EUROPEAN PAPERS ON THE NEW WELFARE

3. Incentives, partial pension

According to the project, employees will earn half of the regular salary for half working hours. As an incentive the state would add a certain amount to the salary. This amount would not exceed the unemployment allowance, which is now 1,000 HRK monthly, about 133 EUR. This amount should be tax-exempted.
As an additional incentive for the employees, this project provides a purchased partial pension. For every year in the project, every employee would be entitled to a partial pension in the amount of 2% of the average gross salary in Croatia in the previous year. At present this would be roughly 100 HRK. For five years, which is the maximum period provided for in the project, an employee could augment his/her basic state pension by roughly 500 HRK, about 67 EUR. This might seem very low by European standards, but we must bear in mind that the average pension in Croatia is still less than 2,000 HRK (267 EUR). So the partial pension would not be insignificant for many members of the plan. The contribution for the partial pension would be paid by the state to the insurer operating the plan. The partial pension would be a lifelong monthly benefit, adjusted like a state pension and would include the entitlement to a survivor’s pension after the death of the pension beneficiary. Like the basic state pension, the partial pension is subject to taxation, payable by the Croatian Pension Insurance Institute (CPII).
The monthly payments (up to 1,000 HRK) would be channelled from the state agencies for employment and development to commercial life insurers (there are more than 10 in the country) which could operate the scheme. At the end of the year, by mutual agreement, the state agencies would also pay to the insurers the contributions for the partial pensions for all employees who were working the full year and consequently were beneficiaries of the scheme.
The project requires some expenditure for the state to provide the incentives for the scheme, but at the same time the state saves substantial sums on early pensions and unemployment allowances. The most important thing, however, is that older workers will remain at work and will be active and not passive members of the community. In many cases, employers could benefit from the knowledge and experience of older workers.

4. Possibilities for new employment, lifelong learning

As a possible and desirable outcome, two older workers would now work 40 hours a week between them, leaving one free working place for a new, young employee, who could at the same time get practical experience working together with older workers.
These basic changes in the employment law would be accompanied by additional regulations promoting the vocational education of older workers. Some experts from the European Commission are already active in Croatia to evaluate education programmes which will be funded by the EU.

5. Conclusions

The authors of the project are currently trying to present it to the Government and the Union of employers. First reactions are mixed, which is not very surprising. On the other hand, trade unions reacted favourably to the project. This project requires changes in some laws, but most of all we need changes in attitude, mentality and culture.

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