engleski

Country Report - Croatia ; Extended Country Reports - Croatia

(1) Current level of development of employee financial participation in Croatia could be assessed as relatively low. Employee share ownership which emerged in the course of privatization is decreasing constantly and does not have significant support. ESOP models defined as every organized program of larger involvement of employees in the enterprise ownership are almost the only form of employee financial participation that is developing after privatization, but they are rare and also without broader political support. The incidence of profit sharing is negligibly small. Lack of political support to financial participation of employees is due to the liberalistic approach of the government during the transition and to mistrust to any concept showing similarity to the self-management system. Cooperatives have a long tradition, but represent a marginal segment of Croatian economy. (2) Employee ownership could emerge at the first stage of privatisation (1991-1995). At this stage, employees and former employees were entitled to buy up to 50% of shares at a discount and could pay for them in instalments. However, in many cases employees did not buy up the maximum quotas. By 1995, small shareholders held about 20% of the nominal value of enterprises that entered the first phase of privatisation. During the second and third stage, support for employee participation ceased and employee ownership gradually declined. (3) Schemes of financial participation of employees are not expressly regulated. Employees who are mostly minority shareholders have only restricted possibilities of influence under Croatian company law. Tax legislation, if applied consistently, would, in fact, hamper employee financial participation, because such transfers to employees would be taxed twice – first under the Profit Tax Law, and then under the Income Tax Law – without any exemptions and alleviations. (4) As an EU candidate country, Croatia gradually transfers aquis communautaire into national law. However, no regulations on employee participation have been transferred. Western European firms doing business in Croatia do not use employee participation schemes. However, Western experts helped to design ESOP models in Croatian enterprises. (5) Future development of employee financial participation in Croatia is difficult to envisage. Although there are plans to create legal regulation supporting the development of ESOPs, at this stage, it is not clear if the legal acts will be adopted and implemented. If this will not be the case, only spontaneous emergence of a small number of financial participation schemes, especially employee ownership, in individual enterprises should be expected.

employee financial participation, profit sharing, employee ownership

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