ZAGREB, Sept 15, 2020  - Croatia and Malta are the two EU countries that saw the weakest growth of hourly labor costs in the second quarter of this year, many times lower than the EU average, which was supported by a strong increase in wage costs, shows a report from the EU's statistical office Eurostat.

In the EU27, working day-adjusted hourly labor costs grew by 4.1% in Q2 compared to the same period of last year. In Q4 2019, they grew by 3.9%.

In the euro area, hourly labor costs in Q2 grew by 4.2%, after a 3.7% increase in the previous three months.

Wage costs in both the EU and the euro area grew more strongly than in Q1 despite measures introduced to contain the coronavirus. In the EU they grew by 5.3%, after a 4.1% increase in Q1, while in the euro area they rose by 5.2%, after a 3.9% increase in Q1.

In both the EU and the euro area, the increase in hourly wage costs indicates that the decrease in the number of hours worked, due to the COVID-19 crisis, was not fully compensated by a matching decrease in wages, says Eurostat.

This increase in hourly wage costs was partly compensated by the moderate increase in the non-wage component, due to tax reliefs and subsidies introduced by EU governments to support enterprises affected by the crisis.

Hourly labor costs in the EU grew the most in the services sector, by 4.3%, followed by industry and construction, where they grew by 3.9% and 2.3% respectively.

In the euro area, the services sector saw the strongest increase in total labor costs, of 4.4%, followed by industry, with an increase of 3.8%, and construction, with a 2.8% increase.

Labor costs grow least in Malta, Croatia

Of the EU countries for which data was available, Romania saw the strongest increase in hourly labor costs in Q2, of 16.1%, almost twice as high as in Q1.

Croatia and Malta saw the weakest growth in hourly labor costs, of 0.7% and 0.8% respectively. In Q1 hourly labor costs in Croatia grew by 0.6%.

Wage costs in Croatia grew by 1.5% n the period from April to June, almost the same rate as in Q1. The cost of contributions dropped by 3.9%, after a 4.2% decline in Q1.

The largest drop in hourly labor costs in the EU in Q2 was reported by Cyprus, of 8.6%, followed by Ireland, with a drop of 3.3%.

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ZAGREB, Sept 11, 2020 - German President Frank-Walter Steinmeier supports the policy of reconciliation in Croatia pursued by Croatian President Zoran Milanovic, it was said after their meeting in Berlin on Friday. 

In his first months as head of state, President Milanovic took important steps in the process of reconciliation with the Serbs and the Serb minority in Croatia, and we are grateful to him for that, Steinmeier said.

The German president said he supported his Croatian counterpart on this brave path. This path launched by Croatia will hopefully be an inspiration for others to build bridges, he added.

The Croatian president began his two-day official visit on Thursday by meeting with representatives of Croatian associations in Germany.

Milanovic thanked his host for inviting him and for supporting him on the path of reconciliation in the region. 

I have been pursuing the policy of reconciliation for twenty years and I believe for the first time that we have interlocutors for such policy in Croatia, Milanovic said, adding that he would continue this policy in the future.

Successful Croatian presidency of the EU

The two presidents also discussed the strengthening and functioning of the European Union in the present circumstances of the coronavirus crisis.

With the aid package adopted in June, the EU demonstrated solidarity that is not even remotely possible elsewhere in the world, Steinmeier said.

He praised Croatia for a job well done during its presidency of the Council of the European Union in the first half of the year.

Strengthening the EU is the most important task and Croatia managed to do that with its presidency under very difficult circumstances. Now it is up to us to continue this work until the end of this year, the German president said.

One of the topics discussed was the fight against the coronavirus pandemic, and the Croatian president expressed hope that the epidemiological situation in Croatia after the summer tourist season would calm down.

I hope the Croatian counties included on the German red list will disappear from that list, Milanovic said.

Excellent bilateral relations

Both presidents said that relations between Germany and Croatia were excellent.

Germany's policy towards Croatia has always been predictable in a positive sense, meaning reliable, Milanovic said.

The two presidents also highlighted efforts in providing humanitarian aid to migrants who have been left without a roof over their heads following a fire in the Moria refugee camp in Greece.

I have heard that the Croatian government has decided to take in a certain number of displaced persons, which I consider a nice and humane gesture and I support it, Milanovic said.

Steinmeier denied claims that the EU's common policy on migrants had collapsed.

During its EU presidency, Germany will work with the European Commission on promoting the common refugee policy, he said.

