INTERNATIONAL CONFERENCE
“The economic crisis impact on industrial relations
national systems: Policy responses as key recovery tools”
Sofia, November 15-16, 2012
Hrvoje Butković, PhD
Višnja Samardžija, PhD
Institute for International Relations - IMO, Zagreb, Croatia
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ECONOMIC CRISIS AND CHALLENGES OF SOCIAL DIALOGUE
◦ Economic framework
◦ Crisis as a challenge
◦ Towards finding solutions
◦ Key issues analysed in a study
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FRAMEWORK FOR INDUSTRIAL RELATIONS IN CROATIA
◦ Legal and policy framework
◦ Basic features of representative social partners
◦ Collective bargaining in Croatia
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LEGISLATIVE AND FISCAL CHANGES
◦ Law on representativeness
◦ Other legislative changes
◦ Fiscal changes
◦ Examples from the practice
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KEY FINDINGS AND RECOMENDATIONS
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Croatia strongly hit by economic crisis in 2009,
continued recession underway, slow recovery expected
Key issues:
◦ Continued economic decline, high level of public consumption,
lack of investment, decreasing competitiveness, restructuring –
new employment or deepening unemployment?
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Austerity measures, cuts in budget, wages in public
sector, material rights in collective agreements
Trade unions and employers associations - strong
response to austerity measures
Negotiations on collective agreement for public services
Challenges of future EU membership
Indicator
2008
2009
2010
2011
2012
prognosis
-1.2
2013
prognosis
0.8
2.2
-6.0
-1.2
0.0
GDP per capita (EUR)2
10 722
10 111
10 394
10 427
-
-
General government
balance (% GDP)1
-1.4
-4.1
-4.9
-5.0
-5.1
-5.0
General government
gross debt (% GDP-a)1
28.7
35.0
41.2
45.7
51.3
57.1
External debt (% GDP)2
85.4
101.0
101.2
99.6
-
-
Average annual
inflation growth (%)2
6.1
2.4
1.1
2.3
-
-
Unemployment rate
(%)3
Employment rate (%)4
8.4
9.1
11.8
13.5
-
-
57.8
56.6
54.0
52.4
-
-
4 218
2 415
0 297
1 074
-
-
GDP, real annual
growth rate (%)1
Foreign direct
iinvestments (mil EUR)5
Government
- Ensuring conditions for economic recovery and growth, preserving work
places
- Reducing public spending, increasing efficiency of public sector
- Ensuring public sector development, maintaining social peace
- Introducing order to payment system, diminishing illiquidity
Employers
- Amending the Labour law, with aim to facilitate flexibility and possibilities of
employment
- Obtaining the greatest possible tax reliefs
- Diminishing the role of public sector in Croatian economy
Trade unions
- Preserving existing levels of salaries and employment
- Maintaining rights from collective agreements
- Strengthening trade unions on all levels
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Crisis as a challenge – new way of thinking, realistic
approach!
Completing structural reforms necessary
Restructuring, reindustrialisation, reducing barriers to
investment, management of human resources
Labour market reform should be accelerated
Social „peace” necessary – further increase of debt not
possible
Agreement between social partners should be achieved
in a different way, considering economic potentials of the
country
Searching for different modalities of work and reaching
agreements through social partnership
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Social dialogue - still not seen as a mechanism for reaching
compromises between social partners and shaping public policies
Positions of Government and other social partners differ
significantly: public spending, reducing substantive rights in public
sector. Rapprochement of standpoints on the ways for overcoming
the crisis
Trade unions are fragmented, not always sharing same views
Fairly and equal distribution of austerity measures needed, finding
solution within available financial possibilities
Quality of social dialogue should be brought on higher level, building
capacities and competencies of all social partners
Analytical monitoring and recording indicators on industrial relations
are not sufficiently developed
Culture of argumentative dialogue should be strengthened
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Labor law (LL)
◦ enacted in 1995 and revised five times;
◦ industrial relations reviewed in five chapters;
◦ strike has to be announced;
◦ mediation process obligatory;
◦ dual system of workers representation
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Economic and Social Council (ESC)
◦ the highest form of tripartite social dialogue in Croatia;
◦ advisory body;
◦ national and the regional ESCs;
◦ permanent and temporary working bodies;
◦ in March 2011 the ESC was re-launched
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Established as Office for Social Partnership in December 2001
Changed to Independent Service for the Social Partnership in
January 2012
Logistic and expert support for the social dialogue and partnership
Coordinates work of the ESC
Promotes sectoral social dialogue
Intermediates in settlement of labour disputes
Operates as the secretariat of the EU-Croatia Joint Consultative
Committee
Confederation/
Association
Year of
establishment
Number of trade
unions/employe
rs
Number of
workers
President
Independent Trade Unions
of (ITC)
Union of Autonomous
Trade Unions of (UATC)
1999
61
125,000
Krešimir Sever
1990
17
110,000
Mladen Novosel
MATICA – Association of
Croatian Trade Unions
(MACT)
1993
10
64,000
Vilim Ribić
Croatian Trade Union
Association (CTA)
Association of Workers’
Trade Unions of (AWTC)
1990
70
45,000
Ozren Matijašević
1994
45
24,000
Damir Jakuš
1993
6,000
400,000
Trade union associations
Employers’ associations
Croatian Employers’
Association (CEA)
Ivica Mudrinić
.
