ZAGREB, 1 May 2022 - Prime Minister Andrej Plenković on Sunday greeted Croatian citizens on International Workers' Day, saying that the government will continue to improve workers' status during times of numerous challenges and resolutely continue with its policy of wage increases in the years to come.

"This year on International Workers' Day I once again wish to express my gratitude to all workers who in these difficult circumstances are the most deserving for the Croatian economy's resilience, growth and competitiveness", Plenković wrote in his message. 

"Hence, the government will continue to improve workers' status in times when we are faced with numerous challenges and changing global and market opportunities that the 4th industrial revolution brings".

Faced with the consequences of the COVID pandemic, Russia's aggression against Ukraine and increased prices of energy and food, the government has taken a series of measures to save jobs, economic stability and the economic and social standards of Croatian families.

The Prime Minister added that, led by the principle of social solidarity, the government is resolving key issues together with the unions for the well-being of workers.

He is satisfied with the agreement reached recently with unions in state and public services that guarantees the further growth of the base wage and material rights and, with that, increased purchasing power for employees.

He noted that after years of stagnation in wages, in the past five and a half years a significant improvement has been made and the base wage in the public and state sector has increased by more than 23%.

The average net wage increased by 32% to HRK 7,452 in February and the minimum net wage increased by 50% to HRK 3,750. In the period from 2016 to 2021, real wages increased significantly more than prices.

"Despite the demanding economic circumstances, and with the support of Croatian citizens, we will resolutely continue with our policy of wage increases in the coming years", Plenković said.

He underscored that the government will continue to implement reforms, create a quality business environment, stimulate investments as a precondition to modernise Croatia, continue with economic growth, create new jobs and continue to increase wages, which means a higher living standard for Croatian citizens.

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ZAGREB, 27 April 2022 - Prime Minister Andrej Plenković said on Wednesday that net wages had risen by 32% since 2016 when he became Prime Minister, increasing from HRK 5,642 to HRK 7,352.

Commenting on Tuesday's meeting with trade unions, Plenković emphasised the government's commitment to social dialogue and recalled that the base pay in the public sector had not been raised from 2012 to 2016.

The increase is a consistent policy of our cabinet, Plenković said during today's meeting of the government.

Thus, the base pay has been increased on several occasions during the terms of his cabinets, or 18.31% on the aggregate.

Congratulations to winners of Slovenian and French elections

PM Plenković expressed satisfaction with French President Emmanuel Macron's re-election on Sunday, and extended congratulations to the new Slovenian PM-elect, Robert Golob, expressing hope that the Croatia and Slovenia would continue developing friendly relations and partnership, noting that the cooperation with the outgoing PM Janez Janša was very good.

(€1 = HRK 7.5)

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ZAGREB, 2 March 2022 - Engineers' pay should be increased by 30 to 50 percent, and in addition to the already imported 30,000 foreign workers, the Croatian construction sector still lacks 20,000 workers, an event marking Croatian Engineers Day was told in Zagreb on Wednesday.

This year's Engineers Day was devoted to long-term plans to make the engineering profession more competitive on both the domestic and global markets. The focus was on untapped national resources and on what the domestic STEM industry can do to put them in the service of sustainable development.

Zdravko Jurčec, head of the Croatian Engineering Association, which organised the event, said that the earthquakes that had struck the country two years ago had shown the importance of having domestic knowledge to deal with such emergencies. "Now we are facing a critical period for economic recovery, which will be a major challenge for the Croatian engineering profession," he said.

"It's regrettable that none of the competent institutions has wondered what the emigration of engineers means, how much this drain of STEM resources has cost us and how to slow or neutralise these unwanted processes," Jurčec said.

He stressed that engineers' pay should be increased by at least 30 to 50 per cent and that in addition to about 30,000 workers already imported, the construction sector still lacked about 20,000 workers.

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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."

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As Poslovni Dnevnik writes on the 8th of July, 2020 due to the coronavirus pandemic, the Croatian economy is among the three most affected in the EU, and the European Commission's summer forecasts are that our GDP could fall by 10.8 percent. Minister Maric said that Croatia is sticking to its estimate of a 9.1 percent GDP drop, but also announced higher salaries for about a million residents.

When it comes to government finances, Minister Maric reported that back in June, the decline in the amount of fiscalised receipts compared to June last year was about 16.5 percent. As for budget revenues, VAT in June, he pointed out, saw a plus when compared to June 2019, due to the overflow from May, so this isn't a realistic look at things, but since the beginning of the year, tax revenues have fallen by a total of between 13 and 15 percent.

The Croatian Government plans to achieve wage growth by reducing income tax rates from 36 to 30 percent and from 24 to 20 percent, which is a move residents will immediately feel in their pockets and bank accounts.

When asked by journalists whether this means that, due to the reduction of income tax, about a million residents will have higher salaries in the first year of the new government's mandate, he answered briefly: "That's right."

