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Judging by the basic indicators of the labor market, Croatia should be a country that effectively and quickly attracts foreign investments. Compared to most EU member states, the share of employees engaged in temporary jobs (8.4 percent) in Croatia is the highest relative to other members, but the overall average hourly cost of employees at 10.6 euros is among the lowest in Europe. Investments, however, bypass Croatia partly due to distorted relationships in the labor market, which are not solely the fault of demographics and emigration but also long-standing political neglect of these issues and clientelist relationships in society.
Supply problems began in 2008 when employment in Croatia started to decline due to the economic crisis, and the migration balance of immigrants and emigrants barely covered the negative natural increase. Demographic problems have only intensified since that year – the difference between immigrants and emigrants from Croatia has become negative, as has the natural increase, which has helped maintain the illusion that unemployment is being controlled. A few years later, at the end of 2016, solely due to emigration and negative natural increase, Croatia lost 158,690 inhabitants, and the labor market an additional 412,000 people who during that period first became entitled to a pension, mostly based on age or early retirement. Thus, in eight years, more than half a million people have disappeared from the labor market.
