Croatia: Construction sector collective agreement signed

A collective agreement in Croatia’s construction sector has been signed and the social partners have asked the government to extend it to cover the whole sector. They believe this would help combat unfair competition from the cheap labour created by the grey economy. The agreement would also serve as a blueprint for other sectors.

Croatia’s Construction Industry Trade Union (SGH) and the Croatian Employers’ Association – Construction Industry Association (CEA-CIA), signed a collective agreement for the sector (in Croatian, 5MB PDF) on 25 September 2015. It will last for an indefinite period although there is an obligation for it to be adjusted annually. It cancels the previous agreement from 2001, which had seven amendments. It covers approximately 20,000 employees who work for members of CEA-CIA, but the social partners hope it can be extended to the whole sector and used to limit the grey economy and unfair competition in the sector. The line Minister extended it to the whole sector by his decision (Odluka o proširenju primjene Kolektivnog ugovora graditeljstva, OG 134/15).

Process and contentious issues

The collective agreement is regarded as a means of helping the sector adjust to business conditions for 2016 and to comply with certain provisions of the Labour Act and the Occupational Safety and Health Act. An integral part of the agreement is the annex to the collective agreement on posting workers abroad (in Croatian, 1 MB PDF).

The negotiation process was rather slow and difficult, given that the sector has been in deep recession since 2009. Talks broke down at one point when the SGH initially refused to give up rights such as 50% overtime pay. However, the most contentious point was the 0.5% wage increase for each year of working experience. Employers tried to revoke this right, but the union, having older members, decided it was not a point for negotiation.

Main points of agreement

  • The lowest basic salary has been increased by 1.5% and is now HRK 2,866.78 (€377) for the simplest jobs. Accordingly, new tariff rates were increased for all types of jobs.
  • The total gross wages for the simplest jobs cannot be less than 95% of the minimum wage. It is important to note that, although pay can be expressed in a labour contract as a fixed gross amount, it cannot be lower than the equivalent salary calculated on the basis of criteria from the collective agreement.
  • The deadline for the payment of salary is the fifteenth day of each month after the month during which it was earned; only in exceptional cases can pay be delayed until no later than the twentieth day.
  • A worker has the right to 30% extra pay for working on Sundays; this is less favourable than the rate set by the 2013 collective agreement, but conditions and supplements for night work, work during holidays and shift work have not changed.
  • The workers still have the right to a 0.5% increase in salary for each year of service; and to an increased salary for arduous working conditions; and a one-time holiday supplement of HRK 1,800 (€237).

Most important changes and application

There are several significant differences between the new agreement and the last agreement which was concluded in 2013.

  • Flexible forms of working time have been introduced – allowing for an unequal distribution of working hours and an extended weekly working time through rescheduled working hours of up to 56 hours a week, or 60 hours if the job is seasonal.
  • Overtime work may amount to 250 hours per year, but a worker must receive a written request for this before the work begins.
  • Compensation for work stoppages which are not the fault of the employee is now 70% of basic salary, but this must not be less than the minimum wage.
  • The field allowance that an employer has to pay to an employee working away from the company's premises, if they do not cover food costs or other expenses, increased from HRK 80 to HRK 90 (€10.50 to €11.80) per day.
  • The number of days of holiday for single parents has increased.
  • The maximum duration of annual leave is five weeks, but more can be agreed at company level.

The agreement applies to all workers, full-time and part-time, regardless of their type of employment contract. It also applies to foreign nationals who have signed a labour contract with the employer unless the Labour Law or a particular law regulating the employment of these workers does not specify otherwise.

Social partners ask for extension

Employers and unions in the construction sector agree that there are many reasons why the collective agreement should be extended to the whole sector. The social partners in the construction sector have therefore proposed to the Ministry of Labour that the agreement should be extended to all workers and employers in construction activities (around 70,000 people) who are not members of the CEA-CIA. The social partners agree that extension will have various positive effects, primarily the removal of unfair competition in the market due to the use of cheaper labour. They also hope it will combat undeclared work and the grey economy, and that there will be more control over calculated and paid gross salary, taxes and social security contributions. This collective agreement is also important because it can be used as a blueprint for other sectors.

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