Amid rumours that the finance minister, Zdravko Marić, is set to step down from his position within the Croatian Government as soon as next month, PM Andrej Plenković has been having his refusal to outright deny the claims scrutinised, with some believing that this means Marić's departure was imminent and due to take place in early 2019. It seems however, that Marić isn't going anywhere.

As Poslovni Dnevnik writes on the 9th of December, 2018, HDZ President and PM Andrej Plenković said on Saturday that Finance Minister Zdravko Maric isn't going to leave the government.

"There will be no departure," Plenković told journalists after the he was questioned about whether or not he'd talked to Marić himself about his alleged departure from the cabinet before the end of his mandate, as was being circulated by some media outlets.

The Prime Minister, upon being questioned about the criticisms of controversial SDSS President Milorad Pupovac regarding recent arrests in Vukovar, said that he didn't listen to that press conference, adding that the current government is not interfering with the work of the police or with the work of DORH in any manner whatsoever.

He pointed out, in order to quell people's natural suspicions that "there are no invisible political hands" holding any influence over this process.

When asked about the elections for the European Parliament, PM Andrej Plenković stated that the party would be "almost sure" on their own and that at least five mandates can be expected. "We'll win convincingly in those elections," he said briefly.

Concerning the controversy around the procurement of Israeli F-16 aircraft, Plenković reiterated that everything that the Republic of Croatia did in this process was done systematically, thoroughly, and in fine detail, and that open issues, if there are any, exist solely between Israel and the United States of America, and are nothing to do with Croatia or the part Croatia played in the process.

He confirmed that he visited Zagreb's mayor Milan Bandić was taken to hospital yesterday morning, adding that Bandić claims to be feeling good and that he believes that he will recover and be back on his feet quickly.

Make sure to follow our dedicated politics page for more on PM Andrej Plenković, the Croatian Government, and updates from both domestic and European politics in Croatia.

Neither Prime Minister Plenković nor Zdravko Marić himself have come out and actually denied the rumours about the Croatian finance minister's potential departure from the government.

As Poslovni Dnevnik writes on the 8th of December, 2018, although no one has officially confirmed this, some claim that a quick analysis of the statements made by both Prime Minister Plenković and Zdravko Marić himself suggest that it is apparently ''almost certain'' that the longtime Croatian finance minister is set to leave his government position.

This information has begun circulating at a very inconvenient time and amid quite a bit of controversy, given the fact that Zdravko Marić's older sister has been promoted in HANFA, which is ironically the organisation investigating the finance minister for his activities during the height of Agrokor saga, which still isn't over. Good timing you say? You're right.

To quickly recall, this isn't the first time the Croatian finance minister has fallen out of favour in such a public manner. Marić used to work at Agrokor before taking on his government position, and as more and more came to light in regard to Agrokor's messy story, many began to suspect that he knew much more than he was letting on about the crimes which allegedly took place under the gigantic company's former owner, Ivica Todorić.

Despite having held strong to his statement of innocence and managing to survive this political test, ultimately retaining his position, the cloud of suspicion surrounding him never truly went away, it only engulfed Martina Dalić instead, the fomer deputy PM, who became a welcome distraction for the minister tormented by his past.

Regardless of the passage of time and the stepping down of Martina Dalić, the curse of the former Agrokor crisis has come knocking at Croatian finance minister's door once again, and this time it looks like he won't be getting off quite as lightly.

Upon being asked, Prime Minister Plenković's response has been scrutinised deeply, and for some it could be concluded that the Croatian finance minister's time is up, purely and simply because the he did not deny it when asked, writes Večernji list.

Similarly, Marić didn't deny it himself, either. The question now is not only who would potentially replace Marić in the government, but whether or not this could potentially be a chance for the reconstruction of the current government.

While unconfirmed, speculation suggests that Marić's departure from the government will take place next month, which would in itself be logical because he has already compiled a budget for next year.

