Working in Croatia?
Working Conditions in Croatia
Once you are about to start working in Croatia, you should inform yourself as to local working conditions, salaries, and social security. We provide an overview of all these topics in this last part of our Expat Guide.
Salaries Will Vary Greatly
First of all, you should take into account that local salaries tend to be lower than what you may be used to. Though the average Croatian does indeed have a higher income than, for example, the average worker in eastern Europe, this income is much lower when compared to the western and northern European countries, and even the southern ones, too. In absolute numbers, the average monthly gross income for October 2015 amounted to 8,076 HRK. From this sum, you need to deduct income tax and social security contributions.
However, according to your skill level, professional experience, location, field of employment, and employer, individual salaries can be much higher. For example, people working in finance, banking, insurance, ICT, logistics and storage are often better paid than the national average, whereas incomes in transportation or hospitality and catering are frequently low.
Also, companies based in Zagreb may pay more as the capital has higher costs of living than other places. It is also worth bearing in mind that international businesses often pay more than local businesses.
When you negotiate your salary, remember that it’s not unusual to quote the net income you’d like to earn, rather than only the gross amount. After taxes, the average net monthly income in Croatia was just below 5,050 HRK in April 2016. If you want to know more about taxation in Croatia, you can download this free Global Tax App provided by global auditor and tax consultant KMPG.
The Cost of Living
When trying to figure out the net income you require, you need to consider local living expenses. The cost of living in Croatia is reasonable and will likely be lower than in your native country if you are from a Western European country, for example. Whilst wages may be lower than you are used to, prices tend to be reasonable.
For example, the average rent for a one bedroom apartment in the city center is around 2,110 HRK. Utilities, including internet, will likely cost just under 1,400 HRK per month, with petrol currently costing approximately 9.50 HRK per liter. A loaf of bread will cost you ca. 6 HRK.
On the other hand, expat living can be more expensive. Leisure, culture, and eating out may seem fairly cheap, depending on where you come from; however, expatriates may need to buy top-up health insurance, as well as pay for tuition fees at international schools. A high-school student at the American International School Zagreb, for example, costs his or her parents over 16,000 EUR per year. At spring 2016 exchange rates, this amounted to an annual sum of over 120,000 HRK.
Working Hours and Leave
Officially, Croatian employees have a 40-hour week, up to 48 hours if overtime is deemed necessary. Of course, this can vastly differ for people in management positions or stressful jobs. Everyone is also entitled to a legal minimum of 28 days in paid annual leave.
In addition to their vacation days, employees benefit from 13 annual public holidays (if they don’t fall on a weekend), up to seven days of personal leave, and up to 42 days of paid sick leave per year. The probationary period for newly employed people ranges from two weeks to several months. Typically, four weeks’ probation is the most common case. The notice of termination period will depend on how long you have worked at the company, increasing the longer you stay there.
Social Security in Croatia: A Well-Developed System
Croatia has a fairly well-developed welfare state. Social security includes old-age pensions and disability pensions, public healthcare, compensation for work accidents and occupational diseases, maternity benefits, parental leave, and unemployment insurance. We have outlined the public health insurance system in our article on healthcare in Croatia; please read up on medical insurance there.
These kinds of government allowances are funded by social security contributions from employees and employers alike. For instance, the contributions for unemployment benefits, healthcare, and accident insurance are the sole responsibility of the employer. However, self-employed people, including self-employed farmers, have to contribute a certain percentage of their income to the healthcare fund and take out accident insurance on their own.
Retirement Provisions: Know What You’re Entitled To
Social security payments for the national pension plan are the responsibility of all residents themselves, be they employees or self-employed. They contribute around 20% of their monthly gross income to both the government pension plan and a mandatory individual savings account. When they turn 65, the minimum retirement age, and have paid contributions for 15 years or more, they are entitled to old-age benefits from the government, as well as the assets from their personal pension fund.
The minimum pension payout amounts to a fixed sum for every year of social security paid. For instance, in 2011, this amount was 56.59 HRK per year of payments to social security. So, if someone had contributed for 30 years and then retired in 2011, they’d get a pension of at least 1,698 HRK per month from the Croatian government. The national pension plan also has a maximum cut-off point. This limit is set at 3.8 times of your average salary during the entire coverage period.
Some countries have agreements with Croatia regarding social security, so your contributions in Croatia may count towards your social security fund back home, or you may be able to avoid paying it in Croatia at all. Before you move to Croatia, talk to your local social security office and your financial service provider about the potential impact of working abroad. Can you stay covered in your national pension plan at home? Are you entitled to a future pension from Croatia? How much might this be?
In some cases, your relocation may leave you with a temporary gap in your retirement provisions, which you may want to close by saving more money than usual. This could be another point to consider during your salary negotiations for Croatia.
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