Leveraging Immigration for Croatia’s Prosperity Leveraging Immigration for Croatia’s Prosperity February 2025 Disclaimer © 2025 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Internet: www.worldbank.org Some rights reserved This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The bound- aries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. 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Design and typesetting: Kuna zlatica, www.kunazlatica.hr Cover photos from left to right: © hxyume / iStock © PeopleImages / iStock © Aleksandar Malivuk / Shutterstock © GBJSTOCK / Shutterstock © alvarez / iStock © Alessandro Biascioli / iStock © Tran Van Quyet / iStock © SrdjanPav / iStock © Darren Baker / Shutterstock 3 Table of Contents Table of Figures.................................................................................................................................................... 5 Boxes....................................................................................................................................................................... 6 Abbreviations and Acronyms ........................................................................................................................ 7 Acknowledgments ............................................................................................................................................ 8 Overview................................................................................................................................................................ 9 1 / Background and Context...................................................................................................................... 25 1.1. Demographic Challenges in Croatia .........................................................................................26 1.2. Immigration as an instrument to fill labor shortages .........................................................30 1.3. Profile of immigrants in Croatia.................................................................................................... 34 1.4. Integration challenges for migrant workers............................................................................. 36 1.5. Attitudes towards immigration .................................................................................................... 38 2 / Diagnostic of the Legislative and Institutional Immigration System in Croatia............... 41 2.1. Framework to analyze the immigration system ..................................................................... 42 2.2.1 Domestic legal system........................................................................................................... 45 2.2.2 Enhanced cooperation models with third countries.................................................. 48 2.2. Legislative framework for immigration......................................................................................44 2.3. Institutional setting for immigration...........................................................................................50 2.4. System of entry and stay of immigrants ................................................................................... 53 2.4.1 The de jure system of entry and stay ................................................................................ 53 2.4.2 Enforcement of the legal system of entry and stay..................................................... 56 2.5. Access to services for economic migrants.............................................................................. 57 3 / Policy Actions to Enhance the Benefits of Migration in Croatia............................................. 65 Strengths and opportunities of the current migration system to enhance migration 3.1.  as a development strategy ........................................................................................................... 66 3.2. Policy recommendations.................................................................................................................71 4 / Deep Dives into Two Actionable Policies for Skills Enhancement and Integration of Foreign Workers....................................................................................................................................... 79 4.1. Global Skills Partnerships (GSPs) ................................................................................................80 Global Skills Partnerships in the context of the migration agenda in Croatia....80 4.1.1.  4.1.2. Designing a Global Skills Partnership.............................................................................. 82 4.1.3. The feasibility of a Global Skills Partnership for Croatia ...........................................90 4.2. Deep dive (II): Improving digitalization and integration of services for migrants .......94 4.2.1. Developing a monitoring system to track integration milestones and tailor adequate services................................................................................................................. 94 4.2.2.  Digitalizing and integrating the service delivery system to support the integration of migrants........................................................................................................97 Leveraging Immigration for Croatia’s Prosperity 4 Conclusions .....................................................................................................................................................102 Literature...........................................................................................................................................................104 Annexes.............................................................................................................................................................. 111 Annex 1: System of entry, stay employment, and integration of asylum seekers and refugees......................................................................................................................................................112 Annex 2: One-stop-shop in Global Skills Partnerships................................................................116 5 Table of Figures Figure O.1: Population trends in Croatia................................................................................................ 9 Figure O.2: Ratio of registered unemployment to job vacancies................................................. 10 Figure O.3: Projected changes in labor supply and demand in Croatia (2022-35)................... 11 Figure O.4: Immigration of foreign-born individuals in Croatia.....................................................12 Figure O.5: Profile of foreign-born individuals in Croatia................................................................13 Figure O.6: Integration challenges and public perceptions............................................................14 Figure O.7: Migration challenges in Croatia....................................................................................... 16 Figure O.8: Measure of integration policies across EU countries.................................................17 Figure 1: Population trends in Croatia.................................................................................................. 27 Figure 2: Demographic and labor market trends.............................................................................. 28 Figure 3: Emigration of skills in high demand....................................................................................29 Figure 4: Projected changes in the labor supply and demand in Croatia (2022-35)...............30 Figure 5: Immigration of foreign-born individuals in Croatia..........................................................31 Figure 6: Migration flows in Croatia and regional correlation with labor market conditions...................................................................................................................................... 32 Figure 7: Foreign-born individuals in Croatia, by region of origin................................................ 33 Figure 8: Trends in the age and gender of foreign workers in Croatia........................................ 34 Figure 9: Education level and migration status among the population aged 25-64............... 35 Figure 10: Number of residence and work permits issued per sector ....................................... 36 Figure 11: Employment rates based on sex and nationality........................................................... 37 Figure 12: Integration indicators of foreign workers in Croatia.................................................... 