March the 9th, 2022 - Croatian GDP growth in the fourth quarter of last year is more than impressive, placing the country among the European Union (EU) member states with the strongest such growth of all.

As Poslovni Dnevnik writes, the Republic of Croatia is among the EU countries with the highest annual GDP growth rate in the fourth quarter of 2021, ranking behind Ireland and Malta and soaring well above the European average, new Eurostat estimates revealed this week.

The EU's seasonally adjusted gross domestic product (GDP) rose 0.4 percent in the fourth quarter of 2021 compared to the previous three months, when it increased 2.2 percent, Eurostat confirmed in its February estimate.

The Eurozone's GDP grew 0.3 percent when compared to the third quarter, when it rose 2.3 percent.

Compared to the same period a year earlier, the seasonally adjusted GDP of the EU as a bloc and the Eurozone increased by 4.8 and 4.6 percent respectively. It rose 4.1 percent in the EU and 3.9 percent in the Eurozone in the previous quarter.

Activity in both the EU and the Eurozone exceeded pre-pandemic levels from back at the end of 2019, by 0.6 and 0.2 percent, respectively, Eurostat determined on the basis of seasonally adjusted data. Throughout 2021, activity in both areas rose 5.3 percent, 0.1 percentage point stronger than Eurostat estimated back in mid-February.

Neighbouring Slovenia is at the helm...

At the annual level, all EU countries form which Eurostat obtained data recorded GDP growth in the fourth quarter of 2021, and the strongest was in neighbouring Slovenia, where it amounted to 10.5 percent.

The Slovenes are followed by Malta and Ireland with a 10 percent increase in activity, and Croatian GDP growth also places it in this group, where it grew by 9.9 percent, after a 15.3 percent jump in the period from July to September. The weakest growth among the countries with Eurostat data was recorded by Slovakia, with 1.2 percent, and Germany is close with a growth rate of a mere 1.8 percent.

Among the countries whose data were available to Eurostat, GDP in Slovenia grew the most on a quarterly basis in the fourth quarter of last year, by 5.3 percent, followed by Malta with 2.3 percent growth and Spain and Hungary, where GDP grew by two percent in both countries.

A decline in activity was recorded in Ireland, by 5.4 percent, in Austria, by 1.5 percent. The same also fell slightly in Germany, by 0.3 percent, and here in Croatia, Latvia and Romania, that fall stood at 0.1 percent. In the third quarter of last year, Croatian GDP growth stood at 1.4 percent on a quarterly basis.

Decreased employment

The number of employees in the EU and the Eurozone increased by 0.5 percent in the last three months of last year compared to the summer quarter, when it increased by 0.9 and one percent, respectively. Compared to the end of 2020, it increased by 2.1 percent in the EU and by 2.2 percent in the Eurozone. Between July and September, it rose 2.1 percent in both areas.

Recovery in Croatia...

Employment in Hungary, Denmark, Malta and Spain accelerated the most on a quarterly basis, ranging from 1.2 to 1.0 percent. Here in Croatia, the number of employees increased by 0.6 percent in the fourth quarter of last year compared to the previous quarter, when it fell by 0.1 percent. On an annual basis, the number of employees in Ireland increased by the most, by 8.4 percent.

When it comes to the growth in the number of employees at the end of last year by 3.6 percent compared to the same period back in 2020, Croatia is equal to Greece, Luxembourg and Malta. In the third quarter, the number of employees in Croatia increased by 1.7 percent on an annual basis. Only Romania saw a 9.1 percent drop in registered employee numbers.

For more, check out our lifestyle section.

March the 1st, 2022 - European Union (EU) funds are up for grabs by Croatian technology companies in the current programming period of the bloc for the period between 2021 and 2027.

As Poslovni Dnevnik/Tajana Striga writes, the current programming period of the European Union, planned for the period from 2021 to 2027, is the most generous so far and makes over 25 billion euros available to the Republic of Croatia. By comparison, Croatia's annual gross domestic product was just over 55 billion euros last year. The size of the funds available is encouraging, but it still isn't enough to declare success.

Only the efficient and market development-oriented distribution of those funds can lay a sound foundation for the growth and development of the Croatian economy in the long run. The first step in this is to provide clear, accurate and above all adequate information to potential applicants so that they can identify tenders of interest as soon as possible and start preparing for them.

