Croatia joined the European Union in July to indifference among EU citizens and Croats alike. The reason – the economic crisis. The twenty years since the transition to a market economy began have introduced the population to unemployment and job insecurity. Workers who remember the “Socialist economy" era alternate between resignation, nostalgia and hopes for an economic reboot. A state enterprise in the throes of privatisation paints a telling picture.

The scent of fennel permeates the boiling hot industrial suburb of Split, the biggest city in the Adriatic coastal region of Dalmatia. It’s late July and the temperature is topping 30°C. Lorry tyres pound the parched earth to dust. But no fennel grows here. The panorama takes in Croatia’s hitherto densest and dirtiest industrial area – Kaštela bay whose prime sea and rail links made it a magnet for industrial development in the 1960s.

In the bay lies the Vranjic peninsula, formerly known as Little Venice for its beauty and home to Croatia’s highest concentration of people suffering asbestos-induced diseases, far and away the main cause of occupational sickness. Their illnesses can be traced to working and living for more than half a century alongside factories and shipyards where asbestos was used. The Salonit factory alone handled up to 25 000 tons of asbestos each year between 1970 and 1990.

Today, that factory like many others in Kaštela bay is no more. The house roofs in Vranjic are no longer grey, but the traditional red of Dalmatia. The sea is a different colour, too. Formerly a muddy green like any city river, it is once again a deep blue hue – Adriatic blue. Twenty years on from the change of political system in Croatia – from communism with a human face, as Yugoslav communism was known, to multiparty democracy — Kaštela bay is unrecognisable. Plant closures meant thousands of job losses. Cleaned-up surroundings have enabled the industrial suburb of Split to branch out into tourism, now the country’s main money-spinner. The 2012 National Bank figures reported tourism revenues as amounting to €6.8 billion, accounting for 15% of GDP.

With 5 835 kilometres of coastline and 1 185 islands, Croatia has a lot going for it. In Yugoslavia, tourism was a means of getting foreign exchange earnings, and the communist model of self-sufficiency meant it
produced everything it needed, from TVs to locomotives. Workers had a job for life, and not uncommonly lived in company-owned housing. They were looked after and had job security. With the political changes of the early 1990s, that security went. Public enterprises were privatised, the labour market was liberalised and many have found themselves unable to get work. Many more fear losing the job they have. The global economic crisis has only made the job situation worse and Croatian unemployment now stands at around 19%.

Who’ll come through and who’ll fail

Dalmatia is Croatia’s biggest tourist region. Once a mere transit town on the road to the islands, Split has become a tourist destination since its historic old town acquired UNESCO World Cultural Heritage status. But although Split, with its population of 178000, welcomed up to 30000 visitors each weekend in July, you won’t find them in the district that is redolent of fennel. And yet they all have a connection with it through taste. For this is home to Dalmacijavino – Croatia’s oldest producer of wines, spirits and soft drinks and it is to "travarica" – traditional Croat brandy – that the fennel is added.

Marija Vrgoč’s family – like most Dalmatian families – has been drinking Dalmacijavino beverages for generations. Her tipple is "pelinkovac", a traditional liqueur; her husband is a wine man; and the whole family drinks Dalmacijavino’s best known product – the orangeade sold under the brand name "Pipi". Marija greets us in a canary yellow t-shirt printed with the face of a freckled blond girl not unlike Pippi Longstocking, the face of the drink "Pipi". She wears the t-shirt all day, she says, as free advertising for the business. She works in one of Dalmacijavino’s 15 tied outlets.

Marija was born in 1959 and started work for Dalmacijavino right out of secondary school, pleased to have found a job with an established, good company. She worked in the Finance Department for 34 years. "We were a big community. There were 1 300 of us and we went through it all together – marriages, children, divorces and deaths. We had secure jobs and steady incomes; I liked going to work", she says. With the break-up of Yugoslavia and the war, Dalmacijavino lost its huge market. But it kept going while other big public companies closed around them. Things got worse with the shambolic transition to a market economy and management failures. Dalmacijavino was unable to get paid for the products sold by its distributors, while being landed with paying high costs to the state. By the mid-1990s, the debts were starting to pile up.

There was no telling who would come through and who would fail. They tried to pull through with loans, but sank further into debt. Interest payments rose and by the end Dalmacijavino had racked up debts of 1.2 bil lion kuna (about 157 million euros), 75 million (10 million euros) of it in unpaid wages. Sup pliers were refusing to supply them with raw materials and essential bottling equipment and by 2009, production was at a virtual halt. The workforce was down to 550 employees, wages were paid late from the end of 2008 on, and not at all by February 2012.

