HUP: Employers expect other reforms too

The tax reform, Agrokor emergency administration and tourism season have contributed to stabilisation and growth in 2017, however, without other reforms and particularly reforms in the public sector, that will not suffice to stop large-scale emigration, it was said on Monday at the traditional pre-Christmas function for members of the Croatian Employers' Association (HUP).

HUP president, Gordana Deranja, said that the economy continued to grow in 2017, in line with expectations and the tax reform and excellent tourism season and Lex Agrokor contributed to that growth. Deranja commended the government on its speedy and resolute action to the crisis in the ailing food and retail conglomerate and that that prevented the system from collapsing and the crisis from spilling over to a large number of Agrokor's partners and suppliers.

Nevertheless, she notes, employers aren't satisfied because other reforms are lacking and that the tax reform alone, is not enough to accelerate the current growth rate which isn't sufficient to compensate for falling behind other European Union countries.

"It is disappointing that we still haven't returned to the GDP level of 2008," nor that prior to the crisis, said Deranja who holds the governments responsible for that.

She recalls that since 2003, HUP has been warning that the current economic model is outdated and it's time for it to be changed.

"Unfortunately, nothing is changing and the result isn't just the poor ranking on the Doing Business ladder but also the massive departure of people across the border," she added.

Many will say, "Increase pays and people will stay," and employers agree, however the proper place for that is on the expenditure side of the budget however, not one government wants to touch that, she said. Deranja explained that the cost of doing business is too high for Croatia to be competitive, which isn't up to employers but up to the government to address.

She called on the government and the Opposition to start focusing on essential matters and added that citizens wanted a better life, recalling that a HUP survey showed that 83% of citizens consider reforms to be essential.

Anyone preventing reforms because of their personal position and their own inabilities are a threat to national interests, Deranja concluded.

Mild increase in HUP-Score

The results of HUP's regular analysis of progress in reforms in 12 areas for the first half of 2017 showed a slight improvement compared to the preceding six months, increasing by 3 points to 36, which is also a significant step forward compared to 2014 when the HUP score was introduced.

The mild improvement has resulted due to economic recovery and growth in employment, reduced cost of setting up a business and decrease in budget deficit as well as more favourable loan conditions.

HUP's secretary-general, Davor Majetic warned however that Croatia had the poorest results of 11 "new European" countries and added that this indicated Croatia's poor competitiveness.

The score for other EU countries ranges from 46 points in Slovakia to the best score of 65 points in Estonia.

The biggest lagging was recorded in over-burdened economies with latent weaker results of the labour market and with structural problems in the education, health and pensions systems.

Majetic added that the poor results are the consequence of the lack of reforms in the public sector and that Croatia will accelerate its economic growth, investments and employment when the public sector become more efficient.

In its traditional survey of expectations, HUP members assessed the economic situation with a score of 2.69. Assessing next year's economic situation, 48.3% of respondents think the situation will remain the same, 46.6% believe it will be a little better. One-third of respondents consider that business and investment conditions will improve next year whereas 62.9% consider these will remain as they are now.

Most employers see high taxes and contributions, inefficient public administration and poor judiciary to be the main obstacles to doing business.

(Hina)

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