cock-a-doodle-doo coalition – Croatia, the War, and the Future

Croatia Economy On A Wing And A Prayer

July 27, 2013 by inavukic 41 Comments

Croatian Finance Minister Slavko Linic Photo: HRT

Croatia’s finance minister Slavko Linic has not learned it seems from his failed step where he published the names of tax evaders – the Pillar of Shame – in order to drive significantly more taxpayers into compliance with tax laws.

It’s been just over a year since then and he is at it – again!

This time he has announced publishing the names of employers who do not and have not for months paid wages to their employees!

According to a fresh Croatian HRT TV report, employers who do not pay their employees are, in addition to tax evaders, to be placed on minister Linic’s public Pillar of Shame. Croatia’s tax administration has recently published on its website the proposal of changes and amendments to the taxation law – and it’s about to add another category to this very public cyberspace: a new list of debtors – those who do not pay for the work done for them.

Special rules have introduced several measures in order to reduce the number of employers who do not pay wages to their workers. The legislation on mandatory contributions provides that Tax administration may publish the list of employers not issuing wages to their employees; information needed to place a name on this new pillar of shame is reportedly easily visible in companies’ filed reports to the tax office.

Ministry of finance keeps emphasising that in order to strengthen financial discipline it’s decisive to ensure that all employers meet their obligations towards their employees in a timely manner.

“Our job at the ministry of finance is not actually a penal procedure nor an implementation of measures in that part, but to make it clearly known to the citizens of Croatia who these employers are and which heads of those corporations are involved. We consider that every head of every corporation that cannot pay its workers knows what the law on bankruptcy says,” said minister Slavko Linic at a press conference in Zagreb on 22 July.

There are no reliable figures as to how many workers in Croatia are not being paid for their work. A figure of 100,000 was bandied around in Spring of 2012 when regulations came into force, which stipulated that wages cannot be paid out without also paying mandatory contributions and taxes. Since then, a number of companies have declared bankruptcy so this number of working people without pay has most likely fallen to perhaps 80,000, increasing with that the number of the unemployed.

This translates to about 8% of the employed in Croatia who are not receiving pay for their work!

It’s estimated that there are about 27,000 companies in Croatia unable to meet their payroll obligations. In most, the workers turn up for work every day – hoping to recoup what’s owed to them, praying they won’t need to join the endless queues of the unemployed along the road that’s paved with economic hopelessness. They linger in anger, bitterness, disappointment, protests … after all it has become illegal for companies not to pay their workers, but not a single company or its head has been processed under the force of that penal matters law.

Indeed one cannot but conclude that minister Linic keeps introducing cosmetic, ridiculous measures through which hope for economic recovery can be detected but, in reality, the roots of economy’s dynamics are rotten to the core. Dialogues between the government and the workers’ unions seem to be taking an increasingly antagonistic form as the government lashes out with unyielding resolve that often includes punitive measures (such as this new pillar of shame).

Linic hopes to introduce financial discipline among employers by forcing them to act in certain ways:

pay up or die!

But if the companies die – what then? Will there be another wave of privatization for cheap money?

Why doesn’t minister Linic create a pillar of shame with the names of public servants and other well-paid entrepreneurs and development bankers who have for years squandered public money, grants … without achieving a single positive outcome in the strengthening of trade environment within which companies could survive, and be able to pay their workers.

If you’re looking for a personification of the idiom “on a wing and a prayer” you’ll find it in Croatia’s minister of finance, or, indeed, in the whole of the Cock-a-doodle-doo government coalition. The punitive, intimidating measures once seen under the communist regime are back with a vengeance in Croatia. Times of consultation and regard for all stakeholders’ needs when it comes to the know-how about economic recovery have still not arrived in Croatia it seems. That’s a pity for that lovely nation of working people who know how to and love to work; be productive. Ina Vukic, Prof. (Zgb); B.A., M.A.Ps. (Syd)

Filed Under: Uncategorized Tagged With: cock-a-doodle-doo coalition, Croatia, economic recovery, on a wing and a prayer, pillar of shame, Slavko Linic

Croatian economy: Political blame game net – now cast wider

April 26, 2012 by inavukic 7 Comments

Finance Minister Slavko Linic - Photo: Boris Scitar/PIXSELL

Croatia’s finance minister Slavko Linic had spent a recent week in the USA in the successful bid to sell USD1.5 billion Croatian bonds to private investors. While increasing Croatia’s foreign debt, the government says this was essential in order to create the capability of repaying due foreign debt obligations and to create an atmosphere/conditions for foreign investments in Croatia.

In his interview by journalist Jadranka Jusresko-Kero, Vecernji List, 24 April, Linic stated how domestic analysts are ruining Croatia’s rating with the International Monetary Fund (IMF) and the World Bank (WB).

Linic stated that the result from his recent visit to Washington shows that the IMF and WB have faith in Croatia’s government’s plan to lift the economy and move it forward. “Imagine, Croatian analysts believe in us less than IMF and WB,” he said. The IMF and WB believe that our government has potential to bring on the needed reforms, he added, also stating that the negative attitude of domestic analysts is destructive as it discourages foreign investments.

Linic also said that eight years of HDZ (Croatian Democratic Union) government is to blame for the state of economy and that it is fortunate that Croatia is still able to secure foreign loans.

Reading other sources it would seem that the WB views about the potential of the Croatian government in which Linic is the finance minister have less to do with faith in the government and more with warnings.

