state budget thirty percent of what would be minimum wage each month for each person with disabilities who they had to employ, and yet did not.

During 2018 in particular, that compensation amounted to 1031.94 kuna per person. For a larger employer that employs 100 people and is obliged to ensure that at least three people employed there are disabled, the penalty is slightly less than 3,100 kuna per month, which is not much at all for most Croatian employers of that size. A total of just over 216 million kuna was paid into the budget from fines collected on this issue last year alone.

9,435 Croatian employers are subject to so-called quota employment of persons with disabilities (employing more than twnety workers with three percent of those employees needing to be persons with disabilities).

Make sure to follow our dedicated business page for much more.

Monday, 7 October 2019

Friday in Slippers, FlexiTime and More - Flexible Working Begins in Croatia

The popular Erste Bank has introduced the option of extended work during the first four working days and shorter working days on Fridays, and HT also widened employees' choice of arrival and departure time. How to retain workers and attract new, good quality employees is a burning question for Croatia's employers. Could this be at least a partial answer?

As Poslovni Dnevnik/Ana Blaskovic writes on the 7th of October, 2019, although some people, such as Tourism Minister Gari Cappelli, tell those in the hospitality sector: "Please increase your salaries, then you'll have staff", the situation is still somewhat more complicated than just a fatter wedge at the end of every month.

One solution is flexible working hours and thus the creation of better working conditions for employees. Atlantic Group, co-owned by Emil Tedeschi, has announced that the company is considering introducing a four-day work week, which is already a popular concept in some countries.

Tedeschi suggested the idea at a summit in Belgrade, Serbia, and it immediately struck a chord with the media, despite the fact that this isn't the first or the only solution to bypass the classic "9 to 5" working day.

Compressing five working days into four, which takes away ten hours and gives workers three days of rest, which (theoretically) reduces stress and increases productivity, was introduced by the consulting firm Logic Matrix. The Atlantic Group chief emphasised that we should not only think about how to attract a quality workforce, but also how to retain it.

"Responsible people also care about a range of amenities that include a quality work environment, a corporate culture and a good balance of leisure and work, and we're seriously considering a four-day work week," said Tedeschi.

Although Poslovni Dnevnik asked the company for further details about the direction in which the idea was being put into practice, corporate communications said that the statement was "widely interpreted" and could say that it was indeed being considered, but not that the idea was in the operationalisation phase yet.

They note, however, that they are already trying to ensure that working conditions within their company are as flexible as possible, such as a working day off for the first day of school or working from home in certain conditions. Although the topic is a burning issue for Croatia's employers, the umbrella association of the Croatian Employers Association (HUP) didn't want to comment on this mode of attracting and retaining workers.

When it comes to flexibility, the Croatian Labour Law is of course quite rigid and requires a working week of at least forty hours, but that can be moved around a little if contracted as such.

In Orbic, which employs 8,000 employees across twenty countries, with more than 900 employees right here in Croatia, they're not even thinking about it. "Nobody leaves our company and we're not thinking about it," says owner Branko Roglić. As one of Europe's largest consumer goods distributors, Orbico will exceed 2.5 billion euros in revenue this year.

Erste already has a version of the four-day work week, although not in full form, at that bank the option is called "Short Friday", which comes down to extended work during the first four work days and a shorter work day on Fridays.

Among other options, Erste points out that they allow employees to work less time in jobs where that type of work permits it, the possibility of part-time work, the possibility of introducing work hours with a different start and finishing time within the same organisational unit, depending on the needs of workers and job opportunities, and the "My Day'' project is a flexible workplace initiative where employees are allowed to work out of the office up to four times a month.

Hrvatski Telekom (Croatian Telecom) points out that they know of the possibility of working hours that deviate from the usual five-day working week, and this possibility is incorporated in HT's collective agreement.

"Working time flexibility is one of the most important benefits recognised by our employees, which is why we've recently expanded the available forms of flexible working to support the development of the digital company," they claim from HT.

In June, they introduced the possibility of more frequent work from home through the "Friday in slippers" project, as well as more flexible daytime work, and a greater choice of arrival and departure times for those who are permitted by the nature of their jobs.

"Depending on feedback, we'll continue to expand our capabilities. We're aware that when it comes to attracting and retaining key talent, working time flexibility is an important element," they say in HT.

