State Subsidies for Sectors Where the New Minimum Wage Could Threaten Jobs

In 2025, the nominal increase in the minimum wage continues, which is determined by a special regulation issued by the Government of the Republic of Croatia. The minimum wage for 2025 amounts to 970 euros gross for full-time work and is increased by 15.4 percent compared to 2024, which is a growth greater than the inflation rate and slightly higher than the growth of average gross wages. According to data from the Croatian Bureau of Statistics, the inflation rate measured by the national consumer price index in November 2024 was 2.8 percent compared to November 2023, and average gross wages in the first ten months of 2024 increased by 15 percent compared to the same period of the previous year.

Comparing the growth of the minimum wage has shortcomings because the statistical data refer to prices and wages in 2024, while the new minimum wage will only be paid for work performed in 2025. For December 2024, the old amount of the minimum wage of 840 euros gross applies. For a part-time employee and for an employee in additional work, the monthly gross minimum wage is determined proportionally to their contracted weekly working hours.

More Favorable for Workers

As of January 1, 2025, amendments to the Minimum Wage Act are also in effect. Among other novelties, the possibility of contracting a minimum wage up to five percent lower in collective agreements has been abolished. According to previous regulations, it was allowed to contract a minimum wage lower than the amount prescribed by the Government regulation, but at least at 95 percent of that amount. Contracting a minimum wage five percent lower than the amount prescribed by the Government regulation could be used in collective agreements concluded with individual employers, in a specific activity, and in collective agreements at the national level. As of January 1, 2025, this is no longer permitted.

The legal obligation remains that in activities to which the decision of the responsible minister has extended the application of the branch collective agreement, minimum wages are considered monthly gross wages according to the complexity of the jobs as agreed in the relevant collective agreement. In 2025, decisions on the extended application of branch collective agreements for the construction, hospitality, wood and paper industries, and for the trade sector, as well as the collective agreement regulating the wages of seafarers in coastal shipping, are in effect. The regulation of the Government of the Republic of Croatia takes precedence in application. If the wage of a worker determined according to the complexity as regulated by the extended collective agreement is lower than the minimum wage prescribed by the Government regulation for 2025, the worker is entitled to a minimum wage of 970 euros gross as it is more favorable for them.

Possible Supplements to the Minimum Wage

The minimum wage of 970 euros does not include wage increases that the worker is entitled to for overtime work, night work, work on Sundays, work on public holidays and non-working days prescribed by special law, and for work in difficult working conditions. Wage increases based on these grounds are determined by collective agreements, work regulations, and/or employment contracts, and only the increase in wages for work on Sundays is determined by law at 50 percent.

A new feature in 2025 is the compensatory state subsidies for the payment of minimum wages intended for sectors where the prescribed amount of the minimum wage as a legal obligation could jeopardize jobs and employment. In the Program of Active Employment Policy Measures for 2025, implemented by the Employment Service, a new measure for obtaining state financial subsidies for retaining jobs in the manufacturing industry is planned. Support can be obtained by employers whose main registered activity is in the manufacturing industry, area C according to NKD, but only for the first three months of 2025, i.e., for the payment of salaries for the months from January to March of this year. This form of state aid can be obtained by companies, crafts, and other individuals engaged in independent activities, as well as other business entities that are tax liable based on this. Individuals can obtain support only if they are mandatorily insured in the pension and health insurance system based on this.

How Support is Determined

The financial support from the Employment Service is determined as the difference between the minimum gross wage for 2025 (970 euros) and the average calculated gross wages per worker for the last three months of 2024 at the employer requesting support (average wages for the period October – December 2024), but no more than 130 euros per month per worker. Support can be obtained for workers who earned less than 970 euros per month in the last three months of 2024, and only for workers employed full-time on a permanent basis. It cannot be obtained for workers who were employed by that employer after September 30, 2024.

Employers who meet the prescribed conditions and are interested in obtaining financial support as a temporary compensation due to the increase in the minimum wage in 2025 must submit a request for support for the payment of salaries for January, February, and March 2025 through the application on the Employment Service’s online portal by January 31, 2025. A single request is submitted for all three months of this year.