Economist Zeljko Lovrincevic agrees with Miniser Maric's forecast that the economic downturn should be slightly smaller than the European Commission's currently dire estimates. How the drop in GDP will affect the standard of living of Croatian residents, he says, depends primarily on whether there will be compensatory measures for the economy and employment support, and of course the question is then who will finance them. It also depends on what the wage policy will be. What is certain is that the state doesn't have much room to help the economy at this moment in time.

The aid plan is questionable...

When it comes to aid of 10 billion euros that should come from the European Union itself, Lovrincevic noted that there has been no talk of that from Europe.

''That plan hasn't been agreed. That rabbit is still far away in the forest,'' said Lovrincevic.

Economist Damir Novotny said that, if you look at the economic history after the Second World War, there were incomparably worse situations than the one we're in today. Since the 1990s, he recalls, Croatia has had a bad economic situation for a whole decade, due to the Homeland War. The economic situation, he continues, began to improve in 2002, when wages also rose, and then came 2008. As a result of the financial crisis, 150,000 people in the private sector lost their jobs. The state sector then protected itself, taxes were raised in the then-introduced crisis tax, meaning that the state sector passed practically unscathed.

Government measures are crucial

Novotny states that Croatia has had very anemic economic growth over the last ten years, but admits that the government has responded well with its various measures to try to save jobs. How this crisis will affect regular people, he says, is currently difficult to assess. He agrees that it all depends on how long the government’s measures to help the economy will last.

''The big question is how long they can last, but it's certainly not infinite. What happened back in 2009 could happen again if the government's intervention doesn't continue. Recovery must be accelerated and that's something I hope will happen, because today we're in different circumstances than we were back in 2009 because we're also now a member of the EU, where we have access to the anti-recession measures that are offered,'' noted Novotny.

He also pointed out that European Union money, which is intended to help the economy, will probably be conditioned by the implementation of structural reforms, without which, Croatia won't get its pockets filled.

Lovrincevic and Novotny both agree that the situation for Croatia would be much better if we were a member of the European Monetary Union because we would have even more measures at our disposal to help the economy damaged by the coronavirus crisis.

Andrej Plenkovic doesn't have time to wait around for the economic storm that is on its way to Croatia and he will have to quickly put together a team that will be there to face many challenges. The elections will be repeated at one polling station next week, and only after that will the final results of the parliamentary elections be announced. That's when the deadlines for constituting the Parliament and forming a new government will begin. Andrej Plenkovic can calmly wait for consultations with President Zoran Milanovic because he collected the required 76 hands in half a day. He spoke with President Milanovic on Monday, and after the announcement of the final election results, they'll contact him again to arrange a formal meeting.

It is to be expected that Plenkovic could get the mandate to form the Government by the end of next week at the latest, and then he has thirty days to form his new team. The president should convene a constituent session of the Parliament within twenty days of the announcement of the final election results, and HDZ believes that this won't be delayed and that it will occur by the end of this month.

HDZ and its partners hope that the new government will be confirmed during the first few days of August, ie, before the anniversary of Operation Storm (Oluja), on August the 5th. It was announced earlier that the Parliament, once constituted, will certainly not have a break as it has enjoyed so far, but all of that needs to be discussed and worked out.

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A comparison of wage developments in the ten most important industries across the Republic of Croatia over the last four years shows that wage growth in the education sector has unfortunately been among the lowest.

As Poslovni Dnevnik writes on the 16th of August, 2019, the payroll story in Croatia is only getting more interesting as the increasingly powerful Mayor of Zagreb, Milan Bandić, is seeking an immediate increase in teacher salaries of ten percent, and an additional seven percent per year.

That, according to Mayor Bandić, would send out a strong message that education is the future of Croatia. Salaries in the public sector have begun to increase steadily since back in 2017, after a stagnation of almost ten years, but a similar trend was also observed in the private sector, which is facing a large number of workers' departures due to low salaries, Vecernji list reports.

This year, wage growth in Croatia has slowed to just two percent, averaging just a little under 6,500 kuna per month. In the last four years, the average wage in Croatian has grown by sixteen percent, with lower wages rising more due to a significant increase in the minimum wage, and better paid ones benefiting somewhat from certain tax policy alterations.

However, in general, wages in Croatia are growing more slowly than in other transition countries, but so are the overall economic developments. According to official statistics, in June 2019, education employees in Croatia received an average of 6,782 kuna, which is a system where seventy percent of employees in primary schools and more than eighty percent of employees in high schools and colleges hold a university degree, and according to some, those wages should therefore be higher.

As previously mentioned, a comparison of wage developments in the ten most important industries in Croatia over the past four years shows that wage growth in the education sector has sadly been among the lowest of all, rising by ten percent in four years, unlike the average wage in Croatia, which has somewhat more encouragingly increased by sixteen percent. Currently, salaries in education are higher than the average salary, but only by a mere five percent. The dilemma is not whether or not highly educated professors or doctors should receive higher wages, as that goes without saying, but the question is rather - how can we get there?

The answer might also include a significant reduction in public sector employment, especially in education where employment is booming even though schools across Croatia are seeing significantly fewer students enroll.

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