November the 22nd, 2021 - 2020 was a year unlike any other for the vast majority of people, if not everyone. A global pandemic had taken the entire world by storm and countries all scrambled to try to find solutions in a truly unprecedented global crisis. Croatian state support reached a massive 21.1 billion kuna during that extraordinarily challenging year.

As Poslovni Dnevnik writes, back on Wednesday, the Government accepted the report on Croatian state support for 2020, which shows that a total of 21.1 billion kuna aid/support was granted in that period, equal to 40 percent more than in 2019, while aid to support the economy during the coronavirus pandemic amounted to 1.64 billion kuna.

State Secretary at the Ministry of Finance, Zdravko Zrinusic, stated at the recent Government session that "the movement of allocated Croatian state support in 2020 is marked by the negative impact of the coronavirus pandemic, which in part affected the structure of granted aid." He pointed out that the continuous growth of granted aid continued and that it increased by 40 percent when compared to 2019.

The share of subsidies granted in GDP stood st 5.68 percent. Per employee, subsidies in 2020 amounted to 13,666.64 kuna, which is an increase of 3,977.93 kuna or 41.1 percent when compared to the pre-pandemic year of 2019.

Last year, the agriculture and fisheries sector received a massive 7.7 billion kuna in support payments, an increase of 15 percent when compared to the previous year, while aid in the industry and services sector amounted to 13.4 billion kuna or 60 percent more in total.

Croatian state support paid out to support the domestic economy during the coronavirus pandemic throughout 2020 was granted and paid out to various industries and companies for the first time ever, with job preservation measures included, and that all amounted to 1.64 billion kuna, representing a share of 7.8 percent in the total support granted.

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

November the 16th, 2021 - The import of foreign labour from outside the EEA into Croatia, typically from neighbouring countries such as Bosnia and Herzegovina and Serbia, is proving cumbersome with the infamously slow and arduous Croatian bureaucracy.

As Poslovni Dnevnik/Dario Knezevic writes, with the stil impaired liquidity due to the ongoing coronavirus pandemic, ''getting the staff'' and having a qualified workforce is still the biggest problem of the Croatian hospitality and catering industry, especially since wages in the sector are still low and workers prefer to choose other occupations or instead opt for emigration.

Importing workers is currently an inevitable solution as the situation grows more tense, but there are a lot of problems in this regard as well, because there is a long procedure for obtaining work permits for foreigners and Croatian bureaucracy is still running at a snail's pace, hampered by draconian laws and what often seem to be senseless rules.

The sector is still plagued by high tax burdens, and the biggest problems are being faced cafes and nightclubs who suffered tremendously during lockdowns, warned participants in the Zagreb Caterers' Forum, held on Friday and organised by the Zagreb Caterers' Association and the Independent Caterers' Association.

Cafes are on the brink of survival

"Coffee bars and nightclubs have had and continue to have a very hard time surviving, when they have little or no traffic, restaurants are doing a little better because they haven't been closed for as long as bars and clubs were, and their traffic drop is around 30 percent when compared to 2019. If we fail to make more money during the advent season, we will have a very harsh winter and the number of 1,100 closed restaurants in Zagreb could increase in relation to the very beginning of the pandemic,'' warned Zakline Troskot, president of the Independent Association of Caterers.

Officially, three requests were sent from the Forum of Caterers to the City of Zagreb. They're looking for resolutions to the problem of being allowed to operate as normal in open spaces and on outdoor terraces. They are also seeking the lowering the coefficient of utility fees for these companies from 10 down to 7, as well as more involvement from representatives of those in the hospitality and catering sector when it comes to decision-making.

They want the state to reintroduce economic assistance measures to keep jobs and reimburse fixed costs, speed up the tragic state of Croatian bureaucracy, ie the process of issuing work permits for non-EU foreigners and further tax relief, in order to ensure higher incomes of employees working in the hospitality sector.

Namely, with the exception of large employers, wages in tourism and catering are still low, and many employers don't have room for raises due to the coronavirus pandemic, and workers are leaving en masse. Quality foreign workers aren't easy to come by either.

