Collective bargaining in Croatia

The Act on Representativeness of Employers’ Associations and Trade Unions set out the representativeness criteria for the conclusion of collective agreements in Croatia. If only one union represents an organisation’s employees, then that union must be recognised as the representative union for collective bargaining. This is regardless of the number of union members and the proportion of employees with union membership. If more than one trade union represents the employees at an organisation, then all of these unions must agree which union (or unions) is (are) the representative(s). The law stipulates that a collective agreement is valid only if it is signed by the representative trade union(s) that represent(s) at least 50% of the members of the representative trade union(s). The agreement on the representativeness has to state the number of members of each representative trade union. If the trade unions cannot agree on the trade union representativeness, then it is decided by the Commission for Determining Representativeness (Povjerenstvo za utvrđivanje reprezentativnosti). Collective agreements are legally binding. Collective bargaining in Croatia is decentralised in the private sector and is mostly centralised in the public sector. It is still possible to collectively negotiate on every level – that is, on the conclusion of the collective agreement that will apply to employees of a single employer, several employers or an employer association.

Patterns and features of collective bargaining in the private sector and the public sector (that is, civil and public services and public enterprises) differ significantly; therefore, there is no single and uniform system of collective bargaining with a similar hierarchical structure and dynamics.

Collective wage bargaining coverage of employees, all levels

Note: * Percentage of employees working in local units where more than 50% of the employees are covered under a collective pay agreement against the total number of employees who participated in the survey.

Sources: Eurofound, European Company Survey 2013 and 2019 (including private sector companies with establishments with >10 employees (Nomenclature of Economic Activities (NACE) codes B–S), with multiple answers possible); Eurostat [earn_ses10_01], [earn_ses14_01], [earn_ses18_01], Structure of Earnings Survey 2010, 2014 and 2018 (including companies with >10 employees (NACE codes B–S, excluding O), with a single answer for each local unit)

Collective wage bargaining coverage is about eight percentage points lower than it was at the beginning of the economic crisis in Croatia in 2009, when it was 61%. The adverse impact of the economic crisis had a particularly negative effect on the overall level of bargaining coverage on employment in civil construction and in tourism and hospitality, two important sectors in which sectoral collective agreements were extended by the Minister of Labour’s decision to all employees in these sectors. In 2009, the construction sector employed about 100,000 workers, namely around 8.3% of all employees, while, by the end of 2013, that number had fallen to about 70,000 and a proportion of 6.4% of employees. The construction sector has recovered since then and, in March 2022, it employed 105,000 workers, that is, around 7.8% of total employment in Croatia. A similar trend was recorded in the tourism and hospitality industry.

The most common type of collective bargaining encountered in the private sector is a traditional system of sectoral collective agreements. Such a system has been established in only a small number of activities, with slightly different forms of collective bargaining. There are relatively narrow categories of activities in which collective agreements are signed for a definite period in regular cycles, but those that do include private healthcare practice, humanitarian demining and maritime transportation of freight and passengers. In these activities, as a rule, collective agreements have not been extended by an administrative decision of the Minister of Labour and are applied only by employers that are members of the relevant association, meaning that the collective agreement provisions are probably widely applied. Another type of sectoral collective agreement consists of the agreements for the construction industry, the hotel and catering industry, travel agencies and the wood and paper industry, which were concluded a relatively long time ago for an indefinite period and apply to all employees and employers in these sectors thanks to administrative extension. These agreements are responsible for most of the collective bargaining coverage, although the number of employees that they actually apply to in practice in unclear. A considerable number of employers have no instruments to control their application. Some of these agreements are very dynamic and up to date, even though they have been concluded for an indefinite period, because of regularly signed annexes and additions through which certain provisions are adjusted to the conditions in the sector in question, including the regulation of the base wage. Others regulate only general issues and rights, but not the basic wage, so the specific issues are addressed through additional in-house agreements (for instance the collective agreement for catering). As a rule, these agreements do not contain unambiguous mechanisms for harmonising wages with macroeconomic and/or microeconomic indicators.

Another pattern of collective bargaining in the private sector consists of in-house collective agreements. Within this pattern there is also a certain heterogeneity, both in terms of the duration of the bargaining cycle (ranging from one-year agreements to agreements concluded for an indefinite period) and in terms of the content. These agreements are mainly present in large enterprises (with over 250 employees) and to a lesser extent in medium-sized companies (50–250 employees). There are also significant differences between sectors – they have a much greater impact in the mining and extraction, finance and insurance, and manufacturing sectors. However, unlike agreements for the public sector, these agreements as a rule precisely regulate the level of basic wages, but rarely contain specifically designed mechanisms for harmonisation of the basic wage with macroeconomic and microeconomic indicators. In general, collective agreements in the private sector, as far as other material rights are concerned, tend to imitate in terms of structure the material rights in the public sector (including public enterprises and state and public administration), but often differ in the number of individual rights. The numbers of these agreements are often low, but in successful sectors and enterprises can be significantly higher. It should be noted that, in several cases in the private sector, there has been a reduction in certain material rights of employees as part of the adjustment of the enterprise and the sector to the effects of the economic crisis.