On 24 April Croatian news agency HINA reported that in an interview for Al-Jazeera Balkans TV network World Bank Director for Croatia Hongjoo Hahm said “Croatia has had three years of negative growth, a very deep recession, the deepest since it became independent, and the World Bank’s outlook for 2012 is also negative. These are very difficult economic times for Croatia, but it is time for action for Croatia to weather this storm …  The World Bank has warned the countries of Eastern Europe and Central Asia about the negative effects of the spillover of the eurozone crisis, and Croatia, because of its close integration with Europe, can hardly avoid such a scenario. Croatia is very integrated with the rest of Europe, the integration of the Croatian financial market with Italy, Austria and Slovenia is high. The banks in Croatia are to a large extent foreign owned, and there is also great trade integration with Europe, especially with Italy. If the eurozone goes into a deeper and prolonged recession, the spillover of the crisis will have a negative impact on Croatia”.

Hongjoo Hahm has also stressed that the honeymoon period is over for the new government in Croatia and that now is the time for action.

The warnings that can be read between the lines in Hahm’s statements are stern.

Major overhaul and structural economic and fiscal reforms are essential. In particular, growth, genuine privatisation and increasing market competitiveness are faced with enormous challenges. Challenges are even greater in the reality of relatively high dependency on the government, which was deeply entrenched in the former communist Yugoslavia system and still fares strongly at the grassroots in Croatia.

As Hahm said: it is time for action and for Croatia to weather the storm.

A great storm will undoubtedly continue with processes needed to reform scandalously complex and slow bureaucratic red tape, corruption (in form of bribes) and sluggish work attitudes that seem to prevail in many key places processing licensing, approvals, registrations, etc. for any new business or investment.

Judging from what Hahm said there does not seem to be anything any domestic analysts can say that’s not already known to the world.

Linic’s criticism of domestic analysts is highly suspect. One can easily see that he may well be setting up a new culprit if his coalition government fails at needed economic and fiscal reforms. That is, time will come when he can no longer blame the old HDZ government, so he needs to find someone else, as time moves on.

In all honesty, Linic’a Social Democrats have spent many years in opposition since the beginning of Croatian independence shift (1990); between 1990 – 1999 they did nothing to influence economic reform and stamping out corruption, but rather concentrated on their own party’s political survival. When in government, 2000 – 2003, Linic was Deputy Prime Minister – again, not much done on reforms, and foreign debt increased. Again, in opposition from 2004 to 2011 – years wasted as Social Democrats failed miserably in their mandate to keep the HDZ government to serious account and push for changes.

In the interview with journalist Jadranka Juresko-Kero, Linic referred to Guste Santini, economist and analyst, when he expressed his objections to the negative views of analysts (private consultants) on problems facing the critically plunging Croatian economy. True analysts must tell the truth and work with the truth. As recent as 21 April Santini expressed his assessment of the situation as follows:

“… Local elections are before us and the Kukuriku (Cock-a-doodle-doo) coalition wants to win in local elections too.

Tax reform is not even in sight, yet. Changes in the tax system are only mild ironing out in relation to the changes that are needed and, therefore, appropriate to the Croatian economy…

What must concern us is the continued rise in unemployment. The investment cycle is just a mental construction. It is not certain that this year’s start of the investment cycle will have an effect on reducing the number of unemployed…”

There’s nothing wrong with this “domestic analysis”, as far as I can see.

And, given the complex nature of the economic environment Croatia is in, it just may be that domestic analysts and economists, private operators, will be the ones (not the government rhetoric) who will, with their creativity, critique and knowhow, galvanise the nation into true economic and fiscal reform. Ina Vukic, Prof. (Zgb); B.A., M.A.Ps. (Syd)

Filed Under: Uncategorized Tagged With: cock-a-doodle-doo coalition, Croatia, Croatian Democratic Union, Croatian economy, Guste Santini, Hangjoo Hahm, International Monetary Fund, Kukuriku coalition, Slavko Linic, Social Democrats, World Bank

Croatian cock-a-doodle-doo coalition plans a cock-up in return of Jewish property

February 25, 2012 by inavukic 16 Comments

Cartoon of Ivo Josipovic by Senad

Well, well, well! It’s only been a few hours since I posted my last article on the return of the confiscated Jewish property and smelled a political rat – on the part of the former Communist/Antifascist camp (President Josipovic and the governing Kukuriku – cock-a-doodle-doo – coalition to which the foreign minister Vesna Pusic belongs).

Only ten minutes ago the Croatian news portal Index.hr has published a “newsflash” – a message from president Josipovic that:

“the return of property needs to be towards all in principle, but that does not mean that the State can pay everything to everybody, and that the Constitution needs to be changed”.

Josipovic commented on the unofficial information that the governing coalition would like to change the Constitution in the way by which the State would be obligated to return the property only to Croatian citizens, but not to foreigners.

“I personally do not think that a change in the Constitution is a good idea, I think that it doesn’t fit into certain European trends and practice in many other countries”.

It seems that the cock-a-doodle-doo’s are planning on a fate worse than the one Jews seeking the return or compensation for their confiscated properties experience under the law passed in 1996 – under Franjo Tudjman’s leadership. At least under the latter foreigners had the door opened, but the cock-a-doodle-doo will cock this up, it seems, without blinking an eyelid.

One doesn’t expect better from the former Communist League of Yugoslavia.

Most Jews, descendants of those whose properties have been confiscated and who live abroad most likely do not have Croatian citizenship, and to obtain one for such purposes would present a yet another hurdle that may take many years to overcome under such a government whose members occupy the villas, the grand apartments, the lands…usurped by Communist nationalisation schemes.

It’s not clear yet whether Josipovic is coming out with these statements to soften the blow for the cock-a-doodle-doo coalition, or whether he is in fact struggling to shed his strong Communist ties. We’ll watch the space around this issue because it is an important issue in the reconciliation of historical wrongs. Ina Vukic, Prof. (Zgb); B.A., M.A.Ps. (Syd)