May the 5th, 2023 - The Croatian Employers' Association's Igor Skrgatic has stated that a new Labour Law which would allow for greater flexibility is now more necessary than before.

As Poslovni Dnevnik/Josipa Ban writes, Croatia is a country lacking in people, warned Igor Skrgatic, the president of the Croatian Employers' Association's Association of Small and Medium Enterprises, at a working lunch with Minister of Labor Marin Piletic.

Igor Skrgatic stated that this problem, which has numerous consequences, the most important of which is the lack of manpower, should be properly addressed and work needs to be done properly and diligently on policies that will lead to a functional solution. Therefore, the Croatian Government must think and act in the direction of keeping those who have decided to remain in Croatia, as well as work harder on encouraging the return of those who have left.

Is an immigration strategy coming?

Irena Weber, the chief director of the Croatian Employers' Association (HUP), told Minister Piletic that the government must raise its general level of awareness of the importance of entrepreneurship because they are the ones who create jobs, fill the state budget and create much needed added value.

The best way to retain workers is by increasing their wages, and for higher wages, Weber repeated, tax relief is needed. As is already more than well known, this will be implemented next year, and while HUP welcomes it, they are also looking for a change in other policies.

In his part of the presentation at a recently held HUP gathering, where this year the topic was the labour market, the Labour Minister was supposed to give an overview of the policies implemented by the state to improve the unenviable position in which entrepreneurs currently find themselves. From everything that the minister said during the 20-minute speech, it turns out that the ruling party doesn't actually have many concrete policies in this regard, apart from active employment policy measures.

For example, a large influx of foreign labour requires certain properly laid out immigration policies, and Croatia does not yet have such a thing. Piletic announced that the first immigration strategy, which the Ministry of Internal Affairs (MUP) is in charge of, will be adopted by the end of the year.

In the meantime, 124,000 foreign (non-EU) workers arrived in Croatia last year alone (we know this because that's how many work permits were issued), and this number is expected to reach 200,000 this year. In addition, there are more and more people arriving from more ''exotic'' countries among the foreign workers currently arriving, warned Igor Skrgatic, such as Nepalese, Pakistanis, Indians, Uzbeks... all of whom need to be properly integrated into society, and Croatia simply isn't ready for that process.

In addition, as Igor Skrgatic stated, employers would also like the new Labour Law to be looked into and amended. "Here in Croatia, there is a lot of unused man power, and according to statistics, this country is the record holder for having an inactive population. The lack of interest in taking up gainful work is part of the Croatian mentality and a consequence of rentierism, and on the other hand, a consequence of demographic trends and the general state of the labour market. In order to change that, we need to change the Labour Law and enable greater flexibility for both employers and workers,'' believes Igor Skrgatic, adding that the amendments to the Labour Law that came into force at the beginning of this year very much failed to meet employers' expectations.

Piletic stated that the plan and agreement is to start creating a new Labour Law, but that it isn't a realistic idea at least for the next year.

"Since the changes came into force at the beginning of the year and the drafting of by-laws and ordinances necessary for the implementation of a new Labour Law are yet to follow, it isn't realistic to start drafting a new law until we pass all of that,'' said Piletic.

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

April 14, 2023 - The Croatian Association of Employers presented its new forecasts for the Croatian economy, which came as a somewhat pleasant surprise following a good period.

As Poslovni writes, back in the winter, employers' associations (HUP) in Croatia expected that this year would be stagnant for the Croatian economy and that after two years of strong post-pandemic growth (cumulative about 20 percent), the GDP growth rate could be slightly negative.

However, the situation in the environment, primarily in the eurozone, has so far turned out to be more favorable than expected: a mild winter and high levels of gas storage eliminated the need for stronger rationalization of the consumption of key energy sources, the improvement of the situation with supply chains favors the recovery of the industry in the first half of the year, and fiscal expansion aimed at mitigating the consequences of the energy crisis greatly helps preserve the purchasing power of the population.

