Croatian government backs down over retirement age increase

Croatian government backs down over retirement age increase
Trade union leaders appealed to the parliament to give the go ahead for a referendum on pension reform shortly after the government backed down on the issue.
By bne IntelliNews September 20, 2019

The Croatian government has agreed to return the retirement age to 65, just months after raising it to 67, following a campaign supported by hundreds of thousands of citizens. 

Prime Minister Andrej Plenkovic said on September 19 that the government had listened to citizens and was revising the law accordingly, but further changes would make it possible for Croatians to continue working after the age of 65 should they choose to do so. 

The increase in the retirement age — which would have come into force from 2033 for both men and women — is part of Zagreb’s plans to reform the pension system in response to the country’s ageing population. The change was approved by the parliament in December 2018. 

However, the move caused outrage among many Croatians, and a campaign, dubbed "67 is too much”, launched by three of the country’s main trade unions to gather petitions for a referendum saw over 700,000 people sign up; Croatia had a population of almost 4.1mn as of 2018. 

Earlier this week, union leaders warned they would mobilise citizens for mass protests unless the referendum was scheduled. 

Rather than calling a referendum that it would almost certainly have lost, Plenkovic’s government backed down on the increase in the retirement age. 

“By this we show that we listen to what our citizens tell us. However, some of our citizens want to carry on working beyond the age of 65 and we will make it possible in a revised [pension] law proposal,” Plenkovic told a cabinet session, Reuters reported.

“Thus we strike a balance between the demands of the campaign and the desire of those who can and want to work longer.”

Currently Croatia’s public pension scheme costs almost HRK40bn (€5.4bn) a year, with a shortfall of around HRK17bn made up by the state budget, according to Reuters.

The leader of the Alliance of Independent Trade Unions (SSSH), Mladen Novosel, called the news a victory for democracy in Croatia, an SSSH statement said. However, he told broadcaster N1 that he still expects a referendum to be held on changes to pension eligibility criteria. 

Members of the opposition Social Democratic Party and Bridge also criticised Plenkovic, saying that his government had “capitulated”.

The opposition to the overhaul of the pension system echoes that in several other countries in Central, Southeast and Eastern Europe, as governments react to longer life expectancies and deteriorating demographics by raising retirement ages. 

Last year, the Russian government also announced a controversial, long overdue, and widely unpopular pension reform hiking the retirement ages for Russians from Soviet era lows. However, as the backlash against the planned reforms threatened President Vladimir Putin’s popularity ratings, the president — who had kept his distance from the changes — eventually stepped in to scale them back and reduce the increases in the retirement age. 

Plans to bring the retirement age for women into line with that for men in Kazakhstan also sparked rare public unrest in the authoritarian Central Asian state when they were announced back in 2013.