Could revising the student income limit solve the Croatian labor problem?

May 7, 2022 – Persistent problems facing the Croatian labor force (or lack thereof, to be more precise) could be solved by changing a current law and increasing the limit on how much students are allowed to earn without they, or usually their parents, face tax problems.

As Poslovni Dnevnik writes, angry employers have rightly pointed out that the income threshold beyond which the right to tax relief is lost for students is far too low, and that raising it would encourage students not only to look for a job, but to be ready to work more. Therefore, they suggested that the threshold be raised to 30,000 kuna, with different treatment if the taxpayer (his parent) has more children. This could solve the problems faced by the Croatian labor market, in particular with regard to seasonal and tourist employment.

According to tportal, this initiative of the Croatian Association of Employers (HUP) is also strongly supported by the president of the Croatian Tourism Association, Veljko Ostojic, who very formally believes that a greater involvement of students in seasonal jobs in the tourism sector reduce the need to import foreign labour, as well as the administrative problems and ridiculous waiting times for work permits that come with it.

“We have proposed to the government that the non-taxable income limit for dependent members be increased to 30,000 kuna. We believe that in this way a significant number of people would be activated in the Croatian labor market,” Ostojic said.

Student work is further regulated by the Student Affairs Act, and the current law on this subject has been in force since November 2018.

Students are employed by Approved Intermediaries, which may be Student Centers or Higher Education Institutions with a Student Standards Center, provided they have received approval from the Ministry of Science and Education superior to carry out mediation activities. The law also regulates the minimum hourly wage, which is calculated by dividing the amount of the minimum gross wage by 160. The hourly wage is adjusted once a year, and for 2022 it amounts to 29.30 kuna.

Changing this and increasing the amount that students are free to earn without facing tax problems would not only put a gradual stop to the import of non-resident personnel, but would put the Croatian labor market in a much better position in terms of relates to the height of the summer season, when the right staff are increasingly difficult to find for potential employers.

To find out more, see our section dedicated to businesses.