Original scientific paper
https://doi.org/10.3935/rsp.v3i3.460
Developmental Stage of the Croatian Economy and the Welfare State
Stjepan Zdunić
; Ekonomski institut, Zagreb
Abstract
The purpose of the article is to define some elements of the economic recovery in Croatia animed at the social priority of overcoming the poverty of large groups of the Croatian population, especially of retired and unemployed people. Retired and unemployed people have suffered the most from economic recession and war. The average monthly pension is little more than 40% of the monthly average net wage of an employee in the legal economic sector. The average gross wage of an employee in Croatia is not lower than the average gross wage in the other transition countries of Central Europe. In order to overcome social tensions and solve the problems of poverty it should be necessary to adopt a policy of economic recovery with the aim of realizing high growth rates of the economy as a prerequisite to solving general social and structural problems. In this respect, an expansive fiscal policy should be implemented, using deficit financing to increase aggregate demand, especcially by financing an additional retirement fund and public investment, as for instance housing investment. The standard of living of retired people should be improved by increasing their average monthly pensions to the level of 70 per cent of their previous average monthly net wages or of the current average net wage. It would therefore surpass the poverty line by about 30 percentage points. An expansive fiscal policy should be coordinated with monetary and exchange rate policies to achieve the competitivness of the export sector on the European market. The tax system and budget expenditure policy should be reformed and restructured in the following way: the criteria should be to avoid an increase in unit labor costs in the business sector, to keep competitivness, and to raise capacity utilization of the economy. The tax system reform should include a tax system, budget expenditure should be restructured to decrease military expenditure and to offset public investment with a long term repayment period and high capital output ratios. The main objective of this policy would be a relaxation of social tensions of the population, better public acceptance of a new capitalist system in order to avoid an old-fashioned image of eighteen century capitalsm.
Keywords
Hrčak ID:
29849
URI
Publication date:
1.3.1996.
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