Whoever finds workers will have to plan business in layers

‘Speed, but caution’ is one of the oldest and most memorable slogans from the arsenal of many traffic education campaigns. It seems that next year, entrepreneurs will also be guided by this maxim, at least judging by the announcement of the head of Atlantic Group Emil Tedeschi, who stated at Lider’s ‘Day of Big Plans’ last Wednesday that his company will be cautious and conservative, but also ambitious in planning business for 2024.

Exporters already on the brink of deflation

Tedeschi was not the only one trying to combine the incompatible next year. The current layering that will spill over into the next year was already announced at the beginning of the conference by Lider’s editor-in-chief Miodrag Šajatović, who assessed that the current situation on the business scene is dictated by inflation with the threat of recession or stagflation. At the same time, he said, in some non-food sectors, traders are warning of examples of deflation. This last is not only the result of freezing prices of thirty products and government pressure on retail chains.

Indeed, September inflation has predictably slowed down (annual from 7.8 percent to 6.6 percent, and monthly from 0.5 percent to 0.4 percent). However, food remains 9.6 percent more expensive than a year ago, even after government intervention.

However, the real danger of (at least partial) deflation lies in the data on producer prices of industrial products. In August, domestic producers’ prices were 0.7 percent higher than in July and 2.6 percent higher than last August. Meanwhile, they have increased slightly more on the domestic market over the year – by four percent. The real victims of inflation were exporters, who raised export prices by only 0.8 percent during that time, and in the eurozone – which is the largest export market – by a negligible 0.1 percent. Indeed, this is on the very brink of deflation.

This story is just an illustration of the estimates that we are entering a layered time in which it is not enough to have just plan A and plan B, but one must dance in contradictions like ‘speed, but caution’.

Or, as Tedeschi said,’we already corrected the budget for the better by the end of February, but if everything does not develop as we planned, we must be ready for tightening’, concluded this cautious optimist.

It is worth highlighting two more doubles for the next year from the entrepreneurial ranks. Končar’s leader Gordan Kolak explained how they have to raise capacities and invest due to large orders, but at the same time ensure that it is sustainable, while the first lady of Siemens Medeja Lončar paired sustainability with technology.

China – a respectable monster

President Zoran Milanović also mentioned two key factors in his geopolitical analysis. He stated that the world in which only one state dominates, the USA, is slowly disappearing, that China has grown into a ‘respectable monster’ and that it is becoming an increasingly important factor on the global stage – both of stability and instability.

He assessed that Europe has not coped well in such circumstances and has become a ‘second-rate world player, an economy that does not possess key technologies, nor does it have sufficiently short supply chains’. In this context, he particularly emphasized Germany. The insistence of the Berlin ‘traffic light coalition’ on saving the climate and the too-quick renunciation of superior production of cars with internal combustion engines leads to a loss of market.

Thus, Croatia has found itself between a rising China and an increasingly weaker Germany.

In other presentations by key speakers, duplicates can also be found, or rather two key factors for the next business year. For Minister of Economy Davor Filipović, these are maintaining purchasing power and investments. The governor of the HNB Boris Vujčić paid the most attention to rising interest rates (which are still lower than in the rest of the eurozone), but also to consumer optimism, which has been aided in this regard by APN loans.

A bit more reserves could be read from the charts presented by OECD senior economist Phil Hemmings, who warned of the double challenge awaiting entrepreneurs – inflation combined with low growth. Therefore, he urged that productivity must be raised. The imperative of raising productivity in tandem with increasing competitiveness was also mentioned by the CEO of Pliva and head of HUP Mihael Furjan. However, President Milanović is skeptical about raising productivity, and the data from the beginning of the year justify his skepticism.

In those eight months, overall labor productivity in industry has not budged even a bit compared to last year.

A new wave of unemployment?

However, there is a problem greater than all the duplications we have mentioned here. The key question is not only the development but also the survival of every company in how to retain people. This topic ran through almost all presentations, and it particularly stood out in a survey completed on-site by 127 conference participants.

As many as forty of them identified the lack of adequate labor as the biggest challenge in the coming year. How dominant this problem is is shown by the fact that only 13 respondents mentioned inflation, 11 mentioned recession, 10 mentioned rising interest rates, and nine mentioned energy problems.

But perhaps there is an end in sight for the search for labor – if the forecast of UniCredit’s chief economist for Central and Eastern Europe Dan Bucșa is realized, who predicts a new wave of unemployment for the region soon. He says that this time it should not be as devastating as in 2008, but it will reduce pressure on wages.