Home / Comments and Opinions / Miodrag Šajatović: Long Live Workers, Farmers, Clerks, and Some Honest Entrepreneurs!

Miodrag Šajatović: Long Live Workers, Farmers, Clerks, and Some Honest Entrepreneurs!

Za sve su krivi poduzetnici
Za sve su krivi poduzetnici / Image by: foto

Attacks on entrepreneurs in Croatia have begun again. They have once more been declared guilty for the fact that wages in the country are far lower than in the developed countries of the European Union. Somehow, they are also accused of taking the profits for themselves at the expense of workers’ wages. But this time, the insults are even worse. The average Croatian entrepreneur is accused of being incompetent. That they do not know how to organize high-productivity production and that is why wages are low. And this is just the introduction to the attacks that will follow when, due to the corona crisis, these proven incompetent owners of private companies, justifying themselves with the corona crisis, will further reduce wages.

It is important that all other classes in the state have found culprits. The witch hunt that repeats year after year reminds one of the time of early socialism when the slogan ‘workers, farmers, and honest intelligence’ was widely used in socio-political life. The honesty of workers and farmers was never questioned. They were all honest, hardworking, and moral. The situation was different with the intelligentsia. It was suspicious, and every intellectual had to prove their honesty and abilities.

Social Realism at Its Strongest

Today, the social realist slogan could be slightly changed to read ‘workers, farmers, clerks, politicians, and some honest entrepreneurs’. And there is not much help in that. Public opinion generalizes the entrepreneurial class to such an extent that it is easiest for entrepreneurs to immediately admit guilt. Yes, all those who did not meet the high criteria for entering politics, state administration, rentierism, etc., went on to establish and lead their own companies. All incompetent from incompetent to incompetent! It is incredible that in a country where everything is teeming with super-capable individuals in all aspects of life, all the worst end up precisely in entrepreneurship?!

Let’s take this a bit more seriously. Of course, among entrepreneurs in Croatia, as in all other professions, there are both good and bad. There are incompetent, controversial, and immoral individuals. Let’s say that half of the entrepreneurs, let’s say about 30,000 people, do meet the basic criteria. It is a legitimate question why they do not pay their employees average salaries of, say, 2000 euros per month. Net, as we see it here.

There is a close link between the level of average salary in a country and the level of GDP achieved. Croatia is no exception. The newly created value in Slovenia was greater even during socialism than in Croatia. The productivity of the entire community was also higher. Thus, wages in Slovenia have always been higher. The next question is, then why has Croatian GDP not grown faster since the return to capitalism in the early 90s? Certainly, part of the blame lies with the war. But not so much that it could not have been abundantly compensated in the next 25 years. If entrepreneurs are responsible for raising GDP, and they are, it is a legitimate question why they do not succeed in raising GDP from a miserable three percent growth per year during fat years?

Wrong Signals

Simplified, the environment has been sending bad and wrong signals for years. An entrepreneur is a person who connects ideas, employees, and resources to create added value through entrepreneurial ventures. This value is best realized in modern industries of the third, fourth, and fifth industrial revolutions. Top technologies and sales in the global market are a winning combination for rapid growth. And high wages. With about 20 percent of high achievers, Croatian industrial companies lag significantly behind. Why?

There are many reasons. It started with the unfortunate transformation when individuals close to the authorities were gifted companies that they destroyed through ignorance and theft. Then there were managerial loans used to buy companies. Managers repaid loans from company profits for years. Instead of that money going into technological renewal, it ended up in the insatiable state budget. Add to that a decade of dramatic non-payment practices. Entrepreneurs spent more than half their time collecting debts or fleeing from creditors. Instead of focusing on development. Again, there was no investment in new technologies. Let’s also add the lack of domestic banks that would support domestic entrepreneurs. Then there is the criminal exchange rate policy that oriented the country towards imports. Hundreds and hundreds of top entrepreneurs did not want to deal with production. They went into easier and more lucrative activities such as imports, distribution, trade, insurance, finance…

Oh yes. And entering tourism was a safer bet than industry. This is just a sketch for a defense in the ‘trial’ of Croatian entrepreneurs. When it is already raised that they do not know how to raise productivity, one only needs to flip through the annual reports of the EBRD. Where it is clearly seen that in times of crisis, it is precisely entrepreneurs who have raised productivity in society. Only they today create much more with fewer people than, for example, in 2005. But who cares. Entrepreneurs have long been declared guilty.

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