About the ILO in Croatia
22 April 2016
Can a strong recovery cure the long-term ills of low economic diversification and a shrinking population?
In 2020 Croatia was hit heavily by the COVID-19 pandemic as well as two devastating earthquakes, causing real GDP to fall by 8.1 per cent. Nevertheless, Croatia’s economy showed a strong recovery. Mostly supported by an outstanding performance of the tourism sector and robust consumer spending, Croatia’s real GDP expanded by 10 per cent in 2021, and 6 per cent in 2022.
Croatia is progressively catching up with the rest of EU. The country’s GDP per capita stands at 70 per cent of the EU average in 2021. Income inequality measured by Gini coefficient was 29 per cent (2021) which is below the EU countries (30 per cent). The rate of population at risk of poverty or social exclusion was 21 per cent in 2021 which is slightly below the EU average (22 per cent). On 1 January 2023, Croatia joined the euro zone and the Schengen area, which completed the process of integration with the EU.
In 2022, the employment rate increased to 70 per cent, but remained below the EU average of 74.5 per cent. Job preservation schemes helped cushion the impact on employment levels. The COVID-19 pandemic strongly affected youth employment, which suffers from particularly high levels of involuntary temporary employment (25 per cent in 2020, compared to the EU average of 12 per cent in the 15-29 age group). The not in education, employment and training (NEET) rate is still above the EU average (15 per cent against 12 per cent in the EU in 2021 in the 15-29 age group), as well as the disability employment gap (33 per cent against 25 per cent in the EU in 2020). The unemployment rate increased marginally to 7.6 per cent in 2021 but decreased to 7.0 per cent in 2022, 0.9 percentage point above the above the EU average of 6.1 per cent.
Croatia is one of the least exposed to Russia's gas cut-off to Europe, but rising inflation is set to affect consumer spending. However, stable labour market developments, trends in consumer lending and expected solid tourism season suggest that consumption will keep a solid contribution to GDP growth.
An inherent labour market challenge during the recovery from the pandemic will be the shrinking population caused by low birth rates and continued emigration. Labour shortages are particularly pronounced in the construction and service sectors. Croatia is among the biggest net beneficiaries of EU funding as a share of GDP in 2021‑27. EU funds will play a critical role in the post-pandemic recovery prospects.
The ILO in Croatia
Croatia is a member state of the ILO since 1992.
The ILO has assisted Croatia in its economic and labour market transformation and in its accession to the EU in 2013. Main areas of work included social dialogue, collective bargaining, labour law, social protection, employment policies, fair migration, and local economic development.
Since then the cooperation focuses on specific technical requests from Croatia such as transition from the informal to the formal economy or compliance with International Labour Standards.
Text last edited April 2023
The three decades since Croatia’s independence in 1991 were turbulent. The country experienced a dramatic 30 per cent drop of GDP because of the war in the 1990s. Croatia again was hit by an economic contraction because of the Great Recession. The unemployment rate doubled to 18 per cent in 2014 and the youth unemployment rate increased to a record high of almost 50 per cent (2013). EU membership in 2013 supported the robust and broad-based recovery.
In 2020 Croatia was hit heavily by the COVID-19 pandemic as well as two devastating earthquakes, causing real GDP to fall by 8.1 per cent. Nevertheless, Croatia’s economy showed a strong recovery. Mostly supported by an outstanding performance of the tourism sector and robust consumer spending, Croatia’s real GDP expanded by 10 per cent in 2021, and 6 per cent in 2022.
Croatia is progressively catching up with the rest of EU. The country’s GDP per capita stands at 70 per cent of the EU average in 2021. Income inequality measured by Gini coefficient was 29 per cent (2021) which is below the EU countries (30 per cent). The rate of population at risk of poverty or social exclusion was 21 per cent in 2021 which is slightly below the EU average (22 per cent). On 1 January 2023, Croatia joined the euro zone and the Schengen area, which completed the process of integration with the EU.
In 2022, the employment rate increased to 70 per cent, but remained below the EU average of 74.5 per cent. Job preservation schemes helped cushion the impact on employment levels. The COVID-19 pandemic strongly affected youth employment, which suffers from particularly high levels of involuntary temporary employment (25 per cent in 2020, compared to the EU average of 12 per cent in the 15-29 age group). The not in education, employment and training (NEET) rate is still above the EU average (15 per cent against 12 per cent in the EU in 2021 in the 15-29 age group), as well as the disability employment gap (33 per cent against 25 per cent in the EU in 2020). The unemployment rate increased marginally to 7.6 per cent in 2021 but decreased to 7.0 per cent in 2022, 0.9 percentage point above the above the EU average of 6.1 per cent.
Croatia is one of the least exposed to Russia's gas cut-off to Europe, but rising inflation is set to affect consumer spending. However, stable labour market developments, trends in consumer lending and expected solid tourism season suggest that consumption will keep a solid contribution to GDP growth.
An inherent labour market challenge during the recovery from the pandemic will be the shrinking population caused by low birth rates and continued emigration. Labour shortages are particularly pronounced in the construction and service sectors. Croatia is among the biggest net beneficiaries of EU funding as a share of GDP in 2021‑27. EU funds will play a critical role in the post-pandemic recovery prospects.
The ILO in Croatia
Croatia is a member state of the ILO since 1992.
The ILO has assisted Croatia in its economic and labour market transformation and in its accession to the EU in 2013. Main areas of work included social dialogue, collective bargaining, labour law, social protection, employment policies, fair migration, and local economic development.
Since then the cooperation focuses on specific technical requests from Croatia such as transition from the informal to the formal economy or compliance with International Labour Standards.
Text last edited April 2023