December the 8th, 2023 – There are more and more foreign workers from distant countries turning up in Croatia, as Croatia bleeds talent. Could a quarter of the Croatian workforce be made up by foreign nationals by the end of this decade?
As Jadranka Dozan/Poslovni Dnevnik writes, every single update on the statistics of issued work permits for non-EEA foreign workers in Croatia, as well as data on the natural movement of the population, is a reminder of the deepening demographic and migration dilemmas and challenges this country is facing. As of the end of November this year, the number of foreign citizens who were issued work and residence permits exceeded 160,000 (160,464), according to the latest figures from the Ministry of the Interior (MUP).
In November 2023 alone, slightly less than 13.2 thousand were issued. Admittedly, this is a thousand fewer than in October, but cumulatively, in eleven months, the total number of issued work permits was exceeded by 30 percent on the level of the whole of last year. In the end, year-on-year growth could stand at around 40 percent. The current situation with more than 160,000 non-EEA foreigners who hold valid work permits is equivalent to, for example, a city the size of Split.
From Croatia’s immediate region to distant lands
More than 70 thousand or about 45 percent of those non-EEA workers come from countries in Croatia’s most immediate region, and about 41.5 thousand or 35 percent come from Asian countries, mostly from Nepal, India and the Philippines. As a matter of fact, the most foreign workers are employed in construction, for which more than 50,000 work permits have been issued, and in tourism and catering/hospitality, where there more than 40,000 have been rubber stamped. The Croatian workforce is becoming, well, less and less Croatian.
The scale of unfavourable population trends has long deserved treatment as a first-class political, social and economic topic, so it isn’t remotely surprising that demographic projections have been echoing in the media for days. According to those projections, the Croatian workforce made up of actual ethnic Croats could decrease by an additional 400,000 in the next two decades. which was recently also discussed by Croatian National Bank (CNB) Governor Boris Vujčić.
Here in Croatia, employers’ associations calculate that it is realistic to expect that the total number of work permits will exceed 200,000 next year and that the total number of foreign workers could reach 400,000 to 500,000 by 2030, assuming an average GDP growth rate of around 2 .5 percent in those seven years. In that case, foreign workers would make up a quarter of the total Croatian workforce, they say.
Integration costs and productivity…
Admittedly, the impression is that these hundreds of thousands of people who make up the Croatian workforce are spoken of rather laconically, with only passing warnings about the need for a more systematic approach to the issue of the integration of foreign workers and their associated costs. In addition, it is sporadically pointed out that the costs of hiring foreigners, primarily those from distant third countries, are about 20 percent higher than in the case of local workers. Since the majority of workers coming to Croatia are low-skilled, employers will emphasise that they are generally less productive in general.
In terms of long-term strategy, as well as measures aimed at the short and medium term, so far, it seems, there are no indications of a well-designed policy. Both in terms of considering the costs of integrating the imported labour force against the benefits for Croatian society, as well as proactive demographic and immigration policies in a broader sense.
The natural movement of the population follows the well-trodden path of the steady reduction of the working population. This week, Croatian statisticians published the latest data on the natural loss of the population, in which the only consolation is that it is at least a bit lower than it was last year. This downward trend in the number of live births in Croatia also continued into this year. In the first ten months of 2023, there were about 1,600 fewer live births than there were back during the same period last year. On top of that, the number of deaths fell slightly more, meaning that ultimately the negative natural increase is smaller.
In the comparable period from last year, natural population loss exceeded 19.5 thousand, and at the end of October this year it stood at slightly more than 15.7 thousand inhabitants. That figure corresponds to, for example, a city about the size of Čakovec. At the level of the whole of 2023, it’s looking likely that the natural loss of the Croatian population will be closer to 19 thousand, which is, for example, a city the size of Zaprešić.
Labour import… but what kind?
The import of labour is, by all accounts, inevitable. That said, for economic perspectives, it is very important whether it will be such that the decline in the share of highly qualified individuals in the total employment structure in Croatia continues or not. Over the last five years, that has fallen from 30% to 29%, while at the level of the EU average, this share is growing (from 34% to 38%).
The change in how the Croatian workforce looks owing to the influx of foreign nationals from third countries showed that in a very short period of time, it was possible to reach a labour market situation where every tenth worker in the Republic of Croatia is not even an EU citizen, and of which over a third comes from outside the immediate region.
“Even the most superficial look at the list of occupations indicates that most of the jobs in question are of a low level of complexity and added value, not many of those famed “specific types of knowledge and skills needed by the labour market” are visible. Highly qualified labour is even less visible, but mostly, we can just see the general labour force which enables the further growth of an unfavourable industrial structure and the decline of productivity”, stated Teo Matković, a senior research associate at the Institute for Social Research in Zagreb.
He noted that, for example, the immigration of students at any level is still completely marginal, as is the immigration of citizens from other EU countries. The most direct adverse externalities of such an approach are already very visible in the housing sector, and strong needs exist and will greatly increase in the field of education and social services as well. At the same time, he added, foreign workers are the biggest victims of the existing modus operandi.
Sustainable immigration and the rapidly altering Croatian workforce
“In the context of abandoning the regulation of the labour migration profile as enacted by the current legal solution, the minimum social responsibility of the business sector would be to demand that these costs be borne by employers – which would move the profile towards greater productivity, but also ensure the sustainability of immigration,” Matković believes.
Regarding the natural movement of the population, considering that now the fertile age is mostly taken over by the small number of generations born in the nineties, experts aren’t really surprised by the sharp drop in the number of live births over the past three years. This year, a new record low number of live births will be reached, and it is likely that in a few years, Croatia will drop to less than 30 thousand live births.
Matković believes that in the election year, topics such as family support through family and education policies will be emphasised, where in recent years, certain improvements have finally been seen – primarily in the availability of kindergartens, school meals, all-day school, as well as more generous parental leave and allowances.
However, this alone will not reverse the demographic trend, nor will it aid the Croatian workforce if things keep going as they have been. In short, he concluded, this country’s migration policy is currently at the stage of declaratory appeal, but it has simply been overrun by the stampede of de facto open flow created through a new law.