Social Policies
#34Key Findings
With significant inclusion concerns, Croatia scores relatively poorly (rank 34) in the area of social policies. Its score on this measure has improved by 0.3 points relative to 2014.
The country’s healthcare system runs persistent financial deficits, creating a serious risk to future fiscal sustainability. It is broadly inclusive, but procedure waiting times are often long. Vaccination rates are low, and COVID-19 mortality figures have been quite high.
The pandemic-era online classes led to serious deterioration in pupils’ performance. A reform intended to restructure all levels of the education system was planned for 2022. Welfare benefits are low in cross-EU comparison, but a new anti-poverty plan is being developed.
A widespread lack of childcare facilities makes it difficult for young families to combine work and parenting. The gender pay gap is smaller than the EU’s average. The pension system is neither sustainable nor intergenerationally fair. There is neither a strategy to attract needed immigrants nor a policy to integrate migrants. Crime levels are low, but levels of family and sexual violence have risen.
The country’s healthcare system runs persistent financial deficits, creating a serious risk to future fiscal sustainability. It is broadly inclusive, but procedure waiting times are often long. Vaccination rates are low, and COVID-19 mortality figures have been quite high.
The pandemic-era online classes led to serious deterioration in pupils’ performance. A reform intended to restructure all levels of the education system was planned for 2022. Welfare benefits are low in cross-EU comparison, but a new anti-poverty plan is being developed.
A widespread lack of childcare facilities makes it difficult for young families to combine work and parenting. The gender pay gap is smaller than the EU’s average. The pension system is neither sustainable nor intergenerationally fair. There is neither a strategy to attract needed immigrants nor a policy to integrate migrants. Crime levels are low, but levels of family and sexual violence have risen.
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To what extent does education policy deliver high-quality, equitable and efficient education and training?
10
9
9
Education policy fully achieves the criteria.
8
7
6
7
6
Education policy largely achieves the criteria.
5
4
3
4
3
Education policy partially achieves the criteria.
2
1
1
Education policy does not achieve the criteria at all.
The year 2021 did not bring about any significant change in the way education policy is implemented. On the positive side, during the second year of the COVID-19 pandemic, there were no major school closures, and only a handful of schools and universities were occasionally compelled to move temporarily to online classes. On the negative side, the legacy of the pandemic 2020 has not been completely reversed. The online classes conducted through much of 2020 led to a deterioration in pupils’ skill formation, motivation and performance. Furthermore, the mental health of pupils and students has worsened. It is too early for any international performance comparison, since the PISA 2021 assessment was postponed until 2022.
In contrast to 2021 and earlier years, 2022 should witness one of the biggest reforms of the education system since Croatia’s independence, across all major areas (pre-primary, primary, secondary and tertiary education). The major intention of this overhaul is to adapt the education system to key priorities outlined in the National Development Strategy 2030 and the National Recovery and Resilience Plan submitted to the European Commission. Minister of Education Radovan Fuchs, who also performed this role 10 years ago, is eager to achieve breakthroughs in the aforementioned areas this time around. The key aspects of his reforms include changes in the way tertiary education is funded, changes in the system of vocational education, changes in the pre-primary education system and finally, changes in the primary and secondary education sectors. First, according to the announced reform, earmarking of funds to institutions of higher education should be tied strictly to learning outcomes. Second, children will be required to attend pre-primary education for two years instead of the existing mandate of one year. The capacities of towns and municipalities should be improved to handle this new requirement, since Croatia has one of the EU’s lowest shares of children less than five years old attending pre-primary education. Third, despite some very praiseworthy achievements in the past, such as the fact that Croatia has the EU’s lowest share of early leavers from the education and training systems in the 18-24 age cohort (3.3%), the system needs a substantial update to improve pupils’ relatively poor skills profiles, as evidenced by modest PISA assessment scores. Finally, vocational schools within the secondary education system will be pushed to undertake further steps toward establishing a dual system of vocational training, so as to improve graduates’ practical skills. It is to be seen whether vested interests will inhibit this reform.
The proposed reforms could also improve the system’s efficiency. Croatia’s share of education spending as a percentage of GDP is approximately equal to the EU-27 average. Moreover, Croatia’s student/teacher ratio is generally lower than the majority of its peers. Nevertheless, this does not necessarily equate to higher quality, as previous PISA assessment scores indicate.
