HUP ‘gives a thumbs up’ for the Enforcement Act and ‘gives a thumbs down’ for the Communal Economy Act

The Croatian Employers’ Association welcomed the new provisions presented in the Draft Proposal of the Enforcement Act on Thursday, as it relieves employers of administrative burdens, while it believes that the new Communal Economy Act brings almost no positive changes.

“HUP supports the new provisions in the Draft Proposal of the Enforcement Act under which employers are no longer parties in the proceedings that carry out enforcement on wages, thereby relieving employers of administrative burdens. According to the new proposal, employers are left only with the obligation of distribution (payment to the account) according to the order of the court/FINA of the amount of wages exempt from enforcement,” states HUP’s press release.

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Although during the work of the working group there was discussion about the possibility of completely abolishing wage enforcement in such a way that with the entry into force of the provisions of the law, enforcement on wages and other permanent monetary income as an object of enforcement would be completely abolished, HUP notes that the Ministry chose the proposal under which wage enforcement is abolished for the future.

HUP explains that with the entry into force of the provisions of the Enforcement Act, the determination and implementation of wage enforcement is abolished, which means that from the day the Enforcement Act comes into force, no new enforcement documents can be delivered to employers nor can wage enforcement be determined.

The Communal Economy Act was a missed opportunity

Regarding the recently adopted Communal Economy Act, HUP believes that it brings almost no positive changes and that, unfortunately, another opportunity for positive shifts that would encourage entrepreneurship and investments has been missed.

“We warn of the negative consequences for the economy that primarily relate to the deterioration of the investment climate, which will be brought about by the recently adopted Communal Economy Act that comes into force on August 4. HUP believes that the new Act should have incorporated a solution from the existing Act that gives local self-government units the possibility to fully or partially exempt important properties from paying communal fees, as this is one of the measures to encourage investment,” it is emphasized in the press release.

HUP assesses that this further and again highlights the fact that the regulation of communal fees is proposed without any census and without the legislator providing any protective mechanism, which is potentially dangerous and harmful from the perspective of investors/entrepreneurs as well as citizens.

The fee is, it is added, conceived with too many variables that are left to the decision of local self-government units, which means that the amount of this obligation can grow to unacceptable levels if a maximum limit on total contributions is not prescribed.

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“On the other hand, without prescribed limits in certain activities, we witness daily that economic entities pay communal fees at coefficients up to 30 times higher than similar companies operating in another city or municipality. In our statements, we emphasized that there is no numerus clausus of communal activities in the Law, which allows local self-government units to declare any activity communal if it in any way serves the infrastructure,” states HUP.

The Employers’ Association believes that the Law should contain an exact list and description of communal activities and at the same time limit the autonomy of local self-government units in their determination, all for the reason that communal activities are performed as a public service, and the services provided in the performance of these activities are of general interest.

“The mentioned danger in the new Law is additionally concerning for entrepreneurs due to the fact that the income from the communal fee is no longer strictly tied to designated use, but can also be used for non-designated purposes. This violates the fundamental principles of taxation according to which the contribution/fee should have a precisely defined purpose that is related to the economic benefits that taxpayers have from its payment,” it is warned.

HUP also believes that a trading company, along with the entrusted communal activity, should not perform any other market economic activity, as this is contrary to the principle of protecting the public interest, the principle of public service, and the principle of non-profitability.

HUP supports the decision to increase the number of permits for employing foreigners

The Croatian Employers’ Association (HUP) supports the Government’s decision to increase the annual quota of permits for employing foreigners for this year by 3,269, to 27,479 permits, according to HUP’s press release published on Thursday.

The Government on Thursday increased this year’s quota of permits for employing foreigners by 3,269, approving 985 new permits for employment in construction, 270 permits in tourism, 650 in transport, 508 in the food industry, and 747 permits in agriculture and forestry.

HUP’s press release states that this quick reaction of the Government is commendable, especially considering the high utilization of the quota for importing labor, which has exceeded all expectations and forecasts.

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HUP also emphasizes that there is still a need for additional corrections to ensure the number of workers according to the needs expressed by the members of that association, with the trade sector leading the way. Namely, there is currently a continuous shortage of about 3,000 traders needed for the tourist season, especially in the areas of Dubrovnik and Istria.

They also state that there is still a labor shortage in other industries, with 110 workers currently needed in the metal industry, 321 in shipbuilding, 280 in the wood industry, and 120 in the electrical industry.

“We expect the Government of the Republic of Croatia to supplement this proposal and we want to remind that Croatia is in a very similar position compared to other European countries, given the state of the labor market which currently presents a challenge for everyone in the segment of the need for importing additional labor,” concludes HUP.