Background for Croatia

Between 2012 and 2022, gross domestic product (GDP) grew by 39.9% in Croatia, and this growth was significantly greater than the EU average growth rate of 15.3% for the same period. Total unemployment between 2012 and 2022 decreased significantly and stood at 7% in 2022, remaining close to the EU average of 6.2% for that year. Youth unemployment decreased by 24.1 percentage points from 2012 to 2022, while youth employment increased by 4.9 percentage points during this period. Female employment rates also improved and reached 65.6% in 2022. In 2020, due to the pandemic, unemployment rates increased, most significantly for young people (by 4.5 percentage points), reaching 21.1% in that year.

On 15 July 2014, the Croatian parliament adopted the new Labour Act (Zakon o radu; OG 93/14). The act aims to increase the number of employed people and to create a legal framework that enables employers to develop more flexible business models and to adapt to market demands while maintaining employee protection. Some smaller amendments to the act were passed in 2017 and 2019 (OG 127/17 and 98/19) and these related mostly to the rights of worker representatives. In 2022, there were further amendments to the Labour Act (OG 151/22), which entered into force on 1 January 2023. Through these amendments, telework can be performed permanently, temporarily or occasionally if, based on a proposal of the employee or the employer, the employee and the employer agree on this type of work. However, it must be ensured that the nature of the work and the degree of risk are in accordance with the regulations on occupational safety. An employee who works on the employer’s premises can, in order to balance their work, family obligations and personal needs, propose to the employer an amendment to the employment contract to implement telework for a certain period of time, especially for (1) health protection due to a diagnosed illness or established disability, (2) pregnancy or parental obligations towards children until the child reaches the age of eight years old and (3) providing personal care to an immediate family member or a member of their household. In the event of extraordinary circumstances resulting from disease epidemics, earthquakes, floods and similar phenomena, the employer may, in order to continue business activities and protect the health and safety of the employees and other people, agree to employees working from home without changing the employment contract. If the extraordinary circumstances necessitating such work last longer than 30 days, the employer has to offer the employee an employment contract that details the scope and nature of the telework.

Regarding social partners’ representation, the Act on Representativeness of Employers’ Associations and Trade Unions (Zakon o reprezentativnosti udruga poslodavaca i sindikata) was adopted in 2014 (OG 93/14). It stipulates the procedure and criteria for establishing representativeness of higher-level employer and trade union associations for participation in tripartite bodies at national level. It also sets out the procedure and criteria for establishing representativeness of trade unions for collective bargaining. The act was amended slightly in 2015 (OG 26/15).

Bipartite social dialogue developed at company level, while sector-level bipartite negotiations mostly remained underdeveloped. The reasons for the inadequate spread of bipartite (especially sector-level) social dialogue are the generally weak tradition of social dialogue, the low degree of coverage of private sector employees in collective agreements, the fragmentation of trade unions, the unwillingness of the private sector to accept trade unions as partners, and trade unions’ and employer organisations’ inadequate capacities. There is no uniform system of industrial relations in Croatia and this has created a complicated precondition for establishing social partner representativeness. The first system of collective bargaining is the system of bargaining for civil and public servants and employees, whose wages are financed from the central budget; the second system is collective bargaining in public enterprises that are majority owned by the state; the third system of collective bargaining is seen in units of local and regional self-government and in public enterprises founded by them; the fourth type of collective bargaining is encountered in the private sector, which has a tradition and a system of sectoral collective agreements; finally, the fifth pattern of collective bargaining consists of in-house collective agreements in the private sector. The Croatian Employers’ Association (Hrvatska udruga poslodavaca, HUP) is the only voluntary association of employers in Croatia that participates in the bodies of tripartite social dialogue. Employer organisation density in terms of the number of employees covered was 31% in 2013 (according to the European Company Survey 2013), while, in terms of employee organisations, trade union density was 20% and works council density was 13% (European Company Survey 2013). Šeperić (2017) estimates that the general trade union density rate is around 26%, with a decreasing trend. According to the latest analysis by Schirmbeck and Šeperić (2022), there are around 280,000 trade union members in Croatia. This corresponds to approximately 20% of all employees in legal entities in Croatia.