Finally, it should be noted that there is a significant segment of the private sector, mainly in small and in some medium-sized enterprises of the service industry, in which the rights of employees have not been regulated by collective agreements at all. Unfortunately, there are no analyses to show the extent to which this has a negative impact on the level of wages or other material rights of these employees. There are no other recent data.

Employers express greater interest in concluding collective agreements at company level than in collective bargaining at industry, sectoral or regional level. This is supported by the fact that the number of collective agreements at industry, sectoral or regional level in Croatia is very small.

Levels of collective bargaining, 2022

Articulation

Croatia is characterised by very weak links between the different bargaining levels. Most bargaining is at company level, although there are some sectors – such as construction and catering, as well as the public sector – where there are sectoral collective agreements, sometimes in addition to company-level deals.

Bargaining rounds take place throughout the year, and there is no specific period of the year when they take place or a pattern over the year.

Coordination

Horizontal and vertical coordination is weak primarily because of the generally weak tradition of social dialogue, the low degree of coverage of private sector employees in collective agreements, the unwillingness of the private sector to accept trade unions as partners, and trade unions’ and employer associations’ insufficient capacities. In the context of a grave economic and social situation and alarming unemployment rates, the trade unions have begun to coordinate more effectively in the last few years, but coordination is still relatively weak among them, across the sectors and various levels.

Extension mechanisms

Extension of the application of a collective agreement is stipulated in the Labour Act, Article 203. The Minister of Labour may, at the request of all parties to a collective agreement, extend the application of a collective agreement concluded with an employer association or a higher-level employer association to an employer that is not a member of the employer association or higher-level employer association in question. The minister will decide if the extension of the collective agreement is in the public interest and determine if the collective agreement was concluded by the trade unions with the largest numbers of members and an employer association with the largest number of workers at the level for which it is to be extended.

Derogation mechanisms

Derogation from minimal standards set by law is stipulated in some of the collective agreements and it is possible to derogate from those collective wage agreements after agreement between the representative company trade union (or national trade union) and the employer, mainly in order to save jobs. Through a temporary employment contract (Labour Act, Article 46), it is possible to derogate from the general legal regulation on the remuneration and other working conditions applicable to the temporary workers assigned to the undertaking, namely that these cannot be lower or less favourable than those applicable to the workers employed with the undertaking in question for the performance of the same tasks. It is possible to set less favourable working conditions for temporary workers than for workers employed at the company in a collective agreement concluded between the temporary employment agency or an association of agencies and trade unions.

Expiry of collective agreements

Article 199 of the Labour Act sets out the possibility for the extended application of legal rules contained in a collective agreement. Following the expiry of a collective agreement, the legal rules it contains for the contents and termination of employment contracts continue to apply until a new collective agreement is concluded for up to three months after the original expiry date. A collective agreement may stipulate a longer period of extended application of its legal rules.

Peace clauses

In principle, there are no peace clauses within collective agreements and they are not used. However, Article 205 of the Labour Act stipulates that:

(1) Trade unions shall have the right to call and undertake a strike in order to protect and promote the economic and social interests of their members or on the ground of non-payment of remuneration or compensation, or a part thereof, if they have not been paid by their maturity date.

(4) A strike may not begin before the conclusion of the mediation procedure, when such a procedure is provided for by this Act, or prior to the completion of other amicable dispute resolution procedures agreed upon by the parties.

(5) A solidarity strike may begin even if the mediation procedure has not been conducted, but not before the expiration of two days from the date of commencement of the strike in whose support it is organised.

Article 206 defines disputes in which mediation is mandatory:

(1) In case of dispute, which could result in a strike or other form of industrial action, the mediation procedure must be conducted as prescribed by this Act, except when the parties have reached an agreement on an alternative amicable method for its resolution.

(2) The mediation referred to in paragraph 1 of this Article shall be conducted by the mediator selected by the parties to a dispute from the list established by the Economic and Social Council or determined by mutual agreement.

The consequences of the organisation of a strike or participation in a strike are set out in Article 215:

(1) Organisation of a strike or participation in a strike, which is organised in compliance with the law, collective agreement and trade union rules, do not constitute a violation of an employment contract.

Other aspects of working life addressed in collective agreements

As the building sector was particularly hard hit by the economic crisis, the amendments to the collective agreement for this sector demonstrate how adverse consequences can be lessened. Some collective agreements also address other working conditions such as working time.