So now, in the HUP report for this year, in the basic scenario (with a 40 percent probability), they expect a growth of the Croatian economy of 1 percent, inflation calming down to 3 percent at the end of the year, and a solid 2 percent employment growth.

A few 'ifs'

Although they underline that pronounced uncertainties still mark the global environment, they are more optimistic about the potential for growth in the somewhat longer term. They calculate that it could rise to an average of 3 percent per year in the next ten years. Hrvoje Stojić, the chief economist of HUP, nevertheless mentions several important "ifs".

This forecast, he says, presupposes tax relief and the implementation of reforms in health, education, justice, and the public sector. They are essential for productivity growth and competitiveness and ultimately for the continuation of the downward trajectory of the level of public debt.

"I believe that Croatia will achieve an A credit rating in the next few years, if necessary reforms are implemented that lead to faster and simpler business, lower tax burden, less administration, and if the absorption of EU funds continues. We have all the preconditions, including stable public finances, and a decrease in public debt. and a significantly increased GDP growth potential," he said.

All this is important in the context of approaching membership in the Organization for Economic Cooperation and Development (OECD). Along with HUP Horizonti as the new format of macroeconomic forecasts of the Association of Employers for the next two years, the expectations of trends for the economies of the 20 most developed countries were presented by the Director of Economic Affairs of the OECD, Isabell Koske, who also referred to the examples of several members of the organization from the Middle and Eastern Europe, which stood out for its progress.

In this sense, she emphasized the successes of the Czech Republic and Poland, which through raising competitiveness, using EU funds, and above all by implementing reforms of the education system, made significant progress and positioned themselves as leaders in the region. So, for example, in the case of Poland, she cited a high-quality and highly educated workforce as the key to success. In 20 years, Poland has raised the share of highly educated people from 9 to more than 30 percent, he says.

Constant improvement

Among the key reforms for the advancement of Croatia, he emphasizes education, because "the labor market must have adequate and qualified personnel in order to be able to develop ideas and compete on the global market." In addition, he adds, it is equally important to enable those who have completed their education to have more accessible re-education and continuous improvement with new skills that the modern world is looking for. "Employment rates in Croatia are still lower than those in OECD countries," she reminded.

Despite the relatively optimistic forecasts of HUP, this year's expectations still reflect a strong cooling of personal consumption and a slowdown in growth, and inflation on average (in the base scenario) should remain elevated, around 6.5 percent.

Nevertheless, along with its slowdown, a gradual recovery of the real income of the population is expected in the rest of this year. The acceleration of investments on the wings of EU funds will contribute to GDP growth; according to HUP's forecasts, investments could grow by 7.5 percent this year. Finally, although a strong slowdown in the growth of merchandise exports is expected this year, HUP expects that the "niche" structure will mitigate the effects of an unfavorable environment.

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

ZAGREB, 22 July 2022 - The Croatian Employers' Association (HUP) on Friday called on the government to adopt a new aid package for the enterprise sector because of an enormous rise in energy prices.

Employers are recommending four measures - to limit the price of electricity to up to €150 per megawatt-hour for all economic operators from 1 August this year to 31 December 2023; suspend from 1 August 2022 to 31 December 2023, or permanently reduce grid use charges and excise taxes; temporarily reduce charges for renewable energy sources; and reduce the income tax base by the amount of the increase in the cost of electricity for businesses compared with 2021.

"Despite the further rise in energy prices and the deteriorating state of the economy, Croatia has still not expanded its initial package of measures adopted in February, especially in regards to significant increases in prices of electricity, which is the primary source of energy for the majority of enterprises," HUP said.

It added that the enterprise sector expects further government interventions because it cannot cope with further increases in energy prices on its own any more.

Employers warned that failure by the government to mitigate the rise in electricity prices would jeopardise not only the operation of individual companies but also the growth of the entire economy.