38 Figure 13: Trends in public opinion on immigration.........................................................................39 Figure 14: Framework to analyze the immigration system in Croatia......................................... 43 Figure 15: Legal domestic framework for migration and international agreements.............45 Figure 16: Institutional framework of Croatia....................................................................................50 Figure 17: The process of hiring a non-EU national in non-shortage occupations in Croatia....................................................................................................................................................... 53 Figure 18: The process of hiring a non-EU national in shortage occupations in Croatia......54 Figure 19: Comparison between permits issued and foreign workers Registered in Croatia................................................................................................................................. 57 Figure 20: User journey map for the foreign worker........................................................................ 58 Figure 21: Health care coverage of foreigners in selected northern Mediterranean EU countries - 2020...................................................................................60 Figure 22: CES leaflet on living and working in Croatia................................................................... 61 Figure 23: CES diagnostic tools for user employability...................................................................62 Figure 24: Migration challenges in Croatia......................................................................................... 67 Figure 25: Policy recommendations......................................................................................................71 Figure 26: A GSP model............................................................................................................................ 81 Figure 27: The key steps for designing a GSP..................................................................................... 82 Figure 28: The choice of sector depends on labor market needs and development goals.. 83 Figure 29: Viable country partners for a GSP have similar labor needs and existing ties.... 84 Figure 30: Underlying principles for bilateral training and migration agreements.................86 Leveraging Immigration for Croatia’s Prosperity 6 Figure 31: International organizations support with matching mechanisms for workers and jobs......................................................................................................................................... 88 Figure 32: Eurostat migrant integration and inclusion dashboard..............................................95 Figure 33: Lead indicators set by the Cluj municipality for tracking refugee outcomes......96 Figure 34: UK What Works centers........................................................................................................ 97 Figure 35: Diagnostic tool for options of working and living in Germany..................................98 Figure 36: One-stop-shop for digital access to services for Ukrainians in Cluj, Romania. 100 Figure 37: The Swedish Migration Agency entry to integration support................................ 100 Figure 38: Nudging messages to the unemployed with relevant offers based on their profiles......................................................................................................................................... 101 Figure A2: Potential usage of one-stop-shop services for the Global Skills Partnerships’ program beneficiaries..............................................................................................................................116 Boxes Box 1. Digital nomads................................................................................................................................46 Box 2. Rapid Growth of Employment Agencies in Croatia............................................................. 55 Box 3. Service provision for migrants in the municipality of Zagreb...........................................59 Box 4. Language courses offered by business associations and recruitment agencies.......64 Box 5. Examples of framing migration strategies to the public.................................................... 72 Box 6. Lessons learned from international experience................................................................... 87 Box 7. The role of technical and vocational education and training (TVET).............................. 91 7 Abbreviations and Acronyms ALMP Active Labor Market Policies BIP Beneficiaries of International Protection CBS Croatian Bureau of Statistics CEE Central and Eastern Europe CES Croatian Employment Services CISOK Career Information and Counseling Centers CV Curriculum Vitae DIOC Database on Immigrants in OECD and Non-OECD Countries DNA Digital Nomad Association EEA European Economic Area EMN European Migration Network EQF European Qualifications Framework ESG Environmental, Social, and Governance EU European Union EURES European Network of Employment Services GDP Gross Domestic Product GIZ German Agency for International Cooperation GSP Global Skills Partnership HZMO Croatian Institute for Pension HZZ Croatian Employment Service in local name ICT Information and Communications Technology ILO International Labor Organization IMF International Monetary Fund IOM International Organization for Migration LFS Labor Force Survey LMIS Labor Market Information System MIPEX Migration Integration Policy Index MROSP Ministry of Labor, Pension System, Family and Social Policy NGO Non-Governmental Organization OECD Organization for Economic Cooperation and Development  SCD Systematic Country Diagnostic SILC Survey on Income and Living Conditions THAMM Towards a Holistic Approach to Labor Migration Governance and Labor Mobility in North Africa TVET Technical and Vocational Education and Training UK United Kingdom UN DESA United Nations Department of Social and Economic Affairs UNDP United Nations Development Programme USA United States of America VET Vocational Education and Training WB World Bank Leveraging Immigration for Croatia’s Prosperity 8 Acknowledgments This report is authored by a World Bank team led by Mauro Testaverde and Daniel Garrote Sanchez, and including Ana Budimir, Matthew C. Martin, Helly D. Mehta, Andrea Sitarova, and Iva Tomic. The material reflects bilateral consultations and workshops conducted in the Republic of Croatia, where the team received feedback and inputs from government repre- sentatives, development partners, international donors, academia, civil society organizations, and key sectoral experts. The team would like to acknowledge the excellent collaboration and dialogue with the coun- terparts and technical teams in the Ministry of Labor, Pension System, Family and Social Policy, the Ministry of Demography and Immigration, the Ministry of Interior, the City of Zagreb, the Croatian Employment Service and the Central State Office for Croats Abroad. The team would also like to sincerely thank all the stakeholders met for their time, inputs, and valuable insights, particularly colleagues from the International Organization for Migration, the Croatian Chamber of Commerce, the Croatian Employers’ Association, the Faculty of Humani- ties and Social Sciences - University of Zagreb, the Centre for Peace Studies, the Non-Resident Nepali Association, Are you Syrious, and AB Support. The team appreciates managerial support and guidance from Jehan Arulpragasam (Country Manager, Croatia) and Paolo Belli (Practice Manager, Social Protection and Jobs for Europe and Central Asia). During the preparation of the report, the team also received insightful comments and useful material from World Bank colleagues, including Pablo Acosta, Josip Funda, Harry Moroz, Dhushyanth Raju, Indhira Santos, Ana Simundza, and Nithin Umapathi. Overview 9 Overview Leveraging Immigration for Croatia’s Prosperity Croatia is at a critical demographic crossroads. Against a backdrop of an aging and declining population, Croatia is transitioning from a country of emigration to one increasingly relying on foreign workers, with profound implications for the nation’s economic and social fabric. While recent reforms have strengthened the migration governance structure, significant challenges remain in the selection, employment, and integration of foreign workers. This Overview sum- marizes the report titled "Leveraging Immigration for Croatia's Prosperity", which assesses Croatia’s migration system and proposes strategic policy actions to maximize the positive impact of immigration while addressing key challenges