THE PROMISES of the Croatian leading political parties before the elections can be described in two words: economic horror.

Unrealistic and expensive promises that lead to a huge increase in government expenditure and additional reinforcement of the country's role in the economy are key policies of the political manifestos in the upcoming elections, the analysts assessed. 

Although it was expected, especially in the midst of the coronavirus crisis, from the Croatian political parties to offer manifestos that would finally modernize Croatia, the analysts said that ideas belonging to the past rather than the present are dominating the electoral campaign. In doing so, they think of redistributing social wealth, with an emphasis on the role of the state and downgrading the market.

Andrej Grubisic: Ideas of the Croatian Democratic Union (HDZ) and Social Democratic Party (SDP) are doctrines of the left that brought us to the bottom of the EU

"Ideas presented in the electoral campaign by HDZ and SDP, as well as other parties, are entirely doctrines of the left that brought us to the bottom of the EU, in company with Bulgaria. Their manifestos are dealing with wealth distribution, but not how to create wealth. Those are populist ideas with the growth of statism," an adviser Andrej Grubisic told Index.

HDZ and Restart actually have very similar manifestos

The Croatian Business Advisory Services and Public Affairs (MKPS) has recently dealt with the political manifestos focusing on the three strongest options on the 2020 Croatian Parliamentary Election - HDZ, Restart, and the Homeland Movement. Their analysis concluded that HDZ and the Restart coalition have very similar manifestos based on minor changes, without significant reforms. Somewhat more original are in the Homeland Movement, but its manifesto has something in common with the rest of them - the ideas cost a lot, and we don't know who will pay for it, or how.

"The manifestos issued by the political parties are, above all else, a part of the political marketing, so keeping all the promises shouldn't be expected. Moreover, the political fragmentation will result in the government in which the dominant political option will strongly depend on smaller partners," the MKPS warned.

HDZ and the Homeland Movement leader Skoro promise to ban Sunday work. That's an economic suicide 

As announced before the campaign, the parties and coalition will fight battles over one of the questions in this year's parliamentary election - Sunday work ban. Despite the fact that many shop owners have been warning for months that Sunday work ban will not only significantly reduce their revenue but will also lead to many lay-offs, i.e., an increase in the unemployment rate. 

Regardless of that, the HDZ's manifesto promises a Sunday work ban with an opportunity for shops to work up to 14 Sundays per year. They go even further in the Homeland Movement and advocate Sunday work ban as some sort of a setpoint. 

A substantial part of the Croatian politicians clearly isn't thinking that the matter of Sunday work can be solved differently, using less radical measures, as the entrepreneurs suggest. Besides, Sunday work doesn't concern only shops, but also other businesses that have to work on Sundays.

We would have to pay around 20 billion kunas (approximately €2.5 billion) to realize the HDZ's ideas 

The MKPS expert's calculations indicate that the realization of the idea with which HDZ entered the election race would cost around 20 billion kunas or more than 13 percent of last year's state budget. The price of fulfilling these promises would, in fact, be an increase of the state expenditure by 14 billion kunas (around €1.8 billion), along with the potential drop of income up to six billion kunas. However, HDZ holds high expectations for withdrawing money from the EU funds, but that is a process that requires intensive work and time, MKPS warned.

MKPS calculated that easing the tax burden offered by the Restart coalition, costs at least six billion kunas. When it comes to the Homeland Movement, the advisory company reminded, they offer its voters a reduction in state expenditure by 15 billion kunas (around €2 billion). At the same time, by fulfilling their promise about easing the tax burden, they would make the state budget shorter by a few billion kunas. 

"What the political parties are offering would be an increase in the state expenditure by 30 billion kunas (around €4 billion), and we need its reduction," Grubisic pointed out.

There are no serious indications in the manifestos which would suggest serious state expenditure cuts, and the privatization isn't even mentioned

Grubisic also added that political manifestos aren't announcing cutting down the state expenditure nor a serious easing the tax burden or strengthening competitiveness in systems such as education, health care, and pensions, which would give people a choice. He is also dissatisfied with the lack of privatization agenda. 