As it has been shown that workers from neighbouring countries manage and fit in much better among foreign workers than from distant cultures, the emphasis is on the search for workers in Croatia's immediate region, but the issue is that these European countries are not EEA/EU member states. This means that the paperwork and red rape is even more of a hassle for would-be employers.

The president of the Croatian Tourism Union, Eduard Andric, revealed that his union is negotiating with the Macedonian union, in order to bring Macedonian seasonal workers in an organised manner with less paperwork and fuss. According to current interest, there are about 5,000 to 10,000 of them.

At the same time, the Macedonians are willing and interested in their employers to give them some preparatory training, whether someone comes to them or they come to Croatia a little earlier for some training.

''Because as much as Macedonians are willing to work, we've had situations where they didn't know things like the names of certain drinks, the names of certain dishes, and we'd have to really educate them to make it better,'' pointed out Andric, adding that workers from that country are more desirable to work in Croatia than, for example, Filipinos, as their culture and language are closer, and communication is therefore far easier.

He revealed that they are also talking to Slovenes about a model to employ their workers in this country during the summer, and for them to go to Slovenia in the winter, which has more developed winter tourism. And this will be worked on in cooperation with the Slovenian trade union.

For more, follow our business section.

November the 13th, 2021 - Croatian GDP growth has been a topic on the lips of many ever since the coronavirus pandemic struck and caused untold and unprecedented negative trends on a global scale. Predictions and expectations have been shared by many and have been varied, but Brussels has some encouraging expectations indeed, with only two EU member states ahead of Croatia in this regard.

As Ana Blaskovic/Poslovni Dnevnik writes, the European Commission's (EC) recent forecasts for economic developments for the Republic of Croatia have brought growth expectations closer to most local expectations. Brussels expects 8.1 percent Croatian GDP growth this year (their expectation previously stood at 5.6 percent), which is close to the Croatian National Bank's expectations of 8.5 percent, but still more cautious than the Croatian Government's 9 percent. This prediction, if it materialises, would also make Croatian GDP growth the third fastest in the entire bloc.

The European Commission's autumn forecasts generally predict a faster pace of recovery from the coronavirus crisis than the spring one did, after all, corrections leaning towards higher percentages as the year draws to a close were also given by numerous Croatian experts. The European leader with the highest GDP in 2021 will be Ireland with a projected 14.6 percent, followed by Estonia with 9 percent.

The ranking next year, of course if there is no correction, could look even better with growth of 5.6 percent, just behind Malta. "The recovery of the Croatian economy continued in 2021, mostly thanks to strong private consumption and better-than-expected results in the tourism sector. Favourable economic trends have spilled over into the labour market, which is experiencing strong employment dynamics,'' they said from the EC. A good outlook for the economy is expected in the next two years, and essentially, there are no major surprises in Brussels' latest autumn forecasts.

The engine of growth remains domestic demand driven by a good labour market situation. During the coronavirus crisis, the accumulated savings and the growth of consumer lending will give their momentum to the economic momentum. A positive contribution will also come from the direction of public spending, but its momentum will slow down due to the targeting of the deficit and public debt within the introduction of the euro in Croatia at the beginning of 2023, if all goes as planned.

Investment momentum should accelerate on the wings of European Union money as part of the National Recovery and Resilience Plan in addition to the regular EU budget and as payments from the Earthquake Solidarity Fund begin to be paid out. The European Commission expects that over time, these funds will encourage additional private investment in Croatia, which will further facilitate favourable financing conditions.

Finally, NPOO reforms (on which future generous payments depend) should support business confidence, according to the EC.

Exports are an item of GDP that should grow in line with the improving situation in major trading partners. After this year's surprising jump in the export of services, primarily tourism, the continuation of solid trends is expected, the preconditions for which are favourable conditions in emitting markets and the final total normalisation of travel.

Although the Croatian economy is projected to grow strongly in terms of exports of goods, its import dependence will result in a gradual deterioration of the trade balance, a picture that essentially reflects the vulnerabilities and competitive weaknesses of the domestic economy. Finally, an unavoidable factor in the uncertainty of these forecasts is the low vaccination rate of only 44.9 percent of all residents of Croatia. Such figures "could lead to tougher measures to combat the pandemic and delay in post-earthquake recovery."