Among the first tenders announced for this year is the "Commercialisation of Innovation", which is planned for the first quarter of the year. The competition is aimed at small and medium-sized enterprises with mature innovation projects that are close to entering the market (TRL level 7 or higher). TRL (or Level of technological readiness) is a measurement system in which each level is characterised by a stage in the development of technology. There are 9 levels of technological readiness, and in order for a given project to be considered level 7 and eligible for funding under this tender, it's necessary to have a prototype whose performance has been tested out in an operational environment at the pre-commercial level.

In addition to the above, a clear plan for the production and commercialisation of products (TRL 8 and 9) is needed. In order for a product or service to be considered an innovation in the context of this tender, its functionalities when it comes to terms of application and characteristics must differ significantly from existing market solutions. In addition to the innovativeness of the project, the probability of commercial success will also be taken into account.

Although the details of the tender are still unknown, we've since learned from the National Recovery and Resilience Plan that the total budget for this tender stands at a massive 380 million kuna. The investment will be supported by at least 95 small and medium-sized enterprises during one public call/invitation and the amount of financing per project ranges from 760,000 kuna to a maximum of 5.32 million kuna.

Additional points will be achieved by those proposals that contribute to the green transition by reducing greenhouse gas emissions, increasing energy efficiency and stimulating the circular economy, offering blossoming Croatian technology companies a fighting chance. While the contribution to the green transition isn't explicitly prescribed by the tender, the project must meet the principle of "no significant harm", meaning that it must not have a negative impact on the six environmental objectives set within the EU Taxonomy Regulation.

Environmental objectives include climate change mitigation and adaptation, the sustainable use and protection of waters and marinas, pollution prevention and control, the transition to a circular economy, and the protection and restoration of biodiversity and ecosystems. This form of funding can be used to adapt a developed product or service and prepare for the launch of a product or service, which is perfect for many quickly developing Croatian technology companies. For example, eligible activities to adapt a developed product include the additional testing and incorporation of those test results into a final product, consulting services, capacity building, feasibility study audits, product design, and the protection of intellectual property rights.

Eligible activities for product launch preparation include the preparation or revision of a business plan and/or marketing plan, market research and testing, product testing with potential customers, production preparation and zero-batch investment, as well as operational marketing activities.

In addition to the aforementioned "Commercialisation of Innovation", the first quarter is expected to have yet another tender announced "Grants for start-ups" intended for innovative small and medium enterprises in high-tech sectors and knowledge-based sectors for TRL projects level 5-8, or those projects maturity beyond the concept-proof phase, but not yet ready for the market.

Companies that have been present on the market for a maximum of five years, with a somewhat defined team, and projects with a credible path to commercialisation can apply. The grant serves to support product development and increase existing production capacities, including upgrading, designing, verifying performance, market validation, testing, pilot line development, intellectual property protection and external services aimed at developing innovative ideas (product, process, service, etc) as well as training on the

Funded activities may also include part of the cost of accessing global business networks/clusters, which also involves the adopting of new marketing tools and accessing new markets. Eligible costs include the purchase of equipment, materials, staff recruitment and outsourcing. The total budget for this tender is planned in the amount of 141.7 million kuna, and the investment will support up to 141 small and medium-sized Croatian companies with individual grants of up to 1 million kuna.

In general, the focus of policies and measures of this EU programming period is the pursuit of systematic integration of sustainable development and green and digital transformation of the economy, which is something most Croatian technology companies also place a focus on, be it directly or otherwise. Thus, in the second quarter of the year we can expect the tender called "Digitisation Vouchers" with a maximum grant of 150,000 kuna, as well as the tender called "Digitisation Grants" with a maximum grant of 750,000 kuna on offer.

During the year, the announcement of the tender "Support to companies for the transition to energy and resource efficient economy" with a maximum amount of support of 7.5 million kuna is expected, and eligible applicants will be micro, small and medium-sized enterprises, and investments will be directed to energy-intensive industries.

In addition to all of the above, in the second half of the year, we can expect the announcement of the tender "Strengthening sustainability and encouraging the green and digital transition of enterprises in the tourism sector." Eligible applicants for this tender will be micro, small, medium and large companies engaged in the field of tourism and hospitality, and the primary focus will be on investing in less developed tourist areas of Croatia.

