Croatia: Latest developments in working life Q3 2019
The standardisation of employment conditions for all employees in the civil service, an agreement to increase pay in the healthcare sector, and a call to balance pay for government and public sector employees are the main topics of interest in this article. This country update reports on the latest developments in working life in Croatia in the third quarter of 2019.
Civil service employment conditions standardised
The amendment to the Civil Servants Act redefines provisions relating to state exams, fixed-term civil servants, the classification of jobs, and the evaluation of the work of civil servants and employees in the civil service. Previously, employees in the civil service concluded employment contracts and the Labour Act was applied to their employment relationships (as it is for employees in the private sector). Going forward, employees in the civil service will be employed in the same manner as civil servants. They will no longer conclude employment contracts and the decision on their admission to the civil service will instead be issued as the legal basis of their employment relationship. The Civil Servants Act will apply to their employment relationship.
- Parliament of the Republic of Croatia: Zakon o izmjenama i dopunama Zakona o državnim službenicima (OG 70/2019)
Healthcare sector talks lead to pay rise
The representative trade unions in the healthcare sector (which employs almost 70,000 workers) and the government's negotiating committee spent almost three weeks discussing a new collective agreement for the sector, with the trade unions threatening to strike. On 13 September, the government accepted the unions’ demands of salary increases and an annex to the sectoral collective agreement was signed. 
The two sides agreed on a rise in wages as of 1 September 2019. The agreement envisages a 3% increase for all employees in the sector on special working conditions – primarily shift work and unregular hours – plus an extra 4% for doctors and nurses involved in the area of disease diagnosis and treatment. For this purpose, the government is due to set aside HRK 400 million (€54 million as at 28 October 2019) annually.
The government felt that the increase was viable financially for 2019 and 2020. Trade union representatives acknowledged that not all workers in the healthcare sector would be satisfied, but said that the increase was the best they could achieve under the circumstances.
Trade unions demand equal pay for public and government employees
A 2% increase in the base pay of civil servants and public service employees came into force on 1 September, after the government decided to take a horizontal approach and treat both types of employee equally. 
However, at a press conference on 27 August, the Trade Union of State and Local Government Employees of Croatia (SDLSN) said that raising base pay by the same amount will not make salaries between public and government employees equal.  It will simply maintain the existing pay gap, while rises by sector and activity will only make this gap even wider. Furthermore, employees in comparable categories in state administration, public services and local government will continue to have different salaries. The union argued that the only solution was for the government and social partners to agree on a long-term and consistent pay policy, where the salaries of public and government employees in comparable categories are brought in line with one another.
Salaries in Croatia are relatively low in terms of purchasing power, but relatively high in terms of gross domestic product per capita and labour productivity. There are many reasons for this. While some are clearly visible (for example, low economic activity, large public sector, significant tax and contribution burden), others are less obvious (for example, excessive administrative costs relating to salaries, unclear and complicated salary systems). Therefore, it is important to identify ways to increase wages that are related to increases in productivity. Wage increases in the public sector – which would transfer to the private sector – that are not related to increased productivity could endanger the competitiveness of the Croatian economy and be a serious obstacle for long-term economic growth.