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News 26 Oct 17

Croatian Companies Argue Against EU-Backed Wage Boost

Croatian companies are protesting that a newly-adopted EU directive likely to increase wages for employees sent to work in other EU states will hurt their their businesses and cause job cuts.

Sven Milekic, Mariya Cheresheva, Ana Maria Touma
BIRN
Zagreb, Sofia, Bucharest
Illustration. Photo: Wikimedia Commons/Palamede

Croatian companies and employers have complained that the newly-agreed EU directive seeking to equalise wages for workers posted to other countries across the Union will damage their business and ultimately result in job cuts.

“Of course this change in the directive doesn’t suit us,” said Maja Kruljac, head of the legal and human resources department at Zagreb Montaza, one of the biggest construction companies in the country, which sends people to work in other EU states.

“Our [business] results will be definitely worse, and it remains a question if there will be any benefit to us doing business abroad, which will as a consequence negatively affect income to the state budget, in terms of the taxes and workers’ benefits we pay to the state for these posted workers,” Kruljac said.

Late on Monday, after lengthy negotiations, labour ministers from EU member states decided to revise the EU’s directive from 1996 to say that companies that send their workers to work abroad temporarily will have to pay them according to conditions in the country in which they will work.

The directive will directly affect companies from EU states where wages are lower and which send their workers to work in states with higher average wages. The directive only excludes transport workers, such as lorry drivers.

The EU Commission welcomed the proposal on Tuesday, calling  on the European Parliament and the EU Council to to move forward and “finalise the agreement and formally adopt the proposal”.

According to Eurostat’s figures for 2015, published in September, there were over two million workers posted to other countries in the EU.

In Croatia, there were around 39,000 such workers in 2015, with 66 per cent of them working in Germany, mostly in construction.

In Romania had over 30,000 people working solely in France in 2017, with the overall number is likely to be considerably higher. Some of them are transport workers, but others work in the IT business.

Around 14,000 Bulgarians were posted to work other EU countries in 2015, transport workers excluded, according to the Labour Ministry. They mostly work in construction and services.

Kruljac said that by “giving equal wages”, it is highly questionable if Croatian companies can remain competitive with local companies in countries in which average wages are considerably bigger than in Croatia because the costs of doing business are usually smaller for local companies.

She concluded that many of these workers in Croatian companies will lose their jobs.

The Croatian Employers’ Association, HUP, also expressed dissatisfaction with the directive, which it said made conditions for companies sending workers abroad harder.

HUP argued that that wages are lower in Croatia, because productivity is lower and that the EU should respect what states prescribe as a minimum wage because they know their own domestic conditions.

“Minimum wages are what member states have decided to provide as a ‘decent’ income at the national level, which needs to remain the basis for the EU rules on posted workers,” HUP told BIRN.

HUP urged the Croatian government to vote against the directive.

According to Eurostat figures for 2016, the median EU wage is around 1,500 euros, while in 2017 the average wage in Croatia iswas around 800 euros, while Romania has an average wage of 500 and Bulgaria is at 530 euros a month.

By contrast, there are 11 EU countries where monthly wages exceed 2,000 euros: Austria, Belgium, Britain, Denmark, Finland, France, Germany, Ireland, Luxemburg, the Netherlands and Sweden.

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