"Without the government's intervention, enterprises will be compelled to considerably increase the prices of their products and services, which, in the present circumstances of galloping inflation, will have an additional and significant impact on the general inflation rate," HUP said, noting that the measures they are recommending do not require any direct allocations from the budget.

The enterprise sector is willing to invest in energy efficiency and renewable energy sources, but the government needs to change the present legislative framework to make it stimulating enough for companies, HUP said.

For more, check out our politics section.

May the 27th, 2022 - The Croatian Employers Association (HUP) is launching a praiseworthy initiative aimed at the prevention of underage drinking, which continues to pose a very real issue across the world.

As Novac/Jutarnji writes, the Croatian Employers Association is launching activities for the public and for those in the hospitality and catering sector, with the aim of providing additional information on the importance of the moderate and responsible consumption of alcohol, as well as responsible serving of alcohol in restaurants to encourage the proper prevention of underage alcohol consumption.

One of the activities of the Croatian Employers Association in this regard is the launch of an online educational page called www.konzumirajodgovorno.hr (consumeresponsibly) where readers can find useful information on the impact of alcohol on the body and on overall health, warnings about groups for which alcohol consumption isn't at all recommended, with special emphasis placed on the negative impact of alcohol on minors.

The site contains useful tips and educates parents on how to approach and talk to their children and other young people when it comes to alcohol. With this initiative, Croatia has joined other European countries which work to promote responsible alcohol consumption as part of the campaign and the international website www.responsibledrinking.eu.

This branch of the Croatian Employers Association simultaneously launched a quiz on responsible alcohol consumption across eleven European countries and supported a project launched by spiritsEUROPE, a European association that brings together the spirits sector through 31 national associations. The quiz provides guidance and answers to key questions about moderate alcohol consumption, explains the differences between moderate and excessive alcohol consumption, contains tips on responsible consumption and explains the differences between different alcoholic beverages. The quiz can be accessed via the website konsumirajodgovorno.hr or directly via the link: http://edapp.click/spiritseu-hr.

In addition to educating the public, the aforementioned association has also developed a platform for online educational training on the responsible serving of alcohol intended for the hospitality sector. Entitled "I serve responsibly", it aims to reduce irresponsible alcohol consumption, and point out the problem of juvenile alcohol consumption, as well as to promote catering and hospitality facilities that serve alcohol responsibly.

"Raising awareness among both the public and among those working with alcohol in a professional sense is key to encouraging responsible behaviour, which is why we've launched a series of activities to highlight the importance of moderate and responsible alcohol consumption, the prevention of juvenile alcohol consumption, and the need for education on potentially dangerous situations such as driving under the influence, with the goal of building responsible behaviour in the community in which we operate and do business. Consumers must have access to information to know the effects of alcohol on their health, and those working with alcohol should contribute to the promotion of moderate and responsible consumption through doing responsible service and business,'' said Zoran Maksic of HUP.

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

ZAGREB, 8 May 2022 - Croatia lost HRK 1.3 billion (€173m) in budget revenues to the consumption of illegal cigarettes and cut tobacco in 2021, a survey conducted by the Croatian Employers' Association (HUP) in cooperation with the Ipsos market research agency shows.

The purpose of the survey was to determine the size of the untaxed tobacco market and its impact on the national economy. It was carried out in December 2021 and January 2022 on a representative sample of 1,243 households including 3,062 respondents aged 19 and above.

The survey showed that 27.9% of the population aged 19 and above smoke, with 21.4% of them smoking cigarettes and 7.5 % cut tobacco. In the last three years, despite the rise in prices of tobacco products, this incidence has remained stable.

"According to the survey, the share of untaxed tobacco products is 19% on an annual level and this mostly accounts for untaxed cut tobacco," HUP chief economist Iva Tomić said, adding that higher prices are pushing people to buy unstamped tobacco products.