The exact name of the person who either may or definitely replace Marić is still unknown, primarily because this information remains officially unconfirmed. But those speculating have suggested that it could be Tomislav Ćorić, the curent minister of energy and environmental protection, but sources close to the government claim that if he is doing his job well and that such a move would make no real sense. It would also be his third new ministry if it were to occur. So, it seems difficult to imagine Corić taking over Marić's job.

The speculation of potential names continues, despite the fact that the rumours of the current Croatian finance minister leaving his position early next year remain unconfirmed. 

Make sure to stay up to date on this situation and much more on the domestic and European political stage by following our dedicated politics page.

ZAGREB, December 6, 2018 - Finance Minister Zdravko Marić said on Thursday there was no favouritism in the appointment of his sister Ljiljana Orlovac as CEO in the Croatian Financial Services Supervisory Agency (HANFA), saying he was ready to step down if there was proof that he did anything wrong.

Speaking after a government session, held in the central city of Karlovac, Marić commented on the information that his sister was appointed director of the HANFA insurance supervision department which investigates whether or not there was any insider trading at the time the Agrokor bill was being drafted.

Marić said his sister had all the necessary qualifications and experience for the position she was appointed to, telling reporters to seek any further information regarding this case from HANFA.

Marić says that his sister was a CEO at the Adriatic Osiguranje insurance company as early as in 1995 and that she arrived in HANFA in 2010 as deputy director. With over 20 years of experience in the insurance business, she was appointed CEO and not a member of the Management Board, which makes all decisions, Marić said.

The Croatian Financial Services Supervisory Agency (HANFA) dismissed any insinuation about conflict of interest regarding the appointment of Ljiljana Orlovac, stressing that the main appointment criteria were competence and expertise.

HANFA is an independent institution that answers to the national parliament and its operations, including the appointment of staff, are professional and independent, agency officials said, reiterating that the main appointment criteria were competence and expertise.

Ljiljana Orlovac has been an employee of HANFA for the past nine years during which she held various offices and performed many duties, HANFA said.

For more on Minister Marić, click here.

ZAGREB, December 4, 2018 - The leaders of the parliamentary opposition parties GLAS, HSS, IDS and HSS told a press conference in Zagreb on Tuesday that Croatian Finance Minister Zdravko Marić "must go" following Monday's decision by the Conflict of Interest Commission.

"Marić must go. However, it is also important to pass a new law on conflict of interest, but not in the way Public Administration Minister Lovro Kuščević would want. All institutions cannot be dependent on the (ruling) HDZ," the leader of the Civic Liberal Alliance (GLAS), Anka Mrak Taritaš, said.

"There already was a vote of confidence in Marić and the result was 75 votes in favour of his resignation and 75 votes against, which showed what we think about him," she added.

In May last year, Croatia's 151-seat parliament did not pass a no-confidence vote against Finance Minister Marić after 75 lawmakers voted for the opposition's motion for the dismissal of the minister whom they accuse of the conflict of interest in connection with Agrokor, and the same number voted against the motion, with one lawmaker abstaining.

Mrak Taritaš noted today that there was already speculation that Marić would resign after the New Year and that he had indicated that he had found a new job.

The Conflict of Interest Commission decided on Monday that former Deputy Prime Minister and Economy Minister Martina Dalić and Finance Minister Zdravko Marić had violated the principle of holding public office in the case of the indebted Agrokor food and retail conglomerate. The violation does not carry any penalties.

The head of the parliamentary group of the Croatian Democratic Union (HDZ) party, Branko Bačić, said on Tuesday that the Conflict of Interest Commission had found that in the case of Finance Minister Zdravko Marić and former Economy Minister Martina Dalić there was no conflict of interest in their actions while they were dealing with the crisis surrounding the privately owned Agrokor Group, and dismissed opposition calls for Marić's resignation.