Ina has been using flexible forms of work since 2016, with more than 1,200 workers using it today, with an average satisfaction rate of 99 percent, they say. Employees can choose "FlexiTime", the ability to choose the start and end of the workday and the length of that day, as well as "FlexiPlace", which is the option of working from home four times a month.

Make sure to follow our dedicated lifestyle page for much more on working in Croatia.

Tuesday, 17 September 2019

Zagreb Man Grows Tired of Traditional Work Day, Succeeds With Own Business

Starting your own business from scratch is an enormous challenge anywhere in the world, but when in Croatia, it becomes a truly monumental task. Meet Mirko from Zagreb.

As Poslovni Dnevnik writes on the 17th of September, 2019, during his third year of college, Mirko Logozar from Zagreb got a job in a company as a student, which later turned into a full-time job with an indefinite contract, writes Gloria. Although this job brought him some invaluable experience and lots of knowledge, he realised that he no longer wanted to work for someone else.

"After seven years, I realised that I wanted to work for myself without the ''8 to 4'' framework, so I quit, and I was fully committed to developing a business from a project I ran on social networks for the last three years," he explained.

And so "Eat Different" was born - a project that promoted fast and cheap recipes of nutritionally rich foods and educated people on proper nutrition on Facebook, and later Mirko rebranded it into today's "Different". Mirko initially came up with the idea of ​​launching the educational platform primarily for one reason. "The internet is full of different and often wrong information about nutrition and healthy lifestyles, and I wanted to bring relevant information to everyone in a simple, fun and easy to understand way," says Mirko.

Starting your own business from scratch in Croatia is far from an easy feat, and being in Zagreb doesn't make it any easier. That difficult experience was certainly no different for Mirko, therefore, the foundations on which his brand is built are very important for further development and success.

"I started with a model to launch a Facebook page and an Instagram profile and give people value, create useful content, and establish an individual relationship with the followers, so that those followers become loyal users who can hardly wait for every next post, but also know that I will always make time for any questions,'' Mirko claims.

When asked by Gloria what he would say to young people who want to start a business in Croatia but are afraid of failure, Mirko was very clear in his response.

"Don't start a business if you're afraid of failure, then. Spend the rest of your life in your comfort zone wondering what it would be like to start it anyway, talking over coffee about how you could have done this or that, citing at least five external factors that are to blame and twenty ideas that would have surely succeed, if only you had millions of kuna in capital. Or open a Facebook page, an Instagram profile or a blog and start being the best ambassador of your passion, talk about it, deliver value, bring together lovers of your passion and those who will tell your story along with you. Who knows, maybe from that, you'll start a business!'' concluded Mirko.

Make sure to follow our dedicated business page for much more.

Saturday, 14 September 2019

IT Study Plan in Istria Connects Students, Companies and Freelancers

As Poslovni Dnevnik/Sergej Novosel Vuckovic writes on the 12th of September, 2019, Giorgio Sinković is the Dean of the Faculty of Informatics in Pula, Istria (FIPU), a scientific and educational institution that has been an independent entity since last year, and he sat down to discuss the Croatian brain drain, education and the economy.

Students are offered attractive educational programs to learn about blockchain, artificial intelligence, the Internet of Things, etc. Owing to that, educated individuals manage to remain desirable and competitive in the ever-growing and ever talent-hungry IT workforce market.

Professor Sinković talks about enrollment at FIPU, which lasts until September the 17th, the harmonisation of education and economy, digitisation and the impact of information and communication technologies on the local, Istrian economy, which is often mistakenly perceived only as tourist oriented.

Although the teaching of informatics in Pula has existed for 15 years within the Faculty of Economics and Tourism, only since last year has there formally been a Faculty within the University of Juraj Dobrila. One academic year has ended and a new one is coming, has anything changed?

The Faculty of Informatics in Pula was registered at the Commercial Court in Pazin on May the 17th, 2018. Its roots can be traced back to 2004, when the undergraduate study of business informatics began to be carried out within the Faculty of Economics and Tourism, and the undergraduate study of informatics started from 2011, first as a separate department within the Faculty of Economics and Tourism, and ever since the 1st of October 2015, a graduate study of informatics was launched and a Department for Information and Communication Technologies was established at the university level.

Changes had to be made gradually to ensure that there were competent staff who had the right type of experience. The founding of the faculty was a great impetus for the further development of studies, as some independence was achieved in planning and the creating of the business policy. The result is, for example, an improved study structure and cooperation with economic and other environmental organisations.

