Croatia - Working conditions

Croatia's transition to the free-market economy began significantly to change the structure and level of employment in the country. During the socialist era, over three-quarters of the labor force of more than 2 million was employed in the public sector and by large, state-run enterprises. Unemployment was kept artificially low (approximately 9 percent in 1990) by over-employment and the creation of unnecessary jobs. During this period emigration was encouraged, and many people left the country to work abroad, contributing to low unemployment. A small private sector did exist under socialism, employing only 13 percent of the labor force in 1990.

With the arrival of the privatization process, new businesses opened and private sector employment increased to 45 percent. At the same time, employment in state-owned firms and the public sector fell to 36 percent of the labor force. Unemployment ceased to be regulated, and privatization and competition from more efficient businesses resulted in massive layoffs and early retirements. By 1998, 17 percent of 1.6 million people in the Croatian labor force were out of work. In order to ease the effects of high unemployment, the government pursued a policy of early retirement which, in turn, strained the pension system since there were far fewer people contributing to the fund than those seeking its benefits. Many pensioners received smaller pensions than they should have and were pushed into poverty.

The country's labor laws set regulations for a 42-hour work week, a 30-minute daily break, and a minimum 24-hour rest period during the week. Eighteen days of vacation are standard and time-and-a half is required to be paid for overtime. Most unions were able to negotiate a 40-hour workweek. The average salary after deductions such as taxes and contributions in 1998 was 3039 kuna, then equivalent to US$425. Over a half of gross salary (salary before deductions) goes to the government and various funds such as health care and pensions. The highest salaries are paid by the financial sector, which employs the smallest number of people. Those working in wholesale and retail trade, fishing, and mining average the lowest salaries. The average net salary is not enough to provide a decent standard of living for an average family. For this reason, most people supplement their income with self-employed activities, work in the informal sectors, or earn income from property such as rents and leases, in-kind income, or help from relatives living abroad. There is also a barter system for the exchange of goods and services, and those who can grow fruit and vegetables on small plots or in their gardens for personal consumption. In March 1999 the government signed an agreement which established a minimum wage of 1500 kuna (approximately US$211). Unemployment benefits also exist and currently assist almost 17 percent of the unemployed.

Croatia has a much higher level of job protection than other European countries. These regulations protect workers' job stability, but are costly to employers. For example, the law on termination of employment requires an advance notice of up to 6 months and, in certain instances, the approval of the workers' council. This makes labor costs much more expensive than in other countries whose economies are in transition and prevents the creation of new jobs. The regulations slow down the process of hiring new employees and make it difficult to offer part-time work. The government also regulates health and safety standards, which are implemented by the Ministry of Health.

Child labor has not been a problem in Croatia, while discrimination against women in the labor force is common if not prevalent. On average, women still earn less than men and share a higher percentage of unemployment than men (57.3 percent of women were unemployed in 1997 compared to 43.1 percent of men). Over half of the female workforce is employed in the service sector.

A large portion of Croatia's labor force is skilled and/or highly educated. In 1999, for example, out of 320,000 (33.7 percent) unemployed, over 30 percent consisted of skilled and highly skilled workers and about 7 percent were people with college or university degrees. Unemployment is highest among the young and is rising, and poor job prospects have driven many to seek work in other countries. Since 1990, the number of unemployed people under 30 years of age increased by 25,000. Since young people are generally most mobile, they tend to be the first to emigrate. Because of demand in other countries for a high profile labor force, many skilled and educated unemployed Croatians have been filling those positions. As a result, Croatia has been experiencing a serious brain drain since the 1990s.