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237 national trade unions, 534 trade unions
423 964 trade union members (35% coverage)
Public sector (68%)
Private sector (17%)
Privatized companies (31%)
New private sector companies (9%)
Employers in numbers
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24 higher confederations
52 employers’ associations
Employers’ associations are mostly grouped by the sectors
Croatian Employers’ Association (CEA) the only representative
employers’ association in Croatia
CEA operates in 3 regional offices and has 25 branch associations
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Negotiation with a bargaining committee
Possibility of extending application of national collective agreement
May 1st, 2012: total of 141 national collective agreements were in
force in Croatia, 16 of which were branch agreements
Five sectoral collective agreements were extended
In 2010 the number of county collective agreements was 685
Collective agreement coverage is around 61%. 44% in private
sector and nearly 100% in public (Bagić, 2010)
Collective
agreements
don't
properly
express
specific
characteristics of branches and industries
2009
No CA were concluded
2010
◦ BCA for public service officers
◦ CA for workers in secondary education
◦ CA for the private healthcare sector
◦ CA for science and higher education
◦ CA for workers in primary education
2011
◦ CA for workers in primary education
◦ CA for workers in cultural institutions
◦ CA for the social welfare services
◦ CA for the security industry
2012
◦ CA for the civil servants
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In the last two years four sectoral social councils have been
established
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Textile – tripartite council
Forestry and Wood Industry -tripartite
Road Transport–bipartite
Railroad Sector– bipartite
Agreements specified actions to be taken by the social councils
In many industries there are no branch unions or existing ones are
weak compared to the in-house unions
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BCA for the Public Services set to expire in October 2013
Government started negotiations to change BCA in June 2012.
Government proposed irreversible revocation of certain substantive
rights in 2012 and 2013
◦ Christmas bonuses
◦ vacation allowances
◦ anniversary bonuses
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Four trade unions accepted proposal, but four rejected it
Mediation process with the four trade unions failed
Government terminated the BCA in September 2012.
The new BCA has been announced
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Law on the criteria for participation in the tripartite bodies and
representativeness for collective bargaining (July 2012)
Law limits extended application of collective agreements to a period
of three months from their expiry
Right of collective bargaining only to representative unions
Representative union has at least 20% of employee members in the
total number of unionized employees
Employers’ associations
Trade unions’ associations
1. At least six months in register 1. At least six months in the
of
higher
level
employers’ register of higher level trade
associations.
unions’ associations.
2. Membership of at least 3000 2. Affiliated trade unions have at
employers, or affiliated with least 50 000members (workers).
employers employing at least
100,000 workers.
3. Gather at least five employers’ 3. Gather at least five trade unions’
associations operating in different associations, operating in different
areas.
areas.
4. Have regional offices in at least 4. Have regional offices in at least
four counties.
four counties.
5. Have proper premises and other
necessary
material
working
conditions and employ at least five
workers.
5. Have proper premises and other
necessary
material
labour
conditions and employ at least five
workers.
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Law on promotion of employment (May 2012)
◦ Riddance from salary contribution (2 years) for employer hiring
unemployed person without work experience
◦ State pays contributions for a highly educated young persons who
can acquire a year of work experience this way
◦ For their work young people will receive atonement benefit of
1 600 HRK
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An annual tax on unused property in the amount 0.5% to 2% of
the market property value to be re-established every year
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Labour Law changes
◦ better regulation of the part time work;
◦ abolishing sharp distinction between indeterminate and fixed term
employment - a single employment contract
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Law on the special tax on salaries, pensions and other incomes
◦ 2%-4% of the net salary („crisis tax”) valid in 2009-2010
The Value Added Tax (VAT)
◦ From from 22% to 23% (2009) / from 23% to 25% (2012)
The Increase of 20% to electricity and gas prices (May 2012)
The Package of Tax Laws (2012)
◦ General Tax Law (publishing names of tax debtors)
◦ Directive preventing redemption of salaries without paying taxes
◦ Law on Income Tax (exempting all reinvested profits)
◦ Law on the Revenue Tax (increases non taxable salary base)
◦ Law on Contributions (health insurance 15 %to 13 %)
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Rapprochement of standpoints on the ways for overcoming the
crisis - parameters of the future economic development
Fairly equal distribution of austerity measures needed
Finding solution within available financial possibilities
Labour market reform in Croatia should be accelerated
Activities aimed at building the capacities and competencies of all
social partners need to be intensified
Solving the persisting problems in the industrial relations system:
◦ fragmentation of the union scene;
◦ reluctance of employers to accept unions as partners;
◦ insufficient CA coverage in the private sector, etc.
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Social partners should be given timely insight in Government's
future intentions
Social dialogue should be started at earlier stages
Collective agreements should express particularities of the areas for
which they are composed
Frequency of using the instrument of extending provisions of CA to
entire industry should be reduced
More intensive work is needed on spreading the model of bipartite
and sectoral social dialogue
Regular collection and development of indicators for monitoring and
evaluation of industrial relations
Communication with the media should be improved
A culture of argumentative dialogue between all participants should
be strengthened
Thank you!
visnja.samardzija@irmo.hr
butkovic@irmo.hr