Background information

According to the Decree of the Amount of the Minimum Wage (Uredba o visini minimalne plaće za 2025. godinu - OG 124/24) from 24 October 2024, the gross minimum wage in Croatia is € 970. Croatia is among the top three European Union members in terms of increasing minimum incomes, in nominal and real terms. This is an increase of 15.5%, which is twice the pace of other EU members. According to the Croatian Employers’ Association, this burdens employers because it encompasses as many as 250,000 workers, mainly in the manufacturing industry who currently receive the minimum wage. Furthermore, minimum wage increases unrelated to productivity growth can also lead to increased demand for various goods and services which causes inflationary pressure.

Content of measure

To facilitate the transition to a higher minimum wage, the Croatian Government introduced compensation measures for employers. The Croatian Employment Service pays employers the difference between the previous and the new minimum wage for the first three months of 2025, for €130 per worker per month. All three nationally representative trade union confederations in Croatia sent on 21 November 2024 a request for an explanation to the Minister of Labour, Pension System, Family and Social Policy. They explained the need for clarification following the discussion at the 268th session of the Economic and Social Council, where due to the increase in the minimum wage in 2025, a compensatory measure for maintaining jobs in the manufacturing industry was announced. Namely, on 29 May 2024, the Ministry of Labour, Pension System, Family, and Social Policy sent a request to the social partners for the appointment of their representatives to the Working Group for Active Employment Policy Measures for 2025. The Trade Unions as social partners selected their representatives, and the Working Group had one meeting on 11 July 2024 but did not meet again after that. The working group was tasked to analyze the implementation of active employment policy measures in 2024 and identify shortcomings in the implementation of the measures. The working group was also to propose solutions for improving the active employment policy measures for 2025, including the compensatory measure for maintaining jobs in the manufacturing industry. On 21 November 2024, a session of the Croatian Employment Service (CES) Governing Board was planned, at which a presentation on the Active Employment Policy Measures for 2025 was scheduled, without being previously discussed at the Working Group for Active Employment Policy Measures for 2025. The trade union confederations required an explanation of why the proposal for changes to the measures for 2025 was not discussed in the working group before it was adopted at the session of the CES Governing Board. Based on this, the trade union confederations requested that a meeting of the Working Group be convened so that the social partners, before submitting them for adoption to the CES Governing Board, could have the opportunity to present their proposals and comments.

Use of measure

The deadline for applications is 31st January 2025, and a compensation measure of up to 390 euros per worker can be obtained to pay salary costs for January, February, and March 2025. The measure is expected to cover around 95,000 employees, and the employer can receive a maximum of €300,000.

Target groups

Workers	Businesses	Citizens
Applies to all workers	Sector specific set of companies	Does not apply to citizens

Actors and funding

Actors	Funding
National government	National funds

Social partners

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

	Trade unions	Employers' organisations
Role	Informed	Informed
Form	Not applicable	Not applicable

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

• Social partners jointly
• Main level of involvement: Peak or cross-sectoral level

Involvement

In addition to considering all measures, the social partners on the trade union side have submitted specific proposals regarding compensatory measures for maintaining jobs in the manufacturing industry. In that proposal, trade unions emphasize that the target group - employers whose main registered activity is in the processing industry - is too broadly defined. Therefore, the trade union confederations argue, that there is a need to narrowly define the activities within the sector that are truly endangered and for which targeted support is desired. Furthermore, trade unions believe that the criterion of minimum and low wages alone is not sufficient, but that there must be objective negative circumstances that endanger the employer's business.

Views and reactions

The trade unions confederation also argue that an employer who makes a profit based on the minimum wages of workers should not be entitled to support. Trade unions also stress that it is crucial to ensure public disclosure of employers receiving support as an important guarantee of transparency and prevention of abuse. This requirement should be clearly stated in the notes and additional criteria for employers intending to exercise their right to support. Finally, they underline the importance of ensuring public disclosure of employers receiving support as a crucial requirement of transparency and prevention of abuse, reiterating that it should be clearly stated in the notes on the measure and the additional criteria for employers who intend to qualify for support. The Ministry and the Croatian Employment Service did not respond to the mentioned requirements and proposals.

Sectors and occupations

This case is not occupation-specific.

Sources

• 24 October 2024: Compensation Measures of the Croatian Employment Services to Employers)
• 30 December 2024: Compensation Measures for 3 Months (mjere.hzz.hr)
• 05 January 2025: The Increase of the minimum wage with the compensation