In the potential lack of pre-tender public consultation, the timeframe for preparing extensive draft documentation is relatively short. The very serious preparation of projects that maximises the probability of success in the tender takes months and requires a significant amount of human resources. At the same time, despite the significant increase in the amount of available funds, the level of competition among interested applicants has increased, as more and more companies are turning to this form of financing.

On top of that, significant interest in grants can be expected from young and innovative companies, such as Croatian technology companies, given the fact that traditional banking financing is often not a realistic option for them, while alternative sources of financing in Croatia are still at negligible levels.

For more, check out our dedicated business section.

February the 24th, 2022 - Croatian cyber-soldiers are being used to help Ukraine out in its hour of need as Russia launches its invasion of that Eastern European country.

As Poslovni Dnevnik writes, Croatian cyber-soldiers who are being sent to the aid of Ukraine during these tremendously difficult times are part of the CRRT, a team for rapid action in cyberspace, which was established by Lithuania, Estonia, Croatia, the Netherlands, Poland and Romania as one of the European Union's ultra modern and enhanced defense cooperation projects.

The Republic of Croatia is among a group of six European Union (EU) member states that are helping Ukraine by mobilising its military cyber forces for rapid action. It is one in a series of reactions from European Union allies to the Russian military's incursion into another part of territory that Russia is formally but illegally trying to seize from Ukraine - the self-proclaimed separatist republics of Donetsk and Luhansk, which Russia recognised as independent states very recently.

According to Lithuanian defense sources, the CRRT, including the aforementioned Croatian cyber-soldiers has been activated to help Ukrainian institutions cope with growing cyber threats as Russia begins its invasion of Ukraine which has been strongly condemned across the board. This is the first time that this new European defense project has been activated in real circumstances. In a request for help, the Ukrainian Government said it expects CRRT members to be physically deployed in the City of Kiev in order to help defend key Ukrainian Government computer networks and systems.

So far, there has been no confirmation that the CRRT member states have agreed to physically send their military cyber experts, or that Croatia has agreed to send its people, be they Croatian cyber-soldiers or others, to Kiev, as reported by Vecernji list.

For more on Croatian politics, foreign policy and diplomacy, make sure to check out our dedicated politics section.

February the 22nd, 2022 - As Croatia's accession to the Eurozone approaches, special motif kuna in gold and silver will be issued by the Croatian National Bank (CNB/HNB) showcasing the Dalmatian, a much loved dog breed which originates from Croatia's gorgeous Dalmatian coast.

It won't be long before the Croatian national currency, the kuna, is rendered invalid and sent to the history books as the country enters the Eurozone, a move it had to promise to make in order to gain EU accession. The only countries which didn't have the make that promise and enjoyed opt-outs were Denmark and the United Kingdom. 

As Poslovni Dnevnik writes, the author of the conceptual and artistic design of these special motif kuna gold and silver coins is Nikola Vudrag, and the coin which celebrates the clownish and much loved Dalmatian dog breed was made in the Croatian Mint.

The Croatian National Bank will issue a gold special motif 1000 kuna coin in a quantity of not more than 101 pieces, another gold special motif 250 kuna coin in a quantity of not more than 2,000 pieces and a silver 20 kuna coin in a quantity of not more than 500 pieces. Back in November 2021, the CNB issued two gold coins and a silver coin with the same special motif.

The sale of these gold and silver coins will be performed by the Croatian Mint, and the initial selling price is expected to be around 16,000.00 kuna without VAT for the first 1000 kuna coin, and about 3,800.00 kuna without VAT for a gold 250 kuna coin.

The initial selling price for the silver 20 kuna coin will be around 1,592.00 kuna without VAT. The final selling price of gold and silver special motif kuna coins will depend on the movement of gold and silver prices on the open market as time goes on.

Those interested can purchase these commemorative coins as of now, and more about ordering and purchasing them can be found on this website.

For more, check out Made in Croatia.

February the 20th, 2022 - The European Commission (EC) very recently granted the Republic of Croatia an EU fund use delay. The cash in question is from what's known as the Solidarity Fund.

