Fininfo provides a brief overview of payments for job preservation that were disbursed to business entities for the month of April 2020, which are in partial or full ownership of the Republic of Croatia, local and regional self-government units.
The conducted analysis identified 133 entities that are in partial or full ownership of the Republic of Croatia, local and regional self-government units and were included in the list of payments for support for job preservation for the month of April. These business entities received 37.9 million kuna in support for job preservation, which accounts for 1.73 percent of the total payments amounting to 2.2 billion kuna for April 2020.
The analysis showed that the list of payments for support for March 2020 includes 113 entities that are in (co)ownership of the Republic of Croatia, local and regional self-government units, which is a slightly lower number compared to April. The support payments for March 2020 received by these 113 entities amounted to 15.4 million kuna, which constitutes 1 percent of the total support payments for the month of March.
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The table shows that 65 business entities, which are the subject of this analysis, are in (co)ownership of the Republic of Croatia and received 26.5 million kuna in support for the month of April, which is 70 percent of the total payments received by entities in (co)ownership of the Republic of Croatia, local and regional self-government units, or slightly more than 1 of all payments for the month of April.
Excluding the Republic of Croatia, whose entities received the highest support for April, the following table shows the top 5 local and regional self-government units whose entities received the highest support for job preservation for April.
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The table shows that entities in (co)ownership of the City of Zagreb received the highest support for job preservation. The total amount paid to these entities is slightly more than 3 million kuna for 378 workers. It should be noted that the ranking of the top 5 local and regional self-government units on this list significantly deviates from the size of the same, as the City of Virovitica is the only local self-government unit that appeared on the list and positioned itself immediately behind the City of Zagreb in terms of the amount of support paid. Entities in (co)ownership of the City of Virovitica received 5 times more support than entities in (co)ownership of Split-Dalmatia County.
Legal form of business entities
According to data from the Fininfo portal, of the 133 entities that received support for April, the largest share of entities consists of limited liability companies (83%), while the least are institutions, which account for only 7%, as can also be seen from the following graph.
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The mentioned 133 business entities received support for slightly more than 9,000 employees in the amount of nearly 38 million kuna. The following table shows how many entities belong to a specific legal form, the number of employees for whom support for job preservation was received, and the amounts of support paid for the month of April.
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From the table, it follows that limited liability companies account for 57.6 percent of the total support payments for the business entities covered by this analysis, while the remainder consists of joint-stock companies and institutions. Only 10 institutions covered by this analysis were on the list of support recipients for April 2020. Institutions are not required to publicly disclose annual financial reports as they do not fall under commercial companies according to their organizational form. However, although institutions are not obliged to publicly disclose their annual reports, we would expect that the publicly available annual reports of those institutions that have the right to receive support are accessible, as other business entities that received support publicly disclose their annual reports, and this would also be in the public interest.
Activities of entities
According to the implementing documentation for job preservation support in activities affected by the coronavirus from the Croatian Employment Service, the measures taken do not apply to business entities whose founders are the Republic of Croatia, counties, and local self-government units, nor to business entities established by these business entities. Furthermore, the measures do not apply to business entities in which the Republic of Croatia, counties, and local self-government units have ownership shares greater than 25% and their subsidiaries. An exception to this rule is employers belonging to the manufacturing industry and activities providing accommodation and preparing and serving food and beverages.
The documentation also states that the previously mentioned items have been in effect since the beginning of the implementation of the Job Preservation Support in activities affected by the coronavirus (COVID –19). The following table shows the activities to which 32 employers whose founders are the Republic of Croatia, counties, and local self-government units belong, and which are covered by this analysis.
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According to the data from this analysis, only SEVEN entities from the table belong to the activities of providing accommodation and preparing and serving food and beverages and the manufacturing sector. The remaining 25 entities received 5.5 million kuna in support and fall into the category of business entities to which the support measures according to the criteria from the implementing documentation do not apply as their founders are the Republic of Croatia, local and regional self-government units and do not belong to the activities that are exceptions.
Furthermore, the following table shows the business entities that are in (co)ownership of the Republic of Croatia, local and regional self-government units, and the activities to which these business entities belong. The table includes joint-stock companies in which the ownership share of the mentioned parties is greater than 25 percent, while for other legal forms included in this table, the percentage of ownership is not publicly available, and we cannot say with certainty what ownership share the Republic of Croatia and local and regional self-government units have in them.
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From the table, it is clear that only 21 entities belong to the activities of providing accommodation and preparing and serving food and beverages, or that 21 belong to the manufacturing sector. Thus, 54 employers who received job preservation support in the amount of 5.8 million kuna do not operate in activities that are qualified to receive the same. From the previous two tables, it follows that for a total of 79 business entities, to which the support measures potentially should not have been applicable, or do not operate in activities that are qualified for support payments, 11.3 million kuna was paid, raising the question of whether the criteria for the payment of job preservation support were correctly applied.
The analysis notes that 47 entities from the aforementioned 79, for which support was paid in the total amount of 5.4 million kuna, are limited liability companies in which the Republic of Croatia, counties, and local self-government units are not the sole members of the company, and the percentage of their ownership share is not publicly available. For this reason, we were unable to determine whether they meet the criteria for payment. We also note that only entities at the first level of (co)ownership were analyzed, meaning that business entities whose founders are entities established by the Republic of Croatia, local and regional self-government units, as well as their subsidiaries, were not included in the analysis.
It can be concluded – there is a lack of transparency of business entities that are in (co)ownership of the Republic of Croatia, local and regional self-government units and the data that is publicly disclosed, as well as potential non-compliance with the criteria for the payment of support.
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