After a long and painful recession following the global financial crisis, which brought a drop in real GDP of nearly 11% and a peak unemployment rate of 17.5%, Croatia has been experiencing a remarkable labour market recovery. Since the peak of the crisis in 2013, the employment rate in Croatia has risen by over 15 percentage points (p.p.), while unemployment dropped by over 12 p.p. (Figure 2.1). In the second quarter of 2025, unemployment in Croatia stood at 4.9%; the employment rate had risen to 68.8%, which however remains substantially below the level attained in neighbouring Hungary (74.9%) and Slovenia (72.5%) and across the OECD (70.5%; OECD (2025[1])).1
OECD Reviews of Labour Market and Social Policies: Croatia 2025
2.1.1. After a long and strong recovery, Croatia’s labour market is starting to tighten
Employment, unemployment and labour force participation rates, working-age population (15‑64), 2008‑2024
Note: OECD is an unweighted average.
Source: OECD (2025), Employment and unemployment by five‑year age group and sex – indicators (dataset), https://data-explorer.oecd.org/s/34h (accessed 1 September 2025).
The COVID‑19 crisis only had a relatively mild impact on employment and open unemployment in Croatia, and key labour market indicators have improved relative to their pre‑COVID‑19 levels. As many OECD countries, Croatia made massive use of job retention support in form of a wage subsidy scheme and a smaller short-time work scheme to protect the jobs and incomes of workers in companies and sectors heavily impacted by the pandemic and the economic lockdowns. At the peak of the crisis, Croatia’s job retention schemes are estimated to have supported approximately 40% of workers, primarily in accommodation and food services, manufacturing, and wholesale and retail trade (Drahokoupil and Müller, 2021[2]; Jaklin, 2021[3]). As a result of these measures, the unemployment rate increased only relatively little, by 1.7 p.p. year-on-year from the Q4 2019 to Q4 2020, and has fallen below its pre‑crisis level since. The employment rate continued climbing and surpassed its pre‑crisis value by 6 p.p. in Q4 2024 (OECD, 2025[1]).
After a decade of sustained labour market recovery, Croatia has therefore been starting to head into a tighter labour market, though data suggest that for the moment there remains substantial labour market slack. The number of jobseekers registered with the Croatian Employment Service (CES) is at an all‑time low, at 95 300 in 2024, down 72% from the value reached in 2013 (Croatian Employment Service, 2025[4]). Already in 2022, more than half of employers in the Croatian construction sector reported low availability of labour to be a limiting factor for business, and reported labour shortages had grown relative to 2019 also in industry and services (European Commission, 2022[5]). However, the job vacancy rate remains lower than in most other EU countries (European Commission, 2024[6]). And despite certain structural imbalances of Croatia’s economy, notably its very dominant tourism sector2 and substantial regional disparities, labour market mismatch as measured by the Beveridge curve is not particularly high. Employers’ grievances about the difficulty of hiring may therefore still reflect in part a certain unreadiness to consider more disadvantaged jobseekers, even when hiring for lower-skilled occupations, such as in hospitality. Also, not all jobseekers in Croatia may be very keen to take up work: homeownership rates are very high in Croatia, at around 90%, and house prices and rents have strongly risen in recent years. Anecdotally, it is not uncommon for jobseeker to get by well enough just from the rental income they generate if they are lucky enough to own a small flat in Zagreb or somewhere on the coast.
2.1.2. Croatia’s population is declining rapidly
Very rapid population decline represents a major challenge for Croatia’s economic prosperity and is increasingly contributing to labour market tightening. As a result of low fertility rates and high emigration, Croatia’s population is shrinking faster than those of most OECD countries. Over the decade to 2024, Croatia’s population declined by 8%, dropping below the mark of 4 million inhabitants for the first time since independence. It is projected to continue declining to about 3.1 million by 2060, a further 17% drop (Figure 2.2). Among OECD countries, only Latvia, Lithuania, Japan, Greece and Korea face larger population declines. As in most countries with shrinking populations, the working-age population (aged 15‑64) in Croatia is projected to fall even faster, by ‑25% between 2025 and 2060, from 2.4 million to 1.8 million.
Population loss has been affecting disproportionately Croatia’s mainland central and eastern regions, but even Zagreb and the coastline regions are seeing their population decline. Croatia’s lowest‑income counties at its north-eastern borders with Bosnia and Herzegovina and Serbia, such as Slavonski Brod‑Posavina, Sisak‑Moslavina, and Vukovar-Srijem, suffered the largest population losses, at between ‑17% and ‑20% between 2013 and 2023 according to Croatian Bureau of Statistics (CBS) data.3 Sisak‑Moslavina was also one of the epicentres of the violent earthquakes that hit Croatia in 2020,4 which caused substantial economic damage and led more people to leave the county. Zagreb’s population declined by less than 3% over the same horizon, while the coastal counties in the south, such as Dubrovnik‑Neretva and Zadar, with their flourishing tourism industry, experienced declines of around 6%.
