Sunday Shop Closure Proposal: Would Croatian Tourism be Affected?

Lauren Simmonds

From social and more basic economic questions to the worry of it potentially damaging Croatian tourism, the country’s most precious and strongest economic branch, opinion is divided when it comes to the proposal to restrict shops doing business on Sundays.

As Novac/Adriano Milovan writes on the 4th of February, 2020, not even several rounds of talks by those in the retail industry who gathered at the Croatian Chamber of Commerce have succeeded in establishing a common position on the proposal by Economy Minister Darko Horvat to restrict shops doing business on Sundays.

While some support limiting work on Sundays, there are traders on the other side of the trench who staunchly oppose such an idea. Regardless of the gap between the traders themselves, Horvat is going further forward with his proposal.

It isn’t only traders and those working in retail are deeply divided on this issue: a similar division exists among economists who otherwise have little to do with that field. However, most of the economists Novac interviewed felt that such a move would be questionable from the point of view of constitutionality, and that it would have major consequences for both trade, industry and the Croatian economy as a whole.

It should be noted that the Croatian tourism industry, which is by far the country’s strongest economic branch, generates one fifth of all Croatian economic activity, and that trade is a significant wheel in the ”cog” of the Croatian economic mechanism. Furthermore, both Croatian tourism and commerce employ a huge number of people. In other words, as some experts have warned, closing shop doors on Sundays would be a real gamble with the Croatian economy as a whole.

”There are certainly pros and cons to this issue. But as a tourist country, we also need to have our shops open on Sundays. I think that the decision should be made by the employers themselves, with the inspections monitoring whether or not they fulfill their obligations to their workers,” says Dragutin Ranogajec, president of the Croatian Chamber of Trades and Crafts (HOK).

He added that warnings had already arrived from major shopping centres that restricting or entirely banning work on Sundays would have a negative impact on their businesses. But, as he notes, small shops, which would face lower incomes, would also suffer significant damage.

”Every kuna is very important to them,” Ranogajec points out.

The big question is also what limiting shops working on Sundays would bring to Croatian tourism, as the majority of Croatia’s foreign guests, as Sanda Corak, scientific adviser at the Institute for Tourism, says, are made up of tourists staying in private accommodation and on campsites.

”There is a ban on shops opening on Sundays in other tourist countries. However, if private accommodation prevails in tourism, as is the case with Croatian tourism, then this can be a huge problem because these tourists really need those shops,” Corak says. They need the shops to remain open much more than people staying in hotels do. She added that Croatia has a relatively small share of guests staying in hotels and those in apartments and camps tend to dominate the Croatian tourism sector.

”Such a measure, in circumstances such as ours, would certainly bring a drop in turnover in shops and in Croatian tourism, or a drop in consumption,” fears Corak.

Predrag Bejakovic of the Institute of Public Finance also opposes the restriction or prohibition of shops working on Sundays. Bejakovic points out that it would be very difficult to explain why one activity is restricted or prohibited, while others, such as restaurants or cafes, can continue to work smoothly on Sundays. The consequences, he fears, could be even more severe than they may seem at first glance.

”Some of the shops would have to reduce their number of workers due to less traffic. In addition, because of a lower turnover, it’s more difficult to expect traders to raise wages. Economic growth would probably slow down a bit, too,” Bejakovic fears.

He points out that the state prohibits by decree the work of certain activities on certain days. Instead, he says, he should insist that workers are paid fairly on Sundays.

Decisions to ban Sunday trading should not be made without a quality analysis, which is currently lacking, said Zeljko Lovrincevic of the Zagreb Institute of Economics. He added that there is neither a simple nor a unique solution, given that the situation is not only different between countries but also within Croatia itself.

”Such decisions should be left to the local self-government units because the situation in Baranja or Dubrovnik just isn’t the same. Local self-government units will be the ones to best evaluate whether shops in their area should be open on Sundays or not,” says Lovrincevic.

He also warns that Croatia is full of specifics. For example, when making such a decision, the traffic of passengers will have to be taken into account as Croatia is a transit country and the traffic of passengers is strongest on the weekends.

Furthermore, it is important whether customers have alternative “shopping sources”: in Croatia, given the shape and proximity of its borders, they have open shops in neighbouring countries, especially in Slovenia, Bosnia and Herzegovina and Serbia. Therefore, the restriction or ban on work on Sundays could result in an outflow of demand from Croatian customers to surrounding countries.

In other words, our customers could once again be helping to bolster neighbouring countries’ economies, at a time when Croatia is finally starting to attract customers from overseas. Finally, there is the question of the moment when such proposals come.

”I think it’s better to think about the growth of compensation for forms of work such as work on Sundays than it is to restrict work, especially because we lack the workforce and because Croatian tourism is strong. If one wants to work on Sundays and pay their workers 50 percent or more for that, then one should be allowed to work. It’s up to the state to create a framework for work,” said Lovrincevic, who believes that compensation for working outside regular working hours could be increased.

In the end, he adds, it’s a sociological issue. Shopping malls have also become places for people to go and hang out on weekends, so bans in that area could also negatively affect people’s habits. Nevertheless, some macroeconomists believe that restricting work on Sundays would not necessarily have a negative impact on the Croatian economy.

”Purchase power doesn’t depend on working hours but on income. In Croatia, working on Sundays will not significantly increase the income of these traders, and it has negative consequences in the segment of family and social development. Therefore, my suggestion is not to work on Saturday afternoons and Sundays, with shops open until 10pm on Thursdays,” concludes Ljubo Jurcic from the Faculty of Economics in Zagreb.

A quick look at the arguments from both sides:

1) Reasons against Sunday restrictions on shops:

– The question is whether such a move would even pass the constitutionality test

– Most tourists in Croatia stay in private accommodation and campsites and are connected to shops

– Croatia is a transit country and many who go through it also buy things in its stores, especially on weekends

– Part of the traffic in the stores will flow from Croatia to the neighbouring countries

2) Reasons for Sunday restrictions on shops:

– Shopping in stores does not depend on their opening hours but on people’s disposable income

– Trade unions advocate restricting Sunday shops

– Trade is not an activity that must be done on Sundays

– Labour shortages are present in stores as well

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