In May, Employment Decreased by 3.4 Percent

Data from the Croatian Pension Insurance Institute for the month of May indicates a year-on-year decrease in employment of 3.4% (approximately 54 thousand persons, or 1.524 million), due to the economic crisis and the absence of seasonal employment.

The most significant negative impact on the overall level of employment on an annual basis was caused by the reduction in the number of employees in Accommodation and Food Service Activities (by 25.6% or 30.2 thousand employees), which was expected given that this sector has been most severely affected by the current crisis, and data from the Croatian Tourist Board for May indicate a year-on-year decline in total arrivals of 95.7% and overnight stays of 95.0%.

The decrease in employment of 3.2% (8 thousand persons) was also recorded in The Manufacturing Industry, due to reduced activity volume and a decline in orders. At the same time, the number of unemployed persons reached 158 thousand, representing an increase of 41 thousand (or +35.5%) compared to May of last year, while the adjusted unemployment rate reached 9.4% (+2.5 percentage points year-on-year).

Data for June indicate a somewhat milder growth in the annual number of unemployed persons (as of June 29, a total of 150,463 unemployed were registered, which is 34.1% more compared to the end of June 2019), considering the somewhat more favorable epidemiological situation, the opening of state borders for the free movement of people (more precisely – tourists), the resumption of production, and the gradual recovery of foreign demand (compared to the end of this May, the number of unemployed was lower by approximately 7.4 thousand persons). The average net salary in April reached 6,622 kuna, which is 0.2% higher year-on-year in nominal terms (+0.4% in real terms), thus continuing the long-term trend of annual growth in net salary, albeit at a decreasing rate.

The largest increase in the average net salary in April was recorded in Health and Social Care Activities (+7.9%), while the largest relative decrease was recorded in activities mainly related to tourism (such as Accommodation and Food Service Activities by 15.1% and Arts, Entertainment, and Recreation by 4.6%).

Given the large number of workers covered by job preservation measures (such as the payment of a minimum wage of 4,000 kuna per worker) among employers whose economic activity has been disrupted due to special circumstances, further deterioration in the movement of the average net salary for the months of May and June is expected (in June, there was a change in the scope for the payment of state subsidies, so the payment was conditioned on a 50% decline in company revenues in May year-on-year, instead of 20% in previous months and only in certain activities, such as tourism).

Announced measures from July also include a reduction in the working week and a related state subsidy of up to 2,000 kuna net per worker, with implementation expected by the end of the year.

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