Projected change in the total population and working-age population, 2025‑2060
Source: Calculations based on OECD (2025), Population projections (dataset), https://data-explorer.oecd.org/s/34j (accessed 30 July 2025).
Rapid population shrinking and comparatively low, if rising, employment rates represent a considerable challenge for Croatia’s economic prosperity and the financing of the social protection system. A policy priority for the country therefore needs to be to further boost formal employment, which will also require raising job quality, productivity and wages, and reducing informality.
2.2.1. Working lives are short in Croatia, and there is much potential to raise employment rates of disadvantaged groups
Low employment rates in Croatia reflect in part that working lives are on average very short. For workers in their prime age, i.e. those between 25 and 54 years, Croatia reached an employment rate a little above the OECD average in 2024 (Figure 2.3). However, employment is dramatically below‑average both for young people (26% vs. 43% in the OECD on average) and older workers (54% vs. 65% in the OECD on average). In other words, Croatia’s low employment rate overall results entirely from difficulties in bringing young people into the labour market and in retaining older workers in employment.
The gender gap in employment is relatively narrow in Croatia, at 6 p.p. in 2024 (OECD average of 14 p.p.). However, this is mostly a reflection of low employment rates for men rather than high employment rates for women. Indeed, the pattern of very short working lives is even more pronounced for women than for men in Croatia: female employment rates surpass the OECD average for prime‑age women, but are much below-average for women in their 20s and those in their 50s and 60s (OECD, 2023[7]).
Note: Educational attainment based on ISCED 2011. Low: below upper secondary (ISCED levels 0‑2); medium: upper-secondary or post-secondary non-tertiary (ISCED Levels 3‑4); and high: tertiary education (ISCED Levels 5‑8). OECD is a weighted average, except for educational attainment.
Source: Calculations based on OECD (2025), Employment and unemployment by five‑year age group and sex – indicators (dataset), https://data-explorer.oecd.org/s/34k, OECD, (2025) National Educational Attainment Classification (NEAC) and labour market status (full dataset), https://data-explorer.oecd.org/s/2mc and Eurostat (2025), Employment rates by educational attainment level (dataset) https://doi.org/10.2908/LFSA_ERGAED (accessed 15 September 2025).
Croatia also still has ample margin for raising employment rates among disadvantaged groups of workers. The employment rate for people with a low level of education, i.e. at most a lower‑secondary qualification, is much below the OECD average, at only 42% in 2024 (OECD average of 60%; Figure 2.3). Strikingly, low-educated workers have not been able to benefit at all from the rise in employment rates since 2013. Croatia also has one of the widest disability employment gaps in Europe,5 with very high rates of disability benefit receipt. Over 50 000 people receive a personal disability benefit for veterans, most of them veterans from Croatia’s 1991‑1995 War of Independence; another approximately 150 000 people receive either of Croatia’s two other disability benefits, though rates have substantially declined over the last decade. And while young people have significantly benefited from the improvement of labour market conditions since 2013, their labour market integration remains challenging. The youth employment rate is low in Croatia, at only 25.7% among 15‑24 year‑olds in 2024 (OECD average of 43.4%; Figure 2.3). The share of young people not in employment, education or training (NEET) has dropped below the OECD average (10.6% vs. 12.8% in 2024) but remains higher than in neighbouring Slovenia (7.9%; Figure 2.4). Moreover, many more young people have left the country since Croatia’s EU accession in 2013 to look for better job opportunities elsewhere (see Section 2.3). One reason for why so many young people in Croatia struggle getting a foothold in the labour market is that Croatia’s upper‑secondary vocational education and training system is only poorly aligned with the needs of the labour market and often fails to equip young people with relevant practical skills (see Chapter 3).
Percentage of 15‑29 year‑olds not in employment, education or training (NEET), 2024 by activity status and 2013
Note: OECD is an unweighted average (excludes Japan and Korea as no data available). Data refer to: 2023 (Iceland, the United States) and 2022 (Chile).
Source: Calculations based on OECD (2025), Distribution of young adults’ education and work status, for a given level of educational attainment, age group and gender (dataset) https://data-explorer.oecd.org/s/34m and Eurostat (2025), Young persons neither in employment nor in education and training by labour status (NEET rates) (dataset) https://doi.org/10.2908/EDAT_LFSE_20 for Bulgaria, Croatia, Lithuania, Romania and Switzerland.
Croatia’s positive labour market developments have also not yet benefited all parts of the country equally. Geographic disparities are relatively large in Croatia for a country of its size, notably between the economically dynamic City of Zagreb and Northern Croatia on one side, and the economically lagging parts of Pannonian Croatia in the continental north-east of the country on the other. The city of Zagreb and the Varaždin county on Croatia’s border with Slovenia are approaching full employment, with unemployment rates of 2.6% and 3.1%, respectively, in 2023. Meanwhile, unemployment rates stood at 13.6% in the Sisak‑Moslavina county a mere two‑hour drive from Zagreb, and 15.3% in the Virovitica-Podravina county on Croatia’s border with Hungary (Figure 2.5). Those big disparities in labour market outcomes mirror large geographic differences in economic activity and income, with regional GDP per capita varying from 118% of the EU average in Zagreb to only 36% of the EU average in the counties in eastern Croatia (European Commission, 2022[8]). They have been a driver of internal migration in Croatia, from the more rural parts of the country towards Zagreb and the coastline regions, and they represent a substantial challenge for the provision of public services, including social support (see Chapter 5).