Access to higher education is relatively unequal, as students from better-educated family backgrounds are over-represented in higher education. However, this outcome is not caused by the presence of burdensome tuition fees acting as a barrier to entry, especially since higher education is overwhelmingly financed out of the public purse. This has more to do with the cost of living for students in major cities and the lack of private scholarships for students from poorer families. The employment rate for recently graduated students is far below the EU average. It is very common that employers in the private and even public sector complain of the lack of necessary skills on the part of fresh graduates.
Citations:
Žiljak, T., N. Baketa (2018): Education Policy in Croatia, in: Z. Petak, K. Kotarski (eds.), Policy-Making at the European Periphery: The Case of Croatia. Cham: Palgrave Macmillan, 265-283.
Doolan, K., S. Puzić, B. Baranović (2018): Inequalities in access to higher education in Croatia: five decades of resilient findings, in: Journal of Further and Higher Education 42(4): 467–481
OECD (2019): Programme for International Students Assessment (PISA) Results from PISA 2018 – Country Note Croatia. Paris.
In contrast to 2021 and earlier years, 2022 should witness one of the biggest reforms of the education system since Croatia’s independence, across all major areas (pre-primary, primary, secondary and tertiary education). The major intention of this overhaul is to adapt the education system to key priorities outlined in the National Development Strategy 2030 and the National Recovery and Resilience Plan submitted to the European Commission. Minister of Education Radovan Fuchs, who also performed this role 10 years ago, is eager to achieve breakthroughs in the aforementioned areas this time around. The key aspects of his reforms include changes in the way tertiary education is funded, changes in the system of vocational education, changes in the pre-primary education system and finally, changes in the primary and secondary education sectors. First, according to the announced reform, earmarking of funds to institutions of higher education should be tied strictly to learning outcomes. Second, children will be required to attend pre-primary education for two years instead of the existing mandate of one year. The capacities of towns and municipalities should be improved to handle this new requirement, since Croatia has one of the EU’s lowest shares of children less than five years old attending pre-primary education. Third, despite some very praiseworthy achievements in the past, such as the fact that Croatia has the EU’s lowest share of early leavers from the education and training systems in the 18-24 age cohort (3.3%), the system needs a substantial update to improve pupils’ relatively poor skills profiles, as evidenced by modest PISA assessment scores. Finally, vocational schools within the secondary education system will be pushed to undertake further steps toward establishing a dual system of vocational training, so as to improve graduates’ practical skills. It is to be seen whether vested interests will inhibit this reform.
The proposed reforms could also improve the system’s efficiency. Croatia’s share of education spending as a percentage of GDP is approximately equal to the EU-27 average. Moreover, Croatia’s student/teacher ratio is generally lower than the majority of its peers. Nevertheless, this does not necessarily equate to higher quality, as previous PISA assessment scores indicate.
Access to higher education is relatively unequal, as students from better-educated family backgrounds are over-represented in higher education. However, this outcome is not caused by the presence of burdensome tuition fees acting as a barrier to entry, especially since higher education is overwhelmingly financed out of the public purse. This has more to do with the cost of living for students in major cities and the lack of private scholarships for students from poorer families. The employment rate for recently graduated students is far below the EU average. It is very common that employers in the private and even public sector complain of the lack of necessary skills on the part of fresh graduates.
Citations:
Žiljak, T., N. Baketa (2018): Education Policy in Croatia, in: Z. Petak, K. Kotarski (eds.), Policy-Making at the European Periphery: The Case of Croatia. Cham: Palgrave Macmillan, 265-283.
Doolan, K., S. Puzić, B. Baranović (2018): Inequalities in access to higher education in Croatia: five decades of resilient findings, in: Journal of Further and Higher Education 42(4): 467–481
OECD (2019): Programme for International Students Assessment (PISA) Results from PISA 2018 – Country Note Croatia. Paris.
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To what extent does social policy prevent exclusion and decoupling from society?
10
9
9
Policies very effectively enable societal inclusion and ensure equal opportunities.
8
7
6
7
6
For the most part, policies enable societal inclusion effectively and ensure equal opportunities.
5
4
3
4
3
For the most part, policies fail to prevent societal exclusion effectively and ensure equal opportunities.
2
1
1
Policies exacerbate unequal opportunities and exclusion from society.
Eurostat data show that Croatia spent 21.4% of GDP on social protection in 2019. The disaggregation of those outlays by function shows that Croatia spends a significantly higher share than other EU member states on healthcare/sickness and on disability payments. By contrast, expenditure on the unemployed and housing are lower. This latter fact was made possible by the rise in emigration rates since EU accession, which reduced unemployment, as well as by the fact that Croatia has a very high home ownership rate. Social protection outlays in euro per inhabitant (in 2010 constant prices) were set at €2,718, more than in other post-socialist EU member states, apart from Slovenia and Czechia. A total of 20.5% of the population is at risk of poverty, slightly below the EU average of 21.9%. This indicator has improved markedly relative to previous years.
