The Croatian Employers Association (HUP) warned on Thursday that the lack of workforce on the labour market was dramatic and that the measures the government was proposing would not solve the main problem – high operating costs.

Calling on the government to accept HUP’s proposal to expand the range of non-taxable incomes of workers, HUP leader Gordana Deranja said that the situation in the business sector was dramatic, but that it went unrecognised and that the laws the government was working on would not change anything.

Deranja went on to say that the economy was inevitably sinking due to a chronic lack of labour and that she believed Croatia had hit rock bottom.

“Maybe the situation in Zagreb is not so dramatic, but HUP has been receiving dramatic appeals from all over the country to do something. The amount of work to be done has never been bigger but we do not have the people to do it,” she said.

She said that HUP’s earlier appeals for quotas for the import of workers had been ignored while now, after the government had introduced those quotas, “nobody wants to work here.”

“Who in their right mind would want to come to work in Croatia when people here are leaving the country?” she said.

Deranja said that the proposed reforms were not really reforms, but only certain changes that would not result in keeping the workforce in the country or an increase in wages.

“Let us help employers keep good workers and pay them decently, so that we can produce and export,” she said.

There is also no coordination between the education system and the labour market, she added.

As for the government’s tax reform, to be presented later in the day, HUP general director Davor Majetic said the proposed measures were so inefficient that they would not help remove the main problem – high operating costs.

“Without lower operating costs we will be losing the workforce, companies will be losing contracts and clients, and that could result in bankruptcies,” said Majetic.

Last week HUP put forward its own tax reform proposal but today it focused on the expansion of nontaxable incomes such as the 13th wage, rewards, daily allowances, a hot meal, and transport allowances.

Majetic noted that those measures could help reduce operating costs without affecting the state budget. He also called for reducing, already this year, para-fiscal levies in the amount of 1.5 billion kuna (€201.9 million), a measure announced by Economy Minister Darko Horvat for next year.