As Novac/Marina Klepo, the coronavirus pandemic has caused profound and probably permanent changes to the labour market, the collapse of certain sectors, the rise of new ones and increasingly widespread work from home trends. Going back to our old ways, many experts believe, is just a misconception because the pandemic has fundamentally changed companies and workers in almost all countries. The International Labour Organisation warned recently that the huge job losses “creates a fiscal gap that could further deepen inequality between richer and poorer countries.” When state aid is excluded, he warns, labour income fell by 10.7 percent in the first three quarters of last year compared to the same period back in 2019. It remains to be seen what will happen once state aid measures expire. What is Croatia doing in this new world of work, and just how many unemployed Croatian residents have been counted?
Construction and communication
Ten months after the beginning of the crisis, says Iva Tomic, chief economist of the Croatian Employers’ Association, we can conclude that not much has changed yet, despite announcements of a complete change in the functioning and appearance of the labour market as we know it.
The total number of insured persons, those who pay pension contributions, according to HZMO, at the end of December amounted to 1,536,300 persons, which is only 0.6 percent (8892 persons) less than in December 2019. The average number of insured persons during the year, on the other hand, was 1.2 percent or 17,940 persons less than the year before. There was a significant increase in the construction and information and communication sectors, while, as expected, the number of insured persons decreased the most in the accommodation, hospitality and catering sector.
“This situation on the Croatian labour market is largely a consequence of the introduction of support for job preservation, because the co-financing of part or all of the salaries by the state certainly enabled those companies that found themselves in a bad situation due to the coronavirus crisis to keep their workers,” Tomic said.
In the first months of the pandemic-induced crisis of 2020, more than one third of all Croatian employees used government aid, and a certain percentage still depends on this aid, in November there were 120 thousand such people.
However, the number of unemployed Croatian residents is increasing, and on January the 15th, 163,807 people were registered at the Croatian Employment Service, 3,962 more than were registered in December. Back at the end of 2020, 28,000 people were out of work, or 21 percent more than a year earlier. Although we don’t yet know the structure of the increase in the number of unemployed Croatian residents in the first two weeks of January, Tomic says that it is very possible that certain companies concluded earlier this year that they couldn’t manage to keep all of their workers or even some of them, and as such simply decided to shut down.
Dismissals
”It’s possible that certain companies, despite the state aid, just won’t be able to maintain business operations, which means certain layoffs in 2021. So far, there are no indications of a significant closure of companies or a larger dismissal of workers, although at the beginning of this year, the number of unemployed Croatian residents began to grow significantly,” explains Tomic.
However, the concrete consequences of the coronavirus crisis, he adds, could be realised only after the expiration of the current state aid measures, which, in addition to aid for job preservation, includes the possibility of covering fixed costs, but also delays and write-offs of certain state benefits and moratoriums on loans. According to the chief economist of HUP, this could primarily be “suffered” by companies in the service industries, which are most affected by the pandemic, and production isn’t exempt from the impact of the crisis either, given that it depends not only on domestic but also on foreign demand.
On the other hand, the coronavirus crisis has accelerated the process of the digitalisation of business, and the demand for workers in the information and communication sector is expected to continue, as it likely will in regard to construction workers, given that part of infrastructure investments are “pending” due to the recent earthquakes in Sisak-Moslavina, as well as the one which hit Zagreb in March 2020.
As a slightly better tourist season is expected this year than what was experienced last year, the growth of demand for workers in that sector is also somewhat more likely.
An adequate workforce
What could prove to be a problem is labour shortages in those sectors where there will be a need for new employment. In a survey conducted by HUP among its members at the end of last year, almost a fifth (19 percent) of respondents believe that the biggest challenge in doing business in 2021 will be the lack of adequate labour in the Croatian labour market. The list of deficit occupations adopted by the CES Board last week also suggests that there is a shortage of workers in the domestic labour market in the sectors that currently employ the most people – construction and ICT.
As the coronavirus crisis has significantly affected changes in business organisation on the whole, one of the lasting consequences, it seems, will be increased teleworking. When asked where you work during the coronavirus crisis, according to a Eurofund survey in June and July, almost 31.5 percent of Croats answered that they work from home. Before the crisis, only 1.4 percent of employees worked from home, while the EU average stood at 5.2 percent.
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