"There is no reason for the opposition to demand the minister's resignation, and the minister will not tender his resignation," Bačić said, adding that the Commission had extensively interpreted the conflict of interest legislation when deciding on the cases of Maric and Dalić.

Bačić said that working in one's own interest constituted a conflict of interest, and that nobody proved that Marić acted in that way in this case.

Finance Minister Zdravko Marić said he would take legal steps to contest a Conflict of Interest Commission decision under which he violated the principle of holding public office in the case of the indebted Agrokor food and retail conglomerate.

Speaking to Croatian reporters covering his trip to Brussels, Marić said he had not received the decision in writing yet and that when he did he would "decide how to comment on it." He said he would "certainly" take legal action "to contest the decision because I believe I wasn't in a conflict of interest, which the Commission already confirmed once, nor did I violate the principle of holding public office."

"I saw that a manoeuvre was made, I don't know for what reason nor do I consider it justified or comprehensible, which was to combine my case with the others that followed, and I will file a complaint regarding this too. I gave a deposition which I signed and gave the Commission and everyone can see that I didn't initiate any of those meetings... but came to them after being invited," said Marić.

He said he did not take part in the creation of any solutions concerning Agrokor nor was he "some kind of operative contact, which I sharply reject." "I attended those meetings in the preliminary stage, when it was necessary to establish the state of affairs and analyse things based on publicly available data. After that, I wasn't involved."

Asked if he was closer to stepping down, as is being speculated in public, Marić said he "wouldn't connect these two things at all" and reiterated that he was doing his job as minister "professionally, responsibly and legally." He said he respected all Croatian institutions but that he had his rights, not just as minister but also as a citizen.

Prime Minister Andrej Plenković said that Croatian Finance Minister Zdravko Marić should not resign, stressing that the Commission did not examine "the concept of conflict of interest" and that it did not find that either Marić or former economy minister Martina Dalić had been in a conflict of interest.

"It's very important that this message be understood clearly, based on what and about what exactly the Commission was deciding. The Commission examined solely... the principles of holding office," he told reporters when asked if Marić should resign, as demanded by the opposition.

"When you have a serious situation, an emergency, the responsibility of the person running the government is big, and this is something which, in all the ex post comments and analyses, those who aren't in that position can't perceive at all," Plenković said, adding that everything that was done to prevent a major economic crisis was not perceived as it should have been.

"The real problem is minimised, while an approach which someone imagines should be taken in a crisis situation is maximised. The reality is somewhat different."

Not one cabinet member has at any moment violated the principles of holding public office, which are conscientious, responsible and unbiased conduct, guarding one's own credibility and the dignity of one's duties, Plenković said.

"Our moves were responsible, we weren't at the level of petty politics and lack of ideas as were the members of then opposition or today's opposition who were then part of the government. But that's their responsibility and something citizens will evaluate when assessing the contribution of every one of us."

Plenković said it had never been as clear as now who in politics was doing their job seriously, responsibly and in the interest of the Croatian citizens and economy, and who saw politics entirely differently. He accused "some political parties" of filing complaints to the Conflict of Interest Commission "to see what it will decide so that (they) can use politically later on."

Asked if former minister Dalić had asked him if the public should be told who was in the informal group that drew up the law on Agrokor's restructuring, Plenkovic said the government could but did not have to form working groups for some matters.

"If you have a company which is on the market and, at that point, is exposed to everything to which the market... if it sees a problem, responds very quickly, then it's wise, responsible, credible and appropriate that everything you do to prevent a bigger problem for Croatian society should be discrete and done in a way which won't additionally destabilise that market. It was necessary to ensure fresh liquidity for the company and this was done in a short time. That's the most important thing," he said.

He said everything concerning Lex Agrokor was done legally by consulting experts who could help draw up a law "which prevented an economic and financial crisis."

For more on the Agrokor affair, click here.

ZAGREB, December 3, 2018 - The Croatian Parliament on Monday adopted the 2019 budget and projections for 2020 and 2021, with revenues in 2019 totalling over 136 billion kuna and expenditures over 140 billion kuna.

