Government presents its latest package of anti-inflation measures

Government adopted its 11th package of anti-inflation measures at Thursday's cabinet session. Among the measures are a freeze on wages and a fifty percent tax on so-called excess profits. Not all of government's social partners are pleased with the new package.

The goal of the package is to cool the ‘overheating’ economy, in the hope that reduced consumer spending will curb the growth in inflation. Prime Minister Andrej Plenković expects the measures reduce inflation to around two percent: "This is important in protecting Croatian citizens from the spillover of the energy crisis to other prices, to ensure a fairer distribution of the burden and to bolster the affordable housing policy."

The package includes a freeze on wages. And while government says it will honor the agreed to public sector salary increase for this year, Finance Minister Tomislav Ćorić says social partners will have to reduce their appetites: "First of all, in the context of the collective bargaining coming in the second half of this year, and with respect to the circumstances we find ourselves in, we want them to show solidarity and to send them a clear message that the period ahead is one in which we should all work together to fight inflation."

As expected, this did not go over well with unions. The President of the Independent Croatian Trade Unions, Dražen Jović: "We think that's the wrong message, given that seventy percent of citizens earn a salary that is below the national average. This is a massive blow to them, given that the majority of our citizens spend all their income on energy and food."

The measures also include an additional tax on those who are deemed to have made excessive profits on the back of the spiraling inflation. Minister Ćorić: "Excess profits, if there were any, will be taxed at a rate of fifty percent in the coming period."

However, employers called for caution in applying such a measure. The President of the Croatian Employers' Association, Mislav Balković: "We should not punish the most attractive segment of our economy, which invests the most, because they may have increased profitability and productivity."

Source: HRT