July the 13th, 2021 - As many as 25,000 Croatian employers have returned the job preservation grants provided to them by the government in an attempt to minimise economic damage caused by the ongoing pandemic.

As Poslovni Dnevnik writes, there is an ongoing debate here in Croatia as to how the government intends to implement its intention to link the payment of job preservation subsidies for the month of July to vaccinations, ie COVID passes/certificates.

The proposal has been unpopular to date, as it seems difficult to imagine that the powers that be might leave those who haven't yet been vaccinated out in the cold financially as a way to turn their hand.

There are still many unknowns about how the government intends to actually implement its plan. For example, there is no clear answer to the question of what one does with a worker who has a COVID certificate at the time of an inspection because they have a valid negative test, and not because they've been fully vaccinated or have evidence of recovery.

Since March last year, when it made the decision on providing very generous aid to the economy, the government has moved the goalposts, both in the sense of the conditions and the amounts. Given that the measure was adopted urgently, the conditions under which the support could and couldn't be obtained, or if Croatian employers would have to repay it had to be determined along the way.

The reimbursement of aid was a factor each time a new obstacle to its use was added, and 25,154 Croatian employers have had to repay the aid in part or in full from the beginning of its use to date.

By the middle of last week, a total of 11.034 billion kuna had been paid out to Croatian employers in the form of aid for job preservation, and more than 25,000 such employers had returned almost 255.8 million kuna of that same aid, according to data that Novi list received from the Croatian Employment Service.

This means that so far, Croatian employers have returned 2.3 percent of the state aid or every 43 kuna provided by the state to help them during the pandemic.

For more, make sure to follow our dedicated busness section.

July the 9th, 2021 - Croatian job preservation measures which were introduced last year as an attempt to fight the dire economic consequences of lockdowns were a Godsend for many companies who would have gone under otherwise. Who made the most use of them?

As Poslovni Dnevnik/Suzana Varosanec writes, according to announcements from the Government, job preservation measures are set to undergo some quite significant changes. On the one hand, the announced changes, starting with the measures for July, are related to the current modality of approving them exclusively to enterprises from certain industries, but the question is which ones, because it hasn't yet been determined.

Unofficially, it has been learned that travel agencies will continue to receive funds from Croatian job preservation measures, while hopes for the catering and hospitality sector continue to be placed in the shaky hands of a hopefully good and long tourist season.

On the other hand, talks between the Government administration and the trade unions started with discussions on another possibility, which is the introduction of restrictions on Croatian job preservation measures for those employees who haven't yet been vaccinated. This second measure is ethically debatable, both because of human rights and personal data protection, with enterprises and the opposition becoming louder, and a decision on that will be known later on this month.

According to an assessment of auditor Dubravka Kopun, who undertook an analysis of the current Croatian job preservation measures, the Government is going in the right direction, especially in terms of defining the activities that further need these funds. The latest available CES data on approved measures have been concluded for the salary payments for March, and in terms of activities it turns out that the most significant beneficiary of these grants is of course the hospitality sector, which participates with as many as 26 percent of all employees to whom these measures apply.

A significant category are travel agencies that employ 9,578 employees, which is a share of close to 8 percent in terms of these measures, and hotels and camps where there are 6,214 or 5 percent of employees to whom the measures apply.

According to Kopun, however, the segment of construction, architects and surveyors is interesting. While there are continuous talks of a significant labour shortage in the construction sector, almost 4.6 percent of their employees or 5,623 people remain in the total number of those for whom economic measures have been approved.

It is also, as she says, an interesting fact about the number of lawyers who still receive suppoer, although their business isn't significantly affected by the pandemic. There are 417 lawyers who employ 667 employees, which is about 0.5 percent of all employees to whom Croatian job preservation measures are approved.

Of the total number of beneficiaries of Croatian job preservation measures as of March 2021 - 35,900 companies employing 123,547 people for whose jobs the measures are still being implemented, the situation is critical in the most vulnerable group - those engaged in micro-entrepreneurship. The most important in the structure of the use of CES measures, which include co-financing the costs of salaries and part-time work, are micro-entrepreneurs who employ from 1 to 10 employees. According to Kopun's analysis, these entities participate with as many as 63 percent of employees for whom such funds have been approved. One year ago, the share stood at around 85 percent, with about 110,000 employees accounted for.