We see things on portals and social networks that this is a state-of-the-art college. In what way does that manifest?

It's a new sort of environment with young staff who aren't burdened with the past and are thinking about the future without such restrictions. Although the study program is modelled after other similar study programs in the Republic of Croatia, for which we've received a permit for implementation, we have included a dozen elective, attractive courses that allow students to focus on their preferences within the program. By connecting with the local economy and with world-renowned scientists, we're striving to organise attractive lectures and professional practices to help students follow the trends of ICT development.

Which courses do you deem to be the most attractive in luring prospective students?

Recent attractive courses include Blockchain applications, computer games design and programming, mobile applications, functional programming, artificial intelligence, Internet of Things, business intelligence systems, dynamic web applications, and more than twenty other courses that address the foundations and upgrades of ICT. In addition to the courses themselves, we strive to attract students to get involved in various projects to broaden their knowledge and gain the necessary experience. In collaboration with the subject teachers, gifted students also publish scientific papers at national and international conferences. The Faculty encourages and provides financial support for such activities.

How many students are already attending college and how many places are scheduled for the 2019/2020 academic year?

There are about 500 students together at the Faculty of Informatics at undergraduate and graduate levels. This year, we want to enroll 100 full-time and 40 part-time students in undergraduate studies, and graduate studies have two fields and we have quotas of 40 full-time and 20 part-time students for informatics. Regarding graduate studies, it's likely that we'll fill the quota with full-time students, while for undergraduate studies it will be somewhat more difficult. Unfortunately, the general trend of the population declining has affected the number of students enrolled in our study. In terms of part-time studies, we've been seeing a decline in interest in this form of study for years.

What titles are acquired after the completion of a particular study?

Upon completion of undergraduate studies, graduates gain the title of Bachelor of Informatics, and after graduation, the title of Master of Informatics (Mag.inf.) Or Master of Education in Informatics (Mag.educ.inf.).

It is always emphasised that educational programs must be aligned with the needs of the labour market. Your college educates for highly sought after professions. How much did you adapt to the labour market needs of the economy?

The practice confirms that our students usually find a job before graduation. This is, on the one hand, the result of the demand for such staff, but also of our efforts to involve students in the work of business entities through the organisation of professional practice and cooperation with the economy. The study programs, especially electives, are done in agreement with our business partners. In addition, experts are invited to guest lectures that highlight topics of particular interest to particular business organisations.

What is the relationship between science and the local economy like? Talking about the Istria IT Land initiative, what does it represent?

Istria IT Land is a platform that will contribute to the development of the IT industry in Istria and make it a recognisable hub in Croatia and throughout the region. The main goals are to increase the attractiveness of design and the development of IT solutions in Istria, to connect companies, freelancers and students, to encourage entrepreneurship and offer a joint appearance in the international market. At the end of the year, an informal initiative will be formalised by establishing an association of the same name, in order to further achieve the set goals and facilitate operational action. In addition to IT, the platform's activities would also cover related areas of marketing, graphic design and multimedia.

What do you think of the ''brain drain'', of most people who work in IT from Croatia? Can it be suppressed, should it be stopped at all, how can it be mitigated?

The brain drain is an old phenomenon that gained more momentum when Croatia joined the EU. If we look at the statistics of the reasons why young people leave, we see that salaries aren't actually the most important motive for leaving, but more often than not, it's the general climate and a sense of an uncertain future. Generally speaking, it's not bad for people to gain international experience if this will ultimately reflect positively on the lives of those who remain in the Republic of Croatia. So, they will either return after a few years or otherwise transfer their acquired knowledge and experience back to their homeland. It's our task to create a stimulating climate for all types of social and economic development.

Make sure to follow our dedicated lifestyle page for much more.

Saturday, 17 August 2019

Work Permits in Croatia Explained: Application, EU, Annual Quotas and More

August the 17th, 2019 - We've tackled the ins and outs of legal residence, citizenship through descent, marriage, naturalisation and special interest, and now we're venturing into the world of work permits in Croatia.

In this article, we'll explore who issues permits, the procedures, what work permits both inside and outside of the annual quotas mean, and who needs a work permit to carry out economic activities in Croatia.

UPDATE: The Croatian Government has opted to abolish quotas for third country nationals. To find out what that means for you, click here.

First things first: Who doesn't need a work permit to work legally in Croatia?