Positive ''risks'' are Croatia's possible entry into the Schengen area and the Eurozone. Inflation is expected to accelerate due to rising energy and food prices, reaching 2.2 percent this year, after which it should then gradually stabilise. The budget deficit should drop down to 4.1 percent of GDP in 2021, and to 2.9 percent next year, and a downward trajectory is also projected for public debt; from 82.3 percent this year to 79.2 percent next year. Employment should return to pre-crisis levels this year, and the unemployment rate should drop to a record low of 5.8 percent in 2023.

For more information on Croatian GDP growth and much more, check out our politics section.

November the 9th, 2021 - We're now in the part of the year when the classic seasonal slump in terms of the Croatian employment rate usually happens, but owing to the pandemic and some of the trends it has created, things are looking a bit different.

As Poslovni Dnevnik/Jadranka Dozan writes, due to slow but steady domestic economic recovery, the total Croatian employment rate exceeded the situation before the pandemic-induced crisis. The recovery in employment and demand for workers is currently being overshadowed by a parallel process of increasing the number of voluntary liquidations and initiating bankruptcies of companies who no longer see a prospect for their businesses to continue operating, which has been going on since the second quarter of the year.

Likewise, in contrast to Croatian employment, which has improved compared to pre-pandemic figures, the number of unemployed people is even higher than it was back during comparable levels from the year before last, analysts at the Croatian National Bank pointed out in a new review of economic trends.

This, they say, points to the increasing employment of workers from countries outside of Croatia and the EU in order to partially offset the growth in demand for labour.

The growing demand for labour is also suggested by the value of the index by which the Zagreb Institute of Economics monitors its current situation through online job vacancies, and the EIZ accompanied it with the title "looking for more workers" and commenting that the data "still offer reasons for optimism".

This is the OVI index (Online Vacancy Index), which was developed by the Institute in cooperation with the MojPosao (MyJob) portal and which, back in October, indicated a higher demand for work compared to last year, but also compared to that of the level of 2019. Demand for work measured by this index is, they say, around 39 percent higher than it was back October 2020 and about 9 percent higher than the pre-pandemic October of 2019.

Last month was the sixth in a row in which the demand for labour in Croatia exceeded the pre-pandemic months, and during October this year, retail workers, waiters, teachers, chefs and warehouse workers were most in demand, the OVI index commented. Almost half of the advertised jobs were related to a fixed-term contract, as well as an increase in the number of advertisements in which the possibility of working from home is explicitly mentioned.

Over more recent days, the employment campaign of Novigrad Laguna, which manages 13 hotels, 4 camps, a settlement of 80 villas, as well as 92 apartments in Novigrad, on Krk and Korcula and the Peljesac peninsula, has attracted special attention. As part of the started preparatory activities for the next tourist season, Aminess hotels and camps have launched a campaign to attract as many as a thousand employees, offering them stimulating monthly rewards, Christmas bonuses, accommodation in a modern hotel for employees, a hot meal, as well as education programmes in which, in 2022, they intend to invest almost one million kuna.

In the business community, so much demand for workers in Aminess hotels and camps is partly related to unofficial information that the company is on its way to acquire a new hotel in Makarska.

Zrinka Bokulic, President of the Management Board, neither confirms nor denies this information. She says the campaign reflects several main things, from expanding the business (in terms of existing capacities) and potential new acquisitions to raising service quality standards, most notably in Orebic and Korcula, which have only recently come under the company's auspices. The new level of service standards, in addition to education, includes a larger number of employees.

After this year's pre-season, a good summer season seemed unlikely, so part of the accommodation capacities opened a little later, and Valamar has already turned to preparations for 2022. Fifteen days ago, they announced that they intend to hire about 400 key seasonal workers indefinitely this autumn, and will provide them with a stable income and year-round work in tourism.

While the leading companies on the Croatian tourism scene are doing everything to ensure the highest quality service for next year, the problem of lack of skilled labour is one of the reasons for the decline in business expectations in the October survey conducted by the Croatian Nationl Bank.

Across all industries, the index of trust and optimism of business entities last month was below the average from the previous three months. In terms of construction and industry, the problem of the labour shortage is most often emphasised, while in the Croatian National Bank's survey, respondents from service industries are primarily afraid of a lack of demand.

