Croatian Entrepreneur Reactions to Government Coronavirus Measures

Lauren Simmonds

The lines of laid-off waiters, chefs and other hospitality workers in front of the Croatian Employment Bureau are concrete proof of the real market situation thanks to the increasingly concerning coronavirus outbreak.

Croatian entrepreneurs and company owners have looked at the recent set of coronavirus crisis measures, with some praise and others left unsatisfied and worried, comparing the measures to ”putting a plaster on a gunshot wound”.

As Poslovni Dnevnik writes on the 19th of March, 2020, despite the announced Croatian Government coronavirus measures, layoffs in the hospitality industry were set in motion, as evidenced by the rows of worried faces standing before the Croatian Employment Service in Zagreb yesterday, where dismissed chefs and waiters went to report.

Larger Croatian hotel companies haven’t announced layoffs for their workers who hold permanent contracts so far, but they still won’t be renewed for a fixed period. One such large company, Sunce, has stated that they will not fire anyone because they want to protect the health and economic security of their workers, aware that they will need everyone when they do open their hotels.

That particular company is awaiting Croatian Government measures and will adapt to the coronavirus-induced economic situation as it unfolds. Maistra is also busy with the employment of seasonal workers, and at the moment, the small Rovinj Adriatic Hotel and Zagreb’s Westin remain open. Interestingly, a review of the hotel chains’ social networks failed to find a single posted message about the closure of hotels in Zagreb.

The Croatian Tourism Association welcomed the government’s response and the measures taken to maintain employment and liquidity. However, they warn that the measures must be properly specified as soon as possible and then be implemented immediately.

”This is crucial for tourism, given that it isn’t realistic to expect any tourist traffic over the next thirty days. We consider a particularly important measure to be the securing of minimum wage funds without which tourism companies will be forced to make unwanted decisions,” said the director of the association, Veljko Ostojic.

Key measures to defer liquidity are the deferrals of all obligations, they emphasised from HUTU, as they call on all levels of government, from local self-government units through to counties and the companies owned by them, to define such measures as soon as possible. They also expect the Croatian Government to make clear recommendations in this regard.

”Travel companies are actively doing everything possible to retain their employees and prepare for the normalisation of the situation as well as possible for the rest of the tourist year. We regard these measures as the first step to amortise the shock of the disruption of tourist traffic, but in order to stabilise business operations, it’ll be necessary to define a second round of measures when the losses start to add up. In this part, we’re ready to continue to actively participate in proposing and assisting the Croatian Government in defining the most effective measures,” HUT said.

”This pandemic has raised global awareness of the importance of agriculture and the food industry. Today, with its own milk production, Croatia meets less than 50 percent of its market needs, so future measures, even in these times of crisis, will have to focus on revitalising the dairy and agri-food sectors in general,” Dukat said.

Vindija pointed out that they are currently producing at full capacity and are doing so over three shifts.

”The demand for local food products has broken records for this part of the year, and it’s our responsibility to ensure a smooth supply and keep the safety of all our workers, subcontractors, partners and customers safe.

The Vindija Group welcomes these measures, as it’s crucial at this moment in time to ensure the liquidity of our companies and to maintain jobs, so that production and other economic activities can continue on a regular basis. It’s a responsible and timely move that will support business stability and counteract the far-reaching effects of the pandemic crisis,” Vindija commented.

The measures are also welcomed by the Pivac Group. However, they point out that, given the fact that the market situation is changing day by day, it isn’t possible at this time to determine precisely to what extent they will contribute to the planned goals.

“We’re in an extraordinary situation and it will take some time to show how it will affect the business in the long run. Once the true proportions of the pandemic are known, it’s inevitable that the measures will need to be evaluated and revised and we’re convinced that the Croatian Government will take the appropriate steps,” they said.

Gavrilovic is focused on maintaining its production. “We urge the government, when adopting these measures, to take into account the specificities of particular groups of businesses and to consider additional measures such as maintaining the smooth flow of goods across the European Union so that the food industries can maintain a high level of food product productivity,” they say.