Milanovic was the first statesman to be received with military honors after a months-long pause caused by the coronavirus pandemic.

During the day, the Croatian president is scheduled to meet with Wolfgang Schauble, Speaker of the Bundestag. He will end his two-day visit by meeting with Mario Ohoven, head of the German association of small and medium-sized enterprises (BVMW).

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ZAGREB, Sept 10, 2020  - Differences between expected VAT revenues and revenues actually collected in EU member states are still high despite a slight improvement, and Croatia is among the most efficient countries in VAT collection, the European Commission said on Thursday.

The Commission released data for 2018 showing that the member states lost an estimated €140 billion in expected Value-Added Tax (VAT) revenues. 

There were great differences among the member states. The highest national VAT gap was recorded by Romania, with 33.8% of VAT revenues going missing in 2018, followed by Greece (30.1%) and Lithuania (25.9%). The smallest gaps were in Sweden (0.7%), Croatia (3.5%), and Finland (3.6%). In absolute terms, the highest VAT gaps were recorded in Italy (€35.4 billion), the United Kingdom (€23.5 billion), and Germany (€22 billion).

In 2018, Croatia collected €252 million less VAT revenue than expected.

"Although the overall VAT Gap, which is the difference between expected VAT revenues in EU member states and those actually collected, is still extremely high, it has slightly improved in recent years. However, figures for 2020 forecast a reversal of this trend, with a potential loss of €164 billion in 2020 due to the impact of the coronavirus pandemic on the economy," the Commission said.

"The considerable 2018 VAT Gap, coupled with forecasts for 2020 -- which will be impacted by the coronavirus pandemic -- highlights once again the need for a comprehensive reform of EU VAT rules to put an end to VAT fraud, and for increased cooperation between the Member States to promote VAT collection while protecting legitimate businesses," it added.

"Today's figures show that efforts to shut down opportunities for VAT fraud and evasion have been making gradual progress -- but also that much more work is needed. The coronavirus pandemic has drastically altered the EU's economic outlook and is set to deal a serious blow to VAT revenues too. At this time more than ever, EU countries simply cannot afford such losses. That's why we need to do more to step up the fight against VAT fraud with renewed determination, while also simplifying procedures and improving cross-border cooperation," said Paolo Gentiloni, Commissioner for Economy.

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ZAGREB, Sept 8, 2020  - Croatia is among the EU countries with the sharpest GDP declines in Q2 of this year compared with the previous quarter, according to Eurostat's estimate released on Tuesday. 

In the second quarter of 2020, compared with the previous quarter, seasonally adjusted GDP decreased by 11.4% in the EU and by 11.8% in the euro area. In the first quarter of the year, GDP had declined by 3.3% in the EU and by 3.7% in the euro area.

Compared with the second quarter of 2019, seasonally adjusted GDP fell by 13.9% in the EU and by 14.7% in the euro area, following declines of 2.7% and 3.2% respectively in the first quarter.

Spain sees by far the sharpest drop

All the EU member states recorded declines in economic activity in the second quarter, both month on month and year on year.

The sharpest quarterly decline, of 18.5%, was recorded in Spain, followed by Croatia (-14.9%), Hungary (-14.5%), Greece (-14.0%), Portugal (-13.9%) and France (-13.8%). In the first quarter of the year, Croatia observed a GDP decline of 1.3% quarter on quarter. 

Germany, the EU's strongest economy, saw its GDP shrink by 9.7%.

The lowest quarterly declines of GDP were observed in Finland (-4.5%), Lithuania (-5.5%), and Estonia (-5.6%).

Compared with the second quarter of 2019, the largest GDP declines were recorded in Spain (-22.1%), France (-18.9%), and Italy (-17.7%). The German economy contracted by 11.3%.

Croatia's GDP fell by 15.1% compared with the second quarter of last year, while in the first quarter of this year it had grown by 0.3% year on year.

The lowest annual declines were observed in Ireland (-3.7%) and Lithuania (-4.0%).  

A heavy blow to employment

The pandemic and measures put in place to contain the spread of the infection dealt a heavy blow to employment both in the EU and the euro area, resulting in the sharpest declines in the number of people employed in both zones since Eurostat started tracking data.

The number of employed persons decreased by 2.7% in the EU and by 2.9% in the euro area in the second quarter of 2020 compared with the previous quarter. In the first quarter of this year, employment had declined by 0.2% in the EU and by 0.3% in the euro area.

