June the 11th, 2022 - Croatian workers at construction sites up and down the country are becoming a rarer and rarer sight with imported labour now the forced choice of many as the demographic crisis makes Croatian workers illusive.

As Ana Blaskovic/Poslovni Dnevnik writes, the rise of the property market has gained additional momentum with continued inflation, and the dynamics of price growth are increasingly causing disbelief. Buyers and sellers are wondering how long this will go on for, each from their own angle calculating the optimal time to sign a contract, and experts warn that problems are still accumulating.

Builders can hardly plan at a time when the prices and availability of materials are rampant, the state doesn't have an adequate housing policy and housing affordability is becoming a luxury for locals while apartment and short-term rentals are booming. All of the above could be heard at the recently held round table called: ''Challenges and opportunities in the real estate market'' organised by the well known Njuskalo portal under the moderation of Robert Pokrovac from Erste Real Estate.

"The public is increasingly realising that we have two real estate markets. One is based on tourism, where projects aren't bought from a salary, but investors are focused on high-income buyers and foreigners, and the other is the lack of housing market for those people who live on Croatian wages,'' said Josip Tica, professor at the Faculty of Economics in Zagreb.

Deficient policies

"Existing business models haven't yet adapted to this duality, and the state lacks public policies that would focus on solving this problem. In the real estate market, it can often be heard that developers and investors are talking about a recession, but I don't see a reversal of the cycle, only the existing model has come to an end. Projects are created two years before the ‘first shovel’ takes to the ground, so with inflation and current prices, it's necessary to exchange data as well as possible. Inflation can end in either recession or monetary restriction and economic slowdown,'' Tica said.

He added that in a situation when the country is perceived as attractive, and in which, due to tourism, foreign buyers have more purchasing power to influence real estate prices, there is a need to deal with the market where the domicile population will live, not just foreigners coming to Croatia.

Builders are plagued by a range of problems, from labour shortages to galloping raw material costs, and many have underestimated the dramatic jump in residential demand since the 2008 crisis, explaining the chronic shortage of current supply. For example, once between eight and nine thousand apartments were built in Zagreb, today the number is three times lower. The founder and procurator of Kamgrad, Dragutin Kamenski, pointed out that after joining the EU, this situation with the labour force was expected, and the local population is less and less tied to such occupations.

"It's not easy, but we're solving these challenges. Bringing foreigners in and having them work on sites instead of Croatian workers requires exceptional commitment to bring them into the system, people come to you who don't have the skills, they have a language barrier, you have to solve the issue of accommodation, food… At one point, we introduced about 200 workers into the system, which is why our productivity dropped by 30 percent with an increase in other costs, which is our reality in Croatia. I'll put it like this; On December the 31st, 2016, we had no foreign workers doing this, today we have almost no Croatian workers,'' he said, illustrating the daily struggles faced by this industry.

He believes that programmes should be made so that everyone in the construction sector can prepare for things on time and plan their capacities, because, otherwise, tenders will be announced in which no one will have the conditions to apply at all.

Although the domestic brokerage market is well regulated, even better than in some other European countries, current times are demanding, according to Dubravko Ranilovic from the real estate agency Kastel-Zagreb.

“Now is the time for sellers, we have an upward cycle and inflation. Our market is small, it's mostly under external influences, although it's also shaped by local conditions such as earthquakes and tourism. Intermediaries need to be accountable for how realistic they're being in their estimates and refer clients, and not just act for short-term earnings. At the same time, the media are communicating the requested prices, so it takes six to eight months for the owner to correct those (too) high prices, and agencies often tell apartment owners what they want to hear, which accelerates the growth of that same bubble,'' warned Ranilovic.

He believes that there is too little talk about the necessity of adopting a proper housing policy, although the current model of the real estate market in Croatia is unsustainable because housing is of course a necessity. The state strengthened the construction of apartments with preferential tax treatment, which expanded to residential areas, taking away part of that space in favour of short-term rentals, and then further aggravated the situation with subsidies. On top of that, the earthquakes of 2020 revealed that the existing housing stock is very poorly maintained, building tenants often don't even consider their chimneys, facades or roofs to be a problem, and that's something that desperately needs to alter.

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

ZAGREB, 25 Oct 2021 - Some 128,000 workers aged under 35 have left the Croatian labour market in the past 13 years, so that now they account for only a third of the country's workforce, Večernji List newspaper wrote on Monday.

Under the new Labour Act, which is under preparation, workers will no longer be required to retire at 65 and will be allowed to continue working even after they meet the formal requirements for retirement, if they so wish and if there is work for them to do. Considering the present situation in the domestic labour market, many employers will turn to this age group for labour because the working age of employees has dramatically changed in the last decade and a half.

This summer the Croatian government boasted that Croatia had reached the second-highest employment rate in the last 30 years and surpassed pre-pandemic levels, which is true. However, the age structure of employees has substantially changed too, so that today only 481,000 employees are aged under 35, the newspaper said.