The budget was adopted with 79 votes in favour, 45 against and one abstention.

Budgetary revenues are based on the economic growth and the third round of tax reliefs, while the expenditure side of the budget is focused on the strengthening of fiscal sustainability, development measures and appropriate care for everybody in society.

VAT revenues are expected to reach 51.8 billion kuna and 15.7 billion kuna is to be collected from taxes and excise taxes. Expenditures are planned at 140.3 billion kuna, 6.9 billion kuna more than in this year's budget.

The parliament adopted two amendments submitted by the government which do not change the overall amount of the budget with the current amounts being redistributed.

The first government-sponsored amendment refers to the development of assisted areas, namely parts of Croatian territory that are underdeveloped in comparison to the Croatian average and therefore need additional development support.

The second government-sponsored amendment proposes a redistribution of 4.1 million kuna to the Education Ministry for the purpose of securing funds for the Hrvatsko Zagorje-Krapina Polytechnic.

The parliament also adopted a revised budget for this year. Seventy-eight MPs voted in favour of the revised budget, one abstained while 45 were against.

Under the proposal for budget revision, budget revenues will increase by 144 million kuna from the original amount, to 129.2 billion kuna.

The most important change in the revised budget is the issue of enforced guarantees given to the Uljanik shipbuilding group, and a minimum 2.5 billion kuna of government guarantees is expected to be paid by the end of the year.

Budget revenues in the budget revision proposal are expected to increase by 2.1 billion kuna or 2.7% from the originally planned amount. VAT revenues are planned at 51.1 billion kuna, 3.1% more than originally planned, owing to positive economic trends and an increase in disposable income.

The profit tax revenue is expected to go up by 1.3% to 8.4 billion kuna, revenues from contributions is expected to go up by 2.6% to 24.9 billion kuna, while revenues from administrative fees are to go up by 18.2% to 4.4 billion kuna.

Budget spending will amount to 131.7 billion kuna, a decrease of 1.6 billion kuna from the current plan.

Guarantee reserves will be increased by 2.6 billion kuna from the originally planned 265 million kuna to 2.865 billion kuna due to the anticipated enforcement of government guarantees given to the Uljanik group.

Only two amendments were submitted to the budget revision proposal, both by the Živi Zid party, and they were both rejected.

For more on Croatia’s budget, click here.

ZAGREB, December 2, 2018 - The Croatian Parliament will reconvene on Monday to vote on 2019 budget and several laws. including the new foster care law which caused disagreements between the Croatian Democratic Union and the Croatian People's Party.

Presenting the 2019 draft budget, Finance Minister Zdravko Marić said last week revenues totalled 136.1 billion kuna, including 51.8 billion kuna from VAT. Expenditures are planned at 140.3 billion kuna, 6.9 billion kuna more than in this year's budget. In said increase, 2.8 billion kuna refers to financing from general sources, while the remaining 4.1 billion kuna refers to European funds, he said.

On Friday, the government adopted three of a total of 217 amendments to the draft 2019 budget and four amendments referring to extra-budgetary users and submitted two of its own amendments.

Finance Minister Zdravko Marić said at the session that of the total of 217 amendments, the government adopted three amendments referring to the state budget and four amendments referring to extra-budgetary users – the Hrvatske Ceste road operator.

Adopted were amendments submitted by MPs Marija Pug Šipić and Žarko Tušek, worth 10 million kuna and two amendments submitted by MPs Pero Ćosić, Ljubica Maksimčuk and Marko Šimić, worth 15.5 million kuna.

Furthermore, the government adopted amendments to a draft financial plan for Hrvatske Ceste for 2019, submitted by MPs Vesna Bedeković, Josipa Đakić, Vladimir Bilek, Željko Lacković, under which additional 37 million kuna would be secured in 2019 for building and upgrading fast roads.

