10.6092/issn.1561-8048/15688
Croatia’s Recovery and Resilience Plan (RRP), adopted by the Council on 20 July 2021, encompasses reforms in three main areas: green transition, digital transition, and economic and social resilience. The Plan in general is expected to foster economic growth and create jobs. The article analyses the social and labour dimension of the RRP, also in light of implementation of the European Pillar of Social Rights and the country-specific recommendations issued by the European Commission.
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Italian Labour Law e-Journal
European Semester
National Recovery and Resilience Plan: Croatia
Text.Serial.Journal
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National Reports
2022-11-03
2022-10-29
2022-11-03
2022-11-03
ILLeJ
Sandra  Laleta
2022/11/03
10.6092/issn.1561-8048/15688
University of Rijeka
1561-8048
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European Semester
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National Recovery and Resilience Plan: Croatia
https://illej.unibo.it/article/download/15688/14868
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    National Recovery and Resilience Plan:                                          Italian Labour Law e-Journal
    Croatia                                                                        Special Issue 1, Vol. 15 (2022)
    Sandra Laleta                                  The NextGeneration EU in Action: Impact on Social and Labour
    sandra.laleta@uniri.hr                                                                                Policies
                                                                                                 ISSN 1561-8048
                                                                  https://doi.org/10.6092/issn.1561-8048/15688




           National Recovery and Resilience Plan: Croatia
                                             Sandra Laleta

                                                    Abstract

      Croatia’s Recovery and Resilience Plan (RRP), adopted by the Council on 20 July 2021,
      encompasses reforms in three main areas: green transition, digital transition, and economic and
      social resilience. The Plan in general is expected to foster economic growth and create jobs. The
      article analyses the social and labour dimension of the RRP, also in light of implementation of
      the European Pillar of Social Rights and the country-specific recommendations issued by the
      European Commission.


      Keywords: NGEU, Croatian RRP, Covid-19 Pandemic, European Pillar of Social Rights, Social
      Scoreboard, Country-Specific Recommendations, European Semester.




1. General framework.

   The key macroeconomic challenges for Croatia’s economy include low employment and
activity rates, a burdensome and complex business environment, low efficiency and high
fragmentation of the public administration and judiciary, a fragmented and ineffective social
protection system and low quality of education. These challenges weigh on potential growth
and employment. Croatia’s Recovery and Resilience Plan (hereinafter: RRP) was adopted by
the Council on 20 July 2021.1
   As emphasised by the Commission, the Croatian labour market took a relatively mild hit
from the pandemic and is expected to recover gradually. After several years of falling
unemployment, the onset of the Covid-19 crisis led to a decrease in employment of 1.2 per


 Full Professor at the Faculty of Law, University of Rijeka (Croatia).
1See European Commission, Croatia’s recovery and resilience plan, available at https://ec.europa.eu/info/business-
economy-euro/recovery-coronavirus/recovery-and-resilience-facility/croatias-recovery-and-resilience-
plan_en, accessed 10 June 2022.
    Sandra Laleta                                                                          Italian Labour Law e-Journal
                                                                                          Special Issue 1, Vol. 15 (2022)
                                                                            The NextGeneration EU in Action: Impact on
                                                                                              Social and Labour Policies




cent. The unemployment rate increased slightly to 7.5 per cent, which can be attributed to
the relatively brief and mild nature of the Covid-19 containment measures and incentives
offered to employers by the Croatian government to retain workforce. The proportion of
the population at-risk-of poverty or social exclusion declined pre-Covid-19, albeit remaining
above the EU average (23.3 per cent vs the EU27’s 20.9 per cent in 2019).2
    The Covid-19 crisis had a particularly detrimental impact on the Croatian economy, which
contracted by 8 per cent in 2020, the steepest drop among peer countries. On the other hand,
policy measures cushioned the impact on household incomes.3
    Structural rigidities in the Croatian economy include an inefficient public administration,
a cumbersome business environment, the substantial presence of the state in the economy,
an inefficient allocation of labour resources and skills shortages, and low investment in R&D
and digital infrastructures.4 Croatia’s research and development intensity remains low.5
    A further challenge is the high fragmentation of the public administration. The wage-
setting framework lacks consistency and transparency across the public administration and
the civil service. This affects equality of treatment and hinders central control over the public
wage bill. Therefore, setting up a standardised wage-setting framework across the public
administration and public services seems to be essential.6
    Labour market challenges have a negative effect on economic growth and resilience.
Challenges include low labour market participation, pronounced labour shortages, high
regional disparities in employment and social outcomes, and high incidence of undeclared
work. Croatian employment and activity rates are among the lowest in the EU. Despite high
unemployment, some sectors of the economy (industry, construction, services) suffer from
labour shortages mainly as a result of skills gaps, but demographic ageing, emigration and
low job quality also play a role. Croatia has a high incidence of undeclared work, caused by
various factors (such as low quality of job offers and the high share of precarious
employment). In order to raise productivity, close skills gaps and encourage declared
employment, the acquisition of adequate skills, including digital skills, during initial education
and training, and later reskilling and upskilling, is needed.7
    Regarding the position of the Croatian government vis-à-vis EU action (and, in particular,
the NGEU) in the aftermath of the Covid-19 crisis and during the relevant political
negotiations (summer and winter 2020), it should be noted that the government insisted that
due note be taken of Croatian circumstances in the drafting of the EU budget and the three-
year budget rule. Among the arguments it used during the intensive negotiations were the
importance of tourism for Croatian economy, the unsatisfactory economic and demographic
situation in eight Croatian counties, and specific problems caused by a number of

2 European Commission, Analysis of the recovery and resilience plan for Croatia. Accompanying the document Proposal for a
Council implementing Decision on the approval of the assessment of the recovery and resilience plan for Croatia, 8 July 2021,
SWD (2021) 197 final, 6.
3 Ibidem, 5-6.
4 Ibidem, 8.
5 Ibidem, 9.
6 Ibidem, 8.
7 Ibidem, 9.