If the domestic labour market as a whole is observed, at the end of September this year, 1.6 million insured persons were registered with the Croatian Pension Fund. This is a slight decrease compared to the month before, but at the annual level of 51 thousand or 3.3 percent more, and it also exceeded the number of insured persons recorded back in pre-pandemic September 2019, by more than 14.7 thousand or slightly less than one percent .

While the manufacturing industry and trade as the activities with the largest number of employees recorded an increase compared to last year, but not up to pre-crisis figures, the construction and IT sector (Information and Communication category) has already exceeded them. Croatian IT companies are also exposed to more pronounced pressures on wage growth and according to the latest available data from the CBS, they are the ones leading the growth of average salaries.

Despite the general trend of wage growth, demand for workers and a larger number of employees when compared to pre-pandemic figures, Croatian National Bank surveys of citizens in October showed a decline in consumer optimism. The acceleration of inflation and the epidemiological situation obviously raise concerns about further developments in the labour market.

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

November the 5th, 2021 - RBA analysts are more cautious when it comes to predicting Croatian economic recovery or the growth of domestic GDP as the instability of the ongoing global coronavirus pandemic still remains a huge issue.

As Poslovni Dnevnik/Ana Blaskovic writes, contrary to the optimism of the central bank and the government about the dynamics of Croatian economic recovery in 2021, ranging from between 8.5 and 9 percent, Raiffeisen Bank analysts are still somewhat more cautious with the expectation that GDP growth will stop at 7 percent.

"Our estimates are significantly lower than those provided by the government because we expect a slowdown in the last quarter of the year," said RBA chief economist Zrinka Zivkovic Matijevic at the presentation of this, the latest RBA research.

The summer quarter, due to the-then good epidemiological situation and a surprisingly good tourist season that brought in 8.5 billion euros (85 percent of pre-pandemic 2019's level), could end with a double-digit growth rate.

However, on the side of the rapid deterioration of the epidemiological situation as the end of the year approaches, the withdrawal of the ''parking brake'' in terms of optimism is a reflection of the uncertainty of energy and raw material prices, as well as disruptions in supply chains. Nevertheless, real Croatian economic recovery and indeed growth throughout 2021 will remain strong, primarily driven by growth in the export of services, ie tourism and personal consumption.

Next year, domestic economic growth should pull in investment on the wings of using European Union (EU) money under the much talked about National Recovery and Resilience Plan.

"From a macroeconomic point of view, investments are a desirable generator of growth," said Zivkovic Matijevic, explaining that the benefits of a generous European Union cash injection are wider than the availability of the money itself, because its withdrawal depends on measures and reforms that will work to reduce the weaknesses of the domestic economy in the long run, and whose outlines are slowly emerging.

The news about Croatian economic recovery and the acceleration of economic dynamics has recently been overshadowed by inflation, which accelerated to 3.3 percent in Croatia back in September (as opposed to 4.1 percent in the Eurozone), which is expected to peak in the first quarter of next year.

"Inflationary pressures continued to strengthen, dominantly caused by strong growth in energy prices, thus reflecting developments in world crude oil exchanges. Since the second half of the year, energy prices have been joined by rising food prices,'' they added from RBA.

Assuming global supply chain disruptions subside, they added, the price jump should slow down in the second half of 2022, but with the caveat that uncertainty, longer supply-side disruptions and steeper transport costs could suggest that inflation could last, not only in Croatia but also in the Eurozone, which Croatia is soon set to join.

That such a scenario will not materialise is strongly assured by central banks, including Croatian ones, from which messages are coming that inflation is only a passing phenomenon.

The refreshed picture of public finances, precisely in the parliamentary debate, wasn't overly surprised by the increased inflows from VAT or the deepening of expenditures, due to which the general government deficit increased to 4.5 percent.

With the cost of the coronavirus crisis totalling a staggering 40 billion kuna so far, in the first half of next year, it is to be expected that the state will actively borrow on the capital markets in order to meet increased financing needs. These activities, together with good market conditions of high liquidity and low interest rates, will be positively marked by the process of introducing the euro, a drawn out process which is entering its final phase.

