Domagoj Ivan Milosevic, former head of the Croatian employers' association and the new vice-president of Small and Medium Entrepreneurs Europe (SME Europe), a business organisation with some 400,000 members across the continent, appeared on N1 television's morning programme Novi Dan on Monday.

Milosevic, currently an MP of the ruling centre-right Croatian Democration Union (HDZ) commented on problems of Croatia’s economy, the need to cut the size of public administration, and ways to deal with the massive drain of labour force in the country.

SME Europe is an European organisation by the European People’s Party (EPP) tasked with promoting interests of small business across the continent.

Milosevic told N1 that Europe perceives Croatia primarily through what official European Commission reports say, as a small country dependent on tourism with good potential.

“Everybody agrees that although we are not a large country, we are located in an important geostrategic area with a huge potential, and it only depends on us how we’ll use this to our advantage… The only significant response to the issue of youth underemployment is in stronger entrepreneurship. Social welfare funding, pensions – all that has to be earned somewhere. When you reduce taxes, budget revenues increase, and economic growth recovers. We have been waiting for reforms for so long, but unfortunately we are lagging behind, some 10-15 years. We joined the EU unprepared (in 2013) and now we are paying the price for it, unfortunately,” Milosevic said.

Milosevic added that reforms in administration are key, and ways to reduce the drain of workforce amid mass emigration.

“We expect to see a bureaucracy that is smaller, non-corrupt, more efficient, and digitalised. I am in favour of cutting the number of employees in the public sector, especially since businesses are experiencing shortage of labour… Jobs in the private sector should be more attractive than in those in public administration,” said Milosevic.

Milosevic added that many of Croatia’s problems stem from creating almost two separate economies – one in which private businesses exist, and another one with state-owned companies controlled by politics.

“The domination of state-owned sector increased instead of being reduced… Why should the government have an ownership stake at (food producer) Podravka or the (engineering company) Koncar? There are rules on how to manage a country and a national economy. If we had introduced them and stuck to them ten years ago, today we would have growth like the Czech Republic, Poland, Hungary, or Slovakia,” he said.

Although to a June report by Eurostat which measured GDP growth over the period from 2003 to 2017, Croatia’s GDP increased by merely 16.9 percent. By comparison, Poland and Slovakia posted 71.7 and 71.2 percent growth in the same period respectively.

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