1. The Attitude of the Croatian Employer’s Association on Croatia’s Underground Economy Natasa Novakovic, CEA Zagreb, September 1, 2015

2. About the CEA  Founded in 1993.  Voluntary, independent non-profit employers’ association that protects and promotes the rights and interests of its members.  Protects and promotes its member’s rights and interests in labour-social legislation.  Represents member companies with government institutions, regional and local authorities and trade unions.  Represents members in collective bargaining, closing of collective agreements and labour disputes.  Promotes entrepreneurial rights and interests, the protection of private property, the development and regulation of a free market, the development of competitiveness and a favourable entrepreneurial climate  6,000 entrepreneurs and employers from all industries, employing 600,000 workers.  Member companies are active through 30 sectoral associations. 2

3. Underground Economy - General Attitude CEA continuously monitors the extent of the underground economy and we actively participate in proposed measures to combat illegal activities. Impact of underground economy :  huge financial damage to a company  destroys jobs  creates unfair competition for employers who work honestly and fulfill their obligations The financial value of illegal business, unregistered activities, and the undeclared work of Croatian workers is about 30% of GDP. 3

4. Agriculture Sector – Voucher System  Interest in seasonal work in agriculture is significant; in Croatia there are about 15,344 family agricultural businesses.  The Law on the Promotion of Employment (57/12) – an employer has to pay social contributions only for the days that an employee works.  The aim is to legalize a significant portion of the current undeclared activities in agriculture and to facilitate employment.  The employer’s obligation is to give an employee a daily coupon for each recorded day of work.  To protect the workers, a number of regulations have been outlined, such as a minimum daily wage of HRK 70.40 (€9.40) and a maximum of 12 working hours per day.  A seasonal worker can be employed for 90 days per calendar year. 4

5. Market Research about Cut Tobacco on which a Tax Has Not Been Paid The aim of this study was to estimate the size of the domestic market of cut tobacco, and its impact on the loss of budget revenues due to non-payment of excise and other taxes. Results of the research:  One in every four smokers in Croatia is smoking cut tobacco.  Three in five cut tobacco smokers are using tobacco on which a tax has not been paid.  One in seven smokers in Croatia consumes cut tobacco on which a tax has not been paid.  Four out of five tobacco users go to dealers or markets to buy tobacco on which tax has not been paid.  According to estimates, the consumption of cut tobacco on which tax has not been paid is about 1,000 tons per year, which represents a loss of income to the national budget of about 100 million euros annually. 5

6. DO YOU KNOW ALL THE CRIMINAL ACTIVITIES THAT SMUGGLED TOBACCO FINANCES? 6

7. 7 DID YOU KNOW THAT SMUGGLED TOBACCO THREATENS MY JOB?

8. 8 DO YOU KNOW WHAT WALKS ON SMUGGLED TOBACCO? COCKROACHES AND EARWIGS? MICE AND RATS? MAGGOTS AND SNAKES?

9. Construction Industry There is a major problem with undeclared work - social partners are united in fighting against it, and they want to introduce several measures:  Create an initiative to form a sectoral working group for construction, with representatives from ministries, trade unions, the CEA and the Croatian Chamber of Crafts and Trades.  Introduce a law on the shadow economy.  Centralize activities at the national level and establish a special body to fight against all types of an informal economy. 9

10.  Raise public awareness about the consequences of undeclared work.  Establish a data exchange between associations and government offices.  Exclude companies that do not respect the minimum wage act and the tariffs of the collective agreement from public procurement,  Introduce some type of subsidy for citizens, so that it would be less expensive to hire a contractor.  As long as citizens do not see the aim of paying bills and as long as paying without a bill is cheaper, there will be undeclared work 10

11. Tourism  For more than 10 years there has been a collective agreement that has been extended and is valid for all employers in that sector.  This is undoubtedly the biggest achievement and most important tool that social partners have against undeclared work and for fair competitiveness.  The problem still exists in the daily hiring of personnel – the solution is a voucher system. 11

12. Instead of conclusion... Thank you.... Contacts: natasa.novakovic@hup.hr 12