EMCC European Monitoring Centre on Change

Non-working Friday – support for preserving jobs

Croatia
Phase: Management
Típus:
  • Response to COVID-19
  • Income support for workers
  • Working time flexibility
Utoljára módosítva: 04 September, 2020
Név:

Neradni petak – potpora za očuvanje radnih mjesta

Angol név:

Non-working Friday – support for preserving jobs

Coverage/Eligibility

Workers for whom the employer, due to business difficulties, cannot ensure the payment of full salary for a five-day working week.

COVID-19 response

Employers in the following sectors are eligible for the wage subsidy during the COVID-19 crisis: accommodation and restaurants, transportation and storage, health, tourism, labour-intensive activities within manufacturing (such as textile, clothing, footwear, leather, wood, furniture).

Furthermore, employers whose activities have been prohibited by the government and those who can prove that their revenue is reduced by more than 20% due to the crisis are eligible. The period is not directly specified, but the application for the wage subsidy requires the provision of a tabular comparison of revenue by the end of the month in which the claim was filed with the same month of the previous year. Further, a forecast for revenue in the next three months, comparing the same period of the previous year needs to be provided. In the request for the support, employers should describe the reasons why they are seeking support for job preservation and provide the evidence and confirm. The also should send a signed Declaration of Accuracy of Data and Reasons, which they provide under criminal and material responsibility. The reasons are following: decrease of revenue; cancellation of reservations, events, congresses, seminars, etc.; cancellation of contracted business activities and orders; inability to deliver finished products or contracted and paid raw materials, machinery, tools, etc; the impossibility of new orders of raw materials, tools and machines necessary for work. 

During June 2020, the government had actively communicated with social partners and the Ministries of finance and economy regarding the implementation of the European Commission's SURE job-keeping programme. They finally agreed and the government on its session held on 25 June 2020 accepted the Decision on a new job retention scheme for companies affected by the coronavirus crisis. The scheme envisages the provision of state co-financing for wages according to reduced working hours. The measure is designed to help out employers who are forced to reduce working hours due to operating difficulties and a drop in business activities. 

Main characteristics

If employers prove to the Croatian public employment service that they cannot ensure the payment of a full working week's wages to their workers due to financial difficulties, the employment service will pay the difference between that amount and what employees would receive for having worked only four days. According to the contracts on aid for job preservation, the monthly payment covers the difference in workers’ salaries and transportation costs. Employers are still obliged to pay all social security contributions for workers on the basis of a full, five-day working week's salary. The measure is temporary and can last up to six months. It can be applied for any working time (full-time or part-time) and shift work (i.e. despite its name, changes in shift and working time is not confined to Friday).

COVID-19 response

Between March and June 2020, sectors affected by the crisis were entitled to a wage subsidy by the public employment service amounting to HRK 4,000 (€ 534) per month for a full-time worker and HRK 2,625 (€267) per month for a part-time workerIn Croatia, full-time is 40 hours per week, while part-time is deemed 20 hours per week. According to the data by the Croatian Pension Insurance Institute, only around 4-5% of all employees were working part-time. There are people that are working fewer hours, for example, in education, but this is very rare, according to the same source less than 1% of all employees. According to the amended conditions as of 6 April 2020, employers are eligible for support:

  • for workers employed until 19 March 2020
  • if they have registered their workers at the Croatian Pension Insurance Institute until 29 February 2020
  • if they are beneficiaries of self-employment support (owners and employees)
  • if they dismissed workers in March 2020 and they intend to re-employ these workers

The government also covers social security contributions. 

The subsidy is not granted if the employer dismisses more than:

  • 40% of the employees in micro-companies
  • 20% of employees in small companies
  • 5% of employees in medium-sized companies
  • 10% of employees in large companies

The new support measure for the reduced working hours, to be in force from 1 July to 31 December 2020, will target firms from all sectors that have more than 10 employees. Depending on the needs of the employer, the state can co-finance wages for working time reductions between 10 to 50 per cent of working hours per month. That means from two and a half working days, up to 50 per cent of the fund of monthly hours. Therefore, the co-financing of workers can be between HRK 400 and 2,000 (€53-264). The government intends to reduce the administrative burden for application to a minimum. In other words, financial aid can be given to companies that would work 36 hours a week and shorter, but not shorter than 20 hours a week. This support will not be available for teleworkers. The government intends to reduce the administrative burden for application to a minimum. The estimated value of the investment in the new scheme will reach some HRK 3 billion (€397 million) by the end of 2020, and will be financed mostly by the European Commission's temporary Support to mitigate Unemployment Risks in an Emergency (SURE) program. 

Funding

  • National funds
  • European funds
  • European Funds

Involved actors

National government
Funding.
Public employment services
They approve the subsidy to workers at risk of redundancy.

Effectiveness

During the COVID-19 crisis, by the end of March 2020, about 65,000 employers with 400,000 employees were using the governmental wage subsidy. At the end of April 2020, almost 84,000 employers with 485,000 employees have received support. For May 2020, 98,532 employers with 486 thousand workers received support. The total expenditures for May were HRK 1,897 million (€252 million). 

In the annual report of the Croatian Employment Service, from 2014 to 2017, no new cases or users of this measure are mentioned. Non-working Friday is a programme that many participants are not aware of and employers are reluctant to participate due to the complicated procedure and potential risks. Likewise, they doubt that they would be able to retain the necessary number of employees, thus jeopardising the implementation of the measure, and risking increased loss and being forced to relinquish the received incentives.

According to the annual reports of the Croatian employment service, subsidies paid to employers for employment preservation amounted to only HRK 20,139 (€2,677) in 2009 and HRK 26,409 (€3,515) in 2010. However, for 2012 and 2013, only data on the number of participants are available. In 2012, there were 170 new participants out of a total of 703 participants in the measure, while in 2013 the total number was 1,310.

The social partners believed that support for a shorter working week would be used by 100,000-150,000 workers each month. However, according to the data by the Croatian Employment Service, in the period from 1 to 7 July 2020, 81 requirements were accepted for 4,404 workers, what is significantly bigger than in the previous years. 

Strengths

This measure helps workers keep their jobs for a limited period of time. Those that did participate report positive effects, e.g. a new atmosphere of security and trust. Likewise, another intended effect is the ability to overcome business crises and maintain work continuity during such times. Experience has shown that this measure helps companies during the transitional period by retaining the trained labour force who are prepared to continue working full-time when the need occurs. Thus, the measure prevents lay-offs and re-entry to the labour market, as well as long-term damage for the employer. Due to COVID-19 crisis, this almost forgotten measure became again very popular. 

Weaknesses

The measure coverage indicates that employers have not yet fully embraced the measure and that it should be enhanced and adapted to suit the groups it is intended for. The negative perception of measure adopters is reflected in their belief that the measure is applicable only to large stable companies which have sufficient operational resources to go through the procedure, as well as better financial benefits due to the number of employees. Workers continue to be at risk of redundancy if employers' financial difficulties last for more than six months. The control mechanism is weak and there are no guarantees that employers will not misuse harsh business conditions to continue paying lower salaries after the non-working Friday programme has stopped in order to avoid higher costs. The workers are not informed about the company's chances of survival after the non-working Friday programme stops. Although, in theory, the measure provides employers with a cost-saving opportunity, in reality, they have not been in favour of using it (as the data for the public expenditure on this measure suggest), partially because of the considerable administrative burden it entails. 

Példák

CEMEX (former Dalmacijacement), Lipik Glas d.o.o.
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