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catastrophic earthquakes. In general, the government expressed its satisfaction with the
results achieved in the negotiations.8


2. The Croatian RRP: overview.

2.1. Amount requested (grants/loans).

    Croatia’s Recovery and Resilience Plan consists of 222 individual measures (146
investments and 76 reforms). They will be supported by €6.3 billion in grants and €3.6 billion
in loans (€9.9 billion in total).9 The plan in general is expected to foster economic growth
and create jobs. As stated, it will raise Croatia’s GDP by between 1.9 and 2.9 per cent by
2026. This boost to the economy will create jobs for up to 21,000 people.


2.2. Major reforms and investments.

   The relevant reforms encompass three main areas: green transition, digital transition and
economic and social resilience. The majority of reforms and investments are directed towards
the climate and digital transitions: as 40.3 per cent of the plan will support climate objectives
and 20.4 per cent will foster the digital transition.10 Concerning the social and labour
dimensions, 15 per cent of funding will go to supporting education, science and research, 5
per cent to health care, and 4 per cent to the labour market and social security.
Croatia’s RRP is structured around five priorities: (i) the economy, (ii) public administration,
judiciary and the state, (iii) education, science and research, (iv) labour market and social
security, and (v) health care, with one initiative for renovating buildings.11


2.3 Impact of the reforms.

   As already mentioned, the plan in general is expected to foster economic growth and
create jobs. Reforms that can be said to have an impact on the labour market – by creating
new jobs – are projected in each of the three mentioned areas.
   Key measures for the first area, green transition (in other words, climate and
environmental policies), supported by the plan include various investments that can create

8 Government of the Republic of Croatia, Report of Prime Minister Plenković to the Croatian Parliament, 29 July 2020,
https://vlada.gov.hr/vijesti/hrvatskoj-na-raspolaganju-22-milijarde-eura-europskih-sredstava-kao-snazna-i-
dodatna-poluga-za-gospodarski-razvoj/30041, accessed 18 August 2022.
9 European Commission, nt. (2), 2. According to SWD 2021, €6.4 billion.
10 In line with Regulation (EU) 2021/241 of the European Parliament and of the Council of 12 February 2021,

establishing the Recovery and Resilience Facility, OJ L 57, 18 February 2021, 17–75, available at https://eur-
lex.europa.eu/eli/reg/2021/241/oj.
11 European Commission, nt. (2), 2; see European Commission, nt. (1).



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                                                                                   The NextGeneration EU in Action: Impact on
                                                                                                     Social and Labour Policies




new jobs, particularly in the construction industry.12 These are investments in (a) energy
efficiency and post-earthquake reconstruction of buildings (in the City of Zagreb, Krapina-
Zagorje county, Zagreb county, Sisak-Moslavina county and Karlovac county); (b)
sustainable and innovative mobility, notably in upgrading railway lines; (c) improving waste
and water management; (d) the low-carbon energy transition (by modernising energy
infrastructure, supporting investments for the production of advanced biofuels and
renewable hydrogen, and financing innovative carbon capture and storage projects); and (e)
supporting businesses for green transition and energy efficiency (underpinning their projects
aimed at boosting the green economy, sustainable tourism and investing in green
technologies).13
    In the second area, digital transition, the plan includes investments and reforms
concerning the digitalisation of public administration and higher education, and the digital
connectivity of rural areas. Key measures therefore include: (i) investment in the digital
transition of the public administration (digitalisation of the justice system, deployment of the
Digital Identity Card and creation of a one-stop-shop for all public administration’ online
services); (ii) increasing national broadband coverage with gigabit connectivity in rural areas
and construction of electronic communications infrastructure for a 5G network, thereby
increasing the digital connectivity of rural areas; and (iii) digitalisation of higher education
through investing in e-learning and digital teaching tools. These activities will probably
increase job creation among workers with different qualifications, such as ICT specialists,
electrical engineers and technicians.
    As regards economic and social resilience, the key measures aimed at tackling the
abovementioned macroeconomic challenges for Croatia’s economy (see Section 1 above) are
directed towards job creation in general, as well as jobs in education (including early-
childhood education and care) and research. Key measures in reinforcing economic and
social resilience include: (i) redesigning active labour market policies to boost employment
and self-employment; (ii) reskilling and upskilling; and (iii) investment in education and
research, including improvement of access to early-childhood education and care.14



12 Dokonal T., Što hrvatski građevinari mogu dobiti kroz Plan oporavka i otpornosti, in Minera & Gradnja, 23 September
2021:
https://www.mineral.com.hr/6460/Sto-hrvatski-gradjevinari-mogu-dobiti-kroz-Plan-oporavka-i-otpornosti,
accessed 15 June 2022.
13 European Commission, Guidance to Member States Recovery and Resilience Plans, 22 January 2021, SWD(2021) 12

final, 24-26. According to Guidance to Member States for the RRP, Part 1, due attention should be paid to “job
creation potential, the development and deployment of research and innovation, as well as to the provision of trainings and acquisition
of the skills that are necessary to address those objectives and accelerate the deployment of the technologies needed for the green
transition”. For example, “investments in upgrading skills in construction and other relevant sectors; curricula reforms, setting
up graduate tracking systems and modular vocational education and training programmes. Investments in biodiversity and nature-
based solutions to increase resilience against natural disasters and climate change (restoration of ecosystems such as forests, wetlands,
peatlands, free-flowing rivers and coastal ecosystems; improving infrastructure in protected areas and investing in nature-tourism;
planting trees; greening urban spaces)”.
14 For example, by creating 22,500 new kindergarten places, it will be ensured that every child after the age of

4 has a guaranteed place. The reform will provide for additional specialised teachers and include a new financing
model to ensure the long-term sustainability and increased affordability of kindergartens.