Compared with the second quarter of 2019, employment fell by 2.9% in the EU and by 3.1% in the euro area, after increasing by 0.4% in both zones in the first quarter.

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ZAGREB, Aug 15, 2020 - The European Commission will provide support for 23 new COVID-19 research projects in the amount of €128 million as part of the response to the coronavirus pandemic, and Croatian scientists are participating in three projects, the Jutarnji List daily reported in its August 13 issue.

A total of 347 scientific teams from 40 countries are involved in the 23 chosen projects, including 34 participants from 16 countries outside the European Union. One of the projects is SHARE COVID, a study of social, health, and economic effects of COVID-19 on persons over the age of 50, in which Croatian scientists have also been involved.

The Faculty of Business and Economics in Zagreb is a partner on the project, and the work package dedicated to the quality of health care is led by Sime Smolic. The main goal of this project is to understand the unplanned effects of pandemic and devise improved health, economic, and social policies.

"In this project specifically we are monitoring how people over the age of 50 are coping with the effect of the lockdown and how it will affect them. Later, we will be able to compare these data with the 2008 crisis research, since we surveyed the same people then, so the data are comparable," Smolic said.

The second project on which Croatian scientists are working is a completely new project, Envision. The project is about smart digital monitoring of COVID-19 patients in real-time, which facilitates decision-making in intensive care units.

The third project involving Croatia is called unCoVer, and it is being implemented in cooperation with 29 European partners, while the project leader is the Institute of Tropical Medicine.

The funding will enable scientists to help contain the pandemic and its impact by strengthening the industry's ability to produce and use already available solutions, by developing medical technology and digital tools, by having a better insight into the behavioral and socioeconomic effects of the pandemic and by studying large groups of patients across Europe, the Jutarnji List daily said.

ZAGREB, July 21, 2020 - EU leaders have agreed on the pandemic recovery plan and seven-year budget after marathon talks, Prime Minister Andrej Plenkovic announced on Twitter early on Tuesday morning.

"The meeting has ended #EUCO. We have adopted #NextGenerationEU and #EUBudget for the next seven years. We are bringing Croatia 22 billion euro as a guarantee of a quick economic recovery and further balanced development of the country," Plenkovic tweeted.

The EU summit lasted nearly five days. It resumed at 9.30 pm on Monday and lasted through the night.

On the table was a €1.074tn Multiannual Financial Framework and a €750bn recovery plan consisting of €390 billion in grants and €360 billion in loans.

ZAGREB, July 20, 2020 - EU member states are getting closer to a deal on the next seven-year budget and the coronavirus recovery plan, after three days of tough negotiations and numerous compromises, Croatian Prime Minister Andrej Plenkovic told reporters outside the government offices in Zagreb on Monday.

"After tough negotiations and numerous compromises, in my estimate, we are nevertheless slowly moving towards an agreement," Plenkovic said.

EU leaders have been unable to agree on the number of grants in the proposed plan for the economic recovery of the EU hit by the coronavirus pandemic.

According to diplomatic sources, five "frugal" countries led by the Netherlands are insisting on €350 million in grants and as much in loans. The other member states are against the amount of grants being reduced below €400 billion.

"Their initial logic was that everything should go through loans. The logic of the other 22 member states and the European Commission is that the Union exists to demonstrate solidarity as well," Plenkovic said.

The 27 member states continue negotiations in Brussels on Monday afternoon for the fourth day in a row.

ZAGREB, June 26, 2020 - Member of European Parliament Valter Flego of the Istrian Democratic Party (IDS) has said that a key point in the IDS's platform for the July 5 parliamentary election is the digitisation and efficiency of the public administration system and that Croatia is at the bottom of the EU ladder for digitisation.

"Unfortunately, according to the latest survey of economic and social digitisation for 2020, Croatia is at the very bottom in the European Union for digitised public services, whereas Pula, for example, is an absolute champion in digitisation in Croatia," Flego underlined.

Noting that Europe is offering concrete help through EU funds and that Croatia must not let that opportunity pass by, Flego stressed that Croatia has a realistic opportunity to be at the very top in this field even though it has fallen to the very bottom due to the consequences of the government's negligence and ignorance when it comes to innovations, science, and digitisation.

"The Digital Europe programme has more than €8 billion at its disposal and it is up to us to absorb as much of those funds as possible. That is why it is exceptionally important to do that together with national, regional and local government units and that is why it is exceptionally important to know who will be sitting in the Sabor, which needs to adopt a series of laws towards that goal," concluded Flego.