1.) Citizens of any country (regardless of whether or not their country of citizenship is an EU member state) who hold permanent residence in Croatia can work in any sense, without any need for a permit, and without any restrictions.

2.) Nationals of the European Union (nationals of the EU's member states, including nationals of Switzerland, Norway, Iceland and Liechtenstein) can work in Croatia freely, without any need for any type of work permit, and are treated in the same way as Croatian nationals.

If they intend to live in Croatia (stay for more than three months), then they will still need to apply for a residence permit. This permit will not be a stay and work permit, because EU nationals who are not Austrian nationals, do not need any type of work permit to work in Croatia.

Why have I mentioned Austrian nationals, you ask?

The only nationals of the EU who continue to need work permits to be able to legally work in Croatia are Austrian nationals. 


Transitional restrictions on the access of workers from Croatia to the labour markets of other EU member states currently still apply in Austria. They previously applied in Malta, the Netherlands, Slovenia and the United Kingdom, but those countries have since dropped all restrictions for Croatian nationals, and Croatia has therefore done the same for Maltese, Dutch, Slovenian and British citizens.

This law means that Austria regulates the access of Croatian workers to its labour market by national law and not EU law, and as such may require work permits from Croatian workers.

Croatia has equivalent transitional restrictions for workers from Austria. This will continue until Austria removes any barrier to the Austrian labour market for Croatian citizens.

What about third country nationals? (Citizens of countries from outside of the European Economic Area)

All citizens of third countries (non EEA nationals) who do not hold permanent residence in Croatia must apply for a work permit should they be offered employment in Croatia.

Work permits are regulated by an annual quota, and there are a certain number of permits issued for each type of ''activity'' (economic) in Croatia each year. Recently, the quota has been increased to allow for third country nationals to fill the work positions Croats and EU nationals are not doing, primarily owing to the current demographic crisis in Croatia.

How does a third country national or an Austrian citizen apply for a work permit in Croatia?

In order to get a work permit, you'll need to either apply from within Croatia if you're already here, or at a diplomatic mission in your own country. Should you need to extend the work permit you've been granted when here in Croatia, you may do so in person at your local administrative police station. 

Please note that the law states you must do this 60 days before your work permit is due to expire. There are exceptions of course, and discretion is commonly used by MUP, but it's best to stick to this rule to avoid needless complications and possible extra paperwork, not to mention a fine.

What does a third country national need to present when applying for a work permit for Croatia?

1.) You'll need to present an official (government issued) ID, such as a biometric ID card or a passport, and a copy of the information page

2.) An employment contract (it's wise to make a couple of copies), or other appropriate proof of having concluded (signed) a work contract

3.) If you're not technically being employed by a third party, and you intend to carry out your work in Croatia as a self employed person, you'll need to provide proof of you having registered your company, craft (obrt), etc, in Croatia. (Extracts from the relevant registers should not be more than six months of age)

4.) A completed application for the work permit (this can be picked up at the administrative police station when you apply, or at the competent diplomatic mission outside of Croatia)

5.) Your OIB (personal identification number used for tax purposes)

6.) If you've registered your address in Croatia, you'll need to provide proof of you having done so (either via a registration certificate, proof of you having submitted that particular document, or your Croatian ID card if you already have it)

7.) A photo of you (done in passport style but not necessarily passport size, MUP will tell you more)

8.) Proof of having paid the applicable fees for the application (Form 9a)

You may be asked for proof of your education and qualifications, proof of sufficient funds, and other documents depending on your individual situation.

You'll notice that unlike when third country nationals apply for residence in Croatia, you may not need to provide proof of having health insurance when applying for a work/stay and work permit if you are being hired by a Croatian employer/company, as this will be paid by them.

In some cases, however, third country nationals continue to be asked for this, and it is prescribed by law even though this often isn't asked about.

Croatia is part of the EU Blue Card Scheme, which often proves useful for third country nationals in Croatia. If you're highly skilled and are offered an EU Blue Card, this can entitle you to two years of being able to work in Croatia. Other work/stay and work permits typically only allow for twelve months at a time and in some cases can prove problematic to extend.

For certain jobs, you don't need a work permit, but a work registration certificate, and your employer can get this for you from the police. If you're unsure of whether or not this applies to you, ask MUP and your employer.

Does the third country national's Croatian employer need to be involved at all in this process?