"It was awful going in to work for three years and having nothing to do. And for months we didn’t get paid either. People had debts; their bank accounts were frozen; their electricity was cut off; they started withdraw ing into themselves and stopped helping one another", says Marija. After several days of strikes and protests in the streets, it declared bankruptcy in May 2012. Under Croatian law, managers have to file for bankruptcy 60 days after the company’s accounts have been fro zen, yet Dalmacijavino – a state-owned con cern – did not file for bankruptcy until ten years after its accounts were frozen.

"It’s the same in many other companies. Some had their bank accounts frozen 15 years ago but haven’t filed for bankruptcy. That’s how you buy industrial harmony", says offi cial receiver Perica Mitrović. When the bank ruptcy petition was filed, all the employees were laid off, but when the official receiver re-started production, they knew that some of them would keep their jobs.

"That’s when it really got awful. Work ing alongside people that you’ve known for decades and not knowing which of you was for the chop. It was a really horrible struggle for survival", said Marija. She came in to work one morning and saw on the notice board that the 232 names of those who would be kept on did not include hers.

"It hit me really hard, physically. For a year, I couldn’t get out of my chair. I was in a severe depression. I couldn’t move, I avoided people I felt to blame for losing my job. My husband tried to get me to go for psychological counselling, but I thought the only thing that could help me was to get my job back". Marija started work again this summer when Dalmacijavino opened a new shop and called her. Although previously an office worker, she doesn’t mind working in a shop as a sales assistant, she says. "I’d even clean the floors for Dalmacijavino if I had to so long as I was working," she says with a smile.

Dalmacijavino’s plight typifies the economic transition ongoing since the 1990s. Big state-owned enterprises have built up debts; they have eked out an existence for years, not paying employees’ wages, only to be privatised or simply closed down. The new owners have slashed the workforce or just "shut up
shop", being more interested in stripping assets than in production. Protecting workers’ health was not a concern. What is unusual for a former state enterprise, by contrast, is Dalmacijavino’s resurgence. The company’s output is now covering its costs and it is looking for new owners. Two public auctions in August and September failed to produce a buyer willing to pay the asking price of 276 million kunas (37 million euros). The workers may be happy at present, but their fate rests in the new owner’s hands.

80 000 unpaid workers

Trade unions estimate that from 70 000 to 80 000 people in Croatia are working without getting paid. Finance Minister Slavko Linić has claimed that some 14 000 enterprises are not paying their employees’ wages, 2 000 of which are more than six months in arrears. But no psychosocial support has been provided.

This situation has led to a rise in psychological problems among employees caused by job loss, uncertainty, stress, unpaid work, etc. Stress-related neuroses and emotional disorders are the fifth most-frequent illness with 2 844 cases compensated by Croatia’s National Institute for Health Insurance last year, according to the 2012 report on sick leave. Added to this are another 8 537 people on sick leave for psychosocial and socio-economic reasons. There are no data on the causes of these illnesses, nor any significant research on the psychosocial health of workers in Croatia. Despite all the negative indicators, these problems are the no man’s land of occupational health.

"The State has not recognised the need to create teams to provide workers with social and psychological support, even though one illness in four is work-related – in most cases, depression, anxiety, cardiovascular system diseases, Type II diabetes, high blood pressure, duodenal ulcer, obesity, alcohol and other addictions", says Marija Zavalić, Director of the Institute for Health and Safety at Work.

Data from the National Institute for Health Insurance and the National Institute of Public Health suggest that mental and behavioural disorders are widespread among workers in the 20-59 age group. The share of hospital admissions for the total population of Croatia is 7.9%, compared to 12.9% in this group. In terms of total days’ in-patient treatment, psychological disorders occupy first place with a share of 24.9%. "These are worrying figures that point to a need for effective prevention of psychosocial disorders in the workforce," concludes Marija Zavalić.

"Lack of resources, but also employee unwillingness to cooperate for fear of the sack, mean that no major research has ever been done on workers’ psychosocial health," she laments.

What research has been done for particular job types, however, shows that employees in all groups questioned show signs of work-related stress, have a higher prevalence of mental problems, behavioural disorders and fatigue, and that most respondents link work accidents to concentration failures caused by fatigue, lack of sleep and depression. Employees’ most common complaints are fear of being made unemployed, poor work organisation, inability to influence the production process, but also a weakening of social ties.

