Croatia is running out of people. Over the past decade, its population has contracted by nearly 400,000—a dramatic drop exacerbated by emigration, declining birth rates, and an ageing citizenry.
The outlook is no brighter; by 2050, the elderly (aged 65 and above) will comprise nearly 30 per cent of the population, and the total number of Croatians could shrink by a further 19 per cent, to just over three million people.
This demographic malaise now threatens Croatia’s economic competitiveness. The workforce shortage, projected to surpass 300,000 workers by 2035, poses profound challenges just as the country attempts a swift pivot towards greener, digital-focused industries.
Tourism, Croatia’s economic lifeline accounting for nearly a quarter of the country’s GDP, finds itself routinely short-staffed. Construction and manufacturing companies meanwhile complain of delays and increased labour costs, while essential sectors such as healthcare, social services, and ICT face acute skill shortages that jeopardise service quality and economic resilience.
To its credit, Croatia’s government is awake to these problems and has already rolled out several initiatives. Under the EU-backed Recovery and Resilience Plan, Croatia is pressing ahead with reforms aimed at improving adult education and refining labour market policies.
The authorities have introduced amendments to the Aliens Act designed to streamline the employment of foreign workers and have launched a Demographic Revitalisation Strategy. Additionally, targeted support for vulnerable populations and grants for upskilling in green and digital fields have been brought into play.
The need for targeted interventions
Yet the scale of Croatia’s labour-market troubles demands deeper intervention. Recognising this, the European Commission Representation in Croatia and the World Bank’s Croatian office recently hosted a conference dedicated to tackling Croatia’s workforce and skills shortages, dissecting both causes and potential remedies.
Drawing from EU-wide experiences and extensive World Bank research, the event spotlighted the EU’s Union of Skills initiative—an ambitious drive to elevate education and skills training across Europe.
“We have identified key areas of action, and we have focused our activities on the inclusion and activation of underrepresented groups in the labour market, providing support for skills development, training and education of employed and unemployed persons, and improving working conditions for both Croatian and migrant workers,” says Ivan Vidiš, state secretary at the Ministry of Labour, Pensions, Family and Social Policy.
Croatia’s labour shortage requires policymakers to tackle multiple fronts simultaneously. Improving workforce participation is crucial: targeted interventions to engage less active demographics—particularly youth, women, older workers, low-skilled groups, and migrants—could substantially ease labour-market pressures.
For young people, expanded apprenticeships, incentives for employers, and entrepreneurship training alongside start-up grants could help. Boosting women’s labour participation would require investing more robustly in childcare facilities, expanding long-term care networks, and developing gender-sensitive employment policies.
Migrants could better integrate through improved language and cultural training, streamlined regulatory processes, and comprehensive support services.
Skills for the new economy
Yet boosting participation alone won’t suffice. The Croatian authorities must accelerate the development of skills aligned to emerging economic priorities—green industries, digital technology, and innovation-driven fields.
Whole-day schooling, modernised curricula aligned with industry requirements, effective career guidance, and strengthened employer partnerships are paramount. Further investment in lifelong learning, upskilling, and reskilling will also prove critical.
Moreover, Croatia might benefit from international cooperation through Global Skills Partnerships, aligning training efforts with migration policies to efficiently fill skill gaps.
“What is crucial for a better understanding of the needs of the economy today, but especially in the coming period, is cooperation with the employers, in order to identify real and concrete needs for competencies for sectors that are growing such as the ICT sector, construction, tourism and transport and which we as the Republic of Croatia want to focus on in order to prepare quality and relevant educational programmes, according to which future workers for the labor market will be educated,” adds Vidiš.
The importance of accurate data cannot be overstated. Improving Croatia’s Labour Market Information System (LMIS) to better forecast skill requirements, track outcomes, and deliver user-friendly interfaces would significantly enhance workforce development strategies.
“People are the strength of the Croatian economy. Building on investments supported by the Recovery and Resilience Plan and the European Social Fund plus (ESF+), such as the innovative voucher system, Croatia can further invest in its education, upskilling and reskilling policies, to improve competitiveness and promote inclusiveness,” notes Zrinka Ujević, head of the European Commission’s Representation in Croatia.
Harnessing untapped potential
Croatia’s demographic pressures and skill shortages may seem daunting, but they are far from insurmountable. A proactive approach to leveraging domestic human capital, coupled with targeted migration and robust investment in education and training, could transform Croatia’s economic outlook.
As Anna Akhalkatsi, World Bank division director for the European Union, succinctly puts it, “If Croatia can further advance policies to harness the untapped potential of the domestic labour force, attract foreign workers across the skills spectrum and elevate the skills of both current and future workers, it could pave the way for stronger economic growth and increased competitiveness in this changing world of work.”
It’s now up to the country’s policymakers to act decisively to prevent demographic headwinds from becoming economic roadblocks.
Photo: Dreamstime.