A comparison of these trends on an annual basis - the realisation of the measure of wages at the beginning of the pandemic for March 2020 compared to March this year shows that the number of beneficiaries decreased by about 4450 companies. A year ago, it was used by 40,350 enterprises who employed 387,372 people, with only 2.5 percent of those companies being in the category of those who employ over 50 people.

Some sectors are still so affected by the current global situation that targeted measures are now under way to replace the horizontal measures at the level of one sector. Such is the latest move by the Ministry of Transport, which recently announced a public call for the allocation of ''small value aid'' to help affected companies operating in the transport sector, worth a total of 60 million kuna. As many as 9,665 people are employed in transport, airports and Croatia Airlines, who receive Croatian job preservation measures (a share of 7.82 percent).

For more, follow our dedicated business section.

July the 7th, 2021 - The Croatian private accommodation sector is slowly but surely recovering from the horrific blow the ongoing coronavirus pandemic and the travel restrictions dealt it. That being said, there's an extremely long way to go yet.

As Poslovni Dnevnik/Jadranka Dozan writes, among the many economic indicators that signal a solid pace of economic recovery, the most recent picture is provided by the weekly updates of fiscalisation data.

The latest data from the Tax Administration claims that last week, the value of receipts issued across all activities within the fiscalisation system stood at 19 percent higher than in the same week last year, two percent behind the comparable week of pre-pandemic 2019.

The latest figures clearly reflect the approach of the peak tourist season. Namely, in the week of the transition from June to July this year, 54 percent more receipts were reported in the tourism and hospitality industry than were reported last year. As such, when it comes to these activities, 804 million kuna of weekly turnover was reported through fiscalisation, but compared to pre-crisis 2019, that figure is still 15 percent less.

In order to get a better picture of the impact of the pandemic, the Tax Administration also offers comparisons of fiscalised turnover for the period since last year's outbreak in Croatia.

They point out that from the end of February to the end of last week, the total fiscalised turnover was 22 percent or 12 billion kuna higher than it was back during the same period last year, and two percent lower than the year before.

However, while in trade the pre-trial traffic was exceeded by four percent, in tourism and catering, the value of receipts issued in the observed more than four months is still lower by about 40 percent.

What do things look like in terms of the recovery of fiscalised turnover when we look more closely at individual activities at the level of the first half of the year?

For example, in the first six months of 2021, 1.74 billion kuna in cash turnover was recorded by the Croatian private accommodation sector (which, in addition to payments with banknotes, includes cards, cheques, etc) which is 700 million kuna more than last year, but quite far from 3.32 billion kuna from the first half of 2019. Cafes and restaurants issued invoices worth 3.75 billion kuna in the first half of the year, which has not yet caught up with 2020's realisation with slightly less than 4 billion kuna in fiscalised turnover, and the gap in relation to the semi-annual turnover from pre-pandemic 2019 stands at more than 2.9 billion kuna in total.

Among the activities that are still well behind the pre-crisis levels of activity is the category of Arts, Entertainment and Recreation, in which, after last year's 250 million kuna, the value of issued receipts recovered a litte, reaching 313 million kuna, but it is still 38 percent less than the 502 million kuna recorded in the comparable period of the last pre-crisis year of 2019.

The same applies to activities in the category of Transport and storage. After the growing cycle in 2019 resulted in more than 1.3 billion kuna in annual fiscalised turnover, last year, enterprises from these activities reported less than 770 million kuna, and the beginning of recovery this year was reflected in an increase in the value of invoices issued to 843 million kuna. Entrepreneurial niches related to tourism and travel generally fared worse than others, which shouldn't come as a particular surprise to most.

According to the NCEA, a part of these enterprises is classified in Administrative and support service activities in which fiscalised turnover is still more than half lower than in the pre-pandemic area. In the first half of the year, they reported less than 290 million kuna, or slightly less than last year's 300 kuna, while the year before, 884 million kuna in turnover was fiscalised in these activities.

For more, make sure to follow our dedicated business section.

June the 19th, 2021 - Many are hoping that the Croatian Government's aid and job preservation measures will continue being paid out until the end of the year, and the Croatian Chamber of Commerce (HGK) is one of the loud voices in that particular crowd.