Unemployment rates across small (TL3) regions, 2023
Note: Registered unemployment as of 31 March 2023. The borders of Croatia’s four large (TL2) regions (Adriatic Croatia, City of Zagreb, Northern Croatia, and Pannonian Croatia) are shown in bold.
Source: Croatian Bureau of Statistics, Employment and Wages – review by counties, https://podaci.dzs.hr/en/statistics-in-line/.
2.2.2. Productivity and wages are low
A relatively small share of employment growth in Croatia over the last decade occurred in high-skilled occupations. This is illustrated in Figure 2.6, which shows changes in the occupational composition of employment, with occupations grouped as being low‑skilled (elementary occupations and service and sales workers), middle‑skilled (incl. clerks, craft and trades workers, and plant and machine operators), and high-skilled (incl. mangers, professionals, and technicians and associated professionals). Croatia, like all European OECD countries except for Slovenia and Greece, experienced an expansion of employment in high‑skilled relative to low- and middle‑skilled occupations. However, the magnitude of this effect is smaller in Croatia than in most other countries, including in neighbouring Hungary. Employment growth in Croatia since 2013/14 disproportionately benefited higher‑skilled professionals and managers, as well as low-skilled elementary occupations; meanwhile, employment shares have declined for middle‑skilled clerical support workers, as well as for high-skilled technicians and associate professionals. Relative to the EU average and neighbouring Slovenia, Croatia has above‑average shares of services and sales workers, but fewer professionals, technicians and associate professionals. Forecasts of skill demand in Croatia up to the year 2035 suggest somewhat of a change in this pattern, with net job creation predicted to occur primarily for high‑skilled professionals, technicians and associate professionals (Cedefop, 2025[9]).
Percentage points change in the occupational distribution, 2013/14‑2023/24
Note: Total employment refers to civilian employment excluding agricultural workers. High-skilled occupations include jobs classified under the ISCO‑88 major groups: legislators, senior officials, and managers (group 1), professionals (group 2), and technicians and associate professionals (group 3). Middle‑skilled occupations include: clerks (group 4), craft and related trades workers (group 7), and plant and machine operators and assemblers (group 8). Low-skilled occupations include: service workers and shop and market sales workers (group 5), and elementary occupations (group 9).
Source: OECD calculations based on the EU Labour Force Survey, Eurostat.
These past trends in the occupational composition of employment reflect recent developments in the sectoral structure of Croatia’s economy. Some of the most marked employment growth over the last decade took place in sectors such as construction, wholesale and retail trade, and accommodation and food services, in which many jobs require only low levels of education and skills.6 A concern has been that Croatia’s booming tourism industry may discourage workers from investing in developing their skills. Given the option of working in a lower-skilled service job in the tourism industry over a relatively short summer season and earning the equivalent of a full year’s salary, not all workers may see the appeal or need of taking up training to increase their earnings potential in a higher-skilled job. Similarly, in a context of high homeownership rates and a recent rise in house prices and rents, Croatians who own a small apartment on the coastline may find it more convenient to vacate that apartment over the summer months and generate a nice income from renting it out than to try and find higher-skilled employment. This is true even more as rental income is hardly taxed in Croatia.
Both labour productivity and wages are consequently rather low in Croatia, though much in line with those in Central and Eastern European OECD countries (Figure 2.7). GDP per hour worked in Croatia equalled approximately USD 46 in 2023 after adjustments for purchasing power, about 71% of the OECD average and comparable to the levels in Estonia and Hungary. The average annual wage for a dependent full-time employee was around USD 42 300, about 76% of the OECD average. Labour productivity has grown relatively slowly over the last decade, and convergence with higher-income OECD economies has stalled in recent years (OECD, 2023[7]). Annual wage growth remained below productivity growth in the initial years of the labour market recovery but has picked in more recent years, in part driven by increases in the national minimum wage (see Chapter 3).
Source: OECD (2025), Productivity levels (dataset) https://data-explorer.oecd.org/s/308 (Panels A and C), OECD (2025), Average annual wages (indicator) https://data-explorer.oecd.org/s/309 (Panel B) and Eurostat (2025), Average full time adjusted salary per employee (dataset), https://doi.org/10.2908/NAMA_10_FTE (Panel C) (accessed 30 August 2025).
Earnings are distributed relatively equally in Croatia. Overall earnings disparities are low, with an earnings ratio from the 9th to the 1st decile of the earnings distribution of 3.3 in 2022 – equivalent to the OECD average (Figure 2.8, Panel A). This reflects in particular comparatively modest earnings at the top of the distribution; the share of people on low pay, i.e. on less than two‑thirds of median earnings, is higher than in nearly all OECD countries. Low earnings inequality is also one of the factors that explain low inequalities in disposable incomes in Croatia (see Section 2.4). The gender pay gap is comparatively low, at around 5.1% of median earnings in 2022 (OECD average of 11.4%).