"As far as I can see, the state is still planning on being involved with the production of chocolate through the ownership in Podravka, as well as the nautical tourism through the ownership of ACI, and banking, because it owns certain banks. Moreover, its goal is to acquire ownership over Ina again. Some of their absurdities were suggesting establishing a state platform for booking or renting apartments," Grubisic noticed. 

Three leading political parties promise the minimum wage growth which would lead to an avalanche of bankruptcies and lay-offs

Even if we set aside the ideas that certain analysts call absurd, there is enough material in the manifestos themselves for rating them as populistic. The example is bidding for minimum wage growth. 

HDZ announced the minimal wage growth from the current 3250 (around €430) to 4250 kunas (about €560). In comparison, the Restart coalition promises the minimum wage of 4000 kunas (around €530), and the Homeland Movement as much as 5000 kunas (around €660).

Of course, no one questions the fact that one can barely survive with the minimum wage in Croatia. The entrepreneurs have already warned that many of them can barely pay it and that a sudden minimum wage growth by a government's directive would lead to an avalanche of bankruptcies and lay-offs. That means that many who now have minimum wage would lose even that too.

A substantial increase in salaries is completely unrealistic in the midst of the coronavirus crisis

HDZ's program even announces raising the average Croatian salary to 7,600 kunas (€1000). According to the Croatian Bureau of Statistics's available data, the average net salary for April reached 6,622 kunas (around €877) in Croatia, which is around a thousand kuna less than the promised 7,600 kunas. Given the dynamics of salary growth in Croatia in the last couple of years, which was mainly the result of mass emigration and the lack of labor force, the goal of average salary growth for almost a thousand kunas hasn't looked unachievable just until recently.

However, the coronavirus crisis reversed the trends, so the salaries in the country are now dropping. Besides, economists also warned that many companies, due to a decrease in demand and lack of a real tourism season, will have to resort to the salary reduction model to avoid mass lay-offs.

Fairy tales about the 100,000 new workplaces while the coronavirus crisis closes the existing ones

Taking that into consideration, HDZ's promises about increasing the number of employed people by 100,00 almost sounds like science fiction. The Croatian labor market was hit hard by the coronavirus crisis, and around 50,000 people lost their jobs in a very short time. Economists have already warned that it would have probably been even more if the government hadn't helped with the financial grants, and now with the shorter working week. 

Around 150,000 people are now unemployed, and according to the analysts, the number is expected to rise, especially after summer. Expectations of 400,000 unemployed people by the end of the year doesn't seem realistic now, but most economists think that 200,000 is the most probable number. Promising 100,000 new workplaces in these conditions and in a tourism-dependant country which was brought to the knees by the coronavirus pandemic and in which production investments can be counted on the fingers of one hand, doesn't sound very serious. 

They don't promise the VAT reduction anymore, but...

As opposed to the last parliamentary elections, where the political parties tossed around promises about the VAT reduction, it won't happen this time. It seems that everyone accepted the fact that it's difficult to reduce the rate of VAT when you have public expenditure this high. 

HDZ promises a VAT reduced rate of 13 percent to all food, which would cost the state budget at least two billion dollars, as calculated by MKPS. The Restart coalition would reduce it to 10 percent and expand it to a number of goods and services, which would cost billions of kunas, as the advisors calculated. 

Where have the Eurozone and Schengen disappeared?

In all of their promises, the leading political parties didn't forget the pensioners, so they announced the increase in pensions. Given the state of our pension system, that promise is really going to be challenging to fulfill.

In the end, one should say that it's good that economic topics finally dominate the upcoming parliamentary elections. The problem lies only in the fact that most of the promises are difficult to fulfill. On the other hand, the lack of topics in connection to the EU is surprising, such as entering the Eurozone or Schengen, which will have to find its way to the focus of the Croatian politics in the upcoming period, regardless of who is going to win the elections.