Zagreb, September 1st An Overview of Accomplishments Achieved by the Government of Croatia in Reducing the Underground Economy Marina Kasunic Peris, univ.spec.

2 EUROPEAN CONTEXT: -Undeclared work – high priority -Country specific recommendations and NATIONAL CONTEXT: -Represented in high percentage in the economy -Lack of proper coordination among the administration in combating undeclared work and underground economy -Agreement with social partners to put combating undeclared economy as a priority subject in BACKGROUND

ACTIVITIES AND MEASURES TAKEN IN 2014 AND IN 2015 Commission for combating undeclared work = 20 August, 2014 the Decision on the establishment of the commission to combat undeclared work The Commission is an expert advisory body of the Croatian Government and its members are the representatives of the relevant ministries and institutes at the level of assistant ministers and deputy or assistant directors. Consolidated report on measures taken in previous 2 years 3

UNDECLARED WORK IN CROATIA Most prevalent misdemeanors involved: failure to pay the workers their statutory minimum wage, failure to issue to the workers their pay, compensation or severance pay statement, failure to issue to the workers a written confirmation that the contract had been concluded before they started work, if the employment contract had not been concluded in writing, working hours and vacations failure to register the workers for the compulsory pension and health insurance on the first day of work or failure to register the appropriate working hours keeping records of workers 4

MEASURES TAKEN I As part of the labour legislation reforms: The new Labour Act introduces new concepts into the legal system, allows the assignment of workers to affiliated undertakings nationally and internationally, flexibility in work time management, and exceeding full-time work arrangements The Employment Promotion Act legalized a major part of the current “black” labour market, and made hiring easier for the employers. The Act, among other things, introduced a new employment model - the voucher scheme for seasonal jobs in agriculture. 5

MEASURES TAKEN II As part of the pension insurance system in the previous period measures that are, among other things, aimed at reducing undeclared work relate to: Pension Insurance Act Ordinance on the Central Registry of the Croatian Pension Insurance Institute e-Registration data exchange with other systems. 6

Act on Employment Services and Unemployment Rights - stipulates that the Service shall remove a person from unemployment register if the person is performing work without a certificate, contract or decision permitting such work. Aliens Act - illegal employment of foreign nationals 7

Institutional framework Customs Administration Act Ordinance on amendments to the Income Tax Ordinance - Ministry of Finance, Tax Administration, as an instrument of the combat to prevent undeclared work and grey economy, introduced a unique JOPPD Form which is effective as of 1 January

Other Sectors Act on Nannies - creation of a legal framework for performing babysitting activities Social Welfare Act Ordinance on Job Placement Service for Regular Students Act on Prohibition and Prevention of Conducting Unregistered Activities Ordinance on seaman's books and embarkation permits, procedures and mode of registration and deregistration of seamen for the compulsory pension and health insurance 9

10 Year for Combating Undeclared Work On 20 January 2014 the Ministry of Labour and Pension System presented the initiative for the campaign named “ Year for Combating Undeclared Work” CAMPAIGN

RESULT Strengthen legislative and institutional framework It could be said that in 2014 has witnessed a reduction in the number of workers whom their employers fail to register for the mandatory pension insurance and in number of foreigners working illegally in the Republic of Croatia 11

12 Thank you for your attention! Thank you for your attention!