Europe’s jobless youth crisis hits Croatia

Zagreb, Croatia – The mood among the graduating class at Zagreb University is gloomy and fearful. Monia Skurtan, who will complete a masters degree in graphic design this summer, says much of the conversation on campus is about the unwelcoming labour market, which she and her classmates will soon attempt to join.

“I have friends that graduated one year ago and not one of them found a job,” 23-year-old Skurtan told Al Jazeera. “It puts really big pressure on me. I know that I will have to depend on my father, on his money, and he is a teacher and does not really earn that much.”

Skurtan is part of Croatia’s jobless generation. The country is experiencing a dramatic increase in youth unemployment – from 25.1 percent in 2009 to 49.2 percent today, according to Eurostat, the statistical office of the European Union. Among those aged 15 to 24, Croatia has the EU’s third-highest unemployment rate, behind Greece and Spain.

To address the growing numbers of unemployed young people across the continent, the European Commission has established the Youth Guarantee programme. The idea behind this new initiative is for each country to implement a comprehensive scheme, involving government authorities, academic institutions and other stakeholders, which would ensure youth get a job offer – or an apprenticeship or vocational education – within four months of registering as unemployed.

New to the EU

This ambitious guarantee was proven successful in Finland. In 2011, after the Finnish set up their Youth Guarantee scheme, 83.5 percent of young job seekers received a successful offer within three months, according to an EU report.

Croatia, which became a EU member state in July 2013, has committed itself to the Youth Guarantee programme. Last month, the Croatian government received more than 128m euros of EU funds to start building a support system that would include creating more opportunities for vocational education, setting up a self-employment scheme, and co-ordinating apprenticeships in the public and private sectors. Within a couple of years, the four-month guarantee will be in action for every young person in the country, according to Aleksandra Gavrilovic of the Croatian Ministry of Labour and Pension System.

“We hope that the employers recognise the upcoming opportunities and be responsive to this group of young people,” said Gavrilovic, adding that Youth Guarantee was a structural reform, which will change the approach to youth in the labour market. “We are certain there will be good results.”

Gavrilovic’s optimism is misguided, according to Boris Kanzleiter, head of the south-east Europe branch of the Rosa Luxemburg Foundation, a German organisation for social analysis and political education. Kanzleiter explained that Croatia’s youth unemployment crisis was rooted in the same causes that have hurt labour markets in Greece, Spain, Italy and other EU countries, and cannot be solved with “cosmetic measures” such as a set of employment programmes.

“These countries have big problems competing with the much more competitive and productive export industries in the centre of Europe,” said Kanzleiter from his Belgrade office, pointing out the de-industrialisation process that Croatia and other southern European countries experienced in the past decade. “It is a problem of the discrepancies between the stronger economies in the centre of Europe and the weak economies in the periphery of Europe which cannot compete with the pressure of these countries of the centre. And if we don’t tackle this structural problem, this asymmetry in Europe, we will not solve youth unemployment.”

Historical context

Croatia is a small, weak player among the more developed European economies, and, like most of Europe’s peripheral south, it was severely affected by the 2008 financial crisis. But Croatian financial woes and rampant unemployment began much earlier, and for different reasons.

The Balkan wars of the 1990s, the breakup of communist Yugoslavia, and the corrupt privatisation of state-owned companies all hurt Croatia’s industrial sector. Within two decades, a proud manufacturing nation with a high export-import ratio turned into a service-based economy where tourism was the main source of income and jobs.

A good example is the Croatian shipbuilding industry. Established in the late 19th century to serve the Austro-Hungarian navy, Croatian shipyards later played an important economic role for Yugoslavia, exporting to 70 countries worldwide. At its peak, this labour-intensive industry employed tens of thousands of people. In the years following Croatia’s independence in 1991, the state-owned shipyards were mismanaged into financial collapse and, in some cases, bankruptcy. Many of the jobs were lost.

“We did not follow the technological advance the world has experienced, so our formerly high-quality products are no longer high-quality,” said Dr Iva Tomic of the Institute of Economics in Zagreb. “Now, there are countries and industries where ships can be produced much cheaper and in better quality.”

Tomic agreed with Kanzleiter that as long as production remains minimal and exports low, the economy will stagnate and it will be very hard to fulfill the Youth Guarantee promise. However, she suggests that the key to solving the jobs crisis is in the hands of the Croatian government. Liberalisation of domestic employment policies, which include rigid workers’ protection laws and high tax burdens, would attract foreign and domestic investors, and that – she cautiously predicts – would resurrect the labour market and decrease youth unemployment.

Measures taken before the EU’s Youth Guarantee initiative indicate that the Croatian government is well aware of the urgency of the situation. In 2009, it began implementing a scheme in which the state would sponsor youth working in certain public-sector positions. In May 2012, the government adopted the Employment Promotion Act, which expanded the subsidies to occupations in the private sector. Last year, more than 17,000 young Croats were employed through this scheme, according to data provided by the Ministry of Labour and Pension System.

But the negative employment trend has persisted, and the tension among Croatian young people is rising. On July 13, hundreds gathered in Zagreb to express solidarity with protesters in neighbouring Bosnia-Herzegovina, where youth, frustrated by the economic situation, have recently organised mass, violent demonstrations. In the Zagreb protest, participants chanted, “We are all facing the same problems!” according to Balkan Insight, a news site covering the region.

Some young Croats are very critical of the EU’s Youth Guarantee programme. Domagoj Mihaljevic is a student at Zagreb University’s Faculty of Economics and a member of the Organisation for Workers’ Initiative and Democratisation, a group dedicated to research and educational activities related to the labour market. He said the Youth Guarantee and the EU funding that came with it were just “a performance” to show that Brussels was fighting unemployment.

“The European elite is trying to establish the social support among youth in a moment when sentiments against all the political class is being seen all across Europe,” Mihaljevic said. “More money can only secure that youth don’t become unrestful immediately, but when the funds dry up, the patience of the youth will also come to an end.”

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