They added that during the coronavirus pandemic, exports of strategic food raw materials outside the EU should be restricted in order to maintain stable input prices and protect the food industry within the EU itself. They also say that direct assistance should be provided through co-financing part of the wage bill through taxes and contributions for activities that are directly affected by coronavirus.

From PIK Vrbovec, they also believe that the Croatian Government is doing everything it can to protect the economy.

”We’re in constant communication with government representatives and we’re doing everything we can to make sure our production and supply chain remains fully operational. PIK meets 40 percent of the Croatian market’s needs for red meat and meat products in Croatia, and at times like this, it’s extremely important to ensure smooth production and distribution, for which we have the full support of the government. All security measures, which PIK Vrbovec approaches in this situation in a responsible and proactive manner, are continuously checked and aligned with the latest recommendations of the authorised bodies,” they say.

Woodworkers and the furniture industry have been among the first to feel the slowdown and the onset of the coronavirus crisis, so they were the first to contact the government for help. The package for these producers also included a few of those aimed specifically at them, such as delaying timber payments to the company Croatian forests (Hrvatske sume).

For many, however, it is too early to make estimates until the announced measures, or regulations and ordinances, have been properly developed and published. It is unknown, for example, whether certain measures related to liquidity credits or wages will be able to be used by companies that have already had their accounts blocked, and many smaller producers unfortunately are in this predicament, especially in the processing and production of pellets.

“I hope this is only the first, ”firefighting” measure and that a more serious package will follow in thirty days, as this crisis will take longer to resolve and the consequences need to be treated so as to ensure not only relief, but also the preservation and the future of this business. From this point of view, the measures that have been adopted are like putting a plaster on a gunshot wound,” said Bjelina’s director, Stjepan Vojinic. Repayments and payment delays, he believes, will not save businesses in the long run.

The Pozgaj Group, an exporter that employs 500 people says that its chairman of the board, Nikola Pozgaj, has submitted to the Ministry of Agriculture a proposal on how to implement the government’s measure on extended payment currencies with Croatian forests. It states that it is necessary for this measure to be applied retroactively to all invoices issued as of February the 1st, 2020, as we’re entering the choppiest waters of the crisis when invoices will be due in April and May, and their maturity has been delayed by this coronavirus measure.

”We’re appealing to Croatian forests to not unilaterally adopt any measures that would conflict with the measures of the government,” stated Pozgaj.

Boris Vukusic, president of the Association of Small and Medium-Sized Shipbuilding at the Croatian Chamber of Commerce (HGK), welcomes the coronavirus measures, but points out that the sector is particularly affected by the fact that it procures 90 percent of its raw material from imports, and the temporary shutdown of operations calls into question deadlines for the completion of construction, while nautical fair cancellations are also happening, resulting in the absence of new contracts.

”All this, and with the help of the measures, will certainly help many shipbuilders in an uncertain situation,” stated Vukusic.

”It’s high time for the state to decide to switch to paying VAT on the realisation of the payment of bills and not upon actually issuing them, which is, even without a crisis, an absurd situation into which Croatian businessmen are put,” Vukusic pointed out.

Large construction sites are currently functioning and all players in the construction sector are hoping for it to simply stay that way. If investment cycles continue, then Croatian construction companies won’t question the same or a similar level of planned revenues. This would mean that the new government measures aren’t entirely crucial for them, but the whole sector is still worried about the question of whether or not construction sites will need to be closed, or whether or not it will be possible to organise work on construction sites depending on the conditions of future quarantines.

“When we investigated the situation in Italy last week, it wasn’t clear whether or not they were closing construction sites at the same time as when shopping centres and hospitality facilities ceased to operate. Formally, it appears that construction sites weren’t listed anywhere in Italy for closure, but honestly, they appear to have made some reallocation of jobs in favour of locations that aren’t being put under strong measures,” says a source who didn’t want to be named.