"The set goal of joining the Eurozone on January the 1st, 2023 is achievable and strong political support across the European Union is important," said Zivkovic Matijevic, believing that it is very likely that Croatia will meet the Maastricht criteria on public debt, deficit, interest rates, exchange rate and inflation.

For more, check out our business section.

November the 3rd, 2021 - The old saying that you just can't get the staff couldn't ring more true than it does in Croatia. The country is lacking when it comes to employees across the majority of sectors, and Croatian computer scientists, despite the country's IT boom, are in such short supply that students are being given jobs.

As Poslovni Dnevnik writes, the situation with both the Croatian economy and the demographic picture isn't news to anyone who doesn't live under a rock, but this is especially evident when it comes to Croatian computer scientists. Companies can’t find enough of them and are simply offering employment positions to high school students to try to bridge the gap. They're promising them additional education and an opportunity for professional advancement.

If any part of the domestic economy has managed to resist the pandemic-induced pressures which began in 2020, then it's the blossoming Croatian information technology sector. Quite on the contrary to the vast majority of other sectors, they even managed to grow and hire new staff throughout the pandemic. Last year alone, Ericsson Nikola Tesla employed about 200 people, this year, as of September the 1st 347 professionals were hired. While that's excellent, the original plan was even more ambitious.

"We wanted 600 people, we didn't succeed, the plan is 500 new experts by the end of the year," said Gordana Kovacevic, president of Croatia's largest ICT company, Ericsson Nikola Tesla.

"It's an extremely slow process for us, so we're offering for students to come and join our teams, educate them further, and establish excellent relationships with the colleges, because the speed of change that is happening is incredible," stated Kovacevic.

The demand is also quite amazing. Tesla is currently looking for about 500 people a year, and the total potential of the Croatian market isn't quite up to par. Zeljko Krizmanic, the coordinator of Bird Incubator, also commented on the topic:

"Companies have been recruiting for some time now, and not only those people who are leaving college, but also those who are still in college, in their third or fourth year,'' he explained.

“It ' also very interesting for young people to try to start their own companies because there have been a lot of successful examples lately, such as Nanobit, Infinum, Rimac, companies that didn't even exist 12 years ago and are now valued at over a billion dollars, so the startup culture is growing a lot. I know of several startups in the Bird incubator looking for experts, and it's proving difficult to find them,'' added Krizmanic.

Kovacevic, on the other hand, says that the state should adapt school programmes to new technologies and the industries of the future, otherwise the most capable will be the constant target of foreign bounty hunters.

"In fact, the whole of Europe has a shortage of experts with ICT skills, unless something completely different happens, in terms of training, creating new knowledge and retraining, they will forcibly take experts from each other,'' he warned. It is imperative to promote STEM since primary schools and to provide scholarships to local talent as of high school age, believes Kovacevic.

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

ZAGREB, 1 Nov 2021 - Croatia's industrial turnover in August 2021 rose by 22.5% on the year and by 3.2% on the month, according to data by the Croatian Bureau of Statistics.

In August 2021, the seasonally adjusted industrial turnover increased by 22.3% on the domestic market and by 24.1% on the non-domestic market, compared to August 2020.

In terms of main industrial groupings, in August, the highest year-on-year increase, of 43%, was recorded in energy sales.

Sales of capital goods rose by 25.2%, intermediate goods by 22.1%, consumer non-durables by 18.7%, and consumer durables by 13.3%.

Industrial turnover has been growing on the year since the beginning of this year, with the exception of February, when it dropped by 7.7%. January saw the smallest increase, of 1.7%, while in March the increase was 11.7%, in April 40.6%, in May 36%, in June 20.8%, and in July 17.8%.

Industrial turnover in the first eight months went up by 17.4% year on year.

During the month, industrial turnover rose by 3.2% in August, increasing by 2.2% on the domestic market and by 1.5% on the non-domestic market.

In August, compared to July, total sales of capital goods increased by 5%, of consumer non-durables by 3.1%, and of intermediate goods by 2.8%, while total energy sales dropped by 21% and sales of consumer durable by 7.9%.

Make sure to check out our dedicated business section.

