Pre-bankruptcy Settlement in Linić

Announcements from some media regarding the departure of Finance Minister Slavko Linić, as Prime Minister Zoran Milanović is allegedly cooling off towards him for some reason, seem to speak about the pre-bankruptcy settlement process of the Finance Minister himself.

I am not sure if the creator of the pre-bankruptcy settlement has entered that phase himself, but if he has, then the trimming of gross salaries by three percent for state officials, civil servants, and employees is Linić’s swan song. I know, those few people who read these lines will say that I am cruel and not socially sensitive, but this is, after a long time, a concrete move by Prime Minister Zoran Milanović, for which, there is no doubt, the Minister Linić is actually most responsible. And most importantly, it is a good move.

It tells us several things. The first is that the influence of Minister Linić, if nothing else, has not weakened at least until now, although one should not forget that a seed of discord has been planted that could lead to a real conflict at some later stage, for example regarding INA. The question is how much that would benefit Milanović considering that Linić is not Mirela Holy, Davor Bernardić, or Zlatko Komadina. If a conflict arises between Milanović and Linić, feathers will fly because despite unpopular moves, or perhaps precisely because of them, Linić is not as disliked in public as someone at the top of the SDP might think.

Linić is the pit bull of this Government that manages a country brought to the wall. His virtue is that he is not a typical politician who will simply pander to the electorate; if he disagrees with the Prime Minister, he says so immediately, and his arrogance is limited only towards those who have been deceiving this society for years by breaking laws or exploiting their loopholes. Unlike Linić, the former First Deputy Prime Minister Radimir Čačić had unlimited arrogance, and besides those he was rightly arrogant towards, he answered every coherent question from journalists arrogantly and with disdain. This is the difference between the two of them, and therefore I believe that the potential departure of Minister Linić would leave deeper consequences for Prime Minister Milanović than if the Prime Minister had dared to confront Čačić.

The second thing this reduction in gross salaries tells us is that we are at the wall. This is confirmed by the fact that the Government, from the beginning, despite advocates for a more radical approach like Čačić and Linić, has not had the courage to delve deeper into reforms and is now forced to violate what it has already agreed upon with part of the unions. Although this move is late, it is necessary but will actually serve as a fire-fighting measure because it lacks the necessary depth of change. For example, at the beginning of the mandate, it was said that one of the main tasks of this Government would be the reorganization of the state structure, which should create a more efficient state service for citizens. Although there were initial ideas on how this would be executed, in the end, nothing was done, and it is certain that the Government could have ended this mandate with the trump card of entering the next one with a more efficient state. 

If that ever happens, there will have to be layoffs in the state and public administration, and that is already a problem that Milanović has turned to his advantage this time with the dilemma ‘either reduce salaries or layoffs’. Of course, that is not the only reason why there is no move towards the reorganization of the state, as there is a much bigger problem of strong resistance from entrenched local political elites, but being aware of this, Milanović was forced to listen to Linić and reduce salaries, but the question is how effective that will be.

Finally, Milanović (read Linić) has sent another message with the salary reductions: that the additional burden on the economy has come to an end, or at least is nearing its end, and that it is time for the state to finally share responsibility for development with the real sector. The leader offered certain parameters at the beginning of October last year that could be taken into account when valuing work, from the Prime Minister down to the lowest positioned employees. According to these parameters, the Prime Minister’s salary would be reduced by 1785 kuna, but although the Prime Minister did not value his work here but merely reduced his salary ‘because there is none’, it would be good for him to continue on this path (it does not have to be salary again) and for the state to take on a bit more of the burden.

The reduction in salaries, therefore, indicates that Linić is not nearly as weak as some in Croatia might think. It also tells us that this is a fire-fighting measure because we are significantly late with reforms and finally, it tells us that the time of burdening the real sector is at least coming to an end. Although, I must admit, I sympathize with Linić’s style and way of working, and it would be a shame for Milanović to marginalize him, let alone dismiss him; he should, in addition to the merits for reducing these salaries, also be a bit more flexible towards the real sector. Laws must indeed be enforced, but they can also be flexible, especially in the environment in which the real sector operates, and give a little ‘push’ to every company that has potential.

The disagreement between Milanović and Linić regarding the new privatization law for INA, which the Prime Minister is pushing, could be, along with their other disagreements, a sort of pre-bankruptcy settlement for the Finance Minister. However, unlike Konstruktor, which will likely go into liquidation, we hope that Linić will emerge politically even stronger from this pre-bankruptcy settlement. The state of the country is such that we need such a pit bull.