HUP: It is not surprising that the pressure for wage growth is shifting from the private to the public sector. We advocate for a smaller state apparatus and higher wages

HUP continuously advocates for wage increases for all workers in Croatia. The growth of total earnings in Croatia in 2022 reached almost 10 percent, while in the real sector, an even stronger growth of often 15-20 percent was achieved.

This year, HUP expects an additional growth of total earnings for employees of about 10 percent, so total earnings will grow faster compared to the annual inflation rate, which we estimate at 6.5 percent. Double-digit growth in wages, or total earnings of employees of HUP members, continues this year.

In this sense, in a tense domestic labor market where there is a chronic shortage of labor, it is not surprising that the pressure for wage growth is shifting to the public sector, especially in deficit professions, states HUP’s analysis Focus of the Week, signed by their chief economist Hrvoje Stojić.

Judges are also on a white strike in an effort to secure higher wages. The highest salaries in the public sector, especially for key positions, are at the level of middle management salaries in the private sector, which contributes to the outflow of personnel in the public sector, which was unimaginable just a few years ago.

The judges’ white strike brings numerous problems to society and entrepreneurship. At this moment, no one can open a company and start business activities, especially before the tourist season. This can cause significant revenue losses, missed business opportunities, and has a negative effect on the national economy.

HUP strongly advocates for judicial reform, which would ensure an efficient judiciary and enhance the quality of the third branch of government. Such a judiciary is only possible by recruiting the highest quality personnel, which cannot be attracted to the system without adequate salaries that correspond to the competence, knowledge, and activity of employees.

The Croatian Employers’ Association advocates for a modern, efficient, and smaller administration with better-paid employees. To achieve this, it is necessary to reform the enormous public sector, where the number of employees, according to the methodology of the International Labour Organization (ILO), when including the central state, all companies in state (co)ownership, 576 units of local self-government, institutes, agencies, and other institutions, exceeded the level of 500 thousand as of 2021.

The total wage mass is enormous, but the individual net salaries of employees in that apparatus are low and uncompetitive compared to the private sector. With this approach of low wages, our public administration will further lose quality as it cannot compete with the private sector and the working conditions therein, they conclude in the analysis.