October the 31st, 2021 - The much loved Croatian company Podravka has been recording some excellent sales growth across important markets, and despite the negative economic circumstances the coronavirus pandemic has dragged the entire world into, things are looking up for this enterprise.

As Poslovni Dnevnik writes, revenues from the Croatian company Podravka's sales for the first nine months of this year amounted to a very impressive 1,651.4 million kuna, which is 3.9 percent more than what was recorded back during the same period last year. Since last year, due to the poor epidemiological situation, there was an increase in demand for Podravka's products and the creation of increased stocks with customers across almost all markets, making this year's growth is even more significant.

If, for example, we compare the Croatian company Podravka's revenues with the pre-pandemic year of 2019, then revenue growth this year is even more significant, standing at 5.4 percent.

Sales revenue growth this year was achieved in almost all business programmes, among which the most significant growth of 5.2 percent was recorded in the Culinary business programme. The aforementioned growth in this particular segment was achieved mainly due to the growth of revenues from the sale of Universal Food Additives and Soups.

When it comes to sales revenue by region, growth was achieved across all of this company's key markets. Particular emphasis is placed on revenue growth of 9.5 percent in the Western Europe region, where growth was achieved in almost all business programmes, of which the largest growth was generated by the Culinary, Podravka food and Baby food segments.

It is worth noting that the other two most significant regions also achieved sales revenue growth, of which in Central Europe there was a growth of 4.4 percent, while the Adria region achieved sales revenue growth of 2.9 percent.

When we look at the business results of the Podravka Group for the first nine months of this year, an impressive 3,383.5 million kuna in sales revenue was generated. This realisation represents growth of 1.6 percent compared to the year before. Higher sales revenues are the result of revenue growth in two important business segments - Food and Pharmaceuticals. The Nutrition segment generated 2,634 million kuna, while Pharmaceuticals recorded 749.5 million kuna in sales revenue, with the largest contribution from the Prescription Medicines category, which increased by 5.4 percent.

The net profit of the Croatian company Podravka for the aforementioned period amounts to 259.3 million kuna and is higher by 23.4 percent when compared to the comparable period from one year before.

It's worth mentioning that the price of Podravka's shares on September the 30th this year amounted to 664 kuna, while back on December the 31st, 2020, they amounted to 485 kuna, which is a promising increase of 36.9 percent.

For more, check our our dedicated business section.

October the 29th, 2021 - Croatian employers would gladly introduce covid certification presentation as a mandatory move but cannot under current Croatian law. As a result, they're seeking two important things from the state.

As Poslovni Dnevnik/Marija Crnjak writes, many Croatian employers claim they're overwhelmed and irritated waiting around for the state to finally define the rules around covid certificates, which they would like to introduce them at workplaces and thus join the health and social care system which already have the same rule, but Croatian employers cannot do that because they have no legal basis to introduce it.

The Croatian Employers' Association (HUP) has therefore asked the relevant ministries to issue instructions to employers, which would answer numerous inquiries and concerns about covid certificates owned by their workers, and provide some clear guidelines on how to organise further business given the negative epidemiological situation and the number of workers who are unwell and in self-isolation. They are also asking the state to cover the costs of testing for the novel virus.

Despite the recommendations of the Croatian Institute of Public Health (CNIPH), Croatian employers currently have no legal basis to ask their employees to present a covid certificate, nor to remove them from the workplace if he doesn't produce one,'' they explained from HUP.

Namely, Resolution 2361 (2021) is in force across EU member states, which stipulates that people must be informed that vaccination against the novel coronavirus isn't mandatory, and that there's no political or any other pressure or discrimination to be placed on those who don't want to receive the vaccine. In addition, as the vaccine against coronavirus is not on the list of mandatory vaccines for the Republic of Croatia, there are no obligations or sanctions for refusing vaccination.

Croatian employers are obliged, according to the recommendations of the CNIPH, to finance all the testing of their workers, if necessary. The state pays this only to the health and social care sectors, which HUP considers to be discrimination. HUP therefore sent a request to the competent institutions asking for coronavirus tests be provided to all Croatian employers in an equal way.

