Croatia faces a dual labor market challenge: a shortage of workers and inadequate skills within the existing workforce. These issues are exacerbated by demographic pressures and emigration, institutional factors limiting labor force participation, and education/training systems misaligned with labor market needs. To address labor shortages, the government has intensified its efforts to activate more people to work, including Croatian youth not in employment, education or training (NEET).
With a NEET rate of 11.8 percent, down from a peak of 22.3 percent in 2013, Croatia almost reached the EU average of 11.2 percent in 2023. However, young Croatians in NEET status vary by age, gender, and education level and face a multiplicity of challenges. The largest NEET group consists of those with secondary vocational education training (VET), followed by those with tertiary education. More than half of the NEET population are women. Regional disparities also exist, with lower youth unemployment in Zagreb and the Adriatic region compared to Pannonia and the North of the country.
To inform government policies, this report analyzes the broader economic context and the root causes of youth unemployment and inactivity in Croatia. It identifies key barriers to employment faced by Croatian youth, reviews the government’s current efforts, and offers actionable recommendations to address these issues and better support young people in accessing the labor market.
On the labor demand side, the lack of quality jobs, a restrictive business environment and limited access to finance stand out as main obstacles. Lack of job-relevant skills (especially among VET graduates), insufficient work experience, and caregiving responsibilities (disproportionately affecting women) affect the supply side. Institutional deficiencies include fragmented information on job prospects, services that are not effectively reaching the most vulnerable, data gaps in NEET identification and limited outreach.
The Croatian authorities have responded with a set of policy measures to help get young people into jobs, learn, or start a business. Building on the government’s progress the report offers three key recommendations to increase youth employment:
Strengthening the Labor Market Information System (LMIS). This would involve upgrading the LMIS by integrating real-time data, forecasting future skills needs, tracking program outcomes, and adopting a user-friendly public interface.
Deploying lifelong human capital development solutions. Actions under this policy area include dynamically adjusting the education system to meet evolving needs and promote inclusivity, expanding apprenticeships and internships, increasing employer engagement in curriculum development, and boosting upskilling/reskilling programs with a focus on green and digital skills.
Tailoring services and their delivery to increasingly diverse target groups. The report highlights the need to augment the services provided by the Croatian Employment Services (CES) by introducing data-driven profiling and targeted outreach strategies, including financial incentives to encourage registration. The report also calls for an increasing adoption of digital and AI solutions to optimize service delivery while implementing proactive digital outreach to accelerate results.
For these recommendations to have full impact, they would need to be accompanied by demand-side measures that could improve productivity and provide better jobs, alongside measures aimed at alleviating family responsibilities and addressing embedded social norms.
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