The government submitted two of its own amendments. The first one refers to the development of assisted areas, namely parts of Croatian territory that are behind in development in comparison to the Croatian average and therefore need additional development support.

The second one proposed a redistribution of 4.1 million kuna to the Education Ministry for the purpose of securing funds for the Hrvatsko Zagorje-Krapina Polytechnic.

For more on Croatia’s budget, click here.

ZAGREB, November 27, 2018 - The parliamentary opposition on Tuesday strongly criticised the 2019 budget, saying it was neither developmental nor socially sensitive and telling Prime Minister Andrej Plenković that no one believed him, to which he responded by saying they were spreading demagoguery and manipulating.

"You are saying something no one believes. As if Croatia was a land of milk and honey. Why did 100,000 of our fellow citizens leave Croatia last year if it's so nice here with Plenković," said Gordan Maras of the Social Democratic Party (SDP).

Plenković said the SDP was "free to stick to demagoguery" and recalled that his HDZ party had almost double the support in opinion polls than the SDP. He added that when the SDP was in power, the government did not pay either holiday cash grants or Christmas bonuses and that the deficit was 17 billion kuna.

"You are criticising this government for not working on what everybody has seen, yet what you don't see because your policy is to be demagogues and to manipulate information," he told SDP MPs.

Nikola Grmoja of MOST complained about the deterioration of the business climate in Croatia, which Plenković dismissed, saying profit tax was cut and that the tax relief was slashed by 6.5 billion kuna and the administrative relief by 2.5 billion kuna.

Ivan Sinčić of the Živi Zid said a 2.9% growth was not enough to even pay loan interest. He said that over the past 27 years Croatia's growth was 6.5% as against Slovenia's 48%, Poland's 124% and Slovakia's 108%. "Where is the 5% growth from your programme?"

Plenković said a 2.9% growth, plus a public debt decrease, was much sounder than a 5% growth plus borrowing.

Anka Mrak Taritaš of GLAS said the 2019 budget was neither socially sensitive nor developmental and asked why expenditures were rising. "The real budget growth amounts to 2.8 billion kuna, all else are EU funds. We are talking about pension indexation, pay correction, population measures, education, capital investments and guarantees to Uljanik shipyard," said Plenković.

Željko Jovanović (SDP) commended the higher outlays for healthcare but doubted that the money would be managed rationally.

Ivan Lovrinović of Let's Change Croatia called Plenković a representative of the neoliberal doctrine because he filled banks' pockets even more, while taking even more from those living off their work.

Presenting the 2019 draft budget, Finance Minister Zdravko Marić said revenues totalled 136.1 billion kuna, including 51.8 billion kuna from VAT. Expenditures are planned at 140.3 billion kuna, 6.9 billion more than in this year's budget. In said increase, 2.8 billion kuna refers to financing from general sources, while the remaining 4.1 billion kuna refers to European funds, he said.

For more on Croatia’s 2019 budget, click here.

ZAGREB, November 20, 2018 - The opposition in the parliament criticised a government proposal for the 2018 budget revision on Monday, saying that the state continued to spend more than it earned and criticising the government over poor absorption of money from EU funds. "When all is added and subtracted, we spend more than we earn, that's it," MOST leader Božo Petrov said on government spending.

"If you think that that's sustainable, I call on citizens to start spending more than they earn and let them see for themselves how that ends," Petrov told the ruling majority.

He said that Finance Minister Zdravko Marić was like "an octopus trying to plug the holes that are opening up on the ship", "while smiling to the cameras for PR purposes."

Petrov said the government lacked a strategy for the management of public finances, that the budget revision did not create conditions for reforms, and that 2.7 billion kuna less than planned had been withdrawn from EU funds.

Social Democrat MP Branko Grčić warned of the same problem, saying that the situation had been similar in 2017. He said that in the past five years of its EU membership Croatia had used up only 14% of EU money available to it and that in the next five years it was expected to absorb and pay out 86% of the total funds at its disposal.

