Demographic trends clearly indicate that in the coming years demand for foreign labor will inevitably grow

Assuming that the country's GDP will grow by an average of 2.5 percent annually over the next seven years, Croatia could have 400-500 thousand foreign workers by 2030, who will make up a quarter of the country's labor force, estimates the Croatian Employers' Association.

The growing presence of imported labor, states the regular publication Focus of the Week by the HUP chief economist Hrvoje Stojić, is clearly indicated by the number of residence and work permits. In the first ten months of this year, 147,301 were issued, as much as 39 percent more than last year, of which two thirds relate to work in the construction sector and tourism. At the level of the whole year, the number of work permits could reach 170-175 thousand.

Estimates say that 80 to 100 thousand foreign workers are currently working in Croatia, which is five to six percent of the total labor force this year. “Given solid economic growth and continued labor market tightness, it is to be expected that the total number of work permits next year will exceed 200,000,” Stojić states.

HUP also has concrete proposals on how to facilitate or “enhance” the employment of an ever larger number of foreign workers. In first place is expanding the list of shortage occupations for which it is not necessary to conduct a labor market test. It also proposes extending the duration of residence and work permits from one to two or three years and from 6 to 9 months for seasonal workers. It also advocates simplifying certain administrative procedures in issuing work permits. “Thus we recommend removing the obligation of taking fingerprints twice from foreign workers who are extending residence and work permits, given that this obligation is also questionable from the aspect of the EU Visa Code. A significant improvement would also be the digitalization of the procedure for delivering the residence and work permit decision by the police station,” the analysis states.

At HUP they also consider it necessary to reduce the retroactive payment of health insurance to HZZO for the last 12 months during which foreign workers did not reside in Croatia at all. Finally, since foreign workers seek a residence and work permit instead of the EU Blue Card, as a result of which the deadline for family reunification has been extended to as much as one year, “we believe that issuing the Blue Card should be accelerated with the help of strengthening the capacities of police stations and police administrations, that is, the Ministry of the Interior itself”.

Demographic trends clearly indicate that in the coming years demand for foreign labor will inevitably grow, and with it the urgency of a quality immigration policy. Recently, Governor Boris Vujčić also presented estimates that in the next 20 years Croatia could lose 400,000 people of working age, calling for the need to devise a demographic policy, both natality-related and immigration-related. “We must agree on what we want,” he said.

Thanks to stronger immigration and stronger economic activity, HUP expects employment growth of 2.7 percent this year. The analysis shows that the highest growth rate in October was recorded by the ICT sector, 8.3 percent in one year, as well as tourism (+4.8 percent) and the real estate sector (+4.4 percent).

Above-average employment growth in pharmaceuticals, 6.1 percent, is also considered encouraging, “as well as certain segments of capital goods production, such as fabricated metal products, equipment and plants, electronic products, transport equipment, branches in which higher added value is achieved.

HUP also points to the continuation of accelerated wage growth. Despite inflation, it states, “Croatia is recording a third consecutive year of strong real wage growth, that is, total earnings”, thereby leading in the CEE region and at the EU level”. In October, the gross nominal wage paid amounted to 1,596 euros and was 16.5 percent higher year-on-year, while the average net wage of 1,156 euros grew by 14.2 percent. This year HUP expects gross wage growth, that is, total employee earnings, of 15-18 percent, noticeably above the expected inflation rate (7.5 percent).

In addition to the labor shortage, intensified competition in the EU single market and lower inflation, the analysis states, real wage growth in Croatia next year “largely reflects the explosion of the wage bill in the 2024 budget”, by 32 percent. And with growth of 20 percent, HUP reminds, Croatia also has “one of the largest increases in the minimum wage”, compared with all EU member states.

Source: jutarnji.hr