Croatia: Increased need for foreign workers debated

Despite Croatia's high unemployment rate, companies are finding it difficult to fill vacancies, particular in the construction, shipbuilding and tourism sectors. The Croatian Employers’ Association has urged the government to increase quotas for foreign workers, while trade unions are calling for an increase in wages so as to encourage more Croatians to actively seek work.

Background

Although there are officially about 225,000 unemployed people in Croatia, companies are experiencing difficulties finding suitable employees. The problem has led to intensive discussions between social partners and the government on bringing in workers from abroad.

In 2016, a round table meeting organised by the Croatian Chamber of Economy (HGK) on how to provide the necessary workers for the Croatian economy concluded that this was a broader European problem of depopulation and of an ageing population.

Davorko Vidović, an HGK adviser on labour policy and employment, has called for a new model for engaging foreign workers in Croatia. According to Mr Vidović, a major problem is that the country’s working population is too small: in addition to the large number of people registered as unemployed people, there are at least as many people of working age who are inactive. An additional problem is the Croatian educational system which does not take into account the demands of the labour market. Furthermore, there are also problems with limited labour mobility and limited participation in lifelong learning and adult education; this has led to many middle-aged people having lower employability.

The problem in the tourism sector is especially severe. The problem is best illustrated by the example of the vocational school in Lošinj where, among the 297 students, there are just 3 future waiters. Each season sees more and more tourists in Croatia; many new hotels are opening and many have already started looking for employees. Some have signed contracts with permanent seasonal workers, giving them even Christmas bonuses or service bonuses, to encourage them to return in future years. The tourism sector currently has around 95,000 permanent employees and it needs around 30,000 seasonal workers. The Croatian Employment Service says it has collected 10,000 applications from seasonal workers at various job fairs who are waiting for the call to start working. However, the tourist industry says there are not enough potential employees with adequate skills and knowledge.

Opinions of social partners

The Croatian Employers’ Association (HUP) has urged the Ministry of Labour and Pension System to reach an agreement with social partners about the number of working permits for foreigners that are to be granted in future years. Any delay in making this decision has a negative effect on the Croatian economy because, apart from the existing problems, it limits possibilities for economic growth.

Many employers have been facing serious problems in finding workers in construction, shipbuilding, tourism and transport. According to a survey carried out by HUP, companies in Croatia have 5,099 job openings for which they cannot find appropriately skilled workers. Furthermore, according some estimates, there is a need for 16,000 foreign workers. HUP has complained that, even for existing quotas for foreign workers, approvals are being issued very slowly; it is seeking much larger quotas and changes to the rules governing foreign workers.

On their side, trade unions believe that the problem is being exaggerated and that it can be solved by increasing wages in Croatia. The unions argue that this will motivate Croatians to actively seek work and to stay in the country instead of going to work abroad. The trade unions are not against bringing foreign workers into the country, but they fear this approach could be used as an excuse for lowering wages and permitting poorer working conditions. Foreign workers are ready to work for lower wages, without complaining under less favourable conditions and without joining trade unions.

The head of the metalworkers’ union, Vedran Dragičević, has claimed that the realisation of €1.5 billion worth of shipbuilding contracts was in question because of the lack of labour. It is estimated that, in the past seven to eight years, around 20,000 Croatian metalworkers have gone to work in Austria, Germany, Italy and the Netherlands. He believes that Croatian workers would start coming back if their basic wage were increased to €1,000 net per month. Mr Dragičević stresses that the trade unions are not against foreign workers because it is in their interest for contracted jobs to be done, but they want an increase in pay.

HUP members, however, do not support an increase in wages. They argue that Croatian companies compete in the open market and must be able to offer competitive prices, despite being burdened with very high costs. There is therefore little room for salary increases, though the situation differs between sectors. They stress that the problem of people leaving the country is only partly related to the issue of salaries, giving as an example, the information and communication technology (ICT) sector, which pays high salaries but requires thousands of new employees.

Opinion of Ministry of Labour and Pension System

The Ministry of Labour and Pension System has reviewed the system of allocating quotas for the import of foreign labour. The Minister, Tomislav Ćorić, has pointed out that bringing foreign workers into the country is a delicate process, which should be approached with care. The Minister is aware that the trend of emigration of highly skilled workers from Croatia is unavoidable, but also believes that it is necessary to enable sectors such as shipbuilding, tourism and construction to function normally.

The government has increased quotas for the number of work permits for 2017 to a total of 7,026, of which 1,800 are for an extension of issued permissions and 5,226 for new permissions in 10 sectors. This is significantly lower than of the number demanded by employers (23,707), but it is still an increase from 2016 when the quota was 3,100 work permits.

Commentary

Croatia is surrounded by countries with the same or similar languages and cultural patterns – primarily Bosnia and Herzegovina – which form a potential solution to its labour shortages. Statistics show that the largest number of applications for foreign worker permits come from the shipbuilding industry, followed by the construction sector and tourism. Trade unions have accused the government of having ‘double standards’, presenting as evidence the case of the shortage of doctors, which has prompted the authorities to promise higher wages to retain those professionals in the country. No such promises, however, have been made when it comes to the shortage of welders, waiters and masonry workers.

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