In 2008, the number of persons aged under 35 in the workforce was 609,000, which means that 128,000 people of the most productive working age have disappeared from the Croatian labour market in the past 13 years, which is equivalent to a city the size of Rijeka. These vacancies are increasingly being filled by older people, and considering the present trends, it can be expected that persons in their sixties and seventies will be in demand in the coming years.

The low birthrate and mass emigration are taking their toll and as a result Croatia now has 103,000 employees aged above 50 more than in 2008, namely 467,000. Over 100,000 of them will qualify for retirement in the next 10 years.  

Croatia has imported nearly 100,000 foreign workers this year to meet the labour demand and they are included in the official statistics. Their number could be even higher in the years ahead. The government has proposed in talks with the social partners that the statutory retirement age of 65 be removed, which would make it possible for people to work as long as their health and labour market conditions permit, Večernji List said.

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

October 22, 2021 - Croatians in Switzerland will be granted the same working rights as the rest of the EU/EFTA nationals from January 1, 2022. 

Switzerland will open its labor market for workers from Croatia at the beginning of 2022, and they will be equal to other citizens of EU member states, the official website of the Swiss presidency announced on Friday. 

24 Sata reported that Switzerland informed the European Union at the 24th meeting of the Switzerland-European Union Joint Committee on the Agreement on Free Movement of People, which was held on Friday by video conference due to the Covid-19 pandemic.

Switzerland has so far applied labor market protection measures for citizens of the Republic of Croatia under this Agreement (Protocol III AELE).

"At its session on October 1, the Swiss Federal Council decided to grant the status of free movement of people to the citizens of the Republic of Croatia starting from January 1, 2022," the website reads.

Should Croatian immigrant workers cross a certain threshold, Switzerland could reach for a safeguard provision and re-limit permits for workers to come from Croatia from 1 January 2023 or at the end of 2026 at the latest, the statement said.

As of December 31, 2020, 28,324 Croatian workers were staying in Switzerland, which is 6 more than in the previous year. That number is 1.9 percent of European Union or AELE citizens living in Switzerland.

Schengen Visa Info reports that Croatians were previously permitted to work in Switzerland under specific quotas for Croats wishing to live and work in Switzerland.

"Swiss-based companies interested in hiring a Croat also had to apply for a work permit and show that prior search efforts in Switzerland to fill the post have been unsuccessful. Such rules had been in place since the beginning of January 2017.

When Croatia became an EU member in 2013, the accession agreement gave the Member States the possibility of putting into use a transitional period of seven years before permitting workers from Croatia to work in their territory under the same rights as the rest of the EU countries. A similar transitional period had been applied to Romania and Bulgaria when they joined the EU.

At first, 13 countries had imposed the transitional period restrictions on Croatians, which are Austria, Belgium, Cyprus, France, Greece, Italy, Luxemburg, Malta, the Netherlands, Germany, Slovenia, Spain, and the United Kingdom," Schengen Visa Info added. 

The majority of these countries no longer have restrictions on Croatian workers. 

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

ZAGREB, Dec 12, 2020 - The COVID-19 pandemic and the consequential lockdown have led to an unprecedented rise in the number of workers absent from work and an increased number of jobs lost, according to Eurostat, while the Vecernji List daily said in its comment on Saturday that Croatian workers fared worst in the EU.

The Vecernji List daily says that the corona crisis reduced this year's income of Croatian workers by 10.6% compared to 2019.

The estimated loss for median employment income at EU level is -5.2% in 2020 compared with 2019, says Eurostat.

Considering the estimated loss for median employment income, apart from workers in Croatia, also workers in Greece, France and Cyprus were adversely affected. Thus, the loss for median employment income in their countries was above 7%.

The smallest loss was in Latvia, Hungary, Denmark and Sweden.

The loss stems from COVID-related absence from work or fewer working hours, says the Zagreb-based daily newspaper.

Broken down by sector, the hospitality and tourism sector experienced a 16.8% loss, while the arts, entertainment and creative industries registered 10.9% loss for median employment income due to the corona crisis.

"The current COVID-19 pandemic crisis and the economic shutdown due to sanitary measures have led to an unprecedented rise in the number of workers absent from work and an increased number of jobs lost," the EU statistical office has reported.

The Eurostat notes that these conclusions are based on "the first results of a nowcasting exercise focused on the estimation of employment income losses along the distribution. All figures provided are part of the experimental statistics produced by Eurostat in the frame of advanced estimates on income inequality and poverty indicators."

"The impact of the crisis is very unequally spread between Member States and is particularly strong for the most vulnerable sub-groups of the working population, with low wage earners having losses 3 to 6 times larger than high wage earners in half of the EU Member States," says Eurostat.

Croatia among members that contribute most to mitigate income loss 

National governments have put in place or activated short-term work schemes to address the COVID-19 economic challenges, in particular, policies to preserve jobs (wage compensation schemes). These contributed to mitigate the income loss in all EU countries with the overall income loss reduced by half, says Eurostat.

 According to Eurostat, Croatia, France, Austria, Slovakia and the Netherlands are member states in which their respective governments have done the most to mitigate the income loss of employees.

The Vecernji List comments that the loss in Croatian could not be completely offset since state schemes and grants did not fully covered the original income and compensatory measures did not reach those who were left out of work.