Croatia: Latest developments in working life Q2 2019

Rules to bolster the rights of unemployed people, an increase in the maternity leave allowance, a potential referendum on the statutory pension age and the government’s new national reform programme are the main topics of interest in this article. This country update reports on the latest developments in working life in Croatia in the second quarter of 2019.

Rules on the rights of unemployed people come into force

A number of amended regulations on the rights of unemployed people came into force on 1 April 2019. These include the following:

  • Regulation on active job search and availability for work
  • regulation on adequate accommodation
  • regulation on the Croatian employment service’s records
  • regulation on conditions and manner of unemployment benefits paid as a one-time amount
  • regulation on activities related to employment
  • regulation on financial assistance and subsidies for travel and moving costs

These regulations were issued by the Ministry of Labour and Pension System (OG 28/2019) in order to enhance rights and opportunities for unemployed people and help them enter the job market.

Increase in maternity leave allowance

Croatia is experiencing a declining birth rate, which has negative long-term implications for a labour market that is already suffering from a workforce shortage. [1] As part of new measures to cope with this decreasing birth rate, the government announced an increase in the allowance for the second six months of maternity leave. From 1 April 2020, the allowance will increase from the current HRK 3,990 (€540 as at 30 July 2019) to HRK 5,600 (€757). [2]

Trade unions call for referendum on statutory pension age

In Q1 2019, trade unions launched the ‘67 is too much’ campaign in response to pension reforms passed by the parliament in December 2018 (which included increasing the retirement age to 67). [3]The reform entered into force on 1 January 2019.

Between 27 April and 11 May, trade unions collected signatures for a referendum on restoring the statutory pension age to 65. They required 373,568 signatures in favour of the action in order for the referendum to be held and in the end doubled that number, with 748,624 signatures submitted to parliament. [4]

The Committee on the Constitution may propose that the parliament consult the Constitutional Court over whether the proposed referendum question complies with the Constitution. The trade unions believe that organising the referendum would be a good opportunity for the parliament to help citizens regain their faith in the top Croatian institutions.

Government adopts national reform programme

The government adopted its national reform programme during a meeting on 18 April. The national reform programme analyses the progress made towards implementing the Council of the EU’s recommendations, reform priorities, economic policy measures and measures aimed at achieving the goals of the Europe 2020 strategy.

The programme sets out three main goals:

  1. strengthening the competitiveness of the national economy
  2. connecting the education system with the labour market
  3. ensuring the sustainability of public finance

To improve the business environment, the government will enable businesses to be set up online and will continue to pursue the liberalisation of the services market. Furthermore, it will implement a regulatory reform which will reduce the administrative burden on the business sector and cut parafiscal charges.

The programme also provides for new incentives to boost investment. The existing programme and incentives for investment in new technologies will be combined and the capacities of counties to attract investment will be strengthened.

As part of the public administration reform, efforts will be made to ensure a more efficient management of human resources by reviewing the wage setting system and digitalised work processes. [5]

During the process of drafting the national reform programme, four special thematic meetings were held between representatives of the ministries (responsible for the measures) and the social partners. Proposed measures in the following sectors were discussed during these meetings: public administration, social welfare, healthcare, the labour market, and science and education. The social partners submitted their written observations regarding the proposed measures and the ministries responded in writing.

Metal company offers perks to retain workers

Inoxmont-VS is a metalworking company based in the village of Sigetec Ludbreški, part of Ludbreg in Varaždin County. The company has about 170 employees and it underlines that its skilled workforce is the reason for its success. For those who work as installers and welders on construction sites and under difficult conditions, the company has introduced improved work benefits since the beginning of 2019. For example, such employees can earn almost HRK 23,000 (€3,111) per month, which is a significant amount in an area where the average net wage is less than €1,000. For each year of work, the company also pays social contributions for these employees for 15 months of their pension insurance and provides various other allowances. [6]

However, the company faces serious problems when it comes to finding qualified and experienced workers, and this problem is compounded by the fact that very few students in Croatia are training to be installers or welders. Therefore, the management of the company has found it necessary to increase the company’s import quota for foreign workers.

Commentary

The activities proposed in the national reform programme are praiseworthy, but it is likely to take some time before the business climate improves or the attractiveness of Croatia as a place to live and work increases. However, providing a clear message now about improved working and living conditions could be an important step towards maintaining the existing population in the country and encouraging those who have left to return.


Footnotes

  1. ^ Eurofound (2019), Croatia: Latest developments in working life Q1 2019 .
  2. ^ Telegram (2019), Murganić planira od 1. travnja 2020. povećati naknade za drugih 6 mjeseci porodiljnog; bit će 5600 kuna , 10 May.
  3. ^ Eurofound (2019), Croatia: Latest developments in working life Q1 2019 .
  4. ^ Reuters (2019), Croatian unions say they have enough support for referendum on retirement age , 12 May.
  5. ^ tportal.hr (2019), Pogledajte koje sve reforme Vlada planira provesti u idućih godinu dana , 18 April.
  6. ^ Poslovni dnevnik (2019), U ludbreškoj tvrtki 170 radnika ima 'njemačke' plaće do 3000 eura uz beneficirani staž, ali ni to ne privlači dovoljno mladih , 27 May.

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