Grčić also warned that tax revenues were growing, meaning the growth of the absolute tax burden on households and the business sector, and that the latest round of tax breaks was insufficient.

Branimir Bunjac of the Živi Zid party claimed the public debt-to-GDP ratio had not declined but had actually increased because the state had paid debts in the amount of 21 billion kuna, and taken loans in the amount of 24 billion kuna. "This is a policy of taking loans to pay loans," he said.

Commenting on the government's guarantees for the Uljanik shipbuilding group, in the amount of 4.3 billion kuna, Bunjac said that the government had granted guarantees indiscriminately and that taxpayers would end up paying for everything.

Anka Mrak Taritaš of the GLAS party said that there was nothing dramatic in the budget revision "or any hope of more radical changes in the future".

Boris Milošević of the Independent Democratic Serb Party (SDSS) said that the problem with planning EU funds was not a new one and that it had persisted for years, calling on the Finance Ministry to help other ministries plan their budgets better.

Ivan Lovrinović of the Promijenimo Hrvatsku (Let's Change Croatia) party said that the budget was unrealistic. "With the economic policy which Croatia has been pursuing for years we cannot achieve a GDP growth rate of more than 3% no matter what we do, and the economy must grow by 3% so that we can just pay interest on state debt," said Lovrinović.

Ruling HDZ party whip Branko Bačić said that 2018 had been a challenging year and recalled the agreement on the settlement of the Agrokor conglomerate's debt, the problem of the Uljanik and 3. Maj shipyards, and the restructuring of the Petrokemija artificial fertiliser company, and commended the management of public finances in those circumstances.

"If we were not faced with the enforcement of guarantees in the amount of 2.6 billion kuna for Uljanik, the budget revision would technically result in a greater surplus than last year," said Bačić, commending a decrease in spending on interest of 100 million euro.

Ivan Šuker of the HDZ said that the reforms launched had yielded results on the revenue side of the budget while the expenditure side was affected by long-standing structural problems, the health system and the enforcement of government guarantees for ailing shipyards.

For more on Croatia’s budget, click here.

ZAGREB, November 19, 2018 - Finance Minister Zdravko Marić, who on Monday delivered the revised 2018 budget in the national parliament, said that the planned budget deficit of 0.5% of the country's GDP would not be changed, despite the enforcement of the guarantees which the government gave to the ailing Uljanik Group. Thus, the budget gap in 2018 would be 2.23 billion kuna.

Marić told lawmakers that the contingencies set aside for guarantees were insufficient to offset the enforcement of the collateral, and therefore the revised budget would increase those contingencies from the originally planned 2.6 billion kuna by 265 million kuna to 2.865 billion kuna. "The sole reason for this increase is the enforcement of guarantees for the Uljanik Group," Marić said.

He went on to say that the government was committed to its plan to reduce the public debt-to-GDP ratio. "Our latest figures show that this could stand at 74.6% of GDP this year."

During the debate on the draft budget revision in 2018 and the execution of the budget in 2017, Marić underscored that in the first half of 2018, Croatia's GDP rose by 2.7% and, in parallel, inflation went up by 1.4%, while industrial production grew by 0.4%, retail sales by 3.9% and the construction industry by 3%, whereas overnight stays by tourists jumped by 8.8% in H1 2018.

The total budget revenues in H1 2018 increased by 2.9% year on year to 59.9 billion kuna, Marić said, adding that the revenues from taxes came to 35.4 billion kuna. The good H1 trends continued in the rest of the year, the minister said.

The revised budget envisages the rise of total revenues from the originally planned 129 billion kuna to 129.2 billion, said Marić.

Under the revised budget, expenses are to be cut by 1.6 billion kuna to 131.7 billion kuna.

The biggest additional allocation under the revised budget is 405.3 million kuna for the healthcare system, the minister said.