The population at risk of poverty has several notable attributes that differentiates it from comparable groups in the majority of EU member states. First, there is a far higher likelihood that these people live in households without dependent children and in rural areas. In Croatia, these are predominantly marginalized people aged 65 and older. The share of population living in material deprivation has almost halved both in absolute and percentage terms since 2017 (9th highest share in the EU). Hence, the overall picture looks better than one would be primed to see based solely on GDP per capita data, on the basis of which Croatia, Greece and Bulgaria rank as the poorest EU member states.
Still, social transfers suffer from extreme fragmentation and are not structured in such a way that they have a major impact on social exclusion. Benefit levels are very low, and eligibility criteria can vary. In comparison to other peers in the EU, Croatia has lower percentage of social transfers paid out as means-tested cash or in-kind benefits. In the long run, social spending levels are jeopardized by demographic decline and aging.
At the end of 2021, the government began designing a new “National plan for fighting poverty and social exclusion,” with which it plans to reduce the absolute number of people at risk of poverty from 720,000 to 600,000 by 2030. It also proposed several laws aiming to improve the provision of social welfare. For example, one of the proposals plans to increase social assistance benefits for individuals able to work from HRK 800 to HRK 1,000, and from HRK 1,000 to HRK 1,300 for those that are not in a position to work. This level of assistance is intended to be higher than the current minimum national retirement pension. The proposal was loudly criticized by professional associations of social workers due to excessive centralization and a lack of consultation. However, given the rising price of energy, it remains to be seen whether the increases will in fact keep more people from slipping into energy poverty (5.7% of Croatians in 2020 were unable to keep their homes adequately warm).
Croatia has significantly reduced the percentage of youth in the NEET (not in education, employment or training) category, which is a very welcome development.
The population at risk of poverty has several notable attributes that differentiates it from comparable groups in the majority of EU member states. First, there is a far higher likelihood that these people live in households without dependent children and in rural areas. In Croatia, these are predominantly marginalized people aged 65 and older. The share of population living in material deprivation has almost halved both in absolute and percentage terms since 2017 (9th highest share in the EU). Hence, the overall picture looks better than one would be primed to see based solely on GDP per capita data, on the basis of which Croatia, Greece and Bulgaria rank as the poorest EU member states.
Still, social transfers suffer from extreme fragmentation and are not structured in such a way that they have a major impact on social exclusion. Benefit levels are very low, and eligibility criteria can vary. In comparison to other peers in the EU, Croatia has lower percentage of social transfers paid out as means-tested cash or in-kind benefits. In the long run, social spending levels are jeopardized by demographic decline and aging.
At the end of 2021, the government began designing a new “National plan for fighting poverty and social exclusion,” with which it plans to reduce the absolute number of people at risk of poverty from 720,000 to 600,000 by 2030. It also proposed several laws aiming to improve the provision of social welfare. For example, one of the proposals plans to increase social assistance benefits for individuals able to work from HRK 800 to HRK 1,000, and from HRK 1,000 to HRK 1,300 for those that are not in a position to work. This level of assistance is intended to be higher than the current minimum national retirement pension. The proposal was loudly criticized by professional associations of social workers due to excessive centralization and a lack of consultation. However, given the rising price of energy, it remains to be seen whether the increases will in fact keep more people from slipping into energy poverty (5.7% of Croatians in 2020 were unable to keep their homes adequately warm).
Croatia has significantly reduced the percentage of youth in the NEET (not in education, employment or training) category, which is a very welcome development.
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To what extent do health care policies provide high-quality, inclusive and cost-efficient health care?
10
9
9
Health care policy achieves the criteria fully.
8
7
6
7
6
Health care policy achieves the criteria largely.
5
4
3
4
3
Health care policy achieves the criteria partly.
2
1
1
Health care policy does not achieve the criteria at all.
Most healthcare services in Croatia are provided by the state and are part of the country’s social health insurance system. Employer and employee contributions, plus some funding from the public budget, account for 85% of all healthcare spending, leaving only 15% to market schemes and private spending. The low employment rate and the country’s demographic aging have together contributed to a persistent financial deficit within the system. On the upside, the system is broadly inclusive, but patients often found themselves on long waiting lists for treatments and check-ups even before the pandemic.
