The Government announced that it intends to raise the minimum wage by 5%, raising it to 43% of the average salary. This means that the minimum wage will go from Kn 3,276 to Kn 3,440. Expectedly, neither the unions nor the employers are happy with the decision. The unions want the minimum wage to be 45% of the average salary, or Kn 3,620, and the employers are warning that this increase might endanger sectors such as textile industry, where companies are barely maintaining profitability.

To appease both, the Government decided to grant them other things. For the unions, the Government decided to do something about their complaint about calculation of the minimum wage. This means that the new Law on Minimum Wage will include a provision that the minimum salary is the base salary, and that it does not include additions such as overtime.

For the employers, the new Law will cut the social security and medical insurance contributions by 50% for minimum wages. So the employers paying their workers the increased minimum wage will pay only half of contributions. This would affect some 50,000 workers in textile, metal, wood, leather and rubber industries.

Croatian minimum wage of EUR 442 is higher than in Bulgaria and Romania, but it is only about half the minimum wage in Slovenia, or about a quarter of the amount in developed European economies.

The Government is also planning to introduce measures supporting the hotel and food and beverage industries, by eliminating income tax on food and lodging expenses for those housing seasonal workers.

Finally, the Government will increase the foreign worker quota from 9,000 to 31,000. Most of these will be construction workers, and those working in shipbuilding, tourism and catering industries.

Comment: this means that, consequently, the pension and health insurance funds will stop receiving payments for around 25,000 minimum wage workers. It is not clear how the Government intends to address this gap.