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   Measures that can have an impact on employment protection include reinforcing
economic and social resilience through reskilling and upskilling.
   A key measure in reinforcing economic and social resilience concerns improving the
provision and adequacy of social benefits and services. They include a guaranteed minimum
benefit as the main benefit for reducing poverty, the introduction of new social services, such
as social mentorship and family assistants, aimed at preventing social exclusion and
institutionalisation, as well as improving long-term care measures.
In the area of economic and social resilience, a key measure targets investment in education
and research, including improvement of access to early-childhood education and care, and
to the health-care system.15


3. Social and labour dimensions of the RRP.

3.1 Evaluation of the plan by the Commission and the Council (with particular regard
to social and labour policies).

    According to both the Commission SWD (2021) and the Council,16 Croatia’s plan, to a
large extent, represents a comprehensive and adequately balanced response to the economic
and social situation, therefore contributing appropriately to the six policy pillars referred to
in Article 3 of the Regulation.17 The Commission holds that “numerous components of the
plan contribute to smart, inclusive and sustainable growth” and, overall, the plan addresses
many of the country's core problems in the areas of labour market, productivity, business
environment, and competitiveness challenges.18
    In the RRP, social cohesion is strengthened mainly through active labour market policy
measures that, among other things, provide support for appropriate skills development
tailored to vulnerable groups, through education and social policies aimed at reducing
poverty.19


15 See: infra 3.3.
16 Council of the European Union, Council Implementing Decision on the approval of the assessment of the recovery and
resilience plan for Croatia, 20 July 2021, 10687/21, point 7. It is emphasised that “the RRP includes measures that
contribute towards all of the six pillars, with a significant number of components of the RRP addressing multiple pillars. Such an
approach helps to ensure that each pillar is comprehensively addressed in a coherent manner” (point 8).
17 The ‘six pillars’ are: (i) green transition; (ii) digital transformation; (iii) smart, sustainable and inclusive growth,

including economic cohesion, jobs, productivity, competitiveness, research, development and innovation, and
a well-functioning internal market with strong small and medium enterprises (SMEs); (iv) social and territorial
cohesion; (v) health, and economic, social and institutional resilience with the aim, among other things, of
increasing crisis preparedness and crisis response capacity; and (vi) policies for the next generation, children
and young people, such as education and skills (the scope of application of the Facility).
18 European Commission, nt. (2), 4. Council of the European Union, nt. (16), point 8: the RRP includes a

significant number of components addressing multiple pillars that contribute to ensuring that each pillar is
addressed comprehensively and coherently. Moreover, given the specific challenges faced by Croatia, the
particular focus on smart, sustainable and inclusive growth and on economic and institutional resilience, along
with the overall weighting across pillars, is considered to be adequately balanced.
19 European Commission, nt. (2); Council of the European Union, nt. (16), point 10.



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                                                                  The NextGeneration EU in Action: Impact on
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   According to the Commission, “investments in education, research and innovation target
specifically children and youth and are therefore essential to support the education and future
of the next generation”.20 These important measures are expected to visibly improve
education outcomes. They are aimed at, for example, increasing participation in early-
childhood education and care through investment in infrastructure, enabling one-shift
schooling and increasing mandatory teaching hours in primary schools, reviewing curricula
and modernising higher education.21 Moreover, reforms are expected to reduce the
fragmentation of public research institutions, moving to results-oriented research and
innovation funding, and improve research career progression.22
   Targeted reforms and investments in education should improve processes at the Public
Employment Service23 and help to increase participation in the labour market by adopting
active labour market policies (ALMP),24 establishing vouchers for training and upskilling
programmes,25 and amending labour law.26 The measures aimed at facilitating inclusion (of
vulnerable groups) in the labour market, such as funding of different types of vouchers, have
the potential to increase labour competitiveness and employability in line with labour market
needs and with a particular focus on the activation of the long-term unemployed and the
inactive population. The objective of the proposed labour-law reform is to establish a clear
and modern legislative framework aimed at improving working conditions and work–life
balance, better regulating new forms of work and encouraging transitions from fixed to open-
ended contracts and from undeclared to declared work.
   One of the challenges facing the Croatian public administration is its high fragmentation,
including across the country. The wage-setting framework lacks consistency and
transparency across public administration and civil service, thus affecting equality of
treatment and hindering central control over the public wage bill. Therefore, reforms setting
up a standardised wage-setting framework across public administration and public services
are essential.27
   The RRP addresses the challenges of the Croatian social welfare system as regards
improving the coverage and adequacy of social benefits, as well as the development of new
social services.
   Increasing the basic amount and coverage of the Guaranteed Minimum Benefit (the main
[national level] benefit for the reduction of poverty), as well as the merger of benefits with
the same functions, is planned to improve the coverage, adequacy and targeting of social

20 European Commission, nt. (2), 2–3.
21 European Commission, nt. (2), 4. Envisaged digitalisation efforts that will be further embedded in a new
strategic framework “Croatia’s 2030 Digital Strategy” seem to be important for education, but also businesses
in the cultural and creative sectors.
22 Council of the European Union, nt. (16), point 11.
23 Hrvatski zavod za zapošljavanje, Croatian Employment Service (CES).
24 Here it should be emphasised that the RRP envisages the adoption of ALMP to boost employment and self-

employment linked to the green and digital transitions.
25 Introduction of different vouchers (system) is planned for the education of employed and unemployed people

to provide skills related to the green and digital transitions, for accredited adult education.
26 Council of the European Union, nt. (16), point 16; European Commission, nt. (2), 34.
27 European Commission, nt. (2), 9; Council of the European Union, nt. (16), point 15.