In this regard, Croatia’s healthcare system represents one of the country’s biggest ticking bombs with regard to long-term fiscal sustainability and social cohesion. As of this writing, the outstanding debt of the healthcare system (predominantly to wholesale pharmacies) amounted to HRK 4.5 billion, and had risen rapidly since the beginning of 2021 at a monthly pace of HRK 283 million. This has occurred despite the fact that the number of non-COVID-19 treatments has been significantly reduced. Many patients are complaining that their access to healthcare has deteriorated during the pandemic. Furthermore, since joining the European Union in 2013, the number of physicians and other medical professionals leaving Croatia has reached alarming proportions.
The dire state of the Croatian healthcare system has persisted in spite of repeated financial injections over the course of 2021, to the tune of HRK 4.1 billion, by the Ministry of Finance. Without any meaningful reform on both the expenditure and revenue sides of the budget, the system will periodically stray from one crisis into another, shifting steadily escalating fiscal costs to future taxpayers. Furthermore, there is a significant risk of future supplier boycotts, such as the one dating from April 2021, when wholesale pharmacies halted both medicinal products and drug deliveries to state hospitals as part of their bargaining strategy with the government. The vendors were seeking to collect outstanding dues and shorten the average maturity of debts from whopping 210 to 180 days.
The government will probably use its current strong foothold to press ahead and impose limited reforms in 2022. However, timid proposals by the minister of health dating from autumn 2021 included increasing out-of-pocket expenses for uninsured patients, introducing obligatory healthcare contributions for workers who are less than 30 years old, and attempting to push off a far higher share of sick leave and maternity benefits to employers. The proposals avoided any mention of cost optimization, which is the crux of the problem. In addition, in the 2012-2019 period, the current health expenditure per capita rose at a pace two times faster than the average expenditure for all EU member states, albeit from a relatively low level. Ceteris paribus, the aforementioned reforms will almost certainly fall short of introducing the most needed reforms due to opposition from many vested interests such as hospitals, associations representing medical personnel, private suppliers of medical equipment, and so on. Party patronage can be often observed in the way hospitals’ governing councils are formed, and in their influence on the appointment of hospital directors. Governing councils are disproportionately staffed by representatives of county and city governments. Politics often trumps competence and coherent planning.
The Croatian healthcare system faces serious challenges due to a lack of coordination between managers and physicians. The role of politics in appointing hospital directors is too discretionary, and directors often lack a clear mandate to steer their institutions. In addition, there is essentially no coherent set of criteria for evaluating their performance, and no plans to develop such criteria. As a result, management of the healthcare system is vulnerable to party patronage. Such practices tend to weaken inclusiveness and equitable access. Finally, the system is overly fragmented and does not reap economies of scale in public procurement.
Access to care is adversely affected by regional variations in the range of care provided, the quality of services suffers from weak organization, a lack of digitalization and the inadequate monitoring of treatment outcomes. Healthy life expectancy amounts to 68.6 years, one of the lowest such levels in the EU. Unfortunately, Croatia has one of the highest obesity rates, the highest level of alcohol consumption per capita and the highest share of smokers in the population.
All things considered, it is hardly surprising that in 2018 Croatia experienced 371 deaths per 100,000 inhabitants from treatable and preventable diseases, as well as from conditions that could have been avoided either through better healthcare and/or better public health interventions. This number ranks Croatia at 20th place in the EU. This number will be much grimmer when the figures for 2020 and 2021 arrive. Unfortunately, Croatia has done a poor job of vaccinating the population aged 60 or older against the coronavirus; at the end of 2021, more than 20% of this cohort remained unvaccinated. Overall, the vaccine rollout was slow during 2021. This conclusion is corroborated by the upsetting fact that at the beginning of 2022, Croatia had the tenth-highest figure globally in the number of coronavirus deaths per million inhabitants.
In this regard, Croatia’s healthcare system represents one of the country’s biggest ticking bombs with regard to long-term fiscal sustainability and social cohesion. As of this writing, the outstanding debt of the healthcare system (predominantly to wholesale pharmacies) amounted to HRK 4.5 billion, and had risen rapidly since the beginning of 2021 at a monthly pace of HRK 283 million. This has occurred despite the fact that the number of non-COVID-19 treatments has been significantly reduced. Many patients are complaining that their access to healthcare has deteriorated during the pandemic. Furthermore, since joining the European Union in 2013, the number of physicians and other medical professionals leaving Croatia has reached alarming proportions.
