ABOVE:
D&D Metal, a small Croatian company in Osijek joins the supply chain of the large multinational conglomerate ThyssenKrupp as a result of ESP project's referral system.
Remarks at the Conference on the Croatian Labor Market in the 21st Century
Mr. Minister, Mr. Tadeschi, ladies and gentlemen, good morning.
We are here today to address Croatia 's labor market in the 21 st Century. This topic profoundly affects every man, woman and child in Croatia - their work, their standards of living, and their futures. I know that you know, this is not the first time you have gathered to talk about this subject. Many of you already understand the extent to which Croatia must reposition its labor market to survive in today's global market place. And yet, the necessary changes are not taking place in any systemic way here. Andy Warhol once remarked " They always say time changes things, but you actually have to change them yourself." He had a point. And my point to you here this morning is that there will never be a better time for revamping Croatia 's labor market than now. Why?
First, rapid improvements in Croatia 's economic performance cannot occur without major improvements in Croatia 's labor markets. The availability , cost and productivity of labor are integral components of Croatia 's relative competitiveness in global markets. Unfortunately, the world will not stand still until Croatia is ready to change. Delays in taking bold decisions today will put the country at a disadvantage to the many other countries which are developing skilled, flexible, and technically-savvy labor markets now. I know there are still some who question the need for perpetually trying to increase the competitiveness of this economy? Why? Shouldn't we stop? The only satisfactory response is this one: Croatia must make its economy more efficient, not only to survive in a harshly competitive environment, not only to maintain your living standards, but also to retain your rich cultural heritage.
Second, a competitive and productive labor force will attract new foreign and domestic investment- that up until now has been reluctant to make large Greenfield investments here. And Croatia needs new investment because it provides capital, technology, worker training, and management expertise. It is essential for government and the private sector to focus on labor issues because they impact the competitiveness of Croatia as an investment destination. For that reason alone, I congratulate HUP and Selecctio for sponsoring this conference.
The third reason for accelerating changes to Croatia 's labor market is to quickly prepare the country for E.U. accession. As Croatia prepares to enter the European Union, current business practices that insulate and protect Croatian enterprises from competitive forces will have to change. To be successful in a global marketplace, Croatian enterprises will be forced to take a critical look at their costs of doing business - and protect their profit margins by cutting those costs, improving quality standards or raising output per unit of production. The cost and productivity of labor figure heavily in that equation.
Finally, workers are already shifting from one firm or industry sector to another struggling to adjust to the fluctuations of the new global economy. Adopting new policies now which respond to this reality is vital for these individuals and for the country. It is everyone's job to make sure that Croatian workers are prepared to succeed in new jobs in new industries.
USAID is involved in these issues. Through Poduzetna Hrvatska and other projects, we have provided resources to revitalize Croatia 's business and investment promotion efforts. Specifically, we are working with thousands of small and medium enterprises, directly or through Croatian intermediaries, to help improve their productivity through better use of technology and "best practice" management techniques. In past years we also supported many labor programs here. We have paid close attention to recent analyses of Croatia 's business and investment climates, particularly the data on labor productivity. From this data and our experience we have drawn the following conclusions:
• Many Croatian enterprises are less competitive than those of other countries in Central and Eastern Europe , because of nominal high labor costs and relatively low productivity such as in the local textile industry. High labor costs are not a problem for the competitiveness of a country if they are accompanied by high productivity. Ireland has proven that. Also, total labor costs in Croatia have also risen by 18.3% since 2001, to nearly 1,000 Euros per month. That is substantially more than the cost of equivalent labor in Hungary and Slovakia , and is similar to labor costs in Portugal .
• Enhancing the productivity of labour is the key to competitiveness. And in that regard, introducing new technologies, workplace learning, technical training and skills development are crucial . Skilled labour is the major source of competitive advantage - and will be even more in the future. Yet the educational system in Croatia is not producing enough skilled workers. And even at the firm level --over 66% of companies have no one designated for managing human resources in their company.
In addition, creating an environment which values and encourages the application of new technologies and where impediments such as overregulation or taxation can be removed are also great productivity boosters.
• The proof: in spite of relatively high rates of unemployment, there is a shortage of highly educated workers in many sectors of the Croatian economy. Less than 7% of the unemployed in Croatia have finished technical schools or colleges. In addition, the registered demand for skilled workers is almost twice as high as the number of unemployed workers who possess technical skills.
These facts underscore the need for a systematic overhaul of the formal and vocational education systems in Croatia . For Croatia to be competitive in regional labor markets, the educational systems must emphasize applied multifunctional knowledge with high transfer value , designed to meet the needs of current and future employers.
• The education system in Croatia must also promote the concept of life-long learning. Participation in life-long learning programs helps counteract disruptions in the labor environment and facilitates restructuring of the economy. Unfortunately, the percentage of adults participating in life-long learning in Croatia is less than in all current EU members and is almost four times less than the average of the EU 25. Of the comparison countries, only Bulgaria and Romania rank lower than Croatia . Last week the Prime Minister announced that next year will be the year for promoting life-long learning. I applaud his decision.
I would like to conclude by asking each of us to commit to accelerate labour reform in Croatia ". Let us use this conference to set clear direction and benchmarks for moving forward on measures that will bring hope and prosperity to Croatian workers and businesses operating here. That is our challenge today.
