Cash Payments: Small Entrepreneurs Under Pressure, Big Ones Get Away

The average salary in architectural and engineering activities in Zagreb, according to statistical data easily verifiable on services like Fina, is around 1600 euros net, recently pointed out in an interview with Lider by Damjan Geber, founder and CEO of Brigade. The truth is that average salaries in architecture are even lower, as the average is raised by engineers. Additionally, part of the salaries is paid in cash.

– The reason is that a large part of architectural firms undertake various projects to survive, including projects that, contrary to all business principles, are paid in cash, and then salaries are also paid in cash. People are registered for meager amounts, while part of their salary is received in cash. This has become the standard. And it shouldn’t be like that; it is degrading – warned Geber.

And start-ups also pay in cash

And this is not just a problem in architecture. An IT professional with many years of experience in the industry, where salaries are high due to a lack of personnel, contacted Lider. He recently negotiated with a prominent start-up, a fintech company, about joining them. The offer included a fairly good salary, but only a certain part of the amount would be paid through the account, while more than 30 percent of the agreed net salary would be received in cash.

– Of course, I did not agree to that – he says.

For architecture, the situation is somewhat clear; there are projects that are done for ‘cash’ in the construction business, but where so much cash comes from in fintech is unclear to anyone. Working illegally has so far mostly been associated with the construction sector and hospitality, but it seems that inspections do not linger in these sectors, and they regularly discover undeclared workers, while the Ministry of Labor even maintains a blacklist of employers who hire ‘illegally’. This list in 2025 counts hundreds of companies, specifically 376. Mostly, these are construction trades, hospitality establishments, transport companies, and other service activities.

The Blacklist of Employers

According to the Regulation issued by the Ministry of Labor, the blacklist of employers should contain a whole range of data: the name and surname of the employer, physical persons, the date when the inspection was conducted, a description of the irregularities for which the employer was entered into the records, as well as the date of entry into the records. No, the published list contains only three basic pieces of information: the name of the company, address, and company registration number, and it cannot be determined from the list how many workers were undeclared during the inspection or for what specific reasons.

Although we requested information on this topic about ten days ago, as well as about established cases with employers who pay part of salaries illegally, we are still waiting for a response from the Tax Administration, which also acts on established irregularities, but we received a response from the State Inspectorate, which oversees this issue.

They inform the Tax Administration of their findings and suspicions, and while all information inter-institutionally reaches one another, the inspectors responded with what they discovered, but due to numerous violations, it is difficult to ascertain how many employers have actually been caught paying salaries illegally.

Thousands of Inspections

From the beginning of January to the end of August 2025, labor inspectors in Croatia conducted a total of 7,415 inspection jobs in the field of labor relations. Of that, 5,299 jobs were regular inspections, while 2,116 jobs involved directly resolving workers’ requests for unpaid salaries and compensations. On average, 265 employers and 718 workers were covered monthly, to whom decisions on temporary securing salary payments were issued, meaning that employers had to block funds in their bank accounts to cover debts to workers.

Due to established irregularities, inspectors issued 36 administrative measures ordering employers to submit the required salary calculations. The most such measures were in hospitality (16) and construction (8). Misdemeanor proceedings were also initiated: 163 violations of non-submission of salary calculations affected 536 workers (of which 54 in hospitality and 40 in construction), while 98 violations of non-payment of the minimum wage affected 409 workers (34 in hospitality and 21 in construction).

In addition, 22 criminal charges were filed due to reasonable suspicion of non-payment of salaries, with the most affected sectors being hospitality (7 cases) and construction (4 cases).

In other words, while we wait for data from the Tax Administration, we can only conclude that inspectors more frequently and diligently scrutinize employers who are habitual violators of rights, while more reputable sectors go unpunished. The IT sector, fintech companies, and top architectural firms, despite obvious insinuations about the occurrence of part of the salary being paid in cash, rarely come under the inspection radar.

While small entrepreneurs and medium-sized restaurateurs feel the pressure and suffer penalties, rightly so, those with serious balance sheets and high revenues manage to hide their misdeeds under the guise of serious business activities. This not only sends a message that the system is selective but also legitimizes the practice of paying salaries ‘in cash’.

In such circumstances, it is not surprising that unauthorized lists of employers who operate in the shadows circulate through the vastness of social media, including some that one would never expect to find there.