Economic logic loses out to political survival

The Croatian Employers Association warned about the unsustainability of the pension system

Croatian Prime Minister Andrej Plenkovic

The pension reform is one of the key structural reforms undertaken by the Government. Along with the praise from the EC and the contribution to Croatia’s leaving macroeconomic disbalance, it was also welcomed by credit rating agencies, PM Andrej Plenkovic reminded at yesterday’s Government meeting. This was however only an introduction to the announcement that the Government was giving up on this reform, i.e. that it agrees to all the trade union demands concerning the referendum initiative “67 is too much”. This way, the retirement age returns to 65 years, while those who want to may work until 68. With this, Plenkovic will avoid the union referendum that would come in an awkward political time, in the sense of presidential elections, as well as Croatia’s presidency in the Council of Europe. The Croatian Employers Association warned about the harmful consequences of this decision and unsustainability of the pension system.

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