Immigration Key for Croatian Economic Development

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ZAGREB, December 8, 2018 – Croatia could be left without 800,000 inhabitants by 2050, and its economy will need a million new workers during that period, the conference “Migration and Identity: Culture, Economy, State” has been told in Zagreb, the Croatian Chamber of Commerce (HGK) said on Friday. Therefore, immigration is key for the Croatian economic development.

Between criticisms about the price of labour being driven down on the one hand and the preservation of cultural identity on the other, Croatia must adopt smart immigration policies and overcome its prejudices in order to survive, the conference heard.

“The Croatian economy does not stand a chance without immigration, because the emigration of people is a much bigger economic loss than their remittances could ever compensate for,” Davorko Vidović, adviser to the HGK president on labour policy and employment, said at a panel on migration and the labour market.

Krešimir Ivanda of the Zagreb School of Economics presented the Croatian labour market from the point of view of immigrants, citing structural problems such as a disproportion between labour market needs and education, very late employment and early retirement, and emigration.

“A remarkable shortage of labour due to negative demographic trends is yet to be expected. According to projections for 2051, counties will lose 30 percent of working-age population on average per year, if the labour activity rate remains at its present level. Although we are a country of emigration, we have also always been a country of immigration. Some sectors, such as construction, tourism and the manufacturing industry, have depended on immigrant labour for the last decade or so,” Ivanda said.

“Immigrants behave like local people with regard to economic activity, which is not good, because their activity should be much higher,” he added.

Željko Bogdan of the Zagreb School of Economics said that the Croatian diaspora could help the Croatian economy with their remittances because they have a positive impact on domestic demand and growth. He, however, added that the inflow of foreign currency could adversely affect the price competitiveness of exports.

His colleague Antea Barišić said that remittances have a countercyclical effect. Citing World Bank data, she said that remittances accounted for 4.5 percent of GDP in 2017. She noted that these were only remittances made via current accounts, while their actual amount was believed to be between 30 and 50 percent higher.

“Emigration has a social and political effect. According to the neoclassical model, the winners are workers in the country of emigration and capitalists in the country of immigration,” Barišić said, adding that as a result of emigration GDP declines generally but per-capita GDP rises.

For more on the Croatia’s emigration crisis, click here.


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