July 18, 2022

The government will spend a staggering 50.2 billion kuna on pension payments over the course of the following year, which is 4.2 billion kuna more than was distributed this year.

Unsurprisingly, the cause is continuous inflation, specifically the anticipated record pension adjustment in the second half of this year, which will also affect next year. With a double-digit inflation rate, the average pension rise of 150 kuna will not significantly benefit any retiree. This greatly raises the largest budget expense in a nation with more than 1,200,000 resident pensioners, but the situation is also improved by the significant rise in income that inflation has brought to the budget.

The second highest budgetary expense, which is the cost of paying the wages of 250,000 public sector employees in Croatia, is, however, an unknown to the state at this time. The base rate was increased by 4% as of May 1st, although this barely covered the pace of inflation before, and in September, the government is anticipated to enter into talks with the unions about an additional base rate rise. The government’s financial framework for the following three years will be destroyed by the negotiations that start as soon as the tourist season in 2022 ends, but this year’s budget will see some much-needed revisions.

The trade unions have refused to say how much they will ask the government for this year’s base rate increase for Croatian public sector wages, but Stipic notes that, in a time of constant price changes and accelerating inflation, the solution could be to agree that wage growth follows the growth of inflation rates, avoiding the need for multiple negotiations each year.

Source: Total Croatia News
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