As Poslovni Dnevnik/Marija Crnjak writes, the Association of Hospitality Activities of the Croatian Chamber of Commerce is asking that the government measures designed to help enterprises in this sector, which has been among the hardest hit by the anti-epidemic measures in Croatia, continue until the end of the year.

The aforementioned Association within the Croatian Chamber of Commerce desires this outcome regardless of epidemiological measures in place at any given time throughout the rest of this year, warning that in the first five months of 2021, only 50 percent of the turnover recorded back in pre-pandemic 2019 was achieved. This means that there is a continued pressure being placed on the Croatian hospitality and catering sector, despite the more favourable epidemiological situation, eased measures and the gradual return of tourism from abroad.

The Association from within the Croatian Chamber of Commerce suggests that the threshold for granting an exemption from needing to pay contributions on top of employee salaries of 4,000 kuna be lowered to those with a proven 30 percent drop in turnover. They propose the same conditions for the exercise of the right to reimbursement of paid fixed costs, and to ensure the payment of this support for the duration of epidemiological measures, they want this to be the case for the entire period in which the business of those in this line of work is limited.

"Recovery will continue long after the pandemic is over. Therefore, we propose that the permanent reduction of VAT on coffee, beer, wine, soft drinks and beverages and its equating with the accommodation and serving of food/desserts to 13 percent be taken very seriously.

We believe that this is a measure without an alternative that is needed to make the hospitality sector more stable and competitive, which will directly affect the increase of employment and investment,'' says the President of the Association, Drazen Boban, adding that to save tourism in Croatia this year, we need to urgently simplify the employment procedures required when employing third country nationals.

For more, follow our business section.

ZAGREB, 17 June 2021 - Annual inflation in the European Union and the euro area in May reached its highest level in nearly two and a half years, while consumer prices in Croatia increased the strongest since the country joined the EU, according to a report released on Thursday by the EU statistical office, Eurostat.

The EU inflation rate rose to 2.3% in May, its highest level since October 2018, from 2.0% in April.

In the euro area, the inflation rate was 2.0%, up from 1.6% in April, also its strongest increase since October 2018.

In May 2020, when economic activities and social life virtually came to a standstill due to the COVID-19 pandemic, inflation amounted to 0.6% in the EU  and 0.1% in the euro area.

Croatia alongside Germany, Spain, and Sweden

The highest annual rates were recorded in Hungary (5.3%), Poland (4.6%), and Luxembourg (4.0%).

Croatia ranked alongside Germany, Spain, and Sweden with an annual inflation rate of 2.4%, the highest increase since August 2013. In April the annual inflation rate in Croatia was 2.1%.

In May last year, prices in Croatia fell by 0.7% on the year.

The lowest inflation in May was registered in Portugal and Malta at 0.5% and 0.2% respectively.

The only country to register a decrease in prices was Greece (-1.2%).

For more about politics in Croatia, follow TCN's dedicated page.

ZAGREB, 17 June 2021 - Croatia ranks 59th on the latest IMD World Competitiveness Ranking that covers 64  economies in the world.

The IMD World Competitiveness Ranking measures the capacity and readiness of economies to manage their competencies to achieve long-term growth, generate jobs and increase welfare.

This year, Croatia has moved upward by one place after, in 2020, the ranking covered 63 economies.

In the last five years, Croatia's annual positions on this ranking ranged between 59th and 61st place.

The latest ranking from the Lausanne-based IMD World Competitiveness Center (WCC) positions Switzerland and Sweden in the first and second place respectively.

The ranking is based on 334 criteria, of which two-thirds are statistical data, and one-third are based on the opinion of businesspeople polled for this purpose.

Considering 20 competitiveness indices, Croatia fares well in international trade (29th place), price level, health and environment, and education.

Croatia, for instance, fares poorly in management practices, labor market, business legislation, and some other criteria.

In comparison to all the EU members, Croatia is at the lowest position.

The president of the National Competitiveness Council, Ivica Mudrinić was quoted as saying that the EU funding available to Croatia could help the country to speed up highly-anticipated structural reforms.

For more about business in Croatia, follow TCN's dedicated page.

