Croatia is the latest country to join the European Union. Not until 2013 did this new country – one of the successor states to the former Yugoslavia – accede. The hope of a better life that many Croats associated with this step has yet to be fulfilled, however. With a GDP per capita of the equivalent of 10,900 euros, the Balkan state is the third-poorest country in the EU, after Bulgaria and Romania. In 2016, economic output was almost ten percent lower than it was when the global economic crisis began in 2008. Among the EU states, it is only in Greece and Italy that the negative effects of the crisis have persisted longer than in Croatia.
Disappointed by economic developments at home and in search of a better life in the West, many Croats have used the freedom of movement conferred by EU accession and left their home country. They are thus exacerbating the demographic challenges that Croatia was already facing: a fertility rate of 1.4 children per woman, which is well below the EU average, and an annually declining population. By 2030, Croatia is likely to lose 270,000 of its current population of 4.2 million and by 2050, more than half a million. Since those going abroad are mainly the young and well educated, society is aging at an increasingly rapid rate.
Emigration of the younger generation is a problem Croatia shares with many other countries in the region, especially Romania and Bulgaria. And in other respects, too, Croatia has much in common with these and other post-socialist states. Besides the small number of births, this is, above all, the fact that women still tend to have their children when they are quite young. The average age for Croatian women to have their first child is 28. This means they start a family when they are on average roughly two-and-a halfyears younger than women in other Catholic Mediterranean countries like Spain or Italy but about the same age as their Hungarian and Czech counterparts. Unlike in the two last-named countries, however, marriage is still important in Croatia. Only 18 percent of children are born outside wedlock, a lower figure than in all other EU states except Greece. By comparison, around half of all infants in Spain and Italy have parents who are not married.
Early marriage is a sign that conservative family values remain widespread in Croatia. The strong influence of the Catholic Church undoubtedly plays a role here, as illustrated by the issue of abortion. In the former Yugoslavia abortion used to be a customary method of birth control, as indeed it was in almost all other socialist states. In 1985, a total of 52,000 Croatian women had abortions, which meant one pregnancy in two was terminated. But since then, the number has fallen rapidly: figures for 2015 show only 3,002 abortions. This decrease can be attributed, on the one hand, to the improved access to contraceptives and on the other, to the fact that an increasing number of doctors are making use of their legal right to refuse to perform abortions out of personal conviction. In some areas of the country, it has become difficult to terminate a pregnancy, which has led some women to seek illegal abortions. Pro-life groups have repeatedly called for a complete ban on abortion.
Historically, the territory that is now Croatia has belonged to a number of different countries. For a long time, the population therefore tended to be ethnically mixed. The Croats have shared their country with Serbs, Bosniaks and Slovenes, among others. But with the disintegration of Yugoslavia and the wars of the 1990s, this changed, and the states of the Western Balkans became ethnically increasingly homogenous. In the case of Croatia, this was mainly due to the fact that Serbs and other minorities were expelled from the eastern territories of Krajina and East Slavonia. At the turn of the millennium, almost 90 percent of the inhabitants of Croatia gave their ethnicity as Croatian. Ten years previously, when Croatia gained independence in 1991, the figure had only been 78 percent. And although some Serbs subsequently made use of their right to return to Croatia, the share of ethnic Croats continued to rise. One explanation for this increase is that many Croats returned to their country. These were not just refugees from the war but also people who had gone to other countries as “guest workers” in the 1960s and 1970s and now wished to spend their retirement in Croatia. The return of these migrants led to immigration surpluses in the second half of the 1990s and throughout most of the 2000s.
This was actively promoted by the government. Indeed, migration policy in Croatia is still mainly directed at the Croatian diaspora. The idea is to increase the population without having to integrate a large number of foreign migrants. Like in many other postsocialist states, large parts of the Croatian population have a sceptical attitude towards migrants from other cultures. This probably also has to do with the fact that apart from Serbs, most of whom have Croatian citizenship, there are hardly any minorities in Croatia. According to the 2011 census, 99.4 percent of the population has Croatian citizenship.
Unemployment and debts
In 2009, Croatia’s net migration turned negative for the first time. Since then, more people have left the country every year than have arrived – and the trend is increasing. The reason for this is the poor economic situation. In 2016, around 13 percent of the labour force did not have a job – more than half of them had been looking for work for more than a year. After Greece and Spain, Croatia has the third-highest unemployment in the EU. And like in many of the other countries that were particularly hard hit by the economic crisis in the late 2000s and early 2010s, in Croatia it is young people who have borne the brunt. Despite mass emigration, unemployment among the under-25s was still as high as almost 31 percent in 2016. Moreover, it seems doubtful that economic recovery would put an end to emigration, since EU membership allows Croats to seek work in the much wealthier states of Western Europe without having to overcome any legal obstacles.
The ongoing economic crisis has also taken its toll on Croatia’s state finances. This makes it difficult to give an impetus to growth and cushion the social effects of unemployment. Between 2009 and 2014, new debt amounted to more than five percent of GDP each year and was hence well above the EU convergence criterion of three percent laid down in Maastricht. More recently, the level of debt has fallen slightly. Since 2013, the Croatian budget has been permanently monitored by the EU under the so-called corrective arm of the Stability and Growth Pact. As part of that monitoring, the European Council requires the Croatian government to reform the public administration, to take measures against the shadow economy and tax evasion and to revoke early retirement schemes.
Around 70 percent of the Croatian economy is based on services. Here, tourism, concentrated mainly in the west of the country along the Adriatic coast, plays an important role. In 2015, more than 65 million overnight stays in hotels, holiday apartments and camping sites were booked by foreigners alone. On the contrary, Croatian industry, of which food production and shipbuilding form the backbone, is considered unproductive and expensive compared with other countries. Exports are suffering as a consequence. Many experts believe that in order to become more competitive internationally and to attract foreign investment, Croatia, will either have to devalue its currency, the kuna, or try to reduce domestic prices and wages through a restrictive fiscal policy.
Both measures would be unpopular, however, and in any case would treat the symptoms of the economy’s structural weakness rather than the cause. In the medium term, Croatia will need to raise productivity – that is, the average output of each individual. This can happen only gradually, however. One approach would be to make the education system more efficient and tailor it more to the demands of the economy. In the past, Croatia has rarely succeeded in equipping young people about to embark on their careers with the skills, qualifications and knowledge required to be an asset for employers. Thus there are very few graduates in the so-called MINT subjects. On the other hand, vocational training in industry and trade is regarded as lacking practical relevance and more than half of those who have undergone such training fail to find a job in the profession they have learned. This is partly because there are very few companies offering apprenticeships, so that vocational training takes place mainly at school rather than on the job. All of this means that young people regard it as very unattractive. Across the EU, only in Italy do company apprenticeships have an even worse reputation./IBNA