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benefits.28 The RRP also envisages the development of new social services (social mentorship
and family assistants) in order to prevent institutionalisation and social exclusion. Long-term
care is likewise supported by the RRP with measures to increase the availability, accessibility
and quality of home- and community-based services, as well as of institutional care
exclusively for people who depend on it.
    It is assessed that the combination of these measures should help reduce poverty, prevent
social exclusion and develop social services tailored for vulnerable groups, thereby building
a more resilient society.29
    The health sector is specifically supported by a component in the RRP. The improvement
concerns the necessary structural reforms, as well as infrastructure and medical equipment
requirements. Moreover, measures are envisaged to achieve full territorial coverage of
primary health care and medicine availability, thereby improving the health system’s resilience
and preparedness.30 The main measures include: improving the digitalised system of joint
procurement, purchasing new medical equipment, increasing the number of physicians,
nurses and other health professionals, the introduction of a new care model for patients, the
functional integration of hospitals and the strengthening of day hospitals at secondary and
tertiary level. The reform aims to improve the efficiency, quality, accessibility and financial
sustainability of the health system.31
    To conclude, the Council emphasises that “investments in education, healthcare and
labour market skills are expected to have long-term positive effects on human capital”.32 The
implementation of RRP reforms and investments should help Croatia to address its
economic weaknesses, such as its comparatively low employment and growth potential:
“upskilling could improve the competitiveness of the workforce and reduce skills gaps and
mismatches on the labour market … while substantial investments in education should help
improve learning outcomes. All those measures should raise human capital, labour
productivity and hence increase the labour contribution to potential growth.”33




28 Digitalisation of the social benefit system will thus provide simplified access and an overview of the social
benefits that beneficiaries are entitled to receive at the national level and the level of local and regional
government units.
29 European Commission, nt. (2), 34.
30 European Commission, nt. (2), 3; Council of the European Union, nt. (16), point 11.
31 European Commission, nt. (2), 34.
32 Council of the European Union, nt. (16), point 37.
33 Council of the European Union, nt. (16), point 20. The RRP features measures aimed at improving the

employability of the most vulnerable people, thus reducing social exclusion and poverty. The risk of poverty
and social exclusion in Croatia is closely linked to unemployment and inactivity (point 22).

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     Sandra Laleta                                                                  Italian Labour Law e-Journal
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                                                                     The NextGeneration EU in Action: Impact on
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3.2 RRP and the implementation of the European Pillar of Social Rights and the
Social Scoreboard.

   As emphasised by the Commission, “the recovery and resilience plan submitted by
Croatia addresses a multitude of employment and social challenges relevant for the
implementation of the Pillar”.34
   Concerning the implementation of the European Pillar of Social Rights (hereinafter:
EPSR), the Council assesses that the Croatian “RRP is expected to have a high impact on
strengthening the growth potential, job creation, and economic, social and institutional
resilience of Croatia, thus contributing to the implementation of the European Pillar of Social
Rights, including through the promotion of policies for children and youth …”,35 and that
“The RRP includes various interventions to contribute to the implementation of the
European Pillar of Social Rights, aimed at, among other things, expanding access to early
childhood education and care, developing digital solutions to exchange data on social
benefits, and introducing social mentoring services to promote employment and social
inclusion, especially for young people”.36
   The Croatian RRP has mainly addressed the following principles of the EPSR: 1.
education, training and lifelong learning; 4. active support for employment; 11. childcare and
support to children; 14. minimum income; 16. health care; and 18. long-term care. The other
principles tackled in the RRP are: 2. gender equality; 9. work-life balance;3713. Unemployment
benefits (will be increased and its duration prolonged), 15. old age income and pensions
(increase of the minimum pension and survivor’s pension), and 17. inclusion of people with
disabilities (for example, through the introduction of the social service called “social
mentorship”).38
   The aspects of the Social Scoreboard mostly addressed by the RRP are: (a) equal
opportunities and access to the labour market;39 (b) dynamic labour markets and fair working
conditions;40 and (c) social protection and inclusion.41

34 European Commission, nt. (2), 47.
35 Council of the European Union, nt. (16), point 19. See European Commission, nt. (2), 46.
36 Council of the European Union, nt. (16), point 23.
37 Council of the European Union, nt. (16), point 49. The planned labour reform is expected to help to increase

female labour market participation, to facilitate work–life balance, to indirectly reduce the gender pay gap and
to address the high gender pension gap.
38 Council of the European Union, nt. (16), point 49; European Commission, nt. (2), 42. Moreover, the RRP

provides several measures to address specific needs of persons with disabilities: to ensure physical accessibility
to buildings and housing, to provide adequate mobility services, to promote hybrid access to a workplace and
to ensure access to digital public services.
39 The plan envisages a new strategy for adult learning and modernisation of the upskilling and reskilling system.
40 The plan envisages significant investments in ALMPs that will complement activation programmes supported

by the ESF, especially targeting the inactive population and those facing multiple employment barriers. Further,
it is important to develop a comprehensive activation strategy and to strengthen an integrated approach to
providing employment and social services. These measures would be complemented by labour law reform in
order to improve labour market functioning and establish a framework for fighting undeclared work.
41 European Commission, nt. (2), 47. The measures include, as already mentioned, expanding access to early-

childhood education and care, developing digital solutions to exchange data on social benefits, introducing
social mentoring services to promote employment and social inclusion, and increasing long-term care capacity.

