Reforms stagnated in 2015, employers slightly optimistic about 2016

The Croatian Employers' Association (HUP) Score for December is 33 of a possible 100 points and confirms stagnation in the implementation of reforms during 2015 while at the same time employers are expecting 2016 with mild optimism, it was said at HUP's traditional pre-Christmas function on Tuesday.

HUP president Gordana Deranja said that Croatia was at the end of a year that would overturn a series of negative trends and that it had finally come out of recession and was beginning to see economic growth. That news needs to be welcomed, however, a dose of caution is needed because growth has been achieved mostly due to external factors and the tourist season, she said.

"This year unfortunately has been a year of missed opportunities, featuring election campaigning, and similarly to the preceding three years, there were no resolute or useful long-term reform moves, which has resulted in lack of significant improvement in doing business, even though there was some good news in the economic field," she said.

Employers are showing that "optimism in the business sector will never die, however, it is still waiting for a government that will be prepared to make courageous and responsible moves to improve the situation in the country," Deranja added.

She suggested that the new government should set clear and articulated plans, appoint capable people willing to take on responsibility, and set economic recovery and fiscal consolidation as the most significant priorities.

HUP's overall Score for 2015 was 33/100, which is two points better on the year, however, it is still far below the minimum 50 points.

That result indicates that Croatia is stagnating and lagging behind 10 other new EU member states with regard to reforms. Critical areas for reform are productivity and competitiveness (20/100 points), fiscal consolidation (20/100), labour market (18/100), judiciary (31/100) and investment (27/100).

Compared to 2014, a positive step was recorded only in the judiciary but it is a result of methodology changes, it was said. The judiciary is followed by the education, health and pension systems (26/100) and by investment and business barriers (30/100). Problems of almost the same proportion are still burdening the economy and business climate, and the situation is only slightly better as regards capital supply, public administration and efficiency of public companies.

Employers assessed the economic situation this year with an average score of 2.13, which is the best score in the past four years. They expect the same or a slightly better situation next year.

HUP's business expectations are based on an assessment of the economic situation in 2015 and business expectations for 2016, which reflect views of more than 6,000 business people and employers representing companies that employ around 500,000 people and make up 60-70% of the country's private sector.

A total of 31.4% of the respondents assessed the economic situation this year as "average" (a score of 3), as against 7.8% who had such an assessment last year. However, the majority (47.9%) consider the economic situation to be mostly bad and 19.8% consider it to be very bad.

Last update: Wed, 22/06/2016 - 15:01

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