Background information

The Government of the Republic of Croatia (GRC) proposed the National Recovery and Resilience Plan, which was officially submitted for evaluation to the European Commission on 14 May 2021. In accordance with the provisions of Regulation (EU) 2021/241 that established the Recovery and Resilience Mechanism that was adopted on 8 July 2021, the European Commission approved the Recovery and Resilience Plan of the Republic of Croatia and submitted it to the Council. Regulation (EU) 2021/241 on the establishment of the Recovery and Resilience Mechanism does not directly determine the forms of grants that member states award to the final recipients. However, the Regulation states the obligation of consistency in the application of the various Union instruments. At the session held on 8 July 2021, the Government of the Republic of Croatia passed the decision on management system and monitoring of the implementation of activities within the framework of the National Recovery and Resilience Plan 2021 - 2026 (OG 78/21). In accordance with the aforementioned decision, the competent authority for the implementation of this Call is the Ministry of Economy and Sustainable Development (MESD).

Content of measure

Within the Framework of the National Recovery and Resilience Plan of the Republic of Croatia 2021-2026, the Ministry of Economy and Sustainable Development announced that they would be providing "Grants for digitalisation" (Call reference number: NPOO.C1.1.2.R3-I3.01). Grants are awarded through an open award procedure during a temporary window for submissions.

The aim of the grant is to help Croatian SMEs acquire digital technologies to strengthen digital development and apply of new products, services and processes. With aid to digitalise, the company should be able to improve its market position and increase productivity.

Acceptable activities that can be financed include:

• the creation, development or procurement of digital solutions and technologies for the purpose of digital transformation of business processes or production
• the implementation, adaptation or integration of digital solutions and technologies
• strengthening the digital skills of employees

The government allotted a total of HRK 206 Million (€27.34 Million) for this grant. The lowest grant awarded per applicant is HRK 150,000 (€19,908.42) and the highest grant awarded is HRK 750,000 (€99,542.11).

Applicants must be SMEs with at least three full-time employees (based on hours worked) in the year preceding the year in which the project proposal is submitted. The size of the grant awarded depends on development level of the region in which the SME is located. This is determination is based on the the Decision on the Classification of Units of Local and Regional Self-Government (OG 132/17). For less developed units (the I. development group) the grant can be up to 70% of eligible costs for applicants. More developed units have maximum coverage between 55% and 65%.

Use of measure

The application for grant had been opened from 1 July until 12 August 2022. The results on the approved grants will be conducted during fall 2023.

The distribution of the vouchers according to the types is following: Digital Skills Improvement Voucher €1,924,480; Voucher for digital marketing €1,990,850; Voucher for creating a digital transformation strategy €1,194,500; Voucher for diagnostics of cyber resilience €2,919,900; and Voucher for complex digital solutions 1,924,480. Total allocation of Calls is €9,954,210, which will be distributed in the equal amounts of €3,318,070 in 2022, 2023 and 2024.

A total of 890 project applications worth €5.9 million were accepted on the first deadline of the call Vouchers for Digitalization. This is 80% more than the indicative allocation according to which €3.3 million of non-reimbursed vouchers for five different activities, should be allocated on the first of the three deadlines. At the same time, the amount of registered projects is much smaller than the total allocation, which amounts to €9.95 million, and which should increase the level of digital maturity of micro, small and medium enterprises. This is important because in terms of the digital maturity of SMEs, Croatia is worse than the EU average. That the interest is lower than expected is probably result of many factors. One of them is Government’s preference for the "cheaper" project, so priority is given to the project proposal that requested a smaller amount of grant support. Furthermore, a large part of entrepreneurs from activities such as accommodation, trade, architecture or marketing are excluded. Also, the voucher in value of €19,900 for the creation of complex digital solutions was not attractive enough.

Finally, the application process has been relatively demanding and complex. When comparing the scope of work in relation to the value of vouchers and the intensity of support up to 60% of eligible costs, the majority of applicants simply gave up. The experts expect equal interest in the second and third calls for Vouchers for Digitization, which should be published in November and March 2024.

According to the data sent by the Ministry of Economy, the voucher for digital marketing was the most requested. For this voucher, for which the amount of support is €9,900, 598 projects applied for €3.04 million. The amount of registered projects in this case far exceeds the planned allocation of €1.9 million. There was also a good interest in vouchers for complex digital solutions, for which 152 applications worth €1.8 million were received (a total of €1.9 million is intended for them). For the digital transformation strategy, 66 applications worth €531,000 (planned €1.1 million) were received, while for cyber resistance diagnostics, the Ministry received 60 applications worth €511,000 - far less than the intended €2.9 million. The least interest was in the improvement of digital skills, for which only 14 projects were reported which requested €58,000.

Target groups

Workers	Businesses	Citizens
Does not apply to workers	SMEs	Does not apply to citizens

Actors and funding

Actors	Funding
National government EU (Council, EC, EP)	European Funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	No involvement as case not in social partner domain	No involvement
Form	Not applicable	Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

• No involvement
• Main level of involvement: N/A

Involvement

Due to the nature of the measure, social partners were not included in its design and implementation. However, social partners in Croatia are fully aware of the importance of digitalisation on the labour market and the need to improve the training of workers. The National Economic and Social Council (ESC) on its 241st session on 20 December 2021, discussed the situation and perspectives on the labour market and the transformation of Croatia workforce in the age of digitisation. The ESC will follow with analysing the impact of digitalisation on the labour market and industrial relations.

Views and reactions

Social partners in Croatia support all measures directed towards the transition to green and/or digital economy.

Sources

• 24 June 2022: Bespovratne potpore za digitalizaciju (Grants for digitization) (mingor.gov.hr)
• 24 June 2022: Poziv na bespovratne potpore za digitalizaciju (Invitation for Grants for digitization) (mingor.gov.hr)
• 14 December 2022: Training on grants for digitalization (Program osposobljavanja o bespovratnim sredstavima za digitalizaciju) (www.hup.hr)
• 14 March 2023: Further information on grants for digitalization (Daljnje informacije o vaučerima za digitalizaciju) (www.uo-split.hr)
• 02 June 2023: Vouchers for digitalisation (Vaučeri za digiralizaciju) (www.poslovni.hr)
• 13 July 2023: Lower interest for vouchers for digitalization (Manji interes za vaučere za digitalizaciju) (www.poslovni.hr)
• 12 February 2024: Vouchers for digitalization (Vaučeri za digitalizaciju) (www.aditus-pro.hr)