While 2020 was a horrendous year for the vast majority of the globe, if not all of it, thanks to the emergence of the novel coronavirus, SARS-CoV-2 and its journey around the world in the form of a pandemic, Croatia also suffered two devastating earthquakes. One struck the City of Zagreb in March, and another struck Sisak-Moslavina County in Central Croatia at the very end of December that year. Known as the Petrinja earthquake, this shattering natural disaster is still fresh in people's minds and the reconstruction process is moving at a classical snail's pace.

The situation here in the very heart of Zagreb isn't miles better, but when it is compared to the situation that has been left to fester in Petrinja, Glina and other nearby locations, it's difficult to fathom how December 2020 was now so long ago. 

We recently wrote about PM Andrej Plenkovic having successfully secured an EU fund use delay from the European Commission which would allow those funds from the aforementioned Solidarity Fund to be utlised until June 2023. Plenkovic has since been asked how and why that approval was given from the EC.

As Poslovni Dnevnik writes, Prime Minister Andrej Plenkovic recently commented on current events and his stay in the Belgian capital of Brussels following probes from journalists. He was also asked if Ursula von der Leyen had asked him to explain why the post-earthquake reconstruction following 2020's natural disasters in Croatia is going so painfully slowly.

“There are two fundamental reasons for that, you have progressive damage and you've also got a global pandemic. These are extraordinary circumstances, they're acts of God. Other countries had the use of the same Solidarity Fund, but not in such conditions,'' explained Plenkovic.

Asked whether or not things being classed as an act of God was the only reason why the Republic of Croatia had successfully received an EU fund use delay, Plenkovic said that it was.

"I don't know another capital city that was hit by such a strong earthquake in these circumstances," Plenkovic briefly commented.

For more, check out our dedicated politics section.

February the 19th, 2022 - Prime Minister Andrej Plenkovic has managed to secure a Croatian EU fund absorption extension until the summer of 2023 owing to the unusual circumstances surrounding the natural disasters which struck Central Croatia back in 2020 in the form of devastating earthquakes.

As Poslovni Dnevnik writes, the European Commission (EC) has stated that when it comes to Croatian EU fund absorption, more precisely money from the Solidarity Fund, it will be sympathetic towards the circumstances surrounding it.

Those of us living in the City of Zagreb and who remember the earthquake happening and the sheer amount of time it took for any sort of real clean up to begin will have a particular understanding of the circumstances that have caused the Prime Minister to request an extension. Many obstacles, mainly in the form of paperwork and a slow administration which wasn't helped by the pandemic continue to exist on the road to post-earthquake recovery, particularly in Sisak-Moslavina County following December 2020's horrific earthquake.

"Glad to meet with Andrej Plenkovic today. We discussed reconstruction work supported by the European Union after the Zagreb and Petrinja earthquakes. Given the exceptional circumstances, the Commission will look favourably at the request to align deadlines for absorption of EUSF funds to June 2023,'' she wrote on her Twitter.

Prime Minister Andrej Plenkovic also took to Twitter and spoke about the meeting.

"Following the arguments presented by Ursula von der Leyen, the European Commission will approve the use of EUSF funds to repair the damage from the Zagreb earthquake until June 2023, which is in line with the period for the use of the Banovina earthquake allocation (of funds) due to progressive damage," he wrote in his own tweet.

For more on Croatia and the EU, as well as Croatian EU fund use across various sectors, make sure to check out our dedicated politics section.

February the 15th, 2022 - Croatia certainly loves to sit back and count the overnight stays during the tourist season, but as sustainable tourism becomes the direction in which more and more countries are heading in, how much can other countries look towards the Croatian eVisitor system for inspiration?

As Poslovni Dnevnik/Marija Crnjak writes, in the near future, EU member states will no longer measure their tourism results through arrivals and overnight stays being registered, but with the help of digital technologies and artificial intelligence, unique, standardised tools will be developed to monitor EU-wide social, environmental and economic impacts.

So far, the deadlines for the introduction of these new metrics haven't been defined, which will include changes in legislation and a number of new infrastructure solutions, but national tourist boards will play a key role in this.

The experience of the Croatian eVisitor system could have a significant impact on the process, as has since been learned. The plan for the introduction of new statistical methods for monitoring the results of tourism, with the introduction of sustainable solutions and digitisation is the most important topic of the just published report of the European Commission (EC).

