Zagreb, March 26th 2020 – By the end of the year, if the government accepts the measures proposed by the initiative GLAS PODUZETINKA (Voice of Croatian Entrepreneurs), 250.000 jobs could be saved, 150.000 layoffs still inevitable.
CRISIS COST PROJECTION ON JOB AVAILABILITY
Headed by the prominent economical and political analyst PhD Vuk Vuković, GLAS PODUZETNIKA initiative made a projection of three possible scenarios that could befall the Croatian private sector. In the worst-case scenario, by the end of the year, 405.000 people could get laid off. In addition to that, by the end of 2021, 160.000 more people could be left jobless. If the current numbers are taken into account, the number of unemployed people could reach up to 700.000, more than half the number of currently working people.
The second scenario that follows the government’s measures will see the shock only partially mitigated. According to the assessments of the analytical team of the initiative, by the end of 2020, 290.000 people, and by the end of 2021, additional 120.000 people could face unemployment. If that happens, the total number of unemployed would climb up to 550.000.
“The assessment was made based on the negative reaction of leading companies to the proposed measures. They offer no security for planning the business years for 2020 and 2021 and some of the companies will have no choice but to go into debt just to keep afloat. In any case, companies will have to react with layoffs which are inevitable at this moment.”, says the initiative and adds that the government’s plan will cause a big growth of budget deficit. They cite the inadequate measures package as the main culprit and add that there are no bigger budget expenses cuts planned. “We estimate that the budget deficit in 2020 could, in that case, reach 39 billion kuna, or almost 10% of GDP. In 2021 the deficit would go down because of the end of paycheck subsidies, but it would still be around 27 billion kunas or 6.8% of GDP.”, they remark.
In the third scenario, the Government would completely adopt the measures proposed by GLAS PODUZETNIKA initiative. The job cost of the crisis would be greatly mitigated and could reach up to 150.000 in 2020 with additional 60.000 in 2021. That would mean that we would end 2020 with a total of 290.000 and 2021 with a total of 350.000 unemployed people. After that, according to the initiative’s projections, a much stronger economic recovery would follow and a huge number of companies would be saved from ruin.
“In the case of accepting our measures, the budget deficit would be a bit smaller in 2020, around 25 billion kuna (6.4% of GDP) and in 2021 the deficit would go down to 3 billion kuna (0.8% GDP) because of the assumption of a faster recovery of the private sector.”, the initiative points out and adds that all three 2021 scenarios have accounted for unemployment growth in both public and private sectors.
The crisis will undoubtedly have a negative effect on employment no matter the scenario, so the goal of GLAS PODUZETNIKA initiative is to reduce the possibility of the worst-case scenario as much as possible. “The Government at this moment does not understand the cascade effect on the economy that will be caused by their inadequate measures. Besides that, the Government has not, at any moment, given information on its own projections. They also did not tell us which data, predictions and simulations they are basing their decisions on. Until they show their data to the public, our projections are valid, limited as they are in access to official data, but adjusted with input from the members of the initiative and observations of effects in real time.”, concludes the initiative.
GLAS PODUZETNIKA has to this day gathered almost 60.000 companies, self-employed, small businesses and their workers. With support from companies and businesses that made a profit of more than 11 billion kuna in 2019, its goal is to save the livelihoods of as many employees and entrepreneurs as possible, and to save the Croatian economy from potential long-lasting crisis.
You can follow the Croatian entrepreneurs initiative on the Glas Poduzetnika Facebook page.