Apparently, there are people who believe that Croatian public sector is not large enough.
Ivan Lovrinović, former economic strategist of MOST and current president of the Let’s Change Croatia party, which is in a coalition with Živi Zid, presented an idea which he claimed could be a solution for the unemployment problem, reports Jutarnji List on August 26, 2016.
Lovrinović’s employment plan surprised even his supporters. His idea is to employ as many as 200,000 people in local government and public sector. “The solution for the unemployment problem is so simple that it looks incredible”, said Lovrinović at the beginning, claiming that the programme had been developed by a group of economic experts.
“We all agree that unemployment is the biggest problem in the country. Our goal is to hire 200,000 people with a monthly net salary of 3,500 kuna. For that, it would be necessary to provide 8.4 billion kuna”, said Lovrinović who admitted that this was a huge amount of money, but before he explained where he would find it, the professor at the Faculty of Economics first described what would all these people be doing. “Various local administration units could report what they need to be done. These people could do everything – work on the infrastructure, teach children and the elderly, minor repairs and seasonal activities, there is also a cultural and entertainment programme… Everybody could simply show how creative they are!”
Would such massive new employment lead to problems in the private sector? Lovrinović claimed that it would not be a problem. “The economy would grow and therefore total incomes of private companies would also grow, so they would be able to offer higher wages.”
Lovrinović subsequently said that such a model was not anything new in Europe. “We have the example of Hungary which employed around 290,000 people. But I want to emphasize that this is an anti-crisis measure which can be discontinued when the economy stabilizes.”
And finally the main question – where would he find 8.4 billion kuna a year? “Everybody would earn 3,500 kuna. So, there would be no savings and they would spend their whole salaries. On an annual basis, they would spend these 8.4 billion kuna, and just through VAT the state would get back as much as 2.1 billion kuna”, said Lovrinović. “The state already spends 3 billion kuna a year on unemployment benefits, so we would just need to find another 3.3 billion kuna. We could refinance 170 billion kuna of public debt, lower interest rates from 5 percent to 2 percent with good negotiating skills, and there would be 5.1 billion kuna left in the budget.”