Minimum Wage Increased

The situation

Effective January 1, 2020, the minimum monthly wage in Croatia has increased to HRK 4,062.51, up 8.3 percent from 2019. The exchange rate at the time of publication of this alert is 1 HRK to 0.15 USD.

A closer look

• Unaffected categories. As before, Key Personnel and EU Blue Card applicants are subject to a different salary threshold of HRK 152,064 gross per year (1.5 times the national average of HRK 101,376, per the Bureau of Statistics); the new national average salary is expected to be published mid-March. EU Intracompany Transferee (ICT) Permit applicants must receive a salary comparable to local staff in a similar role (market salary rate).
• Existing employees. Employers of affected foreign national work permit holders must increase foreign nationals’ salaries to comply with the new rule.
• Initial and renewal applications. Employers of foreign nationals seeking to obtain or renew a general work permit on or after January 1, 2020 must increase foreign nationals’ salaries to comply with the new rule. Immigration applications that do not meet the minimum salary will be refused.
• Pending applications. Employers of foreign nationals with pending general work permit applications as of January 1, 2020 must increase foreign nationals’ salaries to comply with the new rule. Immigration applications that do not meet the minimum salary will be refused.

 

Reminders on other requirements

• Benefits and allowances. As before, benefits and allowances cannot be included in the minimum salary calculation.
• Currency. As before, employers are required to guarantee the salary in HRK regardless of payroll location and/or exchange rate fluctuations.

 

Background

Minimum wage adjustments in Croatia follow a mixture of economic and political considerations, whereas national average wages (which are used to set salary requirements for Key Personnel and EU Blue Card applicants) follow economic trends. The current 8.3 percent minimum wage increase is indicative of the government’s goal to help lower-earning workers cope with the increase of the cost of living in view of the parliamentary elections scheduled for September 2020. Labor shortages resulting from economic growth and a westward move of local workforce are typical for the region. 

Looking ahead

Fragomen will report the updated salary requirement for Key Personnel and EU Blue Card applicants once available. Separately, the Croatian government is submitting draft legislation to parliament which, if passed, would replace the current quota with a labor market test; implement stricter employer sponsorship criteria; and require applicants to submit a police clearance certificate; among other changes. The legislation will be amended based on the results of public debate, and is scheduled to be submitted to parliament in the first quarter of 2020. Fragomen expects parliament to change the legislation as part of its review.

This alert is for informational purposes only. If you have any questions, please contact the global immigration professional with whom you work at Fragomen or send an email to [email protected].