It is a document that confirms the agreement of EU tourist boards to implement new tourism metrics and to give priority to both residents and tourists when it comes to tourism services, instead of harmfully imposing the number of nights as the only criterion for growth and development.

The report was created together with the destinations of the European Union and industrial players. Some analysts of global trends suggest it could be a turning point for the future of EU tourism, while others are skeptical about its future implementation, which has not yet been defined.

"We believe that European national tourism organisations should be the European Commission's main partner and play a major role in implementing these solutions in the coming years. While most have well-established tools to provide a wide range of key performance indicators related to the quantitative economic aspects of tourism, most still struggle with the lack of a broader picture of the impact of tourism,'' said Luis Araujo, President of the European Travel Commission.

He is convinced that expanding metrics and coordination at European Union level will significantly facilitate the sustainable transition of destinations. The Croatian National Tourist Board (CNTB) will also actively participate in the process.

"This is a document created in the context of pandemic-induced disorders and which, among other things, emphasises the need for more sustainable tourism and tourism that is more resilient to crises. Green and digital transitions stand out as key, especially in areas such as sustainable competitiveness, legislation and policy, technical solutions and infrastructure. Great emphasis has also been placed on the collection of other types of data, such as tourist traffic, as well as environmental, economic and social indicators.

In this regard, the ETC and national tourism organisations are already working to establish a single set of indicators that could monitor and compare European Union destinations in terms of the impact of tourism and tourism sustainability,'' the CNTB revealed.

They also added that the CNTB can contribute to the collection and processing of this data with existing solutions, such as the world's unique technological solution for monitoring and analysing tourist traffic, the Croatian eVisitor system, but also by developing new smart digital solutions and services and improving knowledge and skills, as well as the further development and management of tourist destinations and products.

They also added that various national documents that are being drafted, the Strategy for the Development of Sustainable Tourism until 2030 and the National Plan for the Development of Sustainable Tourism from 2021 to 2027 should also contribute to the process.

For more, check out our travel section.

February the 14th, 2022 - Could the Croatian property market be at risk of collapse? It seems so, as with a handful of other countries to whom the European Union (EU) has sent out warnings.

As Poslovni Dnevnik writes, the aforementioned EU warnings were sent to Croatia, Hungary, Liechtenstein and Slovakia. In addition, recommendations were sent to Germany and Austria after they both failed to meet the requirements of the ESRB from back in 2016 and 2019, as reported by Index.

“Financial stability risks related to residential the property market continued to grow in the context of macroeconomic risks associated with the coronavirus pandemic and the continued strong dynamics of the property market, housing loans and household indebtedness. The key vulnerabilities highlighted in the ESRB's assessment are medium-term in nature and relate to the rapid rise in property prices and the possible overvaluation of residential real estate, the level and dynamics of household indebtedness, the growth of housing loans and signs of easing lending standards,'' it was said,

A special warning for Croatia in regard to the Croatian property market notes that "after a long period of correction and subdued growth, real property price growth accelerated to 8% year on year back in early 2019."

"According to the estimates of the Croatian National Bank (CNB/HNB), property prices are increasingly deviating from their long-term basis. This is influenced by a number of supply and demand factors. First of all, in some regions, a significant part of the demand for housing comes from foreigners (about 10% in total). While total transaction activity was lower after the outbreak of the coronavirus pandemic, the share of foreign buyers remained at pre-crisis levels.

Secondly, Croatia suffered two earthquakes back in 2020, both of them hitting the Zagreb region and causing significant property damage. These events revealed some shortcomings in the quality of standards of the housing built before the 1960s. As a result, fewer apartments were advertised for sale, potentially leading to higher overall price levels. At the same time, the gradual reconstruction of damaged housing, the cost of which is estimated at 23% of gross domestic product (GDP) in 2020, could increase house prices through greater construction activity.

Finally, back in 2020, the Croatian Government extended the housing subsidy scheme, which has now been in force since the end of 2017, and provides higher subsidy rates in less developed regions for the purchase of the first real estate,'' the warning about the Croatian property market reads.

