Croatia's Public Sector Boom: A Double-Edged Sword for the Economy?

Croatia Faces Labor Shortage as Public Sector Jobs Become More Attractive Zagreb, May 15, 2025 – A recent report by DNEVNIK.hr reveals a growing trend in Croatia: the increasing preference for government jobs. Salary increases in the public sector, particularly in healthcare and construction, have led to a significant influx of workers, leaving private sector employers struggling to fill positions. This situation has created an interesting contrast between the public and private sectors. "The state is the most desirable employer," states the DNEVNIK.hr report. This is largely due to the recent increase in public sector salaries, which has created thousands of new jobs, especially in areas like healthcare. This is corroborated by the fact that 7,000 new jobs were created in healthcare alone. However, this situation presents a challenge for private sector businesses. One physiotherapist interviewed stated, "The public sector is more attractive because it's more secure." This sentiment is echoed by many private sector employers who are now struggling with a significant labor shortage. In response, private sector employers are calling for tax breaks to help them compete with the state's more attractive compensation packages. The DNEVNIK.hr report also highlights the significant increase in job postings in the public sector in the first quarter of 2025, with a 50% increase in education and a notable increase in healthcare. This situation underscores the complex interplay between public policy, economic incentives, and the labor market in Croatia. The ongoing dialogue between private sector employers and the government will be crucial in finding a sustainable solution to this challenge.