Let organizations in the market compete for craftsmen

A draft proposal for amendments to the Crafts Act is currently under public discussion. One of the topics is the payment of membership fees to the Croatian Chamber of Trades and Crafts (HOK), specifically whether the payment should be mandatory or voluntary. I was struck by the proposal that the membership fee should be mandatory, but that the craftsman chooses whom to pay it to.

Namely, one of the commentators, Ivan Butković, writes that the chamber contribution should remain, but in such a way that it is not binding only for HOK, but that such an option is also available to other craft and entrepreneurial associations.

“This way we will get competition, for example, between HOK and the Association Voice of Entrepreneurs or someone else. Whoever offers the best conditions, or who best represents the interests of us craftsmen, will be chosen by the majority. In this way, the dormant administrative apparatus of HOK will be awakened because it will have competition that will draw away a large part of the craftsmen, and if it continues to behave as it has so far, it will have to choose new leadership or disappear from the market. If we, as craftsmen, have to fight among ourselves for as many customers and users of our services as possible, then it is only fair that the association that represents us and fights for our interests also has competition,” says Butković.

The idea is not bad

It seems to me a good idea to consider. Reading the comments, many insist that the chamber contribution should be non-mandatory because they say they gain nothing from HOK. Moreover, one commentator states that she waited six weeks for a response to her inquiry when she needed help from the Chamber.

The idea that economic associations compete in the market for their members does not seem bad at first glance. Indeed, the association that better represents its members, offers them educational content, or provides fewer legal services (for example, of a procedural nature), will attract those craftsmen.

Today, they pay 10.40 euros per month in chamber contributions and, let’s be realistic, that is not an amount that would cause any craftsman to go bankrupt. It even seems like a worthwhile investment if craftsmen benefit from the Chamber. However, if they never need it in their lives or if they do not receive the help they expect (as can be read in the comments), then every cent paid for that contribution is truly wasted.

Therefore, it might not be a bad idea to introduce a legal change that craftsmen must pay a chamber contribution, but that they choose the organization they will join. Just to see how that will work, and if it doesn’t work, let’s change the Crafts Act again.

There is another problem, which is the possible discrimination of craftsmen compared to small businesses. Namely, as commentator Kristina Domović (and others) writes, companies in Croatia that meet certain conditions are allowed voluntary membership in HGK. In her opinion, it is completely discriminatory that craftsmen are imposed a membership obligation in HOK, and the greatest absurdity is that craftsmen are mostly small entrepreneurs who literally work as self-employed, and the membership fee does not choose how much turnover someone achieves.

Fairer collection

“HGK had a fairer collection of membership fees even during mandatory membership, and now small entrepreneurs are exempt from payment unless they decide on voluntary membership. HOK should also have voluntary membership like HGK and charge for its services and engagements, rather than being financed from a forced levy.

A large percentage of craftsmen constantly emphasize that they pay a membership fee, or a levy, from which they gain absolutely nothing. All others who currently ‘benefit’ will become voluntary members, and that is the only fair solution. It is really high time to stop the discrimination,” emphasizes Domović.

She is right. If smaller companies are allowed to voluntarily pay membership fees to HGK, this should also be allowed for craftsmen. Or at least as a transitional solution, keep the mandatory chamber contribution, but, as Butković proposed, allow craftsmen to choose which organization they will pay it to.

POST SCRIPTUM

The Minister of Economy, Ante Šušnjar, recently announced that amendments to the Crafts Act will reduce burdens for craftsmen, such as reducing the chamber contribution and financial and administrative obstacles. For example, a reduction to 1.5 percent of the basic personal deduction from income is planned instead of two percent, which will have, they believe in the Ministry of Economy, a corresponding echo in the part of the membership that perceives it as a parafiscal burden. The institute of a temporary manager is also being introduced, which allows business operations to continue after the death of a craftsman, and craftsmen will be able to continue working and retire full-time.