"Although this trend has been decreasing since 2019, a relatively high level of illegal products is still present, which has considerable economic and social implications, for budget revenues, the rise in crime, public health services, the decline in jobs and so on," Tomić said.

In 2021, revenues from excise tax and VAT on tobacco products amounted to nearly HRK 8 billion, or 8 per cent of total tax revenues. However, due to the consumption of untaxed tobacco products the government loses HRK 1.3 billion annually.

Tomić said that state institutions were making considerable efforts in combating the illegal trade in tobacco products, introducing a product traceability system, increasing seizures of such products, limiting the import of tobacco products from non-EU countries to two packets per person, and imposing restrictions on raw tobacco.

"A good regulatory and tax environment is crucial for business stability and is in the interest of all tobacco market participants," Tomić said.

(€1 = HRK 7.5)

For more, check out our business section.

ZAGREB, 4 May 2022 - Finance Minister Zdravko Marić said on Wednesday that employers' proposal to further reduce the tax burden on labour are taken into account in principle but that additional discussions and analyses are required, while reducing contributions requires structural reforms in the health and pensions systems.

The Croatian Employers Association (HUP) said on Tuesday that attracting and keeping quality labour required a more significant reduction of overall labour costs so that employers could pay higher salaries to workers, proposing short-term proposals for an increase in net wages, which should happen relatively soon.

"It is necessary to significantly reduce the total cost of labour, including by increasing non-taxable income to HRK 5,000, reducing the lower income tax rate by 5 pp, from 20% to 15%, and keeping the higher income tax rate at 30% but raising the threshold for its application, from the current HRK 30,000 to 50,000", HUP said.

As for contributions, HUP called for reducing the contribution to the first pension pillar by 2 pp, from 15 to 13%, reducing the health insurance contribution by 1.5 pp, from 16.5 to 15%, and limiting the highest amount of payments for pensions and health insurance to four average monthly wages.

HUP also proposed a further increase in non-taxable payments to workers, notably considering that that does not mean additional costs for the state while creating more room for employers to compensate workers.

HUP advocates increasing the non-taxable amount for rewards from HRK 3,000 to HRK 6,000 and rewards for work performance from HRK 5,000 to HRK 12,000. It also advocates the introduction of non-taxable income for work from home, increasing the non-taxable amount for severance pay and retirement from HRK 8,000 to HRK 15,000 as well as increasing the allowance for the use of private vehicles for business purposes from HRK 2 to HRK 3 per kilometre.

Marić said that at present, at least two-thirds of taxpayers did not pay income tax since in previous rounds of tax reform tax breaks were introduced and basic tax relief was increased.

The principle of proportionality of taxation could be further discussed, he said, recalling other tax changes, including the exemption of young people from income tax, which this year will result in 146,000 young workers receiving HRK 640 million in tax return.

He said that he government had worked a lot on income tax, noting that the scope of nontaxable income had been expanded.

"Further reducing the tax burden, of which I am in favour, requires, among other things, paying special attention to health and pension insurance contributions," Marić said but noted that due to the situation in the health and pension sectors, creating preconditions for further reducing the tax burden on labour would require structural changes in the two sectors.

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

ZAGREB, 24 March - About 9,500 Ukrainians displaced by the war in their country have found refuge in Croatia, Tomislav Marević of the Civil Protection Directorate said on Thursday.

"These are still mainly women and children, and many of them are accommodated privately," Marević said in an interview with Croatian Radio.

He said he was proud that Croatia had responded in solidarity already in the first weeks of the war and that citizens were taking in displaced persons voluntarily.

He commended the government's decision to finance accommodation for refugees, adding that the Civil Protection Directorate would sign a contract with each user and owner of a property.

Anny Brusić, director of the association of small and medium-sized enterprises at the Croatian Employers' Association (HUP), said that the business community was very interested in hiring Ukrainian refugees.

