Despite of Covid 19 pandemic and problems related to the war in Ukraine, labor market developments in Croatia in 2022 were quite positive with the number of unemployed people falling further. The positive trends in the labor market were significant increase in the Gross Domestic Product. The Government’s job preserving policies aimed at maintaining stable labor market and various other measures that have led to a further increase in the average wage, have contributed to the economic recovery and relatively large increase in personal consumption.
Croatia introduced Euro as its currency on 1st Jan 2023 and Croatian citizens and entrepreneurs should benefit from a significantly low currency risk. The country’s entry into the Schengen area means smoother entry to the country and significantly faster and cheaper transport options.
The government’s package of measures includes limiting the price of basic food stuffs in an effort to offset inflation.
On October 31st 2022, the Government and trade union of employees in public services signed an annex to the collective agreements regulating increases in the wage base and other monetary rights in 2022 and 2023. Wages and salaries increased by 6 % from October 1st 2022 and by 2% from April 2023. The new minimum wage for 2023 is €700 per month gross, or €560 net, not including social contributions, personal income tax and sur tax (an increase of €78). The new minimum wage will be 51.32% of the average gross wage or 62.14% of the gross median wage for June 2022.
The serious shortages of essential workers in Croatia started before the COVID-19 pandemic, and the pandemic further worsened the situation. There has been a significant shortage of workers in the construction sector, due to the unfavourable working conditions in the sector. Also, there are severe skills shortages in the healthcare system, with a huge need for doctors, general and specialist medical practitioners, as well as nurses.
The shortage of workers in the tourism sector is common; due to the work’s seasonal nature and limited employment opportunities out of season, young people are unwilling to enroll in educational programmes for these occupations. Since the outbreak of the war, more than 20,000 Ukrainian refugees came to Croatia. Information on the exact number of employed Ukrainian refugees is not available, but many of them worked during the 2022 summer tourist season on the coast as waiters, cooks, cleaners and shop assistants.
In 2022, further amendments were made to the Labor Act (OG 151/22), which entered into force on 1 January 2023. The most important changes are a clearer definition of working from home and a mandatory 50% pay increase for work carried out on Sundays. The act regulates a new form of work, that which is carried out through digital work platforms, both to protect people employed in this way and also to promote this form of work. This part of the act will enter into force on 1 January 2024.