Labor Shortage and Bureaucracy Are More Dangerous Than Geopolitical Risks

The labor shortage and administrative sluggishness are the main ailments of domestic entrepreneurs and, as they claim, pose a long-term threat more dangerous than geopolitical instability. At least, this impression was left at the 17th Leader’s Day of Big Plans. The reason they consider these to be their main ailments is that they can influence these circumstances, while they cannot prepare for pandemics, wars, or inflation, so they can only prepare by increasing resilience and flexibility.

Thus, the CEO of AD Plastika, Katija Klepo, stated that the automotive industry, in which this company predominantly operates, is exposed to all risks.

– We operate 100% for the automotive industry and depend on all the risks of that sector. There are things we cannot influence, such as pandemics, wars, inflation, but what we can do is diversify our customers and invest in development. If we increase and expand our customer base, the risks decrease – said Klepo, who believes that the biggest challenge today is the labor force.

– It is difficult to find people, but even harder to keep up with wage growth. We will have to find new models. Digital transformation could help reduce costs, but the knowledge and creativity of workers cannot be replaced by anything. Automation will take over some jobs, but what a person can conceive is difficult for machines to replicate – claims Klepo.

Mirko Habijanec, the CEO of the construction company Radnik, openly spoke about security and infrastructure risks.

– If war is a risk, why do we not have a single shelter in urban planning? Germany is almost entirely underground, while we behave as if dangers do not exist. An even greater risk is earthquakes – we are in a highly seismic area, and we do not have a rebar factory. We spend between 400 and 500 million euros annually on imports, and domestic production would certainly pay off – stated Habijanec, who also emphasized the problem of unfair competition.

– About two billion euros worth of jobs are taken over by companies from India, China, and Turkey. They are cheaper because they have state subsidies and lower wages. Croatian and European companies can build everything in Croatia; there is no reason for foreign companies to occupy our market – says Habijanec.

For Branko Roglić, the owner of Orbico, the key issue is ineffective administration.

– In other countries, you get a construction permit in a few months, while in Zagreb, you wait three years. The same applies to Dalmatia. If we do not solve administrative problems, we cannot move forward. The state must reduce taxes and align the education system. Young people are leaving for abroad after receiving free education. There should be a rule that anyone who studies for four years must work in Croatia for four years before going abroad – said Roglić, who reminded that his group is stable and debt-free precisely because he reinvested profits instead of extracting them. As he stated, they are ready for all risks, and now it is up to the state to be a partner, not to hinder entrepreneurs.

Tourism plays a significant role in the Croatian economy, and it, in turn, depends on peace, says Boris Žgomba from Uniline.

– You will not travel if you do not know whether you will be able to return by plane. Peace is what tourism needs, and unfortunately, we cannot influence that. We have a war in Ukraine, conflicts in the Middle East, trade wars, and all of this affects the economy and tourism – says Žgomba. He also added that inflation is an additional burden.

– You must already negotiate conditions for the next season in October, while you face a series of unknowns. We have good hardware, meaning hotels and restaurants, but without qualified labor, that means nothing – concluded Žgomba.

The last panel of this year’s conference brought more optimistic tones, revealing that opportunities exist; they just need to be recognized and utilized.

Ivan Bešlić from Sofascore sees the 2026 FIFA World Cup in the USA as a chance for a new breakthrough.

– This is our year of opportunity. For all of this to work, our people must be in South America, and we will take advantage of that. We operate with our own capital, the risks are ours, and we create our own workforce. Since we started, we have been nurturing our developers – said Bešlić, commenting on the labor market.

How opportunities have been utilized in the market in recent years was demonstrated by Orqa. The director of that company, Srđan Kovačević, emphasized how the war in Ukraine changed the demand for unmanned systems.

– Before the war, demand came exclusively from the private sector, and then it suddenly came from the state and defense sectors as well. This forced us to reorganize, from sales to customer support. Today, we create 98 percent of our work from exports, and the fact is that if you open a Western drone on an X-ray, there is a good chance you will find one of our components inside – stated Kovačević. However, he warned that with the growth of technology, regulation is also increasing.

– Regulations will change dramatically. Those who want to work in this sector will have to look not only at technology but also at administrative barriers. This is an additional risk that slows down innovation – stated Kovačević.

Iva Rogović Lekić from GrECo reminded that risk management is the foundation of long-term resilience for companies.

– We analyze and predict risks, developing specific insurance policies for industries ranging from agriculture to aviation – said Rogović Lekić, who also mentioned cyber risks.

As she stated, they are no longer a special category because they are always considered and are a comprehensive threat.

– In the EU, awareness of them is only at 45 percent, while in the USA, they are much more aware because cyberattacks occur more frequently and are discussed more – she concluded, noting that as a society, we are not sufficiently aware of the risks.