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    Regarding the different policies and legislation, in the period after adopting the NGEU,
several important documents and legislative acts have been adopted, such as the National
strategy of development of the Republic of Croatia until 2030;42 new Social Care Act;43 and
the amended Act on Maternity and Parental Benefits,44 etc.
    The most important novelties introduced by the Social Care Act are the following: a) the
amounts of some benefits (such as the guaranteed minimum benefit, etc.) have been
increased; b) the circle of the persons that can provide a personal care to persons with
disabilities has been enlarged and the amount of the benefit has been increased for certain
categories of persons with disabilities; c) new social services has been introduced (e.g. social
mentorship, professional assessment, some types of psycho-social treatments etc.); d) the
procedure of the contracting out of social services has been simplified; e) three new
institutions have been established: the Croatian Institute for Social Work (as a public
institution, with the headquarter and local branches, that has replaced the existing centres of
social care, what, according to legal scholars, represents a hyper centralisation of social care
in Croatia45); the Family Centre (as an autonomous institution in charge of the prevention
programmes and individual and group advising for different groups of users); the Academy
of Social Care (with the aim of providing continuous professional education in the field of
social care), etc.
    The most important novelty in the Act on Maternity and Parental (amended in July 2022)
concerns the introduction of the paternity leave of employed or self-employed father of 10
working days for one child and 15 working days on the occasion of the birth of twins, triplets
or the contemporaneous birth of more children. This right the father can use until the child’s
sixth month. Moreover, the amount of parental benefit has been increased.46
    Several laws are expected to be adopted in the near future: a new Higher Education and
Science Activity Act, as well as amendments to the Labour Act (after a two-year process of
drafting a new Act was abandoned). The draft novelties of the Labour Act concern: (i) the
new limitations of successive fixed-term employment contracts; (ii) employment contracts
of indefinite duration for permanent seasonal jobs; (iii) contracts of employment at
alternative workplaces (at the worker's home or outside the employer's premises); (iv) so-
called additional work performed for another employer (one proposal is to remove the
existing limitation of a maximum period of up to 180 hours a year); (v) introduction of carers'

An overall strategic framework and ambition are necessary for strengthening access to and adequacy of social
benefits and services and improving the efficiency of the current complex system of social protection. Reform
proposals aimed at tackling the critically low adequacy of pensions are expected to induce only a limited positive
impact.
42 Nacionalna razvojna strategija Republike Hrvatske do 2030. godine, Narodne novine 13/2021.
43 Zakon o socijalnoj skrbi (Narodne novine, 18/22, 46/22), in force from 16 April 2022.
44 Zakon o rodiljnim i roditeljskim potporama (Narodne novine, 85/08, 110/08, 34/11, 54/13, 152/14, 59/17, 37/20,

85/22).
45 Potočnjak Ž., Berc G., Marčetić G., Ukidanje pravne osobnosti centara za socijalnu skrb neće donijeti ništa dobro, in

Novi List, 19 November 2021, https://www.novilist.hr/novosti/ukidanje-pravne-osobnosti-centara-za-
socijalnu-skrb/, accessed 19 August 2022.
46 With the aim of positively influencing the strengthening of families’ material standards and quality of life,

consequently encouraging the parenthood and family enlargement, especially taking into account the negative
demographic situation in Croatia. See Government of the Republic of Croatia, https://vlada.gov.hr.

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leave; (f) the right to a notice period and severance pay for workers reaching 65 years of age
and 15 years’ entitlement for a retirement pension are proposed to be removed; and (g) the
regulation of digital platform work.


3.3 RRP and implementation of the Country-specific recommendations formulated
in the European Semester cycles 2019 and 2020.

    In the context of the European Semester cycles 2019 and 2020 the Council recommended
that Croatia take all measures necessary to effectively address, among other things, issues
concerning: (i) the health care system: “to enhance the resilience of the health system; and
promote balanced geographical distribution of health workers and facilities, closer
cooperation between all levels of administration and investment in e-health”; (ii) labour
market measures and institutions: “to strengthen labour market measures and institutions
and their coordination with social services, while also consolidating social benefits and
improving their capacity to reduce poverty”; and (iii) education reform: “to deliver on
education reform and improve access to education and training at all levels as well as their
quality and labour market relevance, while also promoting the acquisition of skills”. The
Council also recommended that Croatia (iv) “introduce, in consultation with the social
partners, harmonised wage-setting frameworks across the public administration and public
services”; and (v) “focus investment-related economic policies on research and
innovation”.47 In order to face the challenge of poverty reduction and social inclusion, it was
recommended to improve employment measures and the legal framework for a modern
labour market; develop and improve the pension system and improve the social welfare
system.48
    Both the Commission SWD (2021)49 and the Council Decision50 conclude that the RRP
addresses all or a significant number of the country-specific recommendations (the economic
and social challenges) identified in the European Semester (2019 and 2020), by setting up,
among other things, the reforms concerning: (a) active labour market policy measures;51 (b)
education (by improving access to education and its quality and labour market relevance;
skills especially for vulnerable groups);52 (iii) health-care system (addressed by measures to

