A project of gradual retirement in Croatia

1. Older workers and unemployed under strain

The situation in the Croatian economy is characterized by a GDP per capita of around 5000 to 6000 USD, modest economic growth of 4% per year, a large number (over one million) of retired people and an unemployment rate around 20%. In this environment the most vulnerable groups would appear to be the unemployed and retirees with low pensions. The government as well as many independent institutions and economists are proposing different plans and ideas, which would help speed up economic growth and improve living standards in the country. One such idea is the project of gradual retirement.

2. ‘Gradual retirement’ project

A group of independent experts, economists and lawyers, coordinated by Royal, a pension insurance company in Zagreb, Croatia, has been working for two years on the project of ‘Gradual Retirement instead of Early Retirement’. This project is inspired by the philosophy of the fourth pillar and tries to implement its ideas in the Croatian environment.
This project has taken into account all the circumstances mentioned above. The project aims to address the two most vulnerable groups of Croatian citizens. The basic idea, therefore was to diminish the number of people retiring early, with consequent lower pensions, and to open up possibilities for employing younger participants in the labour market.
The idea of promoting longer working life is quite new for the Croatian society, so the project would start with two smaller but significant groups within the population:
• firstly, employees who became entitled, or in some cases, forced to retire early, with pensions up to 20% less than full pensions, and
• secondly, employees who will soon become redundant, and thus unemployed.
The project offers employees who become entitled to take early retirement the following option: instead of going into early retirement, they should be encouraged to stay in service and work half the regular working hours, e.g. 20 instead of 40 hours a week. The term for this form of employment is ‘part-time work’.
The second group is made up of employees who will be redundant, and consequently unemployed, but need less than five years to meet the conditions for early retirement. As unemployed they have the right to the unemployment allowance and some additional help to cover overhead costs and some medical and similar costs. The project is trying to persuade employers, employees and the state alike to retain these people at work, always in the above-mentioned form, i.e. that they would work half the regular working hours, e.g. 20 instead of 40 hours a week. The term for this part of the project is ‘shortened working time’.
This project is not possible under the current provisions of the Croatian employment law. Therefore it is proposed that the legal changes, which would make this flexible part-time work possible, be introduced into the Croatian employment law. In the so called ‘part-time work’ the qualifying period for an employee would be calculated according to the working hours he/she effectively puts in this plan. According to the plan, an employee would be credited with a six-months period of contribution for one calendar year of work. On the other hand, in the ‘shortened working time’ part of the scheme an employee would be credited with a contribution period as if he/she had worked full time. The reason being that the second group is generally much younger and could lose much more from the qualifying period of contribution.

Vladimir Miletic: Metrokon, Zagreb

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