Although only about half of housing transactions are financed through loans, according to the ESRB, real growth in mortgage lending accelerated back during the second half of 2019, and especially during 2020. It averaged approximately 7.5% between January and August 2021.

“To some extent, this dynamic has been driven by the state housing subsidy system, with an increase in the share of subsidised loans from 18% in 2019 to 35% in 2020. Many new loans have been state-subsidised loans. In addition, in the first half of 2021, in the case of some new loans, the maturity exceeded 30 years. In June 2021, the share of mortgage loans represented about 12% of the real estate market in Croatia,'' it has been stated.

“At the same time, household indebtedness in Croatia is relatively low compared to other EU countries. During 2020, loans to households increased in real terms, but at lower rates than loans to apartments. This was the result of a decline in general consumer confidence, while government subsidy schemes for housing maintained a high level of demand for real estate,'' it added.

The EU has since called for the adoption of measures that would prevent "an increase in household indebtedness, ie state subsidies for housing loans."

Finally, the ESRB states that there is "potential for serious negative consequences for the economy" in Croatia in regard to the Croatian property market and its risks.

"The ESRB believes that the key problems are the rapid growth of retail loans and the overestimation of real estate prices due to the lack of explicit measures that could mitigate the risks associated with residential real estate and the real estate sector," as reported by Index.

For more, check out our lifestyle section.

ZAGREB, 14 Feb 2022 - The highest share of Croatian citizens think that the European Parliament's (EP) priority is to defend freedom of speech and freedom of movement, while most respondents in the European Union (EU) think that the EP's top priority should be to defend democracy, a Eurobarometer survey released last Tuesday shows.

In Croatia, the highest number of respondents think that the EP's priority should be to defend freedom of speech (28%) and freedom of movement (28%), while 25% see the protection of human rights as a priority and 22% see democracy as a value the EP should primarily defend.

At the level of the EU, democracy is seen as the most important value (32%), followed by freedom of speech and thought (27%), and the protection of human rights (25%).

Freedom of movement is the most important value for 16% of respondents in the EU, compared to 28% in Croatia.

In the survey, carried out on behalf of the EP, respondents could choose four topics which they think should be a priority to the EP.

At the EU level, the top priority is public health (42%), followed by the fight against poverty and social exclusion (40%) and action against climate change (39%), which is significantly different from the results in Croatia.

Croatian citizens see the fight against poverty as the top priority (52%), followed by support to the economy and the creation of new jobs (48%), public health (34%), and action against climate change (29%).

As many as 83% of Croatian citizens think that Croatia has benefited from being a member of the EU, which is an increase of 5% compared to the previous Eurobarometer survey. In the entire EU, fewer citizens see the benefits of EU membership, with only 72% support.

52% of Croatian respondents see membership of the EU as "a good thing", 9% see it as "a bad thing", while 39% see it as neither a good nor a bad thing.

Most EU citizens (63%) are optimistic about the future of the EU.

According to the survey, citizens' support for the EU, and especially for the EP, significantly increased during the COVID-19 pandemic. In Croatia and in the EU, 58% of respondents would like the EP to play a more important role.

45% of respondents have a neutral opinion of the EP, and only 17% have a negative opinion. This positive attitude towards the EP is also visible in the latest Standard Barometer 95 of the European Commission, according to which citizens trust the EP the most out of all EU institutions.

Since 2015, the percentage of respondents with a positive opinion of the European Parliament has increased by 12%, to 36%.

In Croatia, 43% of respondents have a positive opinion of the EP, 48% a neutral and only 9% a negative opinion.

The autumn Eurobarometer survey of the EP was conducted from 2 November to 3 December 2021 in all 27 EU member states.

For more, check out our politics section.

February the 12th, 2022 - Could the Croatian minimum wage finally be forced into an increase under increasing pressure from the European Union in Brussels? Things might have to dramatically alter by June with yet another EU directive.

As Poslovni Dnevnik/Ana Blaskovic writes, a new directive on an adequate minimum wage across the European Union could come out of Brussels' ''kitchen'' by June and force the Croatian minumum wage upwards.

Although its pillar is the introduction of the institute of the minimum wage, which, unlike here in Croatia, is not yet available to all EU member states, the domestic labour market could be shaken by the additional demand it will bring, which is that the member state must actively strive to cover at least 70 to 80 percent of its workers with collective agreements.

