Employment in Croatia

• Croatia has a highly skilled labor force in a mainly service-based economy.
• The Croatian economy is still struggling after the 2008 crisis. However, there have been some positive steps forward.
• Knowledge of Croatian will help you in your job search.
• Salaries may be lower than you are used to, but the cost of living is also likely to be lower than where you are from.

Right now, working in Croatia can be an interesting experience for foreign assignees and expatriates on intra-company transfers. However, it’s probably not a good time for self-made expats who are primarily interested in working in Croatia to fund their new life abroad.

On the one hand, Croatia is a well-developed market economy with a stable currency (the Croatian kuna) and a huge service sector. On the other hand, the prospects of working in Croatia are limited by the economic difficulties the country is struggling with. These difficulties include an ongoing recession, which has led to high unemployment figures and uneven regional development.

Below, we outline some possible causes for this crisis, as well as future opportunities for the people working in Croatia. But first, let’s have a look at Croatia’s national economy in general.

A Small Agricultural Sector and a Shrinking Manufacturing Industry

As indicated above, Croatia is in many ways a service economy. Agriculture and other activities in the primary sector, like wine production, fishing, timber, and mining contribute to only 4.3% of the annual gross domestic product. They employ an equally low percentage of all people working in Croatia (about 2%).

The secondary sector is still of considerably more importance, although its significance has declined since the days of a unified Yugoslav state post-World War Two. Manufacturing creates just over a quarter of the total GDP and provides jobs for approximately 30% of the labor force working in Croatia. Key industries include the chemical and pharmaceutical sectors, iron, steel, fabricated metal, shipbuilding, and food processing.

An Economy Reliant on Trade and Tourism

The highest number of employment opportunities in Croatia and the biggest chunk of the GDP come from the tertiary sector. Together, all service industries account for almost 70% of the national GDP. Just over 70% of people working in Croatia rely on service-related jobs to make a living.

Due to Croatia’s strategic location and its scenic beauty, trade and tourism are the predominant sources of income within the service sector. Not only is Croatia a popular travel destination, it also typically has economic ties to import/export businesses in Austria, Bosnia and Herzegovina, Germany, Italy, and Slovenia. Moreover, plenty of import goods come from these countries, as well as Hungary and Russia. The countries that injected the most foreign direct investment into Croatia between 1993 and 2008 were Austria, Hungary, Germany, the Netherlands, and France.

The Prevalent Unemployment Problem

In some regards, people living and working in Croatia are still well off, relatively speaking. Croatia was one of the wealthiest regions in Yugoslavia and this is noticeable today. For instance, the average income is higher here than in plenty of other recent EU member states in Eastern Europe and along the Baltic Sea. But other statistics look worrying.

In January 2016, Croatia had an unemployment rate of 16.4%, compared with an EU average of 8.9%. But when deciding where to work in Croatia, you should remember that unemployment rates vary greatly between Croatia’s 21 counties. People who work in Croatia’s northern parts or coastal areas have better chances of being gainfully employed than those in the south and east.

Around 10% of the active population are defined as long-term unemployed and have thus been hit particularly hard. Moreover, it seems to be especially difficult for the young to break into the job market and even start working in Croatia: youth unemployment was 44.1% at the end of 2015. Under the circumstances, it is no wonder that over 20% of the Croatian population lives under the threat of poverty and that domestic consumption is shrinking.

A Crisis and Its Causes

The roots for the present predicament can partly be traced back to the events of the last two decades. The Croatian War of Independence caused a lot of damage: both of the material and financial kind, as well as physical and psychological harm to soldiers and civilians. The first post-war years were then adversely affected by the rapid change from a socialist state to a capitalist market economy and the accompanying restructuring.

Political issues from this era — the late 1990s — are known as the “Croatian privatization controversy”, where leading politicians were accused of nepotism, favoritism, and corruption. This has unfortunately left a negative legacy. Working in Croatia, or doing business there, is often considered inefficient and it does not place very competitively in international rankings. The main problems cited in “ease of doing business” comparisons are a lack of transparency and an administrative and judicial backlog.

