Croatia: Latest working life developments – Q4 2016

A new government, the revival of public sector collective bargaining, an increase in the basic salary for civil servants and public employees, and setting the minimum wage are the main topics of interest in this article. This country update reports on the latest developments in working life in Croatia in the fourth quarter of 2016.

New government measures

As mentioned in the previous quarterly report, the new Croatian government and new Prime Minister, Andrej Plenkovic, were approved by the Croatian Parliament on 19 October 2016. The new Prime Minister promised to boost economic recovery by easing regulations as well as reforming the education and judicial systems. His government was satisfied with figures showing a 2.9% increase in gross domestic product (GDP) in the third quarter of 2016 because it showed that Croatia was moving in the right direction. According to Plenkovic, this was partly a result of the previous government’s work – which sends out a message of political stability. The government proposed, and Parliament accepted, reforms to the tax system that are expected to make it simple, stable, sustainable and predictable.

Collective bargaining in the public sector

One of the new government’s first moves was to revive public sector collective bargaining between it and the trade unions. As mentioned in the report for the first quarter of 2016, there is a need to resolve the complex issues around civil servants’ and public employees’ salaries. These employees had previously been denied their right to a salary increase linked to years of service. They also claim their right to a 6% increase in basic salary set out in a 2009 agreement, which stated they would get this if GDP grew by 2% or above in two consecutive quarters. When this growth occurred in 2015, the government refused to pay out because it had not factored the claim into its budget forecast.

In the latest negotiations, the government proposed increasing the amount used to calculate public employees’ basic salary by 2% for 3 times during 2017, but public sector trade unions rejected this – except for the Trade Union of State and Local Government Employees (SDLSN) which concluded its agreement with the government on this on 23 December. On 29 December, the government decided to increase the basic salary for civil servants and public employees by 2% in 2017.

Increase in minimum wage

Another important issue is the demand, by trade unions, to gradually increase the minimum wage from 38% of the average monthly gross wage to 50%. Employers, particularly from the textile, leather and footwear sectors, have said this would bankrupt their industries. On 8 December, the government set the gross monthly amount of the minimum wage for 2017 at HRK 3,275 (€436 as at 25 January 2016), an increase of HRK 156 (€20.7).

Health sector issues

In the last three and a half years, 525 doctors have left the Croatian healthcare system to work abroad. The Croatian Medical Chamber called on the government to motivate doctors to stay in Croatia, because their migration represents a serious threat to the nation’s health and prosperity.

Debate on labour force shortage

There are intensive discussions between the social partners and the government on the migrant labour force. The employers state that their serious labour shortages can be solved only by employing foreigners. Trade unions, however, believe that this problem has been exaggerated and that it can be solved by increasing the pay of Croatian workers. They say this will motivate people to stay and search for jobs in Croatia, rather than emigrating. Nevertheless, the government increased quotas for the number of work permits for 2017 to 7,026; 1,800 of which are extensions of already issued permits. The remaining 5,226 are for new permits in 10 sectors. That is significantly lower than the number demanded by employers (23,707), but much more than in 2016 (3,100).

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