The dire state of the Croatian healthcare system has persisted in spite of repeated financial injections over the course of 2021, to the tune of HRK 4.1 billion, by the Ministry of Finance. Without any meaningful reform on both the expenditure and revenue sides of the budget, the system will periodically stray from one crisis into another, shifting steadily escalating fiscal costs to future taxpayers. Furthermore, there is a significant risk of future supplier boycotts, such as the one dating from April 2021, when wholesale pharmacies halted both medicinal products and drug deliveries to state hospitals as part of their bargaining strategy with the government. The vendors were seeking to collect outstanding dues and shorten the average maturity of debts from whopping 210 to 180 days.
The government will probably use its current strong foothold to press ahead and impose limited reforms in 2022. However, timid proposals by the minister of health dating from autumn 2021 included increasing out-of-pocket expenses for uninsured patients, introducing obligatory healthcare contributions for workers who are less than 30 years old, and attempting to push off a far higher share of sick leave and maternity benefits to employers. The proposals avoided any mention of cost optimization, which is the crux of the problem. In addition, in the 2012-2019 period, the current health expenditure per capita rose at a pace two times faster than the average expenditure for all EU member states, albeit from a relatively low level. Ceteris paribus, the aforementioned reforms will almost certainly fall short of introducing the most needed reforms due to opposition from many vested interests such as hospitals, associations representing medical personnel, private suppliers of medical equipment, and so on. Party patronage can be often observed in the way hospitals’ governing councils are formed, and in their influence on the appointment of hospital directors. Governing councils are disproportionately staffed by representatives of county and city governments. Politics often trumps competence and coherent planning.
The Croatian healthcare system faces serious challenges due to a lack of coordination between managers and physicians. The role of politics in appointing hospital directors is too discretionary, and directors often lack a clear mandate to steer their institutions. In addition, there is essentially no coherent set of criteria for evaluating their performance, and no plans to develop such criteria. As a result, management of the healthcare system is vulnerable to party patronage. Such practices tend to weaken inclusiveness and equitable access. Finally, the system is overly fragmented and does not reap economies of scale in public procurement.
Access to care is adversely affected by regional variations in the range of care provided, the quality of services suffers from weak organization, a lack of digitalization and the inadequate monitoring of treatment outcomes. Healthy life expectancy amounts to 68.6 years, one of the lowest such levels in the EU. Unfortunately, Croatia has one of the highest obesity rates, the highest level of alcohol consumption per capita and the highest share of smokers in the population.
All things considered, it is hardly surprising that in 2018 Croatia experienced 371 deaths per 100,000 inhabitants from treatable and preventable diseases, as well as from conditions that could have been avoided either through better healthcare and/or better public health interventions. This number ranks Croatia at 20th place in the EU. This number will be much grimmer when the figures for 2020 and 2021 arrive. Unfortunately, Croatia has done a poor job of vaccinating the population aged 60 or older against the coronavirus; at the end of 2021, more than 20% of this cohort remained unvaccinated. Overall, the vaccine rollout was slow during 2021. This conclusion is corroborated by the upsetting fact that at the beginning of 2022, Croatia had the tenth-highest figure globally in the number of coronavirus deaths per million inhabitants.
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To what extent do family support policies enable women to combine parenting with participation in the labor market?
10
9
9
Family support policies effectively enable women to combine parenting with employment.
8
7
6
7
6
Family support policies provide some support for women who want to combine parenting and employment.
5
4
3
4
3
Family support policies provide only few opportunities for women who want to combine parenting and employment.
2
1
1
Family support policies force most women to opt for either parenting or employment.
The gender gap in employment rate for those 20 – 64 years old is approximately 10 percentage points, which is slightly lower than the EU-27 average. At approximately 12 percentage points, the gender pay gap in Croatia is less than the average such figure in the EU as a whole. When it comes to education, the picture looks different. The share of females in the 20-34 age cohort who earn a university degree is 17 percentage points higher than among the corresponding male group, and is higher than the EU average.
The country seems ready to complete a full 30-year circle with regard to maternity leave. In 1993, the government abolished the right to a full salary after a one-year period after the birth of a child, being the only former Yugoslav country to do so. In 2020, the maternity pay cap between the sixth and 12th month of leave was raised from HRK 3,991 per month to HRK 5,564 HRK per month, while the first six months provide full salary coverage. In autumn 2021, the government announced that it intended to go even further, and lift the cap on the salary coverage in the period from the sixth to 12th month of maternity leave. It remains to be seen how the whole scheme will be financed in light of existing fiscal pressures. The government also obliged itself to introduce paid paternal leave by August 2022, according to EU directive 2010/18/EU.