The work/stay and work permit procedure can either be done by you, or by your employer who has their company seat in Croatia. You'll both be required to provide supporting documents as and when asked for them. You may also be asked to provide official translations for any documents you provide which are not already in Croatian.

What does being inside or outside of the annual quota mean?

If you're confused about Croatia's annual quotas and just what they mean, MUP explains in detail what each of them is and who falls under which category. 

For details on the issuance of stay and work permits outside of the annual quota, click here.

For details on the issuance of stay and work permits inside the annual quota, click here.

Brexit is looming, what do you do if you're a British national wanting to work/already living and working in Croatia?

If you're a British national who is already living in Croatia with regulated residence (a residence permit), then you can continue to carry out whatever economic activities you are currently doing without the need for any special permissions or work registration.

Croatia has vowed to protect the rights of all British nationals who are legally living and/or working in Croatia, regardless of the outcome of the Brexit negotiations (deal or no deal), and who hold a valid residence permit before the UK leaves the EU.

No Deal Brexit: British nationals who are legally resident before Brexit in the case of a no deal Brexit can continue to work, be self employed or be hired just as they did before. British nationals who arrive after a no deal Brexit will be subject to the national rules on third country nationals.

Brexit with a deal: British nationals who are legally resident and continue to be at the end of December 2020can continue to work, be self employed or be hired just as they did before. British nationals who arrive after the end of the transition (implementation) period will be subject to the national rules on third country nationals.

For much more detailed information on that, make sure you register your residence now, and click here.

For more information on working and living in Croatia, make sure to follow our dedicated lifestyle page.


Friday, 16 August 2019

Pay Rising More Slowly in Croatia Than in Other Transition Countries

A comparison of wage developments in the ten most important industries across the Republic of Croatia over the last four years shows that wage growth in the education sector has unfortunately been among the lowest.

As Poslovni Dnevnik writes on the 16th of August, 2019, the payroll story in Croatia is only getting more interesting as the increasingly powerful Mayor of Zagreb, Milan Bandić, is seeking an immediate increase in teacher salaries of ten percent, and an additional seven percent per year.

That, according to Mayor Bandić, would send out a strong message that education is the future of Croatia. Salaries in the public sector have begun to increase steadily since back in 2017, after a stagnation of almost ten years, but a similar trend was also observed in the private sector, which is facing a large number of workers' departures due to low salaries, Vecernji list reports.

This year, wage growth in Croatia has slowed to just two percent, averaging just a little under 6,500 kuna per month. In the last four years, the average wage in Croatian has grown by sixteen percent, with lower wages rising more due to a significant increase in the minimum wage, and better paid ones benefiting somewhat from certain tax policy alterations.

However, in general, wages in Croatia are growing more slowly than in other transition countries, but so are the overall economic developments. According to official statistics, in June 2019, education employees in Croatia received an average of 6,782 kuna, which is a system where seventy percent of employees in primary schools and more than eighty percent of employees in high schools and colleges hold a university degree, and according to some, those wages should therefore be higher.

As previously mentioned, a comparison of wage developments in the ten most important industries in Croatia over the past four years shows that wage growth in the education sector has sadly been among the lowest of all, rising by ten percent in four years, unlike the average wage in Croatia, which has somewhat more encouragingly increased by sixteen percent. Currently, salaries in education are higher than the average salary, but only by a mere five percent. The dilemma is not whether or not highly educated professors or doctors should receive higher wages, as that goes without saying, but the question is rather - how can we get there?

The answer might also include a significant reduction in public sector employment, especially in education where employment is booming even though schools across Croatia are seeing significantly fewer students enroll.

Make sure to follow our dedicated lifestyle page for much more.

Saturday, 10 August 2019

Croatian Employment Rate Increases, Remains Less Than Pre-Crisis 2008

As Frenki Lausic/Novac writes on the 10th of August, 2019, the number of insured persons exceeded 1.6 million at the end of July and reached the figure of 1,600,405, according to data from the Croatian Pension Insurance Institute. This means that compared to pre-recession July 2008, when the figure stood at 1.639 million, there are only 39,000 insured persons less.

Thus, the total number of insured persons at HZMO increased by 0.4 percent on a monthly basis and 2.4 percent on an annual basis, meaning that compared to July 2018, the number of insured persons increased by 37 thousand.

The number of insured persons at HZMO has in recent years almost taken the lead in determining the number of employees in Croatia, although two other methods are officially used, and both of them show employment growth.

