Is a Labour Market Crash Threatening Croatia?

Lauren Simmonds

Updated on:

The Croatian National Bank estimates that the number of workers in the next twenty years in Croatia will be reduced by half a million.

As Poslovni Dnevnik writes on the 25th October, 2018, employees are missing in almost all sectors across the country, employers are sending out alarming warnings for the government to act urgently, and now the CNB (HNB) estimates that the number of workers will be reduced by half a million in the next twenty years.

Just how Croatia can keep a workforce ticking over might lie in making it even more open to foreigners.

The deputy director of the Croatian Employment Service, Marina Nekić, HUP’s deputy general manager Bernard Jakelić, economic analyst Mladen Vedriš, Mirko Habijanec from the Construction Association of the Croatian Chamber of Commerce (HGK) and Nikolina Farčić, president of the Guild of Tourism Workers of the Chamber of Crafts of Dubrovnik-Neretva County, spoke in depth about this most pressing economic issue.

“Croatia lacks an estimated 50 to 60 thousand people, and currently it could employ about 17,000 people,” said Bernard Jakelić.

”We pay tribute to inaction”, he added – relating to education reform, pension system reform, and changes to the labour law. He noted that for several years they have been dealing with a battle with ministries on raising the quota for labour imports.

Marina Nekić said that both employment and unemployment are growing in Croatia. More than half of the country’s unemployed are women, and the highest number of people are those with high school education (57.9 percent) and about 26 percent of the unemployed have completed at least elementary school. There are also many unemployed people in the country who are over fifty years of age.

Mirko Habijanec emphasised that there is indeed a lot of clutter in the system.

“You have people at the Employment Institute, but who don’t work in Croatia. They have an open company, they have their healthcare here, and they’re waiting for retirement.” The building industry can hire people from the institute, we need to train them up, provide them with a decent salary – but they’ve got to want to work. There’s no willingness from people to work – they either work on the black (under the table), or they have other sources of getting money,” he said.

Nikolina Farčić looked at the problems of the hotel industy and of tourism. “The skeleton (backbone/frame) of labour does exist, and it’s supplemented by seasonal workers during the season. Seasonal workers are always needed. A major problem is the de-professionalisation of the workforce because at one point, everyone thought they could just do anything,” she said. Regarding the poor conditions offered to seasonal workers, she stressed that every medal has two sides.

“You can’t always point your finger at a salary, because they look great in their gross amounts. In addition, small business entities are very well aware of who works, and a reward system is needed,” she added.

Concerning wage increases for workers, Bernard Jakelić stated that HUP has no exact answers as to how much, after tax reform, within the gross amount – net wages could actually increase.

“I don’t think this is a real reform. For years we’ve been demanding a reduction in workload and operating costs, and we’ve made cosmetic changes,” he said.

“Our growth is based on an increase in personal spending and exports, and low tax rate corrections have had the effect of charging the budget and GDP growth. If they were a bit more courageous in tax changes, then they’d have more positive effects,” he noted.

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