During the debate, opposition lawmakers criticised the government for failure to absorb more funds from European Union sources.

Peđa Grbin of the Social Democratic Party (SDP) criticised Marić for relying on an annual economic growth of 2.9% which is lower than the economic growth in some of the countries in the neighbourhood.

Marić replied that Croatia based its economic growth on realistic foundations. "All of us would like to have higher growth rates and I believe Croatia can achieve higher rates. However, this is our current reality," the minister said.

For more on Croatia’s finances, click here.

ZAGREB, November 19, 2018 - Leaders of public sector workers said on Monday that public sector workers would launch a strike on November 28 and hold it on one day of every subsequent week until their demands for higher wages were met.

Croatian Teachers Union president Sanja Šprem told a news conference the strike announcement was a message to the government after talks between public sector workers and the government on a pay rise failed. "The government's offer was unfavourable, the government did not accept the arguments that public sector workers are underpaid and that their salaries should not lag behind the national average. The government's offer of a three-percent rise in the base pay in 2019 is humiliating and clearly shows that the government does not appreciate employees in public services," Šprem said.

She said that the strike would start on November 28 and continue on December 4 and 13 and be held every week for a day until the unions' demands were met. She also said that public sector unions had launched a nation-wide campaign for a base pay rise and better status of public sector employees, noting that strike was not the only instrument of pressure against the government.

The leader of the Independent Union of High School Employees, Branimir Mihalinec, said that the national campaign for better services for citizens and a better status for public sector employees would last until a wage policy for public services was defined in talks with the government. He said that unions today also announced a process of conciliation with the government.

Mihalinec said that unions would inform employers on time how long the strike would last on a specific day because it could last the whole day or less. He said that public sector unions wanted a wage increase of 5.8%, which is how much wages in the country are projected to grow next year.

Social Care Professionals Union head Jadranka Dimić said that wages were not the only reason for the strike but that it was also the fact that citizens, who during their working life pay high contributions for healthcare, social care and education, need quality services.

She warned that the government was saving on the employment of doctors, teachers, social workers and others, and noted that before a ban on public sector hiring, the social care system had 8,800 employees while now there were 1,727.

"The government is offering our members a three-percent pay rise, and that's only crumbs left over in the budget. By treating public sector workers that way the government is actually telling citizens that it does not care who will treat them or care about them, what kind of education their children will get or who will care for the country's cultural heritage. The three-percent offer is 150-200 kuna and that amount will not prevent young and educated people from leaving the system," Dimić said, criticising the proposal by the Croatian Employers Association (HUP) that a part of government employees should be transferred to the public sector.

As for HUP's proposal that surplus workers in the public sector should be transferred to the private sector, MHS trade union leader Vilim Ribić said that such an attitude was harmful and accused employers of a neoliberal worldview whose main idea, he said, was that spending is bad and should be reduced "so that taxes are reduced and greater profit can be made."

Finance Minister Zdravko Maric said on Monday unions had a legitimate right to strike after turning down a 3% base pay rise proposed by the government which he said was within the possibilities of the 2019 budget. "We came with an offer which some unions found acceptable and some didn't. I think we'll have another talk because they proposed it," Marić said.

Marić said the government never met with unions "with a hidden agenda but always very openly and transparently." "We understand and accept some of their proposals... that it's necessary to have a long term framework," he said, adding that it was necessary to see to the sustainability of public finances and that the government was offering a 3% base pay rise because only that was possible within the 2019 budget.

Reporters said the unions wanted a 6% rise. Marić responded that "no one would be happier than we if public finances could stand such a percentage." "That 3%, without Christmas and other bonuses, is about 900 million kuna. Every percentage is 300 million kuna," he said, adding that his ministry had envisaged that percentage before it had information about the state of affairs in the ailing Uljanik shipyard.

Asked what he expected of future meetings with the unions, Marić said he expected constructive dialogue.

For more on Croatia’s trade unions, click here.