However, with GDP growth of 4-6% per year for several years, the Croatian economy had begun to recover and tackle some of these problems when the worldwide financial crisis struck in 2008/2009. Compared to the GDP shrinking by 6.9% in 2009, the slight growth of 0.8% in 2015 shows a great improvement in the economy.

A Positive Economic Future?

Not everything is all doom and gloom for those working in Croatia. Once the economy picks up again, exports may increase and Croatia could attract more foreign investment. There are many administrative and economic reforms ahead, though the high public debt continues to be a problem. Nonetheless, the country does have its fair share of strengths and opportunities, for example, a well-qualified labor force. Lots of people working in Croatia are not only highly skilled, but also multilingual. This, in turn, will benefit international tourism and foreign trade.

However, while the opening of borders after Croatia’s accession to the EU has benefited many businesses and tourism is going from strength to strength, the economy is still struggling. Although it has begun to grow again, the Croatian economy has been predicted by Bloomberg to be in the top ten worst performing economies of 2016. In 2015, the government was finally able to bring the deficit under the 3% threshold set by the EU excessive deficit procedure, but there is a long way to go before the economy will be fully recovered.

Expats with experience who want to work in Croatia should keep up with the country’s progression over the next few years. Once business picks up, one international company will follow the other into the Croatian market, hopefully creating new jobs for both locals and foreign nationals alike. Increased employment, beginning in Zagreb and other cities, should drive the economic recovery and, thereby, peak foreign interest in Croatian business.

Expat Jobs in Croatia

The Employment Market: Still Highly Competitive

As we describe on the previous page of our guide to working in Croatia, the current situation of the local labor market isn’t exactly favorable for expats searching for a new job on their own. The national unemployment rate was 16.4% in January 2016.

However, those destinations that are especially popular among expatriates fare somewhat better. Local unemployment in the urban areas of Zagreb, Split, and Rijeka tends to be lower than the average for the country as a whole, though still comparatively high. These cities are also important business locations within Croatia, with maritime trade and tourism going strong on the coast, and the national headquarters of many companies in the capital.

What is more, rising unemployment quotas disproportionately affect young people with little or no professional experience, as well as the low-income sector — e.g. catering, seasonal labor, or manufacturing. Qualified and experienced expatriates looking for a temporary job contract in the right field might be in luck.

Benefit from Croatian Language Skills

Hard skills in your field of employment, rather than general soft skills, tend to persuade local employers. But you should also consider that most Croatian enterprises obviously expect some Croatian language skills. While you are welcome to send in your application online with an unsolicited CV, such queries should preferably be written in fluent Croatian. Multinational or international businesses are among the few exceptions to this rule.

Local employees with suitable credentials have the distinct advantage of being both Croatian native speakers and multi-lingual candidates. Bosnian and Serbian are mutually intelligible languages in the region, and some proficiency in English, German, or Italian is relatively common.

Resources for Job Seekers

If you are not a foreign assignee, but would nevertheless like to work in Croatia, here are some resources to start your job search.

• Big Croatian newspapers with good job listings include Večernji List (Zagreb), Jutarnji List (Zagreb), Novi List (Rijeka), and Slobodna Dalmacija (Split).
• It’s also worth trying your home country’s international chamber of commerce in Zagreb, the Croatian foreign chamber of commerce back home, or the Croatian Chamber of Economy. They may offer print magazines with job ads, online job boards, membership directories with contact information for various companies, or networking events.
• Headhunters are always on the prowl for highly skilled employees and executive staff interested in Croatia. The following HR consultants, among others, are active in the country: Dekra, Hill International, Pedersen & Partners, Alexander Hughes, and Selectio.hr.
• Popular online job search engines include Hzz.hr (website only in Croatian), Posao.hr, and Moj Posao. Again, job seekers are usually expected to be proficient in Croatian.