47 Council of the European Union, nt. (16), 3-4. Also, to focus investment on sustainable urban and railway
transport, clean energy, renewables and environmental infrastructure, as well as on green and digital transitions,
while taking into account regional disparities.
48 European Commission, nt. (2), 39.
49 European Commission, nt. (2), 3.
50 Council of the European Union, nt. (16), 11.
51 European Commission, nt. (2), 33. The ALMP measures aim to boost employment and self-employment

linked to the green and digital transitions, to facilitate the inclusion of vulnerable groups in the labour market,
including through the vouchers system for accredited adult education, training and upskilling programmes to
acquire the skills needed in the labour market, focusing on the long-term unemployed and the inactive
population.
52 European Commission, nt. (2), 33-34. The RRP includes measures aimed at: improving access to early-

childhood education and care; increasing the quality of teaching and learning outcomes; and necessary
infrastructure investments, including in digital infrastructure. The measures will help to promote the acquisition

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 Sandra Laleta                                                                         Italian Labour Law e-Journal
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                                                                        The NextGeneration EU in Action: Impact on
                                                                                          Social and Labour Policies




improve its efficiency, quality, accessibility and financial sustainability). Furthermore, the plan
contains measures to support investment in and the policy relevance of research and
innovation.53


4. Lessons from the previous crisis?

   Concerning the fiscal/macroeconomic recommendations for Croatia in the context of the
in-depth reviews carried out by the Commission since the Covid-19 pandemic, the 2021 Alert
Mechanism Report concluded that an in-depth review should be undertaken for Croatia to
examine further the persistence of imbalances or their unwinding. Croatia faced “excessive
imbalances” from 2014 to 2018, and “imbalances” from 2019 to 2021.
   It should be noted that in February 2020, at the outset of the pandemic, under the
previous annual cycle of surveillance under the Macroeconomic Imbalances Procedure, the
Commission identified macroeconomic imbalances in Croatia related to high levels of
external, private and government debt in a context of low potential growth. In its SWD 2021
the Commission54 concluded that “the analysis shows that these vulnerabilities remain”,55 but
the context of the assessment of vulnerabilities in 2021 in-depth review (IDR) for Croatia
was markedly different from the previous year.
   On 20 July 2020 the Council recommended that Croatia “in 2020 and 2021 take all
necessary measures, in line with the general escape clause, to effectively address the
pandemic, sustain the economy and support the ensuing recovery”. Furthermore, it
recommended that it pursue fiscal policies aimed at achieving prudent medium-term
positions and ensuring debt sustainability, while enhancing investment.56 Croatia’s fiscal
policy response supported the economic recovery in 2021. The discretionary measures
adopted in 2021 included reductions in personal income and corporation tax, totalling 0.5
per cent of GDP.57

of skills (including by a voucher system) and the digital transformation of higher education, and to facilitate e-
learning. See: supra 3.1.
53 European Commission, nt. (2), 3.
54 European Commission, In-Depth Review for Croatia in accordance with Article 5 of Regulation (EU) No 1176/2011

on the prevention and correction of macroeconomic imbalances. Accompanying the Communication from the Commission to the
European Parliament, the Council, the European Central Bank, the European Economic and Social Committee, the Committee
of the Regions and the European Investment Bank, Economic policy coordination in 2021: overcoming COVID-19, supporting
the recovery and modernising our economy, 2 June 2021, SWD(2021) 406 final. Available at:
https://ec.europa.eu/info/sites/default/files/7_en_autre_document_travail_service_part1_v3.pdf.
55 Ibidem, 2.
56 Council of the European Union, Council Recommendation of 20 July 2020 on the 2020 National Reform Programme

of Croatia and delivering a Council opinion on the 2020 Convergence Programme of Croatia, 2020/C 282/11, 68–73.
Further, the Council recommended that Croatia: enhance the resilience of the health care system; strengthen
labour market measures and institutions, and improve the adequacy of unemployment benefits and minimum
income schemes; promote the acquisition of skills; and maintain measures to provide liquidity to SMEs and the
self-employed.
57 European Commission, Recommendation for a Council Recommendation on the 2022 National Reform Programme of

Croatia and delivering a Council opinion on the 2022 Convergence Programme of Croatia, 23 May 2022, COM(2022) 613
final, 4-5.

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     Sandra Laleta                                                                      Italian Labour Law e-Journal
                                                                                       Special Issue 1, Vol. 15 (2022)
                                                                         The NextGeneration EU in Action: Impact on
                                                                                           Social and Labour Policies




