In the public space, there is a myth that Croatia is at the top of the EU rankings in terms of the share of fixed-term employment contracts, with an alleged share of such contracts at a level of 20 to 25 percent. It is dangerous when such a myth appears in state strategies without fact-checking, states this week’s analysis by HUP Focus of the week, signed by the chief economist of the Croatian Employers’ Association Hrvoje Stojić.
Facts, which are data from Eurostat, show that in 2021, the share of fixed-term employment contracts was 11.8 percent in the age group of 15 to 64 years, which is below the EU average of 12.1 percent.
At the end of September 2022, Croatia slightly surpassed the EU average (14.6 percent compared to 13.9 percent), which again, says Stojić, undermines the thesis that Croatia is the European record holder for fixed-term contracts. Furthermore, both relevant sources (Eurostat, HZMO) show a trend of decreasing these contracts from 2016 to the present.
In the discussion about fixed-term contracts, it should, emphasizes Stojić, take into account the specificities of the domestic market:
1. Due to the seasonality of the Croatian economy, the high share of tourism (19 percent of GDP) and trade (24 percent of GDP), and the need to perform temporary jobs, during the season the number of fixed-term contracts increases by 18 percent;
2. Some companies, usually smaller employers faced with numerous administrative burdens, are late in entering changes in the forms for reporting employment relationships when transitioning from fixed-term to indefinite contracts, as indicated by HZMO;
3. The increased influx of foreign workers with permits for residence and work for one year increases the practice of concluding fixed-term contracts.
The number of fixed-term contracts is not an indicator of success
In the end, it remains questionable whether the number of fixed-term employment contracts is a qualitative indicator of the success of a particular economy. Namely, the least developed EU members, Bulgaria and Romania, are among the five countries with the lowest share of such contracts, while much more developed members such as the Netherlands, France, Italy, and Sweden have a higher share of fixed-term contracts than Croatia.
Considering the officially proclaimed goal of reducing the share of fixed-term contracts by one percentage point by mid-2026 compared to 2019 (source: NPOO) and the already achieved decrease of four percentage points from 2019 to 2021, has a much stronger qualitative shift already been achieved compared to the plan?
Therefore, it is unclear on what criteria the state justifies recent changes to the institute of fixed-term employment contracts in the Labor Law, which, among other things, include limiting fixed-term contracts to a maximum of three consecutive contracts, concludes Stojić.