"We need a little more time to get the system going because certain procedures need to be simplified before hiring actually begins. A state authority should say that at this point Ukrainian workers are not required to show a certificate of education or a diploma. Our legislation is rather rigid," Brusić said.

Politics: For more, check out our politics section.

ZAGREB, 8 March 2022 - Despite greater employability and more women in leading positions they are still insufficiently represented in the economy, particularly at the highest levels which indicates that there are still significant legal, structural and cultural obstacles to their full equality, it was heard at a conference on Tuesday.

The conference  - An economy without prejudice strengthening the economy by empowering women - was organised on the occasion of International Women's Day by the Croatian Employers' Association (HUP) and International Network of Business Women.

The status of women in Croatian society hasn't changed drastically despite a lot of stakeholders being included in changing the mood and awareness, Milka Kosanović from HUP said. She said that women are still paid less than men, with women earning 84% to 87% of the pay of their male colleagues for the same job. Today 79% of girls enrol in higher education and 49% gain higher qualifications.

"When they start climbing up the career ladder, women are faced with something we know as the glass ceiling. They don't advance equally with men and certain positions are not accessible to them and they are paid 13% to 16% less for similar jobs," said Kosanović.

It is necessary to systematically work on changing the mindset of women too. Women need to be aware that they can do everything men can and society needs to live by the principles it advocates," she added.

Gordana Matković, the owner of the Educamix for the development of human potential and a member of the International Network of Business Women said that more than 100 years have passed since the start of the struggle for equal rights, however, even today we are talking about the inequality of women.

That is why in fact the network organised today's conference to motivate society to think about ways of improving the status of women.

Congratulating women on the occasion of International Women's Day HUP Director-General Damir Zorić said that things can always be better. He added that he was glad that women have recognised HUP as a possible platform where they can act and improve things.

ZAGREB, 3 Sept 2021 - The process of amending the Labour Act to regulate teleworking will be initiated before the end of this year, and the amended legislation should be passed no later than August 2022, a conference on remote work was told in Split on Friday.

The conference was held within the Devote programme, which is being implemented by the Croatian Employers' Association (HUP) in cooperation with the Oil Industry Union (SING) and the Confederation of Norwegian Enterprise (NHO).

"It is our duty to adjust our legislation, including the Labour Act, to the European Union's 2019 directives, and deadlines expire in August 2022," said Josipa Klišanin of the Croatian Labour Ministry.

The EU directives will have the greatest impact on contracts on teleworking enabling employees to choose their place of work in agreement with their employer, according to Klišanin.

It is a worker's workload and performance that matters and not the place where they perform their duties, she underscored.

The future amendments will introduce the protection of teleworkers, and labour inspectors will be able to visit them only if they announce their visit and have the substantive reason  for such a visit, she said.

The HUP director-general, Damir Zorić, said that the amendments should produce better regulation of remote work.

HUP's chief economist Iva Tomić said that on average, 3% of employed Croatians were teleworkers, however, during the COVID-19 pandemic this percentage had risen by 30%.

 Surveys show that an estimated 100 million people will soon be teleworking worldwide.

For more on politics, CLICK HERE.

ZAGREB, 27 Aug 2021 - The latest GDP data for the second quarter of 2021 show that Croatia formally exited recession after four consecutive quarters of downturn, the Croatian Employers' Association (HUP) chief economist Iva Tomić said on Friday.

Croatia's economy grew by 16.1% in the second quarter of 2021 compared to Q2 2020, which is the first time it grew after going down for four consecutive quarters and at the highest rate since 1996, when the national statistical office started collecting those data.

Tomić underscored that this growth rate placed Croatia among the best performers in the European Union considering the 2021 Q2 GDP.

Croatia, Spain, France, Hungary, Italy and Portugal are together with Croatia at the top of the ranking, after those countries experienced a double-digit fall in the same period last year, Tomić said underscoring that all components in GDP had risen in Q2 compared to Q2 2020.

For more on business, CLICK HERE.