Šonje: Croatia Allocates One-Fifth of GDP for ‘Cold Operation’

In relation to our economic strength, GDP, and the number of employed, our country spends a lot. It consumes a lot of resources, said prominent economic analyst Velimir Šonje during his appearance on RTL Direkt on Monday.

– Relatively, this is an expensive country if we exclude allocations for health care and pensions and only separate what that cold operation costs. Here we are talking about the salaries of the administration, officials, employees, and about material costs and what goes through public procurement and outside of public procurement. We arrive at about 20 percent of GDP, so one-fifth costs us before we even earn some pensions and pass them on to retirees. Here we are relatively expensive, said Šonje.

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He explained that Scandinavian countries cost that much too, which take but also give a lot.

– The problem is always that balance. People will even vote for higher taxes in some societies if they feel that they are getting quality in return. Unfortunately, we do not have that feeling. The profession has been trying for some time, and the Lipa association has now started to address the entire breadth of that problem, actually to point out that in a number of public systems there are spaces for savings and for better management and for better results, better services for citizens considering how much is invested in those systems, he commented on the Black Book of Public Spending presented by the Lipa association on Monday, which he had previously analyzed in detail on his portal Ekonomski lab.

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The efficiency of the state apparatus would be better if there were stronger controls in the conception of policies, oversight, and measurement of efficiency, and if there were a greater role for the profession in that. Economic, sociological, and other professions are involved in public processes and the design of public policies precisely so that they are effective and achieve the greatest effect with the least resource expenditure. Of course, there is also a political part of the responsibility. In our case, the state is not separated from political parties. It is normal for political parties and the state to be one and the same when they gain power. That does not exist in the developed world, he established.

When asked by Zoran Šprajc whether the pension reform is flowers on the balcony with a rotten facade, Šonje said that it is positive that the government reacts to external stimuli, in this case, the European Commission’s objections due to the non-implementation of structural reforms. On the other hand, enthusiasm for ad hoc action, such as the announced pension reform, fades after a few days, and we need a systematic policy for implementing reforms, especially in the pension system considering that we are a nation that is aging and that reforms in that area are necessary.

– In 2018, there will be more reforms than there have been so far, but there will be fewer than would be necessary, concluded Šonje.