June the 15th, 2021 - Just what needs to be done to speed up economic recovery following the coronavirus pandemic? Respected Croatian economist Vedran Sosic says that we need to take a serious look at the number of so-called zombie companies as the pandemic draws to a close, and limit them.

As Ana Blaskovic/Poslovni Dnevnik writes, the pace of economic recovery could vary very significantly between countries, said the Croatian National Bank's chief economist Vedran Sosic in Rovinj at the 9th meeting of the region's governors, primarily due to their different economic structures and aid effectiveness. The state has helped companies out financially and with various job preservation measures, but now it's crucial that we work to reduce the number of zombie companies, and the speed of recovery will also depend on how much households will spend on ''forced'' accumulated savings due to the global crisis.

Vedran Sosic gave a presentation entitled "Post-Covid Syndrome in the Economy and Financial System: How do we Deal with It?" explaining that the current crisis will spur some structural changes in numerous economies, and that economic policies will play a key role in preserving growth potential, especially through support for companies and workers in the most affected industries.

The business of companies has been hit by restrictions, epidemiological measures have brought with them higher costs, and at the same time their demand has decreased, supply chains have been disrupted and general insecurity has increased. While strong fiscal support has helped businesses, the question now is of the optimal rate of the withdrawal of that support.

“These subsidies have reduced the insolvency rates of companies even below the levels normal for good times, which, among other things, has enabled an increase in the number of zombie companies that are squeezing out healthy companies and the damage is growing in the long run. Reforms aimed at reducing zombification are vital,'' Vedran Sosic said.

In the ongoing coronavirus crisis, the savings rate rose with a simultaneous decline in investment. "If households don't spend their accumulated additional savings, it could negatively affect the speed of recovery," the CNB chief economist said, adding that the pandemic and restrictive measures limited private consumption, while state aid compensated for part of the loss of income, and high levels of uncertainty generally reduced the propensity to spend.

"All this has led to ''forced'' savings in addition to the precautionary savings common during times of crisis. Although it isn't possible to determine exactly who saved the most during the crisis, an increase in savings was probably pronounced among those with higher incomes who will probably not significantly increase their spending during the recovery,'' said Vedran Sosic.

He also referred to the residential property market, saying that it had shown a level of resilience, meaning that the price levels more or less remained the same throughout the crisis. Here in Croatia, residential real estate prices rose by 7.7 percent last year. At the same time, due to new trends related directly to the pandemic, such as increased work from home and an increase in online shopping, prices for commercial real estate have fallen.

For more, follow our dedicated business section.

ZAGREB, 27 May 2021 - Croatia and Taiwan continued expanding their economic relations, despite the pandemic, and cooperation can be bolstered in IT, tourism, supplies of medical equipment surveillance equipment, cosmetics, and food products, a meeting of the Taiwan-Croatia Business Council heard on Thursday.

The meeting was organized by the Croatian Chamber of Commerce (HGK), the Chinese International Economic Cooperation Association (CIECA), Taiwan, and the Importers and Exporters Association of Taipei (IEAT).

Ivan Barbarić at HGK said that the main topic of today's meeting was smart tourism and IT solutions for other sectors.

CIECA advisor Fred P. C. Huang underscored that expanding economic relations between Croatia and Taiwan continued despite the pandemic.

Croatia is a country with a dynamic economy and is recognized for its tourism industry, said Huang.

"Croatia's IT sector is also quite strong and those two industries have great potential to develop relations between our countries," said Huang and added that CIECA and HGK keep working on networking entrepreneurs.

Head of the Taipei Economic and Culture Office in Austria, Katharine Hsiao-Yueh Chang underscored that Croatia and Taiwan are natural partners with regard to economies. 

According to Taiwanese statistics, our bilateral trade is usually about $50 million. As a consequence of coronavirus, Taiwanese imports to Croatia fell by 19% in 2020 whereas Croatia's imports to Taiwan increased by 68%. In the first few months of this year, an unbelievable growth in Croatian imports on our market occurred by as much as 237% and that is a figure that clearly shows what sort of potential we are talking about," she said.

According to Chang, Croatia is a sought-after destination for Taiwanese tourists while hundreds of Croatian professionals work in Taiwan on cruise ships and offshore wind parks.

We are glad to see that the pandemic is waning slowly and this is the right time for meetings like this so we can take up good positions and continue to strengthen cooperation, said Chang.