   In the Commission’s 2022 country report for Croatia (published on 23 May 2022)58 the
Commission assessed Croatia’s progress in addressing the relevant country-specific
recommendations adopted by the Council in 2019, 2020 and 2021, and took stock of
Croatia’s implementation of the Recovery and Resilience Plan, building on the Recovery and
Resilience Scoreboard. The country report identified gaps concerning those challenges that
are not or only partially addressed by the RRP, as well as new and emerging challenges,
including those emerging from Russia’s invasion of Ukraine. It also assessed Croatia’s
progress in implementing the European Pillar of Social Rights and on achieving the EU
headline targets on employment, skills and poverty reduction, as well as progress in achieving
the UN’s Sustainable Development Goals.
   In its In-depth Review59 the Commission concluded that Croatia is no longer experiencing
macroeconomic imbalances and that important progress has been made in reducing private
indebtedness and net external liabilities, while government debt remains high but has
resumed the downward trajectory that delivered marked improvements before the pandemic.
   In its 2022 Country-Specific Recommendations the Commission recommended that in
2022 and 2023 Croatia – among other things – implement measures of “continued temporary
and targeted support to households and firms most vulnerable to energy price hikes and to
people fleeing Ukraine”, while ensuring the growth of nationally-financed current
expenditure in line with an overall neutral policy stance. Croatia should “stand ready to adjust
current spending to the evolving situation”. Subsequently, Croatia has to proceed with
implementation of its RRP.60 As already mentioned, it includes active labour market policy
measures aimed, among other things, at the appropriate skills development tailored to
vulnerable groups (vouchers for training and upskilling programmes) and amendments to
labour law. Furthermore, the RRP is concerned with improving the Croatian social welfare
system (regarding social benefits, development of new social services and long-term care).
Measures are also needed in education, research and health care.
   Parliamentary elections were taking place in Croatia when the European Council
introduced the 750-billion-euro NextGenerationEU (NGEU) package in July 2020 in order
to stimulate economic recovery from the Covid-19 pandemic. Despite the diverse political
landscape compared with previous elections,61 two major parties, HDZ and SDP, continued


58 European Commission, nt. (57).
59 European Commission, In-depth review for Croatia in accordance with Article 5 of Regulation (EU) No. 2011/1176 on
the prevention and correction of macroeconomic imbalances. Accompanying the document Communication from the Commission to
the European Parliament, the Council, the European Central Bank, the European Economic and Social Committee, the
Committee of the Regions and the European Investment Bank 2022 European Semester - Spring Package, 23 May 2022, SWD
(2022) 633 final. Available at:
https://ec.europa.eu/info/sites/default/files/economy-
finance/croatia_swd_2022_633_7_en_autre_document_travail_service_part1_v1.pdf.
60 European Commission, nt. (57); European Commission, nt. (59). Other recommendations mainly concern

the expansion of public investment for the green and digital transitions and for energy security.
61 The previous parliamentary elections were held on 11 September 2016, when the Croatian Democratic Union

(HDZ) and its allies won 61 seats, the Social Democratic Party of Croatia (SDP) and its People’s Coalition
partners 54 seats. Eight seats were reserved for national minorities, while the remaining 28 seats were won by
six other parties or coalitions. HDZ formed a coalition government with Most and the MPs representing

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 Sandra Laleta                                                                    Italian Labour Law e-Journal
                                                                                 Special Issue 1, Vol. 15 (2022)
                                                                   The NextGeneration EU in Action: Impact on
                                                                                     Social and Labour Policies




to dominate. What is more, they have formed the basis of all governments since Croatian
independence. Nevertheless, shortly before the elections new parties were established, such
as the right-wing Homeland Movement (Domovinski pokret) and the left-green We Can!
(Možemo!), which won parliamentary seats for the first time.
   At the parliamentary elections in July 2020, the two biggest parties achieved the following
results: HDZ won 66 seats, and SDP and its allies (Restart koalicija) 41 seats. The elections
were also characterised by the emergence of some new populist movements, but they did
not do particularly well.62 Generally speaking, the adoption of the NGEU appears to have
had no significant impact on the Croatian political landscape.
   During the pre-electoral campaign, the NGEU issue was a topic of various political
debates. The HDZ government emphasised its efforts to procure NGEU funds. When after
the elections Croatian government representatives reported on the RRP draft to the Croatian
Parliament, the opposition expressed strong criticism. Criticisms included the point that the
opposition, as well as the business sector, had no opportunity to participate in drafting the
RRP, that the RRP included projects already included in previous national strategies but
never implemented, and that resources had been allocated without a preliminary
assessment.63
   The RRP was first presented to the representatives of trade unions and the Croatian
Employers’ Association (hereinafter: CEA) 64 in the form of a draft summary, at the meeting
of the Economic-Social Council65 on 29 March 2021, eight months after the preparatory
work, in which all government departments took part, began. On that occasion both the
trade unions and CEA expressed their satisfaction with the RRP, which they assessed as
“encouraging” (mainly because of its generous budget), and their hope that they would be
participating in the formal process of its elaboration, including public and e-consultations.
Trade unionists emphasised the important link that should be achieved between the RRP’s
financial resources and such issues as emigration from Croatia and transformation of the
economy. They pointed to the importance of the social aspect of the RRP and the need to
decrease social inequalities. They were satisfied with the amount that would be allocated for
education (15 per cent), but also for public health, green economy, digitalisation and so on,
emphasising the importance of the quality of investments.66
   On the other hand, representatives of the SSSH trade union were quite critical, saying that
social recovery was not addressed sufficiently in the draft. Quality jobs were not mentioned,


national minorities. In June 2017, most left the government, followed by the Croatian People’s Party – Liberal
Democrats (HNS), who had previously been part of the SDP-led coalition during the 2016 elections.
62 Such as Domovinski pokret, Most and Možemo. For statistical data see Croatian Parliament,

https://www.sabor.hr/hr/zastupnici/statisticki-pokazatelji, accessed 18 June 2022.
63 See Croatian Parliament, https://www.sabor.hr/informacija-o-sazetku-nacrta-nacionalnog-plana-oporavka-i-

otpornosti-2021-2026-podnositeljica-vlada?t=124462&tid=209426, accessed 19 August 2022.
64 The biggest Croatian employer association.
65 A tripartite dialogue body involving the government of the Republic of Croatia, trade unions and employers’

associations with a view to resolving economic and social issues.
66 Independent Union of Science and Higher Education, GSV s Plenkovićem raspravljao o Nacionalnom planu za

oporavak i otpornost, https://www.nsz.hr/novosti-i-obavijesti/sindikalne-vijesti-i-socijalno-partnerstvo/gsv-s-
plenkovicem-raspravljao-o-nacionalnom-planu-za-oporavak-i-otpornost/, accessed 17 June 2022.