ZAGREB, June 24, 2020 - Those working with refugees and migrants in Bosnia and Herzegovina, close to the Croatian border, have become accustomed to seeing shocking scenes. People are frequently forced back across the border, beaten, stripped, having had their documents burned, or having had dogs set on them.

But men returning with orange crosses spray-painted on their heads or brutally beaten and smeared with food represented a new, dark, low, read an article in EUobserver.

The incidents, originally documented by local NGOs and Amnesty International, and recently reported by The Guardian and EUobserver, were confirmed by various international humanitarian organisations supporting refugees and migrants in the camps in Una-Sana Canton near the Croatian border, reads the article on the independent news portal covering the EU.

"The pictures are chilling; the lack of an EU response even more so," says the author of the article in EUobserver, stressing that impunity is the norm at the border and that reports of violence by Croatian police continue to go unchecked.

"The humiliation of people seeking safety in Europe by painting crosses on their heads is just the latest in a long list of incidents, and a symptom of a wider trend of violent pushbacks and other severe human rights violations taking place at the EU's external borders, which we also observe in Bulgaria, Hungary, and Greece.

"The failure of EU institutions to call out individual member states for their unlawful behaviour has allowed these practices to flourish and encouraged further heavy-handed deterrence tactics by some countries.

"Despite lockdowns across Europe due to the Covid-19 pandemic, pushbacks from Croatia into Bosnia and Herzegovina continued in early 2020, with NGO monitors recording over 1,600 recorded incidents of migrants being pushed back in April alone.

"Men, women, teenagers, and entire families have been assaulted, physically abused, subjected to arbitrary detention, and their belongings destroyed.

"Refugees and migrants have consistently reported how police stripped them of their clothes and shoes and forced them to walk for kilometers in bad weather back to the Bosnian border.

"These are not isolated events. The sheer number of cases and consistency of allegations point to a systematic and deliberate policy on the part of the Croatian authorities," says EUobserver.

Croatian authorities inevitably deny incidents

Simultaneously, there have been cases of hate speech and intolerance towards refugees and migrants across the region - including attempts to portray them as the main carriers of coronavirus and a threat to public health.

The Schengen border code, which sets out rules on the control of EU borders, explicitly states that border checks should be carried out with full respect for human dignity.

Yet, the European Commission's silence over the distressing events at Croatia's borders is deafening, says EUobserver.

There has been no public denunciation, no call for the Croatian government to properly investigate the evidence or serious attempt to engage in independent monitoring, EUobserver says, adding that repeated calls by the European Parliament to investigate the abuses have been met by a tepid response, weakly pointing at difficulties in verifying claims and Croatian authorities' inevitable denial of any wrongdoing.

"Where does the EU draw the line if these widespread abuses can continue with impunity?" EUobserver wonders, adding that credible reports of hundreds of incidents documenting unlawful practices and violence at the EU's external borders should prompt effective independent monitoring, transparent investigations, and accountability for blatant breaches of EU law.

"If the European Commission is seriously committed to its fundamental values, it is time that it puts words into practice and decisively condemns unlawful returns and violence at its external borders and demands that perpetrators of such illegal acts are held to account," the article concludes.

ZAGREB, June 19, 2020 - Croatian Prime Minister Andrej Plenkovic said on Friday that the billions of euros intended for Croatia in the EU's plan for recovery from the coronavirus crisis were not in question despite objections from some member-countries to the €750 billion plan.

At a virtual meeting to be held on Friday, EU leaders will discuss for the first time the Next Generation EU recovery plan and a proposal for the new seven-year budget, worth 1,850 billion euros in total.

The value of the recovery plan of €750 billion, proposed by the European Commission, is opposed by the so-called frugal four - Austria, Denmark, the Netherlands, and Sweden.

More than ten billion euros has been intended for Croatia for a period of four years, of which three-quarters are grants and one-quarter are favourable loans.

Speaking ahead of today's video-conference, Plenkovic said that the funds intended for Croatia were not at risk.

"Definitely not. I think that we can be satisfied considering that the criteria by which the EC was guided were rather comprehensive, and it is also a fact that the two most influential countries, Germany and France, have supported (EC President) Ursula von der Leyen's proposal," Plenkovic told reporters.

"I think that the final agreement will be very close to what is on the table today. I do not expect any major changes."