According to data from the Croatian Central Bureau of Statistics, according to the so-called “administrative method” used by the Croatian Tax Administration, the number of employees in June stood at 1,451,541 and in June 2018, it stood at 1,432,701, which means that in June 2019, the number of employees increased by 19 thousand at the annual level.

However, due to changes in the method, it isn't possible to compare 2008 and 2019 according to the above-mentioned statistics. According to a third method, a labour force survey, also conducted by the CBS, which is also the official statistical method recognised by the European Union, ie the Eurostat umbrella statistical authority, the number of employees is increasing.

According to the labour force survey, for the first quarter of this year, the number of employees on Croatian territory stood at 1.66 million, while in the same quarter of 2018, it was 1.61 million. According to this method, the number of employees increased by 50 thousand. Still, there remains a big difference in the recording of employment growth between the CBS, HZMO and the labour force survey.

For example, in June this year, the number of HZMO insured persons increased by 40 thousand and the number of employees under the CBS administrative method increased by 19 thousand. This is partly explained by the fact that one who is unemployed can pay for his/her own pension, or simply work abroad.

Thus, at the end of June, of 1.59 million HZMO policyholders, 1.36 million were employed by legal entities, 122,193 were employed by natural persons, 66,933 were employed in an obrt (craft), 19,628 were insured farmers, 19,314 were insured in independent professional activities, 88 of them were insured persons employed by international organisations abroad and Croatian nationals employed on the territory of the Republic of Croatia with employers based abroad, while 4715 had extended insurance.

Croatia reached the level of gross domestic product from 2008 this year, and in all likelihood, it will reach the same level of policyholders as back in 2008. This, despite the differences compared to the dynamics of growth provided by the CBS administrative method, nevertheless speaks of a positive dynamic in the the labour market, especially when looking at the labour force survey, but it would be good for CBS and HZMO to finally do something about too much "discrepancy" when it comes to their respective numbers and methods.

RBA analysts, who analyzed HZMO data for July this year, noted that, despite seasonal fluctuations in the labor market, positive annual rates of growth in the number of policyholders have been present since the second quarter of 2015, reflecting the recovery in economic activity and, consequently, the strengthening of labor demand. The growth of insured persons on a monthly basis of 6822 persons is a consequence, they note, of growth in many industries.

However, they emphasise that the noticeable and expected growth in the number of insured persons in the provision of accommodation and food preparation and services is a mere consequence of seasonal employment and an increasing orientation towards tourism-related activities.

In these sectors, the monthly growth of insured persons amounted to 4343 or 3.4 percent, while, on the other hand, the education sector (as it has in previous years) recorded a sharp decrease in the number of insured persons in July, totaling 2656 or 2.4 percent less, but their numbers are likely to increase in September with the turning of a new academic year.

At the annual level, the largest contribution to the growth of insured persons came from the construction industry, in which the total number of insured persons in July amounted to 114,438 persons, which marks 7.5 percent growth on an annual basis.

“In the first seven months of 2019, the average number of insured persons amounted to 1.549 million, which is 2.3 percent or 34,487 more than in the same period in 2018. The largest contribution to the growth of the average number of insured persons in the first seven months came from the construction industry whose share in the total of insured persons is 7.2 percent. With an average annual growth of 7.3 percent in the January-July period, a relatively high contribution to the overall increase of 22 percent is in line with present positive trends in construction,'' RBA's analysts said.

The largest number of employees, ie insured persons, are still in the manufacturing industry (16 percent, or 248,324), but after a slowdown in 2018, the annual number of policyholders since January 2019 has recorded a decrease in the number of policyholders annually in this industry (manufacturing participates with 80 percent in the overall Croatian industry).

Moreover, as the analysts point out, there is also a slight acceleration in an unfavourable trend, and in July the fall in the number of policyholders in the manufacturing industry was one percent per year. Thus, on average, 2.8 percent fewer persons were insured in manufacturing in the first seven months of 2019 compared to the same period last year.

"This is very likely due to the fall in manufacturing output in 2018 and its modest growth in 2019. The growth in the number of policyholders will continue in the coming months, so according to this indicator, employment growth could amount to about two percent," the RBA analysts concluded.

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Saturday, 22 June 2019

600,000 People in Croatia Don't Work and Aren't Looking for Work?

Croatia's paradoxical economic situation continues as the country continues to raise its quota to allow for the importation of foreign workers to do the jobs it seems that Croats simply don't want to do.

