Reskilling the Future: Croatia’s Plan to Activate and Empower Its Youth Labor Force

The World Bank’s report outlines Croatia’s persistent youth employment challenges, rooted in skills mismatches, weak institutional coordination, and limited job opportunities. It proposes integrated reforms in education, labor services, and market systems to empower youth and align them with the evolving economy.

In close collaboration with Croatia’s Ministry of Labor and the Institute of Economics in Zagreb, research by the World Bank delivers a compelling and detailed analysis of the complex issues plaguing the country’s youth labor market. Backed by rigorous data and case studies, the report sets out to diagnose the barriers facing Croatian youth, especially those classified as NEET (Not in Employment, Education, or Training), and propose actionable solutions. Although Croatia has made measurable progress, reducing its NEET rate from 22.3 percent in 2013 to 11.8 percent in 2023, this still translates to over 72,000 young people disconnected from education and the labor force. These challenges are especially acute for women, older youth, and those in economically weaker regions such as Pannonia and the North, where opportunities are limited due to a reliance on low-productivity sectors like agriculture and basic manufacturing.

A Labor Market Caught Between Shortages and Underutilization

Croatia's labor market is paradoxical. On one hand, employers report severe worker shortages, particularly in construction, tourism, and IT. On the other hand, a significant segment of the young population cannot find work that matches their education or career aspirations. This mismatch stems in large part from systemic weaknesses in the education and training systems, which have failed to adapt to a rapidly evolving economy. More than 70 percent of Croatian secondary school students enroll in vocational education and training (VET) programs, yet these are often outdated, theoretical, and lack a strong work-based learning component. Tertiary graduates face a similar problem: while demand in technical and STEM-related fields is growing, degrees in humanities, law, or business frequently lead to underemployment. The result is a youth labor force that is both underutilized and ill-prepared for the jobs of the future.

Cracks in the Transition from School to Work

For young people in Croatia, the path from education to employment is full of pitfalls. The transition is slow, uncertain, and often discouraging. Many graduates lack practical experience, and employers are reluctant to hire untested candidates without internships or apprenticeships under their belt. A large portion of youth employment is based on temporary contracts; over 27 percent of employed youth worked under such arrangements in 2023, often involuntarily. This undermines job security, limits access to benefits and professional development, and makes long-term planning difficult. At the same time, structural issues such as poor public transportation, weak childcare infrastructure, and ingrained gender norms contribute to the inactivity of young women, particularly in rural areas. About 45 percent of young women not working cite family responsibilities as the primary reason.

The Government’s Response: A Mixed Bag of Progress and Gaps

Croatia has undertaken numerous reforms to address youth unemployment. The Youth Guarantee program, backed by EU funds, promises that anyone under 30 will receive a job offer, training, or education within four months of registering as unemployed. The Croatian Employment Service (CES) and its network of Career Information and Counselling Centres (CISOK) have played a central role in implementing these policies. Additional programs include green and digital skills vouchers, tax incentives for hiring youth, start-up grants for young entrepreneurs, and scholarships for occupations with labor shortages. However, these initiatives often fail to reach the most vulnerable segments of the NEET population, particularly those who are inactive and not registered with employment services. Data systems remain fragmented, service delivery is inconsistent, and program evaluation is weak. Many policies also lack sufficient coordination across ministries, local governments, and educational institutions.

Turning the Tide: Strategic Recommendations for Lasting Impact

The World Bank’s report presents a forward-looking reform agenda centered around three core pillars. First, it calls for a transformation of Croatia’s labor market information system (LMIS), enabling the integration of real-time employment, education, and skills data to support more accurate forecasting and smarter policy design. Such a system could better align training and educational curricula with labor market needs, offering tailored career guidance to students and job seekers. Second, the report urges a major investment in lifelong learning. Personalized learning accounts, digital and green skill development, expanded apprenticeships, and updated VET curricula would ensure that young Croatians are better equipped for the future. Third, the delivery of employment services must be modernized. This includes data-driven profiling, AI-supported job matching, and a centralized digital platform to streamline access to all relevant services. These reforms must also address the specific needs of young people with disabilities, those with limited education, and young women facing care responsibilities.

Building a More Inclusive and Dynamic Workforce

The report makes it clear that no supply-side solution will succeed without also addressing demand. Croatia must focus on stimulating quality job creation through investments in innovation, research and development, green technologies, and small and medium-sized enterprises. Simplifying regulations, improving access to finance, particularly for youth-led startups, and supporting entrepreneurship ecosystems are essential steps. At the same time, expanding access to childcare and eldercare would allow more young women to enter or return to the workforce. Croatia’s smart specialization strategy, supported by EU funding, provides a valuable platform for aligning workforce development with national growth priorities in the green and digital sectors.

In essence, the report is not just technical, it is a call to action. If Croatia can act on these recommendations with urgency, coordination, and political will, it has the potential to transform its youth from a struggling demographic into a dynamic driver of economic progress and social inclusion. The stakes are high, but so is the promise.