From June 2020 till the end of the year, companies with more than 10 employees will be able to receive financial support for the reduction of the workweek.
The measure applies to companies having a turnover reduction of at least 20% compared to May 2019, and it will amount to 2,000 HRK ($297.48) per month per full time employee.
In practice, the employer pays the employee the agreed or prescribed salary as if he/she had worked full time and will receive reimbursement from the Croatian Employment Service (CES) in proportion to the reduction of working hours, after submitting the documentation to both CES and the Tax Authority.
This is the result of a tripartite taskforce established by the Government and composed of representatives from the government, trade unions and the employers’ organisations that are entitled to sit in the Croatian Economic and Social Council. The four trade unions arethe Union of Autonomous Trade Unions of Croatia (SSSH), the Independent Croatian Trade Unions (NHS), the Matrix of Croatian Trade Union (Matica)and the Croatian Trade Union Association (HUS). The employers’ organisation is the Croatian Employers’ Association (HUP), which is an IOE Member.
Since the beginning of the Covid-19 pandemic. HUP has advocated and suggested specific measures in support of the economy. HUP considered the taskforce as a good practice of social dialogue producing high satisfactory outcomes for both employers and employees. It largely responded to its expectations and members’ interests.
Interviewed on this matter, Dr Iva Tomić, Chief Economist at HUP, replied as follows:
- What was the participation of HUP in this taskforce established by the Prime Minister? Is this a good example of social dialogue processes?
HUP (Croatian Employers' Association) represented the employers’ side within the working group (taskforce) - which consisted of representatives from all social partners, the government, trade unions, and employers - that was working on the design of the short-time work scheme in Croatia during Covid-19 pandemic. Both HUP employees and representatives from specific HUP members (firms) participated in the working group. HUP representatives equally participated in both live meetings with other members of the working group as well as by sending additional comments and suggestions via email communication during a rather short and hectic period in designing the final version of the scheme. We believe that this process presents a good practice of tripartite social dialogue.
- What was HUP’s position on the measure?
HUP’s main position was that the proposed scheme should be inclusive, covering as many endangered business entities as possible, but at the same time clear and simple in its implementation. As a representative of employers that operate in different sectors of the economy, are of different size, and have different experiences with the Covid-crisis and accompanying restrictions, HUP’s intention was to include as many firms as possible that have the need to shorten regular working time (per week/month) in order to preserve jobs, but also that the scheme is easy to implement for both employers and workers.
- Was HUP’s position taken into account for the final measure?
Many of the HUP’s suggestions were acknowledged in the final version of the document that defines the measure in question. For example, the scheme was opened to firms operating in sectors other than manufacturing, firms with 10 to20 employees . Moreover, most importantly, the condition to participate in the scheme was lowered from 50% of drop in revenue in 2020 compared to 2019 to 20%-drop, with additional possibilities for the manufacturing industry.
In addition, during the first stage of the implementation in June andJuly, many employers have encountered several practical difficulties. . Thus, HUP conducted a members’ survey (available in Croatian) to find out more information about the scheme in practice. The answers revealed three main reasons that hindered employers from using this measure: (i) overly demanding administration; (ii) unclear instructions and insufficient support within the CES when implementing the measure; and (iii) inapplicability of the measure to all activities/industries and/or ways of organizing/doing business. HUP communicated these difficulties to both the Ministry of Labour and Pension Systems and CES to improve the implementation.
- How will the reimbursement operate in practice?
The employer is obliged to pay the employee the agreed or prescribed salary as if he/she had worked full time and will receive reimbursement from the CES in proportion to the reduction of working hours, upon submission of documents to both CES and the Tax Authority.
- Did HUP propose this measure?
At the start of the Covid-crisis, HUP proposed a version of the short time work scheme as a way to preserve jobs during special circumstances. However, the government later issued the “Support for preservation of jobs in sectors affected by coronavirus (Covid-19)” aimed at assisting three types of employers. Those in the accommodation and food service activities, transport and storage, labour-intensive activities within the manufacturing industry (textiles, clothing, footwear, leather, wood and furniture); employers who cannot perform activities in accordance with the decisions of the Civil Protection Headquarters; and employers who can prove the impact on their business performance. Lump-sum payment in the amount slightly higher than the minimum wage was paid to more than a third of all employees in the period March to May.
- What about companies with less than 10 employees?
The support for job preservation in the period March toMay mentioned earlier was mainly used by micro firms (up to 10 employees), which amounts to more than 92% of all employers. . HUP insisted that they should not be excluded from the government support as of June, even thoug they were excluded from the short-time work scheme. Through this scheme, employers receive a financial aid equal to HRK2,000 per month per full time employee. However, it is only open to employers with a 50% reduction in their turnover compared to one year ago.