Croatia: Latest working life developments – Q2 2016

A vote of no confidence in the government, suspension of active labour market measures and problems with educational reforms are the main topics of interest in this article. This country update reports on the latest developments in working life in Croatia in the second quarter of 2016.

Vote of no confidence in the government

On 16 June 2016, the Croatian Parliament passed a vote of no confidence in the Prime Minister, Tihomir Oreskovic, and his government. Croatia will now have a technical government until the parliamentary election, which will probably take place in September 2016.

This situation has had an substantial impact, halting structural reforms to improve industrial relations. A new election could cost Croatia €1–2 billion in lost EU development funds. The crisis could also threaten the reform plan, which involves cutting government spending by HRK 2.5 billion (€340 million) in 2016, to be achieved in part by trimming the public administration and reducing healthcare and pension payments. Due to the political instability in the country, creditors have offered Croatia a high interest rate of 5% on its state bonds; in March 2015, the interest rate was 3%.

Public-sector collective bargaining – between the government and trade unions – has  stopped. This means there is no possibility of resolving the complex issues around civil servants’ and public employees’ salaries. Issues include a previously denied right to a salary increase linked to years of service and the provision of a 2009 agreement, which stated that basic salary would increase by 6% in the event of growth in gross domestic product (GDP) of 2% or above in two consecutive quarters. As mentioned in the update on Croatia for Q1 2016, this requirement was fulfilled in the last quarter of 2015 and the first quarter of 2016, although there is some disagreement about GDP growth between social partners and the government.

Trade unions believe the government should continue to negotiate the process of this salary increase. However, due to the resignation of the government, negotiations have been postponed. If an appropriate solution is not found, it is possible that the trade unions or their members will take the government to court. This could be costly for the government if it were required to pay reimbursements, legal fees and interest payments.

Active labour market measures suspended

On 23 June 2016, the Croatian Employment Service temporarily suspended the receipt and approval of part of the active labour market measures within its remit. It seeks to redefine the measures and improve targeting of the most vulnerable people in the labour market.

Curriculum reform group resigns

An expert working group that is proposing comprehensive reforms to school curricula has resigned. The aim of the proposed reforms is to radically alter Croatia’s education system, which is considered obsolete by social partners and the general public. The goal is a greater focus on the learning of skills by children and students, to more competitive and better prepared for the labour market.

The working group was made up of experts from different fields, as well as teachers and professors. It worked for over 16 months on the draft of the reform. However, the group was dissatisfied with the support it received from the government and therefore resigned, leading to a series of protests at the beginning of June in 12 cities across Croatia.

Commentary

After the hot summer there is a likelihood of an even hotter political and social climate in the autumn, related to the parliamentary election. Issues such as salary increases in the public sector and measures for dealing with high unemployment, particularly among young people, will be high on the agenda. In addition, the future of the proposed curriculum reform is now uncertain. 

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