Sustainable Policies


Economic Policies

Despite notable recent gains, Croatia’s overall score for economic policies places it in the bottom ranks (rank 35) in international comparison. Its score on this measure has improved by 0.8 points since 2014.

Growth in recent years has been steady and robust. Unemployment rates have fallen to below 7%, but the country has among the EU’s lowest overall employment rates. Employment rates are additionally quite regionally uneven. However, wages have begun to increase, and a new minimum-wage law is in place.

Public debt levels remain high, but the government has run small surpluses since 2017, and the country has exited the EU’s excessive deficit procedure. Successive tax-reform packages have reduced VAT on key consumer items and increased tax-rate thresholds, effectively lowering personal and corporate taxes for many. Environmental taxes are higher than the EU average.

R&D spending is rising, thanks to the private sector and universities. The country is slated to join the EU banking union, which is expected to have positive effects on the country’s regulatory system. More than 90% of bank assets are held by foreign banks.

Social Policies

With significant inclusion concerns, Croatia falls into the bottom ranks (rank 36) in the area of social policies. Its score on this measure is unchanged relative to 2014.

The education system is inefficient, with outcomes lagging behind EU standards, and socioeconomic status strongly affecting outcomes. A long strike succeeded in winning salary increases for teachers. Poverty and social exclusion remain major problems, with the fragmented social-transfer system having little impact. Significant pockets of extreme poverty persist.

The healthcare system is inclusive, but quality varies widely by region, and the system runs persistent deficits. Per capita spending levels are near the EU’s lowest. Childcare coverage is minimal, especially in rural and semi-rural areas. Labor-market discrimination against younger women and women with children remains widespread.

The pension system is not fiscally sustainable, though ongoing reforms have improved the situation somewhat. Trade-union pressure forced the government to retreat on retirement-age increases. Reintegration of ethnic-Serbian returnees has made progress. Civil-rights groups have criticized the country for using police to push refugees back from its borders.

Environmental Policies

With a number of new programs in the early phases of implementation, Croatia falls into the upper-middle ranks (rank 18) with regard to environmental policies. Its score in this area has improved by 0.2 points relative to 2014.

The country’s environmental policy has been strongly shaped by EU accession. Waste management, water management and air quality are the most important issues. However, program implementation has been slow, with an incoherent public procurement law hampering the use of EU funds.

The country has met climate-protection targets, procuring nearly 30% of energy from renewable sources. However, the share is much lower in the transport sector. Development of a low-carbon strategy for 2030 has been slow.

Air pollution has improved, but waste management remains uncoordinated, without sufficient incentives or enforcement. Biodiversity protection is improving, but the legal framework in this area remains weak.

Robust Democracy


Quality of Democracy

While electoral procedures are largely fair, Croatia receives comparatively low scores (rank 34) with regard to quality of democracy. Its overall score in this area has improved by 0.1 point relative to 2014.

Recent campaign-finance laws have increased transparency, but have failed to close a number of loopholes. Political influence over the media is strong, with reporters who criticize the government subject to dismissal, and defamation suits often used to intimidate or harass journalists. Media pluralism is quite limited.

Access to government information has substantially improved. Civil rights are formally protected, but Roma and ethnic-Serbian citizens face discrimination, and human-rights advocates are criticized. Domestic violence is a serious problem. The rights accorded to LGBT people have expanded, and the overall social climate has improved, but some discrimination persists.

Regulations are sometimes inconsistent and subject to frequent change. Courts lack independence, and a significant case backlog persists. Corruption remains a concern. High-profile politicians and public figures have been indicted, but many prominent individuals have been acquitted after interference by powerful interests.

Good Governance


Executive Capacity

Lacking a smoothly functioning administration, Croatia falls into the bottom ranks internationally (rank 39) with respect to executive capacity. Its score in this area has declined by 0.4 points relative to its 2014 level.

Strategic decisions are often made on a pro forma basis, and lack follow-through. Strategic planning diminishes in the run-up to elections. A Prime Minister’s Office unit tasked with coordinating line-ministry polices has limited capacity to provide policy analysis. Interministerial coordination and communication is of poor quality, requiring frequent cabinet-level intervention.

A relatively new RIA law and RIA strategy have improved the assessment framework, though only a small share of bills undergo the full RIA procedure, and the public has little interest in the process. Ex post evaluations are rare. A web-based consultation process led to changes in a key conflict-of-interest bill, but the trade unions have pulled out of the tripartite social-partner dialogue framework.

Ministry communications are often contradictory, requiring public reversals. Enforcement of regulations is politicized and subject to corruption, creating conditions of clientelism and regulatory capture. Laws are often passed hastily, leading to low-quality texts. Funding for local governments has been increased.

Executive Accountability

With a number of notable weaknesses, Croatia falls into the bottom ranks (rank 36) with regard to executive accountability. Its score on this measure has risen by 0.1 point relative to its 2014 level.

Citizens’ policy knowledge is on average comparatively limited. While most media are focused on entertainment, a few newspapers do provide good coverage of political and economic affairs. The two leading commercial TV broadcasters enjoy significantly higher levels of trust than the public broadcaster.

Parliamentarians have limited resources. Oversight powers are formally sufficient, but sometimes disregarded by ministers. The Audit Office is independent, with a wide-ranging scope of activity, but the government tends to react slowly to Ombudsperson requests. The data-protection authority has been overwhelmed by GDPR-related administrative tasks, leaving little capacity for enforcement.

Political parties are dominated by their leadership ranks. Trade unions have become more active, but have focused on salary hikes rather than broader policy proposals. A number of other interest organizations have sophisticated policy-development capabilities.
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