No doctor or social worker

Croatia ranks above the European average for the number of workplace fatalities and working days lost due to work accidents, prompting Labour and Pensions Minister Mirando Mrsić to insist that health and safety at work must be oriented towards prevention (see interview p. 11). The aim is to bring down the work accident rate by 5% a year, the occupational disease rate by 10% a year, and the number of employees taking early retirement on disability benefit by 10% a year up to 2016.

There is nothing in these measures for the prevention of psychosocial risks at work. The Minister’s reply to my question on this, sent from his press office, was that such assistance is necessary and "should be provided through the company’s human resources department". He also stressed that workers at risk of redundancy could get appropriate assistance from the National Employment Agency’s outreach units. The Agency advises employees on how to write a CV and conduct themselves in a job interview, but not how to get over being thrown out of work.

Marija Zavalić argues for setting up hospital centres for psychosocial support to workers modelled on the post-traumatic stress syndrome centres created after the wars of the 1990s.

But these are all proposals and solutions for the future, whereas what thousands of people are worrying about today is losing their job or not getting paid at month-end, and no-one is concerned to find out how they are coping. Under socialism, all big firms had company occupational medicine specialists and social workers who were also responsible for workers’ mental health. There were also company doctors working in medical centres attached to specific firms.

Since the changes towards democracy, spending cuts mean that companies no longer have a works doctor or in-house social worker. The doctors we talked to reported seeing many workers complaining of chest pain, tremors, general unwellness, headache, and heart flutters. They are unaware that these are all symptoms of anxiety. Likewise, psychiatrists say that psychiatric hospitals fill up with workers whenever a large company goes bust.But that’s a taboo subject. Every worker, like every citizen with health insurance, can seek psychological counselling as part of general health care. Most suchconsultations end after 10 minutes with a prescription for tranquilisers. It is very hard to get free therapy because psychiatrists and psychologists in the public health system are overwhelmed and a consultation with a private therapist costs from 250 to 400 kunas (33 to 53 euros) an hour, which cash-strapped workers cannot afford.

Then there is the specific problem that long before they stop paying wages employers have also often stopped paying social security contributions. Dalmacijavino paid no social security contributions for its workers for seven years, despite being a publicly-owned company. Official receiver Perica Mitrović argues that unions share some responsibility for agreeing to the payment of net wages. Dalmacijavino trade union official Lukica Bucat’s answer is they would never have got the money for employee social security contributions in negotiations with the state and the workers needed something to live on.

Steeped in debt as it was, Dalmacijavino had a health insurance contract with the costly Sunce polyclinic. Franjo Ivčević, a manual worker born in 1956, doesn’t care whether the money handed over was, as rumoured, in bribes or commissions because the insurance saved his life. Wages were in arrears. He and his wife both worked at Dalmacijavino. They lived with their two unemployed adult sons and his wife’s father, whose pension they were living off. He was unable to sleep at night for worrying about the future. In early 2012, he went for his annual health check at the Sunce polyclinic where he was diagnosed with a malignant kidney tumour.

"If I hadn’t had that check-up, I wouldn’t have found out I was ill. Employees whose employers don’t pay their social security contributions sometimes get turned away by public hospital doctors but they have no money to see a private doctor", he said during our talk in the boiler house, which like the rest of the plant is run-down but well-ventilated and clean. Franjo was operated on successfully and returned to work. He said he and his colleagues would certainly have needed psychological counselling.

"If workers in Western Europe had it like us, the hospitals would be overflowing. Just think about working and not getting paid, which is situation normal for a lot of people. First we went through the war, then privatisation, then production tailed off; it hardens you. People get used to expecting the worst, which is why they don’t ask for psychological counselling. They aren’t used to anyone asking them how they’re doing", says Franjo.

As we talk, 1 500 people are laid off from Brodosplit, Croatia’s largest shipyard, a kilometre and a half down the road. In the late 1980s, the shipyard employed 7 500 people. Today, it has 3 500. All the shipyards had to be privatised to qualify for joining the EU. The new owner has promised the state 

to keep 2 000 employees on until 2018. On Friday, 26 July, they learned who would be going and who would keep their jobs. Brodosplit’s independent trade union official Pavle Matošić says people are at the end of their tether, in tears and not knowing what to do with themselves. "I hope it doesn’t end up in tragedy. Obviously, people in this state would need counselling", says Matošić.

Franjo Ivčević gazes towards Kaštela bay. He says that as recently as 15 years ago, the factory smoke rising above the bay hid the view of the hills that overlook it. Now you can clearly see the quarried slopes and silent chimneys. And beneath the surface of the pellucid-looking sea lurks a high concentration of mercury and untreated hazardous industrial waste•.

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Croatia: painful lessons in market economics