As Poslovni Dnevnik writes on the 22nd of June, 2019, in the Republic of Croatia, as many as 600,000 residents over the age of 25 and younger than 65 aren't working, nor are they even looking for work, according to a report from Vecernji list.

Most of them, as the aforementioned publication quoted, referring to the data of the Central Bureau of Statistics (CBS), are of an age when it's typically more difficult to gain employment, which is over 50, but among them are nearly 190,000 younger people who could work without any issues, but remain completely economically inactive.

Contrary to what might one think at first sight with an issue such as this, among this group there aren't just people with less of an education, but a large number of highly educated men and women. Interestingly, there are more highly educated women in this group of economically inactive citizens than there are men.

It isn't possible to accurarely assess in which age group these highly educated economically inactive citizens are in, and there's a chance that a decent number of them are actually retired, but the fact remains that in Croatia, as many as 204,000 highly educated people aren't employed, nor are they searching for work. There are almost 97,000 men and 107,000 women in this group, Večernji list pointed out.

Such is the level of disinterest for work among Croatia's inhabitants, that it would only be natural to come to the conclusion that this is a problem of the rent economy or about the grey economy in Croatia.

Otherwise, it is completely illogical that there are so many people in the country who just don't want to work, so it can be concluded that they must be making their money in some way or another, or they've simply not reported their departure from Croatia and are currently working abroad, and these statistics simply refer to them as being present in Croatia, when they may not be at all.

On the other hand, there are about 200,000 less educated Croats who haven't even completed their primary school education, and are likely to be living off the social system because their qualifications can't gain them adequate employment. However, in this group, there is huge potential for auxiliary workers in tourism and construction, two sectors which lack the most workers of all in Croatia at this moment in time.

While 600,000 people in Croatia apparently don't want to work, or even look for work, the country is continuing to import nearly 70,000 foreign workers to deal with the strain on the Croatian labour market.

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Tuesday, 18 June 2019

Romania Raises Wages by 18%, Croatia Sticks With Less Than 5%

Despite numerous moves being attempted to be made by Croatia's government and the Croatian Employers' Association (HUP), there's sadly bad press for Croatia's economy as countries like Romania put better measures in place.

As Poslovni Dnevnik writes on the 18th of June, 2019, according to Eurostat, Slovakia is the third highest country on the list in terms of wage and salary increases (around 9 percent), with Slovenia, the Baltic countries and the Czech Republic, where salaries have risen by about 8 percent a year, gaining on it.

For the past year, Romania has increased its average salaries by as much as 16 percent to stop its own labour force from leaving the country and to try to encourage more foreigners to come, as Ljubica Gatarić reports for Večernji list.

In March this year, the average gross salary in Romania jumped a little bit up from the 1,000 euro mark (more specifically to 1062), and the country, faced with its own demographic crisis, sought out labour from countries like Pakistan.

The powers that be in the two countries are now all set to sign a special agreement that will allow tens of thousands of Pakistani nationals to work as drivers, doctors, IT engineers and construction workers in Romania.

Romanian Ambassador to Pakistan, Niculai Goa, informed the Pakistani authorities that Romania will have to import as many as a million workers from different countries in the next few years to cover the country's local workforce deficit.

Bulgarian employers are also worried about the same things. Bulgaria has seen a salary increase of about thirteen percent in one year, and as stated, according to Eurostat, Slovakia, Slovenia, the Baltic countries and the Czech Republic are doing well, with Slovakia introducing a 9 percent increase and the following countries introducing one of 8 percent. 

The hourly wage in Croatia has risen by about five percent in a year, which is less than that of comparable transitional countries that are also opening up their doors for workers from countries such as Pakistan, Vietnam, Sri Lanka, Nepal, Turkey, China, and so on.

The Croatian Chamber of Commerce and the Croatian Employers' Association (HUP) are pushing for a new model for the employment of foreigners, which will enable companies to hire a foreigner automatically if they can't find workers on the Croatian labour market. However, official statistical sources (Eurostat and CBS) point to a slowdown in the demand for a workforce in Croatia.

In the paradoxical country that is Croatia, where people can't find work despite there apparently being many jobs available, and where employers also can't manage to find staff to do that work, it's difficult to say what the next move, if any, will be to try to increase wages enough to match other countries, some of which are typically considered to be less developed than Croatia.

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