Croatia's public sector unions refuse coronavirus wage cap this year

Croatia's top public sector trade unions refused to give up a pay rise agreed for 2020 before the coronavirus crisis, following initial talks on Wednesday with the government. After a two-month strike by primary and secondary school teachers at the end of last year, the government agreed to gradually raise public sector salaries by 6.12% throughout this year..

It recently proposed putting the agreed hike on hold on the grounds that the pandemic will hammer the state coffers and the economy as a whole, which relies heavily on tourism. One of the main union leaders, Vilim Ribic from the education sector, said it was counterproductive to reduce salaries in the public sector.

"Lower public sector salaries would just negatively affect domestic demand. None of the European Union countries have taken that way," he said. Labour Minister Josip Aladrovic said after the talks with the unions that the government would save more than 1 billion kuna ($143 million) if the salary increase this year didn't go ahead as planned.

"We don't want to cut salaries, we just want to temporarily suspend the increase we agreed upon before this crisis. Our proposal did not find understanding, but we'll continue the talks," he said. Croatia expects its economy to shrink by 9.4% this year, while the government has said it needs 24 billion kuna in additional borrowing in 2020 to mitigate the impact of the coronavirus crisis on the budget and the economy. ($1 = 6.9939 kuna)