The directive seeks to strengthen the European Union's idea of ​​social security and it has strong political support, as could be heard recently coming from the Belgian capital.

The topic is on the table of the convocation of the European Parliament in the continuation of this mandate and is being additionally pushed by the current President of France. On the eve of the April elections, President Emmanuel Macron's trump card is an ideal opportunity to strengthen France's leadership position in the European Union after the departure of the very well known and long-standing German Chancellor Angela Merkel.

Although here in Croatia there are regular spears about the amount of the minimum wage that the Government adopts by decree (it isn't enough for workers and is always a question of competitiveness for employers), Croatia is among the 21 member states that already know and are quite well acquainted with this institute.

The exceptions are Denmark, Italy, Cyprus, Austria, Finland and Sweden. By raising the Croatian minimum wage to 3,750 kuna in 2022, Croatia has approached the goal set by the new EU directive, which is that the minimum wage must be 60 percent of the gross median and 50 percent of the average gross wage.

Therefore, the directive does not exclude the instrument of minimum wages, but provides a clearer calculation of how to calculate it and provides for a mechanism for testing the adequacy of its national level.

"We hoped that the directive would be passed during the Portuguese presidency, but some countries made a number of remarks, and Croatia doubted whether the goal of at least 70 percent of workers covered by collective agreements would be too difficult to achieve," said Kresimir Sever, the president of the Independent Croatian Trade Unions.

It's worth noting that the proposal of the European Commission is that it should be 70 percent of the workers covered by collective agreements, while the MEPs are proposing 80 percent in their amendments. "The aim is to ensure that every worker in the EU is paid for their work so that they can live with dignity, and nothing less than that. Croatia is close to the aforementioned minimum wage target, but hasn't yet reached it in gross terms. The problem in Croatia is low wages, so naturally the Croatian minimum wage is also low,'' the trade unionist added.

The trade unions themselves have a hard time estimating how many workers are actually covered by collective agreements in this country. Sever estimates that about 50 percent of employees in Croatia have a collective agreement in addition to an employment contract, but with the caveat that there is no data on "home" contracts.

In this context, it is important to note that the European Union as a whole is moving towards strengthening the role of trade unions, not only as workers' representatives, but also as bodies that collectively negotiate with employers.

It should be noted that the directive isn't binding, but it does work to further encourage member states to achieve a high percentage of coverage of their workers by collective agreements. The setting of benchmarks and modalities is still being negotiated, as are the timeframes within which each member state should achieve these goals.

Although in practice collective agreements are often perceived as clashes between employers and workers, their prevalence carries wide social consequences.

"The wide application of collective agreements is a way of coordinating wage policies that can ensure greater transparency and certainty of workers' incomes at the national or sectoral level, but also the stability of the workforce and the control of labour costs for employers, without harsh, generally universal legal interventions," said a senior research associate at the Institute for Social Research, Teo Matkovic.

He also mentioned that the legal instrument of the Croatian mininum wage has existed now for just over a decade, and it has been growing significantly for several years since. It is the opposite of collective agreements, the use of which has decreased significantly in the last 20 years or so.

"In this country, the coverage of collective agreements is modest, and the content is thin, especially outside of the public sector, so this coordination mechanism will need to be worked on if the adequacy of income in Croatia is to be relied on," explained Matkovic. He believes that a significantly larger area for collective bargaining, provided by the directive, "would strengthen the position of work across the EU, and in Croatia is likely to reduce emigration and encourage investment in skills and productivity."

For employers, the cost of labour is a calculation of competitiveness, especially emphasised in the circumstances of accelerating inflation and rising costs of raw materials. "Any increase in the Croatian minimum wage has significant consequences for employers, especially in the situation we're now witnessing when there's inflation, the rising cost of living and rising energy prices across the market.

If we take into account the consequences of the ongoing coronavirus crisis, it's clear that employers can hardly bear the new increase in costs, without these costs being accompanied by a reduction in the workload,'' they said from the Croatian Chamber of Commerce (HGK), also pointed out that they're aware of the need to increase the living standards of citizens, "but it is necessary to apply a rational approach that will not lead to new layoffs."

For more, check out our politics section.