Childcare facilities and extended-day school programs are unsatisfactory. Childcare coverage is especially poor in less-developed rural and semi-rural areas with low employment rates, reflecting the inability of local governments to pay for services. Even the richest parts of Croatia, such as the capital city of Zagreb, lack necessary kindergartens due to the concentration of younger families in the most economically vibrant parts of the country. All of this complicates the work-life balance for younger parents, and is additionally compounded by the poor track record of policies aimed at the elderly population. There is a dearth of adequate nursing homes and trained personnel, which will become an even more pressing issue with the rapidly aging population.
There is no coherent national strategy for demographic revival, and existing initiatives are poorly coordinated. For example, the leftist coalition that took over the mayor’s office in Zagreb decided to scrap “parent-educator” measures targeting families with three or more children. This measure had enabled mothers to stay at home and raise their children. Even though the measure had been fiscally unsustainable, its abrupt termination, with a short phase-out period, will push many large families into social exclusion. Finally, parents of disabled children still find themselves in a very precarious situation, in spite of some improvements over the last two years. The financial costs to support disabled children and their medical bills stand in no correlation with the monthly payment of HRK 4,000 per caregiver parent.
The country seems ready to complete a full 30-year circle with regard to maternity leave. In 1993, the government abolished the right to a full salary after a one-year period after the birth of a child, being the only former Yugoslav country to do so. In 2020, the maternity pay cap between the sixth and 12th month of leave was raised from HRK 3,991 per month to HRK 5,564 HRK per month, while the first six months provide full salary coverage. In autumn 2021, the government announced that it intended to go even further, and lift the cap on the salary coverage in the period from the sixth to 12th month of maternity leave. It remains to be seen how the whole scheme will be financed in light of existing fiscal pressures. The government also obliged itself to introduce paid paternal leave by August 2022, according to EU directive 2010/18/EU.
Childcare facilities and extended-day school programs are unsatisfactory. Childcare coverage is especially poor in less-developed rural and semi-rural areas with low employment rates, reflecting the inability of local governments to pay for services. Even the richest parts of Croatia, such as the capital city of Zagreb, lack necessary kindergartens due to the concentration of younger families in the most economically vibrant parts of the country. All of this complicates the work-life balance for younger parents, and is additionally compounded by the poor track record of policies aimed at the elderly population. There is a dearth of adequate nursing homes and trained personnel, which will become an even more pressing issue with the rapidly aging population.
There is no coherent national strategy for demographic revival, and existing initiatives are poorly coordinated. For example, the leftist coalition that took over the mayor’s office in Zagreb decided to scrap “parent-educator” measures targeting families with three or more children. This measure had enabled mothers to stay at home and raise their children. Even though the measure had been fiscally unsustainable, its abrupt termination, with a short phase-out period, will push many large families into social exclusion. Finally, parents of disabled children still find themselves in a very precarious situation, in spite of some improvements over the last two years. The financial costs to support disabled children and their medical bills stand in no correlation with the monthly payment of HRK 4,000 per caregiver parent.
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To what extent does pension policy realize goals of poverty prevention, intergenerational equity and fiscal sustainability?
10
9
9
Pension policy achieves the objectives fully.
8
7
6
7
6
Pension policy achieves the objectives largely.
5
4
3
4
3
Pension policy achieves the objectives partly.
2
1
1
Pension policy does not achieve the objectives at all.
Like other East-Central European countries, Croatia introduced a three-pillar pension system with a mandatory fully funded second pillar in the late 1990s. The average gross replacement rate for pensions (gross pension divided by pre-retirement gross wage) stood at 32.5% in 2020, while the EU average is significantly higher at 46.2%. Unfortunately, this figure has been on a steady downward trajectory. Only about 15% of pensioners have worked for 40 or more years. As a result, pensioner poverty is high in Croatia, with more than one-third of pensioners at risk of poverty or social exclusion. Approximately 170,000 retirees enjoy privileged pensions, among them the more than 70,000 war veterans and former politicians. As a consequence of the country’s demographic aging, low employment rate and decline in the effective retirement age, the system is neither fiscally sustainable nor intergenerationally fair.
The National Recovery and Resilience Plan approved by the EU contains several important reforms. First, the government wants to redefine the survivor’s pension model. As a part of planned amendments to the Pension Insurance Act, the goal is to increase pension rights for the surviving partners of a deceased spouse. The surviving partner could opt either for 80% of the deceased spouse’s pension or their own pension plus 50% of the deceased spouse’s pension. Second, the goal is to increase the gross replacement rate via changes to the existing laws such as creation an obligation for employers to pay the full costs of sick leave for workers who have reached retirement age. The document also contains a rather vague statement that contributions to the second pension pillar will be raised in the future.