"We believe that it's inconceivable and unfair to all other companies to make some sort of difference based on the protection of the health of employees by sector, and by belonging to the public or private sector. All of the above leads to legal uncertainty, and consequently the inability to organise business in a healthy working atmosphere. This situation requires urgent action by state institutions in the form of issuing clear guidelines to employers that would ensure the protection of their workers and the legal operations of Croatian employers during the pandemic,'' they concluded from HUP.

At the time of writing this article, they hadn't yet received answers from the authorities.

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October the 29th, 2021 - A huge amount of Croatian workers will need to consider changing their occupations as digitalisation and automation continues to leave the need for the human touch in the past, according to a recent analysis.

As Poslovni Dnevnik writes, approximately 340,000 jobs will disappear due to automation and trends fueled by the COVID-19 pandemic, but rest assured, these will be replaced by almost the same number of new jobs in new occupations and growing industries and due to a general increase in productivity. While net labour demand will remain virtually unchanged, there will be significant changes in the structure of occupations on offer. Therefore, by the end of the decade, almost 140,000 Croatian workers will need to change their occupations in order to remain employed.

This is one of the conclusions of the analysis published by McKinsey & Company Adriatic in cooperation with McKinsey Global Institute entitled The Future of Work in Croatia - Transformation of the Croatian Workforce in the Age of Automation and Digitalisation, which examines the impact of automation, artificial intelligence and digital technologies on various sectors, occupations and jobs, and the combined impact of all this on the combination of skills that the Croatian workforce will need to have by 2030.

Realising the full economic potential of automation and digitalisation, but also maintaining the existing level of employment will require the cooperation of all stakeholders to find ways to enable Croatian workers to transform and acquire the skills that will be required in the future.

"This isn't just going to happen by itself - all private organisations, public institutions and educational institutions will have to work together during the transition period to realise this potential," said Tomislav Brezinscak, CEO of McKinsey & Company Adriatic.

By 2030, six percent of the total number of working hours in Croatia will move from jobs that require physical skills to solve work tasks to jobs that require cognitive, social, emotional and technological skills. Specific skills, such as those needed to manage devices and equipment and to easily enter and process data, are likely to experience the largest drop in demand in the share of employees by 2030. This is to be expected, as activities that require physical strength and skill as well as data collection and processing skills are something that can be very easily automated now.

The analyses described in this report take into account the composition of the workforce throughout the country, combined with the expected rate of the adoption of automation, based on available technologies and the economic feasibility of their implementation. When looking at the potential speed of automation from the perspective of trends fueled by the coronavirus pandemic, Croatia will achieve an automation adoption rate of around 22 percent by 2030.

In other words, the activities that currently account for about 22 percent of the total number of working hours of employees in Croatia will be automated by the end of the decade. The adoption of automation will vary from sector to sector - manufacturing, wholesale, business functions that serve to support the administration, and public administration - will be the areas with the highest rate of automation adoption.

Croatia needs to improve its productivity in order to achieve sustainable economic growth and income growth in all segments of the population. This is especially important because the population of Croatia is only getting older. Automation is also an opportunity to realise Croatian national interests. Companies, if supported by the appropriate policies and investment in skills development, can develop new services and products, increase their productivity and create new and better paid jobs. By embracing the changes that will take place in the world of work over the current decade, Croatia can avoid structural unemployment and create new national wealth in a way that promotes social inclusion.

Accelerated digitisation may be the most important new driver of growth, and Croatia's digital economy, which encompasses all digital activities in all economic sectors, now accounts for approximately five percent of GDP, equivalent to 2.4 billion euros. By 2025, the digital economy in Croatia can reach 11 percent of GDP, which means that it will contribute to the value of the overall economy with 8.3 billion euros.

Although automation and digitalisation provide an opportunity to create a more productive and competitive Croatian workforce, they also bring several challenges - especially in terms of losing existing jobs and developing future skills. Like stakeholders in other EU countries, all stakeholders in Croatia must balance the pace of automation and the acquisition of new skills if they want the country to benefit from automation and the introduction of new technologies.

If automation and digitisation happen too quickly, it may happen that the new jobs that will be created will remain unfilled by Croatian workers, and that, potentially, could lead to worsening income inequality. On the other hand, if automation and digitalisation happen too slowly, it could harm Croatia's competitiveness and prevent economic growth.

For more, check out our business section.