Secretary-General in the Taiwanese Bureau of Foreign Trade, Ministry of Economic Affairs,  Amelia W.J. Day confirmed that in the past three years, Croatian imports to Taiwan increased drastically.

I am certain that after this meeting we will have better insight into the potential for trade to grow. The sectors we focused on today will help our relations to boom in the post-COVID period. Taiwan has excellent IT companies that can help Croatia to develop tourism based on sustainable principles," said Day, and in particular stressed the potential in engineering and food production.

Local companies like Infosit, Inter Soft Technologies, and the Šibenik Fortress of Culture project were presented to the Taiwanese partners.

Smart tourism was the main focus of today's meeting while B2B meetings focused on cooperation in the field of medical equipment, surveillance equipment, cosmetics, food products, and other sectors.

For more about politics in Croatia, follow TCN's dedicated page.

ZAGREB, 20 May 2021 - Croatia's take-home pay in March came to HRK 7,138, rising 6.3% on the year in the nominal terms and five percent in the real terms, according to the data released by the national statistical office on Thursday (DZS).

The average wage in March rose by 1.4% in the nominal terms and o.3% in the real terms in comparison to February 2021.

The DZS says on its website that "the highest average monthly paid off net earnings per person in paid employment in legal entities for March 2021 were paid off in Information service activities and amounted to 13 237 kuna, while the lowest earnings were paid off in the activity Manufacture of wearing apparel and amounted to 4 387 kuna."

Median net earnings for March 2021 amounted to 6,000 kuna, while median gross earnings amounted to 7 728 kuna. It means that half of the people employed were paid less and the other half more than this net amount.

(€1 = HRK 7.5)

For more about business in Croatia, follow TCN's dedicated page.

May the 20th, 2021 - It isn't new information, unless you've been living under a rock of course, that the Croatian demographic picture is far from ideal. Economic and demographic issues have reigned strong since long before the coronavirus pandemic struck, and some counties are far worse off than others. Sisak-Moslavina County currently being the most worrisome.

Croatia, like many Mediterranean countries, has an ageing population. With many members of the working age population leaving en masse to other European countries, taking advantage of the borders opening and the scrapping of work permits ever since Croatia joined the EU back in July 2013, this situation has only grown worse.

Traditionally, the Dalmatian coast has always fared better economically than more or less everywhere else in the country with the exception of Zagreb. With tourism providing for as much as 20 percent of Croatia's GDP, the summer months are employment-rich (in as much as is possible in the Croatian sense) and all about earning enough money to survive the winter before doing it all over again in Croatia's seasonal employment trap in which it has been stuck for years.

Continental Croatia, and particularly Eastern Croatia, have never had the God-given luxury of the Adriatic sea at their doorstep and as such have never been able to rest easily on their laurels in the same way Dubrovnik and Split do on an annual basis. The former bread basket of not only Croatia but the region, Slavonia and Baranja, have been experiencing a brain drain for very many years, with many other locations in Eastern and Central Croatia experiencing the same.

Sisak-Moslavina County, which was the victim of a devastating earthquake back at the very end of December last year, is among the most concerning of all. Now with more retired people than employed people, it's difficult to see how the future might look for this county. 

As Poslovni Dnevnik writes, Northern Croatia is a convincing national champion in terms of the ratio of total employees and pensioners, according to data from the Croatian Pension Insurance Institute.

According to this recently released data, Medjimurje County (1.66) and Varazdin County (1.54) have the highest ratio in favour of workers. By far the worst is the aforementioned Sisak-Moslavina County, which has more retirees than it does employees (the ratio is a troubling 0.95), followed by Sibenik and Karlovac (1.03) and Pozega County (1.04).

Among those cities which are also municipal county heads, Northern Croatia is again in the lead: in the top five in terms of the ratio of workers and pensioners there are three Northern Croatian cities, Varazdin (2.62), Cakovec (2.46) and Koprivnica (1.92). This data refets to figures recorded back the end of March this year, writes Danica.hr.

The average for the Republic of Croatia is 1.25 (just over one employee per pensioner), which is a long-term unsustainable situation for every sort of economy. Croatia as a whole currently has about 1.55 million employees and about 1.24 million retirees.

For more on Croatian demographics, follow our lifestyle section.