ISSUE TO WATCH: Unions & Activists Rising Against Government Austerity Policies

Last week, Croatia’s national union leaders (SSSH, NHS, Matica, URSH, HUS) expressed a unified position against the government’s fiscal consolidation and austerity economic policies that have resulted in reduced salaries and compensation to public services employees, which were sparked by the latest unilateral decision by the government to linearly reduce salaries by 3%.  Last year, the unions reluctantly agreed to cut obligatory benefits, such as Christmas bonuses and travel benefits, with the condition that there would be no cuts to base salaries. They have sent a clear message to the government, “Change (your policies) or citizens will replace you.”  Their minimum demands are the return of the 3% cut, while the maximum demands have been disclosed by the media as a plan for the final goal being the fall of the ZoranMilanovic (SDP) government.
The unions are calling for a mass public demonstration on the Ban Jelacicmain square of Zagreb on international Labour Day (1 May).

In the past 6 months, Croatia is experiencing numerous examples of social unrest, sparked by the restrictive economic policies of the government, which is causing economic hardships to the average citizen.  Examples include: the unions initiative, NGO and environmentalists protesting against the “fast tracking” of controversial investments (e.g. Golf Park Dubrovnik, power plants PlominC and Ombla, employees of bankrupt companies protesting (e.g. Dioki/Dina, Petrokemija), referendum protest initiatives by Occupy Croatia and Anonymous activists.

According to Deputy Prime Minister NevenMimica (SDP), the coalition government’s platform has been based upon 3 overriding policies – economic growth and sparking investments, fiscal consolidation and discipline, and social ideological change. He stated that the government has been successful in the latter two policies, but has been unsuccessful in sparking investments, which has resulted in continued economic restriction, but believes that the government will succeed in the long run to spark investments and economic growth. However, this optimism is not shared by stagnant mid-term economic forecasts by the International Monetary Fund (IMF), World Bank, European Bank of Reconstruction and Development (EBRD), European Commission (EC), Croatian Institute of Economics, and the Croatian National Bank (HNB); all are forecasting a GDP drop in 2013 and an insignificant GDP rise in 2014.

Generally, global macro-economists disagree whether national austerity policies are an effective means of ending economic recession. However, most are in agreement that austerity measures are counterproductive and mostly destructive if they are not simultaneously matched with significant investments and policies that ease the every day operations of doing business for both local and international businesses.
The government’s austerity policies are focused on fiscal discipline and tax collection, as opposed to the reduction of public spending, which have proven to be detriments to investment.

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