Croatia - Poverty and wealth

Until 1991 Croatia was part of a socialist-governed country whose system and ideology did not allow great disparity between rich and poor. Those who benefited most from the system and were better off than the majority, were the senior functionaries of the ruling Communist Party. They lived in pleasant, state-owned apartments, drove good cars, and earned relatively high salaries. The poor generally lived in underdeveloped rural areas of the country, were badly educated, and were not politically active.

GDP per Capita (US$)
Country 1975 1980 1985 1990 1998
Croatia N/A N/A N/A 5,432 4,846
United States 19,364 21,529 23,200 25,363 29,683
Romania 1,201 1,643 1,872 1,576 1,310
Slovenia N/A N/A N/A 9,659 10,637
SOURCE: United Nations. Human Development Report 2000; Trends in human development and per capita income.

Distribution of Income or Consumption by Percentage Share: Croatia
Lowest 10% 4.0
Lowest 20% 9.3
Second 20% 13.8
Third 20% 17.8
Fourth 20% 22.9
Highest 20% 36.2
Highest 10% 21.6
Survey year: 1998
Note: This information refers to expenditure shares by percentiles of the population and is ranked by per capita expenditure.
SOURCE: 2000 World Development Indicators [CD-ROM].

Since Croatian independence in 1991 and a move to the free-market system, social conditions have changed, to the benefit of some and the disadvantage of others. Inadequate progress towards privatization and the appointment of political favorites to influential positions brought corresponding wealth to the few, although the free-market system has also rewarded a number of skilled or enterprising Croatians. Those groups dependent on the government for their survival suffered as a result of the changing economic system and suffered further from the social and economic impact of the war. These disadvantaged groups include pensioners and the privileged prewar middle class who later found themselves impoverished by changes in the country.

The poor of Croatia tend to be concentrated among the uneducated and the elderly. The United Nations Development Program 's 1999 Human Development Report states that in 1997 the average pension was less than half of the average salary. Pension payments are often months late, and the elderly have to rely on other means for survival, such as help from relatives. Retired people represent one-fifth of the total population, and as the ratio of pensioners to workers increases, the pension system is becoming overburdened.

The Croatian education system is almost entirely state-run and is very good. Close to 100 percent of children are enrolled in primary schools, and almost 70 percent attend secondary school. As a result, literacy rates are high (99 percent for men and 96 percent for women) and similar to those of other Eastern European countries and the industrial countries. The children of both the poor and the rich attend the same elementary schools, but although the vast majority of the poor are literate as a result of primary school education, they tend to drop out of the education system early. If they do pursue secondary education, they usually attend vocational high schools and few go to college. University education is not very expensive, but the number of scholarships and stipends that would help the poor are limited, and their numbers lag behind those of other East Central European countries. Insufficient education prevents the poor from competing for jobs that would earn them a better living, thus locking them into poverty.

The state maintains the country's health care system, although a small private sector does exist. A shortage of resources for the health sector has caused problems in recent years (only 6.7 percent of GDP goes towards health expenses), including a failure in targeting the needs of the poor, but most of the population does have basic health coverage. Since the price of food and clothes is high relative to average salaries, poor people spend most or all of their income on basic necessities. They tend to have weak and monotonous diets and although the majority have housing, they often find it difficult to pay for utilities or maintenance of their homes. Those households whose monetary income falls below 350 kunas per month (approximately US$55) qualify for the social assistance program. This monetary allowance equals 15 percent of average salary and, at this level, covers only a quarter of the expenses of poor households.

Even though Croatia has experienced significant social changes in recent years, differences between the rich and poor are not as vast as in Western economies. They are, however, greater than in other Eastern European countries.

Household Consumption in PPP Terms
Country All Food Clothing and footwear Fuel and power a Health care b Education b Transport & Communications Other
Croatia 24 4 18 4 3 6 41
United States 13 9 9 4 6 8 51
Serbia N/A N/A N/A N/A N/A N/A N/A
Slovenia 27 8 14 4 16 11 20
Data represent percentage of consumption in PPP terms.
a Excludes energy used for transport.
b Includes government and private expenditures.
SOURCE: World Bank. World Development Indicators 2000.

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