UGP: Collective agreements for construction are yet another attack on small entrepreneurs

The Association Voice of Entrepreneurs wishes to highlight the danger threatening small entrepreneurs due to the adoption of Collective Agreements for construction. The Collective Agreement for construction has been extended to all entrepreneurs and workers in Croatia in the construction sector, area F of the National Classification of Activities 2007. The extension came into effect on November 1, 2022.

As they state, a concerning change is the new group XI, which consists of a Management Board member, director, owner of a craft, and other persons authorized to represent the economic entity, whose minimum gross base salary from November 1, 2022, must amount to 15,000.00 kuna (86.21 kn/hour).

The rest of the statement is quoted in full:

“We believe that with this Agreement, the unions and the Government are working against the productivity and competitiveness of our economy, and this will certainly have an impact on the higher cost of construction and renovation, as well as the continuation of galloping inflation.

In all sectors, including the construction sector, salaries must be defined in the market, especially when we are facing a labor shortage, and thus growth. Anyone who wants to work in the construction industry today has much better conditions than they did a few years ago, and every director, if they do their job well and responsibly, will certainly earn a good salary from their employer and receive a normal (good, market) salary for their work in the market.

We also believe that a director who is also the owner of their company has the absolute right to pay themselves a salary based on their capabilities and income, and not because a certain law/agreement dictates it. The owner of the company must, of course, have the right to choose whether they want to pay themselves a higher salary or a higher profit.

All this regulation, including this one about the minimum director’s salary in the construction industry, is nothing more than the terrorization of entrepreneurs, free market, as well as the competitiveness and productivity of the economy. This approach to the minimum salary of directors primarily benefits large construction companies, while such a collective agreement will have a devastating negative impact on small entrepreneurs who will struggle to cope with such high additional expenses.

We wonder if someone is deliberately pushing small entrepreneurs out of the market, as certainly, there are few who will be able to endure and survive.

– In addition to minimum salaries for directors, the Collective Agreement defines minimum salaries for a whole range of other jobs such as independent designer or site manager. We believe this is nonsense because these salaries must be defined in the market and that everyone must earn their salary, not that by merely defining a job position, a worker has the right to a relatively high minimum salary. We expect that such a collective agreement will lead to small entrepreneurs relocating to another EU country, causing Croatia to lose tax revenue, as well as labor in the construction sector, which is currently under pressure due to a labor shortage – says Hrvoje Kvasnička, a member of the Construction and Architecture Committee of UGP.