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     Sandra Laleta                                                                    Italian Labour Law e-Journal
                                                                                     Special Issue 1, Vol. 15 (2022)
                                                                       The NextGeneration EU in Action: Impact on
                                                                                         Social and Labour Policies




while the proposed reforms did not ensure more social cohesion, and thus less poverty and
social inequality. Furthermore, they complained that there had been no discussion of
establishing a national Tripartite Foundation for a Fair Transition as a body of continuous
and strong support for workers who would lose their jobs as a result of the green and digital
transitions in order to prepare them for finding new jobs. They argued also that the draft
RRP did not mention gender equality, nor the implementation of the 20 EPSR principles,
and that the 4 per cent of funding allocated in the RRP for the component “Labour market
and social protection” demonstrated that social recovery was not addressed adequately.67
    After the Commission had approved Croatia’s RRP, CEA representatives depicted it as
an opportunity for Croatia, faced with the demographic problems of a declining number of
young people and an increasing number of pensioners. Their opinion was that the creation
of 60,000 to 100,000 quality jobs through investments in the private sector was the only
viable generator of economic growth and social development. Finally, they expressed their
expectation that they would continue to participate in the management of the RRP through
its rebalancing process.68
    Regarding the role of the social partners in the implementation of the RRP so far, CEA
participated in the drafting of various tenders, such as for tourism (in cooperation with the
Ministry of Tourism and Sport); for vouchers for development of the skills of employed and
unemployed people (in cooperation with the Ministry of Labour, Pension System and Social
Care); and for the creative and culture industries (in cooperation with Ministry of Culture
and Media).69 No data are available on trade union participation in RRP implementation,
although they did take part in the process of drafting a new Labour Act.
    Croatian workers have been hard hit by austerity measures imposed during economic
crises since 2008. As in other EU Member States, in Croatia public sector employment was
suspended because new hirings were halted, wages frozen and services often outsourced as
a result of budget consolidation.70 Because of low wages and precarious working conditions
many workers have been leaving the public sector. Labour shortages are especially visible in
the health sector71 and education. We should not forget how heavy a burden these two
sectors carried during the depths of the Covid-19 crisis, and they continue to do so. The

67 Federation of Independent Trade Unions of Croatia, Savez samostalnih sindikata Hrvatske, 29 March 2021,
https://www.sssh.hr/hr/vise/nacionalne-aktivnosti-72/gsv-o-nacionalnom-planu-oporavka-i-otpornosti-
hoce-li-hrvatski-radnici-osjetiti-boljitak-4728, accessed 17 June 2022.
68 HUP, EK potvrdila hrvatski plan za oporavak i otpornost – HUP: Efekt na oporavak gospodarstva kroz NPOO neće biti

dovoljno velik bez stvaranja 60.000-100.000 novih radnih mjesta, 8 July 2021, https://www.hup.hr/ek-potvrdila-
hrvatski-plan-za-oporavak-i-otpornost--hup-efekt-na-oporavak-gospodarstva-kroz-npoo-nece-biti-dovoljno-
velik-bez-stvaranja-60000-100000-novih-radnih-mjesta-v2.aspx, accessed 17 June 2022.
69 HUP, Provedba Nacionalnog plana oporavka i otpornosti: natječaji za poduzetnike u 2022. Godini, 16 March 2022,

https://www.hup.hr/provedba-nacionalnog-plana-oporavka-i-otpornosti-natjecaji-za-poduzetnike-u-2022-
godini.aspx, accessed 18 June 2022.
70 Glassner V. and Watt A., Cutting Wages and Employment in the Public Sector: Smarter Fiscal Consolidation Strategies

Needed, in Intereconomics, 45, 4, 2010, 212-219. Available at:
https://www.intereconomics.eu/contents/year/2010/number/4/article/cutting-wages-and-employment-in-
the-public-sector-smarter-fiscal-consolidation-strategies-needed.html.
71 A high number of medical staff (doctors and nurses) have left Croatia for other EU Member States, seeking

better wages and working conditions.

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 Sandra Laleta                                                           Italian Labour Law e-Journal
                                                                        Special Issue 1, Vol. 15 (2022)
                                                          The NextGeneration EU in Action: Impact on
                                                                            Social and Labour Policies




public sector in Croatia is generally depicted by employers (and ‘public opinion’) as too large,
inefficient and “costly”, and public sector workers as “unfairly advantaged”.


5. Final considerations.

Croatia’s RRP includes a range of reforms and investments in the three main areas – green
transition, digital transition and economic and social resilience – that are expected not only
to foster economic growth, but to create jobs, improve education outcomes, help increase
participation in the labour market, address some of the challenges of the Croatian social
welfare system and help improve the health-care system.
   Even though the RRP covers, to various extents, many important social and labour
aspects, some seem to be underdeveloped (such as decent wages, social dialogue, work–life
balance, and a healthy, safe and well-adapted work environment or “fair working conditions”,
as defined in EPSR). This creates the impression that they are expected to emerge as an
indirect result of other measures, with no need to give them the appropriate weight. This
points to the conclusion that the RRP social aspects still neglects the social dimension.




Copyright © 2022 Sandra Laleta. This article is released under a Creative Commons
Attribution 4.0 International License




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