Croatia Faces 300,000 Layoffs Within Three Months

Croatia Faces 300,000 Layoffs Within Three Months

Foto: Depositphotos

The analytics team of the VOICE OF ENTREPRENEURS initiative led by eminent economic and political analyst Vuk Vuković, carried out an in-depth assessment of jobs already in jeopardy, potential layoffs and the cost of efficient measures the Government should implement to prevent the economic collapse. According to the assessment of the analysts, 730,000 jobs in total will be in jeopardy within the next two months and the number of jobs which would be lost within the next three months could reach 300,000. Because of insufficient measures adopted by the Government for the purpose of assisting the economy, they have requested the Prime Minister of Croatia to dismiss Minister Horvat.

To avoid sweeping layoffs in the private sector, the initiative has proposed to the Government the measures to save the economy. The cost of these measures over the first three months would be 4.3 billion Croatian Kuna i.e. 8.6 billion Croatian Kuna over the period of six months. The stated cost refers to exemption from payment of the corporate income tax, health insurance and pension contributions, local income tax, public utility charges, urban lease and other local charges. In addition, the initiative has proposed a one-off abolishment of 4.9 billion Kuna of parafiscal charges over the period of six months.

For minimum wage subsidies, for which a measure has already been adopted by the Government for a part of entrepreneurs and the applications for which are already in course, additional 7.1 billion Kuna would be spent over the period of the next three months i.e. 14.2 billion Kuna over the next six months. The total cost of the stated measures and abolishment of parafiscal charges would be 16.3 billion Kuna over the period of the next three months i.e. 27.7 billion Kuna over the next six months. These measures would account for 4.1% of the GDP over the period of three months i.e. 6.9% of the GDP over a more likely period of six months, which is significantly less than the GDP percentages other countries have projected.

If the Government decided to intervene with the stated measures aimed at 185,000 jobs which are most at risk, the total cost of measures, with the abolishment of parafiscal charges, would be 8.3 billion Kuna over the period of 3 months, which is 2.1% of the GDP, or 11.8 billion Kuna over the period of six months which is 2.9% of the GDP.

„Considering that many other countries, whose financial situation is even worse than ours and which are even more indebted, have taken even more substantial financial measures than ours, we believe that these would be initial measures which would ensure at least some kind of continuity of operation of the private sector and the Croatian economy”, said Vuković.

A survey carried out among the members of the initiative prior to presentation of the Government measures has demonstrated that only 6.8% of entrepreneurs plan to accept and use the Government measures. As many as 68% of the surveyed stated that they are waiting for better and more quality Government measures, while 9% will choose the most extreme measures such as layoffs, suspension of payments to the state/city, closure of businesses or suspension of businesses which are in the course of opening. Aco Momčilović, in charge of carrying out surveys of the initiative, stated that the data obtained prove the failure of the measures to date and that a set of better measures is needed.

Hrvoje Bujas, one of the founders of the initiative, expressed his dissatisfaction with the presented Government measures after the Government’s press conference and his informal meeting with Finance Minister Zdravko Marić. He stressed that the Government has transferred the whole crisis risk on entrepreneurs. He called donating ministers’ March salaries for Zagreb’s earthquake relief “cheap populism” because tens or thousands of people working in the private sector and filling the state budget for the purpose of salaries of Government members will end up in the street. “Entrepreneurs are facing a tough decision: to apply for Government measures or to lay off their employees and close the businesses that took years or decades to build,” concluded Bujas.

Dissatisfied with the reactions from the Government and, in particular, with the reaction of Economy Minister Darko Horvat, as well as with insufficient measures which will result in a wave of dismissals, the VOICE OF ENTREPRENEURS initiative has requested from the Prime Minister of the Republic of Croatia the dismissal of the Economy Minister.

“By adopting these measures, Minister Horvat has rejected the proposal of our initiative, all relevant business associations and experts on the necessity of tax and contribution write-offs and considering his inappropriate public statements, he has shown that he is incompetent to manage his department in a crisis and that he does not represent the interests of the Croatian economy and society in whole. We need a Minister who will stand up for all businessmen in the same way that Minister Beroš stands up for health”, all initiative founders stated and requested immediate dismissal of Minister Horvat. “Appoint a competent Croatian Economy Minister and urgently establish an Economic Crisis Headquarters which must include representatives of both entrepreneurs and the economic profession”, the initiative members urge.

So far, the VOICE OF ENTREPRENEURS initiative has brought together more than 60,000 entrepreneurs and their employees, business owners and freelancers. Supported by entrepreneurs and business owners who generated over 11 billion Kuna in revenues in 2019, the goal of the initiative is to maintain the livelihood of as many employees and entrepreneurs as possible but also to ensure the survival of the Croatian economy facing the potential crisis which could last for years.

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