”We’re working normally,” claims the CEO of the Krizevci-based construction company Radnik, Mirko Habijanec, president of the HUP Construction Association.

He stated that the same is the case with other construction companies, and he considers the Croatian Government’s coronavirus measures to be commendable because they will help a lot in mitigating the evident damage that occurs in other industries due to disruption of work processes. However, Habijanec doesn’t agree with the growing number of appeals for the introduction of a measure for the write-off of overdue payments to the state, for example, write-offs of contributions for pension and health insurance for employees whose employers are practically earning only 20 percent of their planned income.

“The write-offs don’t lead us anywhere, but there’s justification for introducing partial subsidies for direct damage incurred – for example, if the workers were stuck at home and couldn’t fulfill their obligations, in which case employers should be compensated for a certain amount,” said Habijanec.

He added that Radnik procured some of its strategic materials by paying for part of its deliveries in advance, which maintained continuity and prevented a deadlock.

“However, the possible problems for the builders in the upcoming period due to the supply of materials can’t be ruled out, as they come mainly from imports. The coronavirus crisis has shown how much we depend on the external market, so the best government measures would be those that have yet to be brought in to strengthen and even revive those industries we once had, an example being the steelworks,” he noted.

Gordana Vrdoljak, a member of the board of directors of the large Slavonian transport and logistics company, Ricardo from Darda, said that the company welcomed the government’s coronavirus crisis measures and thought that they would alleviate this crisis and help to secure current liquidity and maintain jobs. Accordingly, the Ricardo administration has prepared a plan to secure funds for the payment of salaries for the next three months.

Croatia’s largest shipping company, Jadrolinija, pointed out that given the uncertain economic situation caused by the coronavirus epidemic, any assistance and support from the state to the economy is certainly welcome.

“At the moment, we can’t predict to what extent the drop in revenue from passenger and vehicle traffic could be, given the unknown duration of this situation. We believe and hope that the conscientious behaviour of all of us, this epidemic will be over as soon as possible and we’ll continue with our successful business,” said Jadrolinija Rijeka.

Croatia Airlines has been taking all preventative measures since the onset of the coronavirus crisis to ensure the basic functioning of its business processes in these worrying circumstances, including adjustments in restricted movement and assembly conditions, the national airline said.

”On January the 23rd, the crisis management readiness level was raised, and on March the 10th, the crisis headquarters of the company was activated. Since March the 10th, a total of 410 flights have flown and nearly 19,000 passengers have been transported.

So, with these extraordinary circumstances, the company strives to carry out its planned business activities as much as possible, in accordance with the current circumstances, while sharing the fate of the entire aviation industry, which suffers daily damage caused by the negative effects of the global coronavirus pandemic,” they say from CA, adding that as Croatia’s national air carrier, which strongly supports Croatian tourism and the entire Croatian economy, it supports all previous measures adopted by the government, as well as any possible future measures to assist the Croatian economy in order to overcome the damage caused by the coronavirus pandemic.

Croatian motorways (Hrvatske ceste) is ultimately a public company and its primary public interest is more than profit. They have also become involved in helping their customers. Thus, HAC, as part of its assistance to the economy, will implement a number of its own measures, which are also part of the overall measures introduced by the Croatian Government.

The temporary suspensions of concurrent services on Croatian motorways and fees for extraordinary transport licenses shall be suspended until the 1st of June, 2020, which is particularly important because of convoys currently operating international goods transport across the country.

In addition to this, HAC also issued a temporary measure on March the 13th, 2020 for users who don’t have an ENC device and made available 3000 devices at a discount of 40 percent, at a price of 73 kuna instead of the previous 122 kuna.

This article was originally written by Marija Brnic, Darko Bicak, Marija Crnjak, Suzana Varosanec and Marta Duic

Make sure to follow our dedicated section for more on coronavirus in Croatia.


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