Croatia: Latest working life developments Q3 2018

Increasing tension over pension reform, a new decision on the representativeness of high-level trade union organisations and strike action and prohibited strike action 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 2018.

Trade unions resist planned pension reform

In the previous quarter, the government launched a comprehensive pension reform. On 17 September, trade union representatives walked out of a meeting with Labour and Pension System Minister Marko Pavić on a planned pension reform. The unions said that the Minister did not take into consideration their suggestions, but presented them with a finished proposal. The Croatian pension system consists of three pillars: the first is a pay-as-you-go scheme, the second a mandatory, fully funded scheme and the third consists of voluntary supplementary contributions. In 2008, a supplement was introduced for those with low pensions which could range from 4% to 27% of the pension, but which was only for those insured under the first pillar.

Currently, the legal retirement age for men is 65 years, while for women there has been a transitional period since 2011 (with a yearly increase of 3 months). Thus, for women it is 62 years in 2018, 62 years and 3 months in 2019, with equalisation by 2030. For both genders, an increase in the legal retirement age is envisaged during the period 2017–2031 to 67 years of age.^[1] Under the draft of the pension reform, the retirement transition should begin earlier, while early retirement will be penalised more strictly.

The abovementioned supplement of 27% is envisaged only for those who transfer their assets to the first pension pillar. Minister Pavić refused to negotiate on the delay of the proposed increase of the retirement age and the penalisation of early retirement. Trade union representatives felt that the Minister did not respect social dialogue because he went ahead with changes in the pension legislation package without debate. As the key demands by the unions (primarily to keep the existing legal retirement age) were refused, they announced protests and will call on their members to resist the government's proposals.^[2] The Croatian Employers’ Association supported the proposal. The Minister underlined that social dialogue has two sides and he would be willing to discuss the problems further. The Prime Minister, Andrej Plenković, explained that the purpose of the pension reform was to ensure the long-term sustainability of the pension system, provide adequate pensions and even out the position of present and future pensions. Furthermore, the intention was to increase the average pension in relation to the average wage, which is one of the lowest in the EU (less than 39% of the average wage). He said that the pension reform proposal was being prepared for public consultation, it was not about dismantling the second pension pillar and reiterated that current pensioners have absolutely no reason to feel that their pension is under threat. On the contrary, future pensioners would know where their contributions are going, while the second pension pillar would remain unaffected.

New decision on the representativeness of high-level trade unions

The Committee for the Determinacy of Representation decides on the representativeness of the higher-level trade union organisations. According to it, the Independent Trade Unions of Croatia, the Union of Autonomous Trade Unions of Croatia, and the Association of Croatian Trade Unions (MATICA) are considered representative, while the Croatian Association of Workers' Union lost this status because it did not fulfil the condition regarding the required number of unionised employers. The first session of the Commission was held in October 2012. To date, 78 meetings have taken place. The sessions are held depending on the dynamics of the arrival of the new cases that should be assessed.

• Narodne novine (OG) 52/18: Rješenje Povjerenstva za utvrđivanje reprezentativnosti

Strikes in Croatia Airlines and Uljanik

National air carrier Croatia Airlines has been experiencing problems for some time. The airline has suffered from flight cancellations, the departure of pilots and engineers, serious illiquidity (forcing the airline to sell landing slots at London Heathrow and engines), unfavourable working conditions and more. The dissatisfied workers wanted to launch a strike on 9 July, during the peak of the tourist season, but the Zagreb County Court forbade the strike.^[3] The Court concluded that the Organisation of Workers at Croatia Airlines (ORCA) trade union did not negotiate a new collective agreement in good faith. The representatives of ORCA refuted the Court decision, because they had met all prerequisites for the strike to be legal.

On 22 August, 6,500 workers took strike action at the Uljanik shipyard in Pula. The strike committee issued a statement calling for the payment of their salaries, and for the resignation of the management of the company.^[4] The Croatian metalworkers’ union (SMH-IS), which represents workers at the shipyards, called on the Croatian government to intervene and cover salary costs in the short term until a restructuring plan is finalised. The government agreed to cover the salaries of the workers for two months, so the workers opted to discontinue the strike.

Commentary

What is most likely the best solution regarding the pension supplement is the one proposed by Danijel Nestić ^[5], who argues that it should be extended to those insured under both pillars, according to their pension contributions and the value of their pension. In light of the ongoing problems, the future of the Uljanik shipyard remains uncertain.