ZAGREB (Reuters) – Croatia is suffering a critical labor shortage, most glaringly rolling around in its booming seaside tourist resorts, which is compounding obstacles to economic growth and dimming hopes in catching up to more developed European peers.

The problem reflects poor levels of pay, education and skills-training in a very still mainly state-dominated economy who has driven many young Croats to get most sought after, fulfilling operate in affluent western EU countries, analysts say.

"The mismatch between education and the needs of the economy, a minimal readiness for mobility within Croatia and also a high number of us leaving to function in other EU states negatively affect Croatia's labor market," Iva Tomic with the Zagreb Economic Institute think-tank told Reuters.

According towards national employers' association HUP, Croatian firms cannot fill no less than 30,000 jobs, largely in tourism, which makes up about almost 20 % of gross domestic product, also in construction, retail and manufacturing.

This during a period when Croatia and also other European Mediterranean tourist hotspots are incapable of overcome huge crowds arriving on cheap flights and cruise trips in the summertime peak season.

Tourism in Croatia, using its spectacular, rugged Dalmatian seacoast and offshore islands, regularly offsets the country's considerable trade deficit, making it crucial for any service sector underpinning that it is competent to fill job openings.

But various businesses, Croatian- or foreign-owned, also provide many job opportunities going begging, compounding the continue growth and helping retain the unemployment rate unacceptably high – currently at 9.One percent, analysts say.

That is down from 11.6 percent 12 months, only due to the brain drain of young Croats.

"In (the town of) Sisak there’s a simple visible loss of adequate workers. In past times financial year, after we hired 71 workers, 40 % of those interviewed failed to satisfy the conditions and 43 percent of your 90 employees needed to be trained internally," said Ivana Rumac at Italian-owned steelmaker ABS.

"The (Croatian) education system won’t offer programs which offer skills we end up needing," an agency statement said.

ABS, in Sisak 50 km (30 miles) southeast of the capital Zagreb, has recently built its workforce around 116 having a target of 150 after the actual fiscal year next June.

Franz Letica, head of Zagreb's restaurant and bar owners association, declared in the first nine months of 2018 there have been 782 unfilled openings for cooks and 1,493 for waiters, with only 272 cooks and 796 waiters used in an urban area of 800,000.

The newest EU member country's public sector is also affected. Ankica Prasnjak on the nurses union said Zagreb University Hospital was less than some 300 nurses as many had gone to higher-paying jobs elsewhere in the EU.

Potential investors face similar difficulties.

"A greater Austrian company planned to expand business in Croatia but, because of a lack of adequately skilled workforce, eventually opted for Brazilian where in addition, it runs businesses," said Sonja Holocher-Ertl, director from the Austrian Chamber of Commerce's office in Croatia.


Labor shortages usually are not unique to Croatia – other emerging economies in Europe's ex-communist east and southeast have also

experienced a drain of young talent on the richer west on the EU, exploiting the correct of free movement inside bloc.

But it explains analysts' doubt that Croatia's longer-term growth will surpass a modest 1-2 percent needed to rise to western numbers of prosperity.

At the moment the first Yugoslav republic's economy is expanding just below 3 % annually, but even that’s below peers in eastern and southeastern Europe.

Labor-starved businesses are lobbying the Zagreb government to lift the annual quota for foreign workers, which this current year amounted to 38,769 licenses.

But skilled workers from less developed European economies are hard to lure because they can find better paid jobs further west, by way of example in wealthy Austria or Germany.

The average salary in Croatia in September was 6,195 kuna ($950.21), far below european levels. Croatian media report anecdotally that Croats employed in hotels in Austria earn at least double anything they could from home.

"Businesses here cannot raise salaries much and for that reason be competitive given that they would jeopardize their profitability," Tomic said.

Critics express that excessive red tape as well as tax rates lingering from Croatia's communist past within Yugoslavia, lumbering judicial procedures and sometimes changing, opaque regulations complement barriers to growth and investment.

While an apparent solution for Croatia's growth problems is not really in view, senior Labour Ministry official Marija Knezevic Kajari said the domestic workforce pool was not even close to exhausted.

Only about Sixty percent of Croatians between 15 and 64 years widely-used to – among the list of lowest rates within the EU.

"Importing workers is partly a resolution but we predict there exists space for retraining people, that we provide you with financial support to businesses and also for those who a profitable business idea and wish to be self-employed," Knezevic Kajari said.

In the meantime local businesses fear losing out on new contracts. "Using the shortage of skilled workers some employers are already being forced to cancel some business deals for buy. It was a really significant problem," the HUP statement said.