Nevertheless, the proposed reforms do not go far enough in tackling the problem, since they omit many important steps. Early retirement cannot be prevented simply by marginal tweaks, but instead requires improvements to work conditions, especially for the less educated and workers prone to sickness. Furthermore, mandatory pension funds predominantly invest in government securities and securities issues by state-owned enterprises. The latter are rather poorly managed and carry low yields. Privatization and/or the professionalization of management in those enterprises is also part of the solution to the low gross replacement rate. In the long run, the pension system is clearly unsustainable in the current form.
The National Recovery and Resilience Plan approved by the EU contains several important reforms. First, the government wants to redefine the survivor’s pension model. As a part of planned amendments to the Pension Insurance Act, the goal is to increase pension rights for the surviving partners of a deceased spouse. The surviving partner could opt either for 80% of the deceased spouse’s pension or their own pension plus 50% of the deceased spouse’s pension. Second, the goal is to increase the gross replacement rate via changes to the existing laws such as creation an obligation for employers to pay the full costs of sick leave for workers who have reached retirement age. The document also contains a rather vague statement that contributions to the second pension pillar will be raised in the future.
Nevertheless, the proposed reforms do not go far enough in tackling the problem, since they omit many important steps. Early retirement cannot be prevented simply by marginal tweaks, but instead requires improvements to work conditions, especially for the less educated and workers prone to sickness. Furthermore, mandatory pension funds predominantly invest in government securities and securities issues by state-owned enterprises. The latter are rather poorly managed and carry low yields. Privatization and/or the professionalization of management in those enterprises is also part of the solution to the low gross replacement rate. In the long run, the pension system is clearly unsustainable in the current form.
Graph View
How effectively do policies support the integration of migrants into society?
10
9
9
Cultural, education and social policies effectively support the integration of migrants into society.
8
7
6
7
6
Cultural, education and social policies seek to integrate migrants into society, but have failed to do so effectively.
5
4
3
4
3
Cultural, education and social policies do not focus on integrating migrants into society.
2
1
1
Cultural, education and social policies segregate migrant communities from the majority society.
In 2020, a total of 33,414 people immigrated to Croatia from abroad, while 34,046 people emigrated. Thus, for the first time since Croatia joined the EU, both flows virtually balanced each other out. In previous years Croatia was first and foremost a country of strong emigration. Immigration to Croatia is mostly composed of ethnic Croats from neighboring countries such as Bosnia and Herzegovina, or parts of the Croatian diaspora (25% of migrants).
In the first nine months of 2021, a total of 1,858 persons sought asylum in Croatia and just 32 persons were granted this right, which constitutes a marked decrease over 2018 and 2019. Generally, Croatia’s economic and social model is not attractive to potential asylum-seekers and migrants, a fact that will exacerbate Croatia’s future demographic and economic challenges. There is neither a coherent strategy to attract culturally similar immigrants, which could facilitate their integration, nor a policy to integrate existing migrants. Integration is complicated by weak intersectoral cooperation between institutions responsible for carrying out immigration policy with local communities and civil society organizations. Skills shortages will constitute one of the key impediments to potential growth in the coming years, and Croatia’s decision in 2021 to lift the quota on foreign workers won’t be of much help unless it manages to improve incentives for digital nomads and young immigrants.
In the first nine months of 2021, a total of 1,858 persons sought asylum in Croatia and just 32 persons were granted this right, which constitutes a marked decrease over 2018 and 2019. Generally, Croatia’s economic and social model is not attractive to potential asylum-seekers and migrants, a fact that will exacerbate Croatia’s future demographic and economic challenges. There is neither a coherent strategy to attract culturally similar immigrants, which could facilitate their integration, nor a policy to integrate existing migrants. Integration is complicated by weak intersectoral cooperation between institutions responsible for carrying out immigration policy with local communities and civil society organizations. Skills shortages will constitute one of the key impediments to potential growth in the coming years, and Croatia’s decision in 2021 to lift the quota on foreign workers won’t be of much help unless it manages to improve incentives for digital nomads and young immigrants.
Graph View
How effectively does internal security policy protect citizens against security risks?
10
9
9
Internal security policy protects citizens against security risks very effectively.
8
7
6
7
6
Internal security policy protects citizens against security risks more or less effectively.
5
4
3
4
3
Internal security policy does not effectively protect citizens against security risks.
2
1
1
Internal security policy exacerbates the security risks.