Croatian Work Permits and Work Registration Certificates

Work Permits

A so-called “stay and work permit” is a single permit that allows foreign nationals to temporarily stay and work in the Republic of Croatia. Stay and work permits can be granted as part of the annual quota or outside the annual quota. The annual quota, i.e. the number of foreign nationals who may be granted work permits in Croatia, is published in the Croatian Official Gazette.

If applying for a stay and work permit within the annual quota, you will need to enclose the following documents:

• a color photograph, 35x45mm
• a copy of a valid travel document
• proof of health insurance
• proof of sufficient funds to support yourself
• a contract of employment or other relevant proof of work
• proof of educational background and qualifications
• proof of registration of your employer’s company in Croatia (should not be dated more than six months prior to the application)
• a consular fee if the application is submitted at a Croatian diplomatic mission/consular post or a revenue stamp of 20 HRK if the application is submitted in Croatia

Stay and work permits can be issued outside of the annual quota to certain categories of third-country nationals such as key personnel, people who have been internally transferred to the Republic of Croatia by a company, nationals who are self-employed in a company they own, and many more. A full list is available on the Croatian Ministry of the Interior website. If the application is successful, you will be issued a biometric residence permit.

When applying for a stay and work permit outside the annual quota, you will need to enclose the following documents:

• a color photograph, 35x45mm
• a copy of a valid travel document
• proof of health insurance
• proof of sufficient funds to support yourself
• a contract of employment or any of relevant proof of work (unless you are self-employed in a sole-trader business that you own)
• proof of educational background and qualifications (a list of people who do not need to provide this is available on the website for the Croatian Ministry of the Interior)
• proof of registration of your employer’s company in Croatia (should not be dated more than six months prior to the application)
• explanation on the justifiability of employing a foreign national that contains information on their professional knowledge, qualifications and work experience, and the reasons why this position cannot be assigned to a Croatian national
• a consular fee if the application is submitted at a Croatian diplomatic mission/consular post or a revenue stamp of 20 HRK if the application is submitted in Croatia

When you submit the application at a police administration/police station, you will have to pay 800 HRK for the issuance of a stay and work permit and 240 HRK for a biometric residence permit.

EEA nationals, Swiss nationals, and third-country nationals who are family members of Croatian nationals may work in Croatia without a stay and work permit or a work registration certificate. All nationals of EU member states who are self-employed in their own company, who provide services or are posted workers may work in Croatia without a stay and work permit or a work registration certificate.

Aside from these people, though, the concept of reciprocity is applied by Croatia, meaning that if Croatian nationals are not free to work in your home country, you will have to apply for either a work registration certificate or a work and stay permit outside the annual quota. More information can be found on the Croatian Ministry of the Interior website.

If you are a highly qualified third-country national, you can apply for an EU blue card, which functions as a permit for temporary stay and work in Croatia. Further information can be found on the EU Immigration Portal.

Work Registration Certificates

Work registration certificates are issued to people in certain fields for working stays in Croatia of 90 days or less. You must apply for the work registration certificate prior to starting work at a competent police station, depending on the location of your workplace. You will need to provide:

• a written request for the issuance of a work registration certificate containing personal data, the time needed for the work and the type of work you will do
• a certified copy of your travel document
• papers proving that the respective work requires a work registration certificate

You will need to pay a revenue stamp of 20 HRK and an administrative fee of 150 HRK. You can find more information, as well as a list of people allowed to work in Croatia without a stay and work permit or a work registration certificate, on the website of the Croatian Ministry of the Interior.

Business Permits

Business permits function solely as permission to work in Croatia, and you will need to be granted temporary stay for the purpose of employment before you start working. Business permits may be issued to:

• private founders of companies in Croatia or foreign nationals who have a majority share in a company of at least 51% and carry out business in Croatia
• sole proprietors who have registered their business in Croatia, or one of the co-proprietors in a joint proprietorship
• those engaged in freelance work in line with Croatian regulations
• those providing services on behalf of a foreign employer

For more in-depth information on the exact conditions for obtaining a business permit, which may apply to you, or to find out if you are allowed to work in Croatia without a work or business permit, visit the Croatian Ministry of the Interior website.

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 Relocation 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.