OUTSOURCING: Government Selects “Spin-off” Model of State-owned Public Services Company

milanka-opacic23 June 2014, LPJ Croatia Issue 90

On 16 June, Deputy Prime Minister and Minister of Social Policy and Youth, Milanka Opacic (SDP), stated that the government has selected a ‘spin-off’ model to boost efficiency of non-core businesses in the public sector.  Namely, the government will establish a sizeable state-owned company to manage these public services.  Opacic claims that this will result in a €36.8 million savings to the state budget.

If the model is adopted, approximately 24,000 workers performing ancillary jobs in the public sector (i.e. cleaners, launderers, cooks, housekeepers et al.) would be transferred to this ‘mega’ company. The management structure has not yet been defined.  However, according to local media, the company would have an exclusive contract with the state for providing ancillary services for a period of 3-5 years.

Subsequently, the spin-off entity would be privatised under the ESOP (“Employee Stock Ownership Plan”) model; meaning the workers would be provided with an ownership interest in the company.  The new firm  is expected to begin working from 1 January 2015…

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