In Croatia, crime represents no significant threat to public safety or security. The homicide rate per hundred thousand inhabitants is slightly below the EU-27 average and has been trending downwards since 2010. However, the incidences of family-related violence, rape and sexual violence have increased since 2019. On the positive side, given the number of burglaries and thefts, Croatia remains one of the safest EU member states. In addition, with regard to subjectively perceived security, relating to the safety felt Croatia has the second-highest share in Europe of people who feel safe in walking alone in the streets during the night (77.4%; based on Numbeo data). The country has also been spared from any large and violent forms of protest.
The internal security is maintained by the Croatian police forces, and their effectiveness has improved over 2019. When compared to 2019, the crime resolution rate increased from 66.2% to 70.5%. Even higher crime resolution rates were seen in the categories of homicide and rape (102.8% and 98.8%). The Croatian police are quite effective in their work, especially given the fact that field officers are generally poorly paid and often overtaxed. However, the recurrence of certain crimes and recidivism has more to do with the way how the Croatian judicial system works, since verdicts often lack a powerful deterrent effect.
Croatia has the fourth-largest number of police officers per 100,000 inhabitants in the EU, but almost one-third of these police officers are deployed to protect the country’s borders, the bloc’s longest external land border. The problem of too much administrative staff as compared to police officers remains a constant challenge.
The police and national prosecutor’s office collaborate effectively with international organizations such as INTERPOL and EUROPOL, countries in the southeast European region, the EU, and other international peers. Intelligence services cooperate with their counterparts within NATO and the EU, and act within an integrated security system.
The internal security is maintained by the Croatian police forces, and their effectiveness has improved over 2019. When compared to 2019, the crime resolution rate increased from 66.2% to 70.5%. Even higher crime resolution rates were seen in the categories of homicide and rape (102.8% and 98.8%). The Croatian police are quite effective in their work, especially given the fact that field officers are generally poorly paid and often overtaxed. However, the recurrence of certain crimes and recidivism has more to do with the way how the Croatian judicial system works, since verdicts often lack a powerful deterrent effect.
Croatia has the fourth-largest number of police officers per 100,000 inhabitants in the EU, but almost one-third of these police officers are deployed to protect the country’s borders, the bloc’s longest external land border. The problem of too much administrative staff as compared to police officers remains a constant challenge.
The police and national prosecutor’s office collaborate effectively with international organizations such as INTERPOL and EUROPOL, countries in the southeast European region, the EU, and other international peers. Intelligence services cooperate with their counterparts within NATO and the EU, and act within an integrated security system.
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To what extent does the government demonstrate an active and coherent commitment to promoting equal socioeconomic opportunities in low- and middle-income countries?
10
9
9
The government actively and coherently engages in international efforts to promote equal socioeconomic opportunities in low- and middle-income countries. It frequently demonstrates initiative and responsibility, and acts as an agenda-setter.
8
7
6
7
6
The government actively engages in international efforts to promote equal socioeconomic opportunities in low- and middle-income countries. However, some of its measures or policies lack coherence.
5
4
3
4
3
The government shows limited engagement in international efforts to promote equal socioeconomic opportunities in low- and middle-income countries. Many of its measures or policies lack coherence.
2
1
1
The government does not contribute (and often undermines) efforts to promote equal socioeconomic opportunities in low- and middle-income countries.
The Croatian government takes part in the activities of international organizations and integrations to which the country belongs. The most important avenue for promoting development assistance is the EU itself. Croatia’s efforts rely on the National Strategy for Development Cooperation 2017 – 2021, which has recently lapsed, and there is thus a clear need for the adoption of a new strategic framework. The country aims to increase its development aid to 0.33% of GDP by 2030, which would be a major feat, since the data for 2020 indicate that Croatia had reached a level of just 0.14% at that point. However, the good news is that in spite of the record 8% drop in Croatia’s GDP in 2020, the official development aid and humanitarian aid increased by 7.5% in the same year. For the first time in Croatian history, the official development assistance reached a milestone of HRK 0.5 billion, having doubled since 2016. Of the previously mentioned sum, 76.27% was earmarked for multilateral assistance, while the rest was part of Croatia’s bilateral efforts to promote development and alleviate suffering worldwide. The biggest beneficiaries of Croatian humanitarian aid in 2020 were Bosnia and Herzegovina, Albania, Lebanon, and Venezuela. Croatia also donated 490,000 doses of COVID-19 vaccine via COVAX to eight different countries. Finally, Croatia promotes global development according to the EU’s trade policy guidelines.