Note: The gender wage gap is defined as the difference between median earnings of men and women relative to median earnings of men. All earnings estimates refer to gross earnings of full-time wage and salary workers. Country-specific variations from this definition as well as national data sources and earnings concepts can be found in the metadata of the sources below.
Source: OECD (2025), Decile ratios of gross earnings (indicator), https://data-explorer.oecd.org/s/30b and OECD (2025), Gender wage gap (indicator), https://data-explorer.oecd.org/s/30c (accessed 12 August 2025).
2.2.3. Job quality is in line with that in European OECD countries, but the incidence of very short work contracts is relatively high
Job quality in Croatia, measured as the level of strain that workers experience at work, is much in line with that experienced by workers in European OECD countries.7 According to the Job Strain Index, constructed however from data collected during the COVID‑19 crisis in 2021 (Eurofound, 2022[10]), about one‑in‑eight (12.5%) workers in Croatia experienced high or extreme job strain (Figure 2.9). This is a little higher than across European OECD countries on average (10.8%), but lower than in some central European OECD countries such as Poland and the Slovak Republic (both above 16%). A breakdown of this composite index into its 14 components, i.e. different dimensions of “job demands” and “job resources”, provides insights into areas where workers feel particularly strained or resourced. Croatia stands out positively in that comparatively few workers report concerns about the intensity of their work, and many express appreciation for the time flexibility and social support at work. Main areas of concern are the high physical demands and physical risks at work; also, only few workers report high levels of autonomy, self‑realisation and intrinsic reward. Further microdata analysis would be needed to be able to profile the groups of workers who are at greatest risk of suffering from high work strain, and indeed some of this work is currently planned in the framework of the OECD’s forthcoming projects on job quality. But the main challenges for job quality in Croatia – high physical demands and low autonomy and intrinsic rewards – are broadly consistent with the observed employment growth in construction, hospitality and retail and trade.
Breakdown of employment by worker’s level of experienced job strain, employed workers aged 16 and over, 2021
Note: For details on the construction of the Job Strain Index, See Annex 4 of Eurofound (2022), Working conditions in the time of COVID‑19: Implications for the future, European Working Conditions Telephone Survey 2021 series, Publications Office of the European Union, Luxembourg.
Source: OECD calculations based on the European Working Conditions Telephone Survey (EWCTS) 2021.
The incidence of non-standard work in Croatia is generally also in line with the levels observed in most OECD countries, though very short work contracts are comparatively frequent. Indeed, in the initial years of Croatia’s labour market recovery, there had been concerns that the job gains made may have come at the cost of a surge in temporary employment, and notably in contracts with a duration of less than three months (Tomić et al., 2019[11]). However, this trend substantially reversed in recent years, and the share of employees on temporary contracts was lower in Croatia in 2024 than across the OECD on average (9.3% vs. 11.2%; OECD (2025[12])). Also the share of workers with contracts of very short duration (i.e. at most three months) substantially declined, though at 2% in 2024 it remained higher than in most OECD EU countries (EU average of 1.4%; Eurostat (2025[13])). While this certainly reflects the frequent use of very short contracts in Croatia’s tourism industry, short contracts are widespread also in industry and construction. Temporary work in Croatia has a gender dimension, with women being more likely than men to be employed on temporary contracts (10.7% vs. 7.8% in 2024) and on very short contracts (2.2% vs. 1.7% in 2024). Other forms of non-standard work are comparatively rare: self-employment has declined over the last decade to around 12% of total employment, below the OECD average of approximately 18% in 2024; part‑time work accounted only for 2.4% of total employment in 2024, much below the rate of around 15% across OECD countries on average (OECD, 2025[14]).
2.2.4. Estimates of informality vary greatly, but studies seem to point to a decline in its incidence
Assessing the magnitude of informal activity is, by its very nature, challenging, and available estimates of the Croatian shadow economy vary widely across studies and have at times been heavily contested. Standard macro‑level analysis suggests that Croatia’s shadow economy is among the largest in the EU, with estimates reaching as high as around 30% of GDP, nearly twice the EU average (see discussion in the last OECD Economic Survey of Croatia (OECD, 2023[7])). However, these numbers represent an upper bound, and even proponents of the approach that was used concede that the true size of the shadow economy may be about one‑third smaller (Schneider, 2023[15]). The method also suggests a gradual decline in the Croatian shadow economy since the early 2000s up until the COVID‑19 crisis. More conservative micro-level estimates, which focus alone on undeclared work and therefore represent a lower bound yield much smaller numbers.8 The most recent available study (Franic, Horodnic and Williams, 2023[16]) estimates that undeclared work in the private sector accounted for about 13.5% of gross value added in Croatia in 2019, down from 17.1% in 2013 (Figure 2.10). This share is lower than the average estimate across EU countries (14.8%) as well as in many European OECD countries, notably Hungary (20.1%), Italy (20.4%) and Lithuania (26.0%). The positive labour market developments over the last decade may be one of the factors behind the measured decline in informality, since lack of formal employment opportunities is generally a common reason for people to engage in undeclared work (Franic and Williams, 2014[17]).
Undeclared work in the private sector as a percentage of total gross value added, 2013 and 2019
Note: Estimates are based on the labour input method, which calculates the gap between self-reported labour supply in labour force surveys with official employment figures reported by businesses, e.g. in declarations to tax authorities, national statistical offices, or labour or social security authorities.
Source: Franic, J., I. Horodnic and C. Williams (2023), “Extent of undeclared work in the European Union”, Report prepared for the European Labour Authority, www.ela.europa.eu/sites/default/files/2023-03/Study-on-the-extent-of-undeclared-work-in-the-EU.pdf.
Survey evidence also suggests that undeclared work is probably rather widespread. In a 2019 Eurobarometer survey (European Commission, 2020[18]), 18% of respondents in Croatia indicated having paid for goods or services that likely included undeclared work in the last 12 months, one of the highest shares across European countries (EU average of 10%). By contrast, only a fraction of people admitted to having carried out any undeclared work themselves. While the low tax burden on labour in Croatia should normally reduce incentives to engage in undeclared work, people may still seek to avoid the burden from social insurance contributions, because they do not understand, or value, the entitlements that these contributions bring. Croatia’s non-means-tested minimum pension may further reduce incentives to fully declare earnings for people in the lower parts of the earnings distribution. Besides such financial considerations, lack of trust in public institutions likely plays a role: in the same Eurobarometer survey, only about one‑in-three Croatian respondents indicated having trust in the labour inspectorate and in their national tax and security authorities, much below the EU average of around 50%.
2.3.1. Population decline is going hand in hand with rapid population ageing
Population decline in Croatia goes hand-in-hand with rapid population ageing. From 2025 to 2060, the share of working-age people (15‑64 years old) in the population is forecast to decline from 62% to 57%; meanwhile the share of seniors (aged 65 and older) is expected to rise from 24% to 31% (Figure 2.11, Panel A). While peer OECD countries, such as Hungary and Slovenia, experience similar trends, these countries are ageing much faster than the OECD overall. Low fertility rates have been one driving factor of this population ageing. Croatia’s fertility rate gradually declined in the second half of the 20th century, from 2.24 in 1960 down to a historical low of 1.38 in 1999, after Croatia’s War of Independence. The fertility rate has since recovered a little, but remains much below replacement level, at an estimated 1.47 in 2025 (World Bank, 2025[19]). The number of seniors per working-age person is consequently rising, with the old‑age dependency ratio forecast to increase from 42% to 59% between 2025 and 2060 (Figure 2.11, Panel B).
Note: OECD is a weighted average. Demographic old-age to working-age is defined as the number of individuals aged 65+ per 100 aged 20‑64.
Source: Calculations based on OECD (2025), Population projections (dataset), https://data-explorer.oecd.org/s/34z (accessed 30 July 2025).
2.3.2. Croatians have left their country in large numbers since EU accession in 2013
High emigration, in particular since Croatia’s accession to the EU in July 2013, has been the main driver of Croatia’s rapid population decline. Emigration has historically been a significant phenomenon for Croatia: successive emigration waves have led Croatian emigrants to first settle in overseas destinations in North and South America, Australia, New Zealand and South Africa in the late 19th century, and then later in Western European countries following World War II and during Croatia’s War of Independence. According to CBS statistics on the most recent wave of emigration, based on people’s de‑registrations, the annual number of emigrants more than tripled between 2013 and 2017, from around 15 300 to 47 400, after which it plateaued at that level (Figure 2.12). However, these numbers likely underestimate true emigration figures by a substantial margin given that, in practice, people often do not de‑register before leaving the country – because they may consider their departure to be temporary or to keep entitlements to certain benefits or privileges. Data from the OECD International Migration Database, which rely on statistics provided by OECD destination countries, show that annual legal migration flows from Croatia to OECD countries alone doubled from 35 000 to 72 500 between 2013 and 2017. Croatia’s EU accession in 2013, after which Croatians were allowed to move freely to other EU countries,9 coincided with the peak of the labour market crisis. In the years after, scores of Croatians left the country in search of better job prospects and higher wages elsewhere, particularly after eight European countries, including Germany, lifted the remaining labour market restrictions for Croatian nationals in 2015.
Annual number of immigrants to and emigrants from Croatia, and migration rate, 2007‑2023
Source: Calculations based on data from the Croatian Bureau of Statistics, Table 7.2.2. International migrant of population of Republic of Croatia and dataset “Population Estimate”.
Particularly young and highly educated people have been leaving the country. Among emigrants in 2024, more than one‑in-two (59%) were aged 20‑44 years according to CBS statistics, and emigrants have been getting younger on average over the past decade. Reliable statistics on emigrants’ level of educational attainment are not available, but there is ample anecdotal evidence suggesting that many of them are highly educated. This is confirmed by exploratory OECD estimates, which suggest that more than one‑in‑six of all Croatian-born tertiary-educated individuals reside in OECD countries.10 Even now that unemployment rates have much declined relative to their peak in 2013, the difficult school-to-work transition for many young people in Croatia contributes to high youth emigration, a trend that significantly exacerbates Croatia’s labour shortages.
The extent to which emigration flows since 2013 have been temporary or permanent is unclear, notably because data on return migration are scarce. Research shows that some emigrants have been returning to the country, and the COVID‑19 pandemic accelerated temporary returns (Hornstein Tomić, Bagić and Kurilić, 2021[20]). In 2024, 13 290 Croatian nationals immigrated to Croatia according to CBS data, compared to 7 900 in 2017 (Croatian Bureau of Statistics, 2025[21]). There are significant potential benefits for Croatia in re‑attracting these emigrants to the country, and Croatia has taken several initiatives over the past decade to that end (see Chapter 4).
2.3.3. Immigration to Croatia has traditionally been low but recently started rising
Over the last decade, annual immigration flows have been rising, and exceeded emigration flows in 2022 for the first time in 15 years (Figure 2.12). This reflects changes in immigration policy, as Croatia facilitated the immigration and employment of third-country nationals (TCNs). This happened initially through a substantial rise in immigration quotas in 2017, followed by the introduction of a new system of labour market testing in 2021 (see Chapter 4). As a consequence, immigration numbers have more than quadrupled between 2017 and 2024, from approximately 15 500 to 70 400 people. These changes have also turned around net migration numbers, from a negative peak of ‑31 800 in 2017 to a positive 31 400 in 2024. Rising immigration numbers are entirely attributable to an increase in the number of permits issued for employment reasons; the number of family permits has remained broadly stable, at around 2 400 to 3 000 per year. As a result, the number of TCNs in Croatia for employment purposes has increased nearly twentyfold in just a few years according to permit data from the Ministry of the Interior, exceeding 200 000 in 2024, up from just 11 000 in 2017.
And for the first time, TCNs are not just coming from Bosnia and Herzegovina, Serbia and other Western Balkan countries, typically the main origin countries of immigrants to Croatia. Croatia has recently seen a surge in immigration of TCNs from Asia, notably from Nepal, Bangladesh, India, and the Philippines, immigrants who mostly come to work in low-skilled occupations in the construction sector. The share of total work permits issued to these TCNs increased tenfold from 4% to 40% between 2017 and 2024. Conversely, the share of work permits issued to Bosnian nationals, which stood at 65% in 2017, has declined by a factor of three, to around 18% in 2024. More recently, following Russia’s unprovoked war of aggression against Ukraine, a significant number of Ukrainian refugees have come to Croatia. As of August 2025, about 31 200 people from Ukraine had applied for Temporary Protection, according to statistics provided by the Ministry of the Interior.
As a country on the EU’s south-eastern border, Croatia has also been facing increasing transit migration flows since the 2015/16 refugee crisis, notably through its land borders with Bosnia and Herzegovina and Serbia. Croatia’s entry into the Schengen zone further prompted such transit migration, a trend that is unlikely to cease in the coming years (see Chapter 4 and Box 4.1).
2.4.1. Inequalities are low, and material deprivation has declined substantially
Household incomes in Croatia are comparable to those in many OECD countries, and inequalities are low. Croatia’s equivalised median disposable household income equalled to about USD 23 600 per year in 2022 after adjusting for differences in purchasing power. This would place Croatia in the lower third of OECD countries, with an income level comparable to Japan, Latvia, Lithuania and Portugal (Figure 2.13). Income inequalities are relatively low, with a Gini Index of around 0.30 in Croatia, compared to an OECD average of 0.32. This level of inequality is higher than in neighbouring Slovenia (0.24), similar to those in Hungary and Poland (0.29 to 0.27), and much below the levels observed in Latvia and Lithuania (0.34 to 0.36). Inequalities in household wealth are also relatively low in Croatia because of widespread homeownership, with the top 10% of households having owned 47% of total net household wealth in 2021 (51% on average across OECD countries with available data; OECD (2024[22])).
Annual median equivalised disposable income in USD at PPP rates and Gini of disposable, 2022
USD: US dollars, PPP: Purchasing Power Parity.
Note: Household incomes are after taxes and transfers and equivalised using the square root of the household size. Data refer to 2020 (Australia) and 2021 (Germany, Japan, the United Kingdom). OECD is an unweighted average of the 36 countries shown.
Source: OECD (2025), Income distribution database, https://data-explorer.oecd.org/s/30d (accessed 30 August 2025).
Thanks to rising wages and incomes, and declining unemployment, Croatia has made considerable progress in reducing material deprivation. The share of people experiencing severe material and social deprivation, i.e. an enforced lack of necessary and desirable items to lead an adequate life, has dropped by a factor of four since 2015, from 8.4% to 2.0% in 2024 (Figure 2.14, Panels A and B).11 This is substantially below the EU average (6.4%) and the rates observed in many European OECD countries.
Progress in reducing income poverty has been less notable. Fourteen per cent of people in Croatia lived on an equivalised household income of less than 50% the median in 2022, approximately the same share as in 2013 (13.2%). This is about 3 p.p. more than across the OECD on average (Figure 2.14, Panel C). However, the absence of a significant downward trend in measured poverty likely reflects mainly the use of a relative poverty measure, which implies that along with the rising median income also the poverty threshold increases.12
However, declining unemployment and rising wages seem to have contributed to a shift in the poverty risk between age groups – away from the working-age population and children towards seniors. Croatia’s high level of old-age poverty reflects that pension adequacy is very low for the current generation of seniors, who often had short working lives (see Chapter 5). However, given high homeownership rates, even many low-income households, and notably seniors, own their homes and may therefore be able to get by a little more easily on low incomes. Indeed, while the rate of severe material and social deprivation among seniors is about twice as high as for the overall population, at 3.8%, it is only a fraction of the income poverty rate and has declined by more than six p.p. since 2015 (Eurostat, 2025[23]).
Note: Severe material deprivation is defined as the enforced inability (rather than choice) to afford at least four of the following nine items: to pay their rent, mortgage or utility bills; to keep their home adequately warm; to face unexpected expenses; to eat meat or proteins regularly; to go on holiday; a television set; a washing machine; a car; a telephone. Poverty rates represent the share of people living on less than 50% of median equivalised household income.
Source: Eurostat (2025), Severe material and social deprivation rate by age and sex (dataset), https://doi.org/10.2908/ILC_MDSD11, Eurostat (2025), Severe material and social deprivation rate by age and sex (dataset), https://doi.org/10.2908/ILC_MDSD11 and OECD (2025), Income distribution database, https://data-explorer.oecd.org/s/30d (accessed 30 August 2025).
Given Croatia’s relatively large geographic disparities, poverty and material deprivation are almost certainly much larger in rural and remote areas than the countrywide average would suggest. While many municipalities provide some sort of in-kind support to top up the meagre cash benefits available to low‑income households, the often very patchy provision of social support for vulnerable households in rural communities is a challenge (see again Chapter 5).
2.4.2. Some minorities face disadvantage and discrimination
Croatia is a largely ethnically homogenous country, with over 91% of the population identifying as ethnic Croat, according to the 2021 Population Census. Among the 22 national minorities residing in the country, the Serb, Bosniac and Roma minorities are the largest, accounting for 3%, 0.6% and 0.5% of the population, respectively. However, these figures – which are based on self-identification – may be underestimates as minorities may choose not to reveal themselves for fear of stigmatisation. The Office for Human Rights and Rights of National Minorities of the Government of Croatia estimates, for example, that over 24 000 Roma people live on Croatian territory, 37% more than counted in the Census.
As in many European countries, the Roma population in Croatia still faces major structural disadvantages in the labour market and in society more generally, faring significantly worse than the overall population and other national minorities. According to a survey carried out in 2021 by the EU Agency for Fundamental Rights (FRA), more than four‑in-five Roma people in Croatia are at risk of poverty, against just under one‑in‑five people in the overall population. Roma people are also more likely to live in severe material deprivation (29%, against 7% in the overall population). Moreover, educational enrolment is significantly lower for Roma children: only 24% of Roma children in Croatia are in early childhood education, against 79% of the overall population, the largest difference found across the ten countries surveyed.13 While 97% of Croatians aged 20‑24 attain at least upper-secondary education, this is the case for only 39% of Roma people of the same age (FRA, 2022[24]). The socio‑economic situation of Croatia’s Roma population has improved in recent years, reflecting significant steps taken by Croatia to support Roma inclusion (see Chapter 5). However, evidence also shows that Croatia’s Roma live increasingly segregated from other Croatians, with for example 53% of Roma children attending schools where all or most students are Roma in 2021, compared to 40% in 2016. Evidence on the socio‑economic situation of other national minorities in Croatia is lacking because data on the subject are scarce, but some are overrepresented in economically weaker regions.14
Discrimination likely contributes to the economic and social disadvantages faced by the Roma minority. In the 2023 Standard Eurobarometer Survey, one‑in-five (20%) respondents in Croatia declared that they would feel “uncomfortable” if a colleague at work with whom they are in daily contact belonged to the Roma minority, a share higher than across EU countries on average (16%; Figure 2.15). Negative attitudes are relatively widespread also towards people from other ethnic or religious groups when comparing Croatia to the EU average. According to a recent report by the Ombudsperson’s Office, ethnic discrimination in Croatia primarily targets Roma and Serb communities, with one of the key challenges faced by Roma people being discrimination at hiring and in the workplace (Ombudswoman of the Republic of Croatia, 2022[25]).
Another minority that according to several recent surveys likely faces discrimination in different areas of life in Croatia are LGBTI people. According to the same 2023 Eurobarometer Survey, negative attitudes towards people based on their sexual orientation or gender identity are even more widespread than based on ethnic or religious background. One‑in-four (25%) respondents indicate that they would feel “uncomfortable” working alongside a person who is transgender or gay, lesbian or bisexual, compared to 15% and 12% across EU countries on average (Figure 2.15). The 2020 FRA Survey on LGBTI discrimination indicated that 57% of LGBTI people in Croatia felt discriminated based on their sexual orientation in eight areas of life15 in the year preceding the survey, a share nearly twice the EU‑28 average of 30% (FRA, 2020[26]). This result is in line with a similar FRA survey, carried out in 2012, according to which 60% of LGBT16 people in Croatia felt discriminated against on the grounds of their sexual orientation – the highest share across EU countries (average of 47%) behind Lithuania (FRA, 2013[27]). A 2018 World Bank survey and the 2020 FRA survey both showed that 17% of LGBTI people felt discriminated against in the workplace, a smaller share than in most South-Eastern European countries surveyed (World Bank Group, 2018[28]). However, reported discrimination is larger in other areas than employment, such as in education or daily life.
Share of respondents who would feel “uncomfortable” if a colleague at work with whom they are in daily contact belonged to the following groups, in Croatia and EU27, 2023
Note: Results are based on answers to the question “Regardless of whether you are actually working or not, please tell me how comfortable you would feel, if a colleague at work with whom you are in daily contact, belonged to each of the following groups?”
References
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← 1. The weights of the Croatian labour force survey were recalibrated in 2023 based on the 2021 census. This has caused a break in the series at the start of 2023, such that Croatian labour force statistics for 2023 are not fully comparable to those for previous years.
← 2. The direct contribution of tourism to Croatian GDP was 11.8% in 2019, the total (direct and indirect) contribution 19.5%, according to data from the Croatian Ministry of Tourism.
← 3. Croatia’s counties correspond to small (TL3/NUTS3) regions according to OECD and Eurostat classifications. All three counties are part of Pannonian Croatia, one of Croatia’s four large (TL2/NUTS2) regions (see Figure 2.5).
← 4. Two earthquakes hit Croatia in 2020, one in Zagreb on 22 March, the other near Petrinja in the Sisak-Moslavina county in Central Croatia on 29 December. One person died in the first earthquake and seven as a result of the second earthquake, and the quakes caused substantial damage to many buildings and other infrastructure.
← 5. Available data on the disability employment gap are based on the EU-SILC and much less precise than statistics based on the EU-LFS. According to those data, the estimated employment gap for people with some or severe limitation in activity was 41 p.p. in 2024, compared to an average of 24 p.p. across EU countries (Eurostat, 2025[31]).
← 6. Employment growth measured in the absolute numbers of net jobs added was highest in public administration, education and health as well as in manufacturing as the two largest sectors of Croatia’s economy.
← 7. The incidence of job strain is of the three dimensions of the OECD Job Quality Framework, measuring the quality of the working environment (Cazes, Hijzen and Saint-Martin, 2015[29]).
← 8. The authors consider their estimate to be conservative in the sense that the estimation method used focusses alone on undeclared labour relations in the form of unregistered employment and envelope wages. It does not capture other forms of informality, e.g. businesses failing to declare the entirety of their business turnover. Also, the authors exclude the agricultural sector from their analysis for data reasons (Franic, Horodnic and Williams, 2023[16]).
← 9. Upon Croatia’s accession to the EU, different transition periods were agreed in the Treaty of Accession. These offered EU Member States the possibility to temporarily restrict the labour market access for Croatian nationals and to continue applying national rules as well as those resulting from bilateral agreements with Croatia, for a maximum of seven years. This option was used by several countries, including Germany and Austria, who only lifted labour market restrictions in 2015 and 2020, respectively.
← 10. The emigration rate to OECD countries for Croatian tertiary-educated individuals is estimated at 17% as of 2020, surpassing that of any OECD country. It is defined as the ratio between the number of emigrants from a specific country living in OECD countries and the total sum of the resident population of that country plus all emigrants from that country living in OECD countries. These estimates are based on the 2015/16 Database on Immigrants in OECD Countries, 2020 United Nations data, the EU Labour Force Survey, and Census data.
← 11. Eurostat defines the severe material and social deprivation rate as the proportion of the population experiencing an enforced lack of at least 7 out of 13 deprivation items, including capacity to face unexpected expenses, to afford paying for a one‑week annual holiday away from home, to afford a meal with meat, chicken, fish or vegetarian equivalent every second day, the ability to keep home adequately warm, having an internet connection, regular leisure activities, and getting together with friends/family for a drink/meal at least once a month (Eurostat, 2025[30]).
← 12. An alternative poverty measure, Eurostat’s risk of poverty or social exclusion, gives higher rates but shows a significant decline over the last years (Eurostat, 2025[32]).
← 13. The survey was conducted in Croatia, Czechia, Greece, Hungary, Italy, North Macedonia, Portugal, Romania, Serbia and Spain.
← 14. Detailed analysis of the socio‑economic outcomes of people in Croatia by ethnicity is not possible using OECD data.
← 15. The eight areas include: looking for a job; at work; looking for housing; by healthcare or social services personnel; by school/university personnel; at a café, bar or nightclub; at a shop; when showing your ID or any official document that identifies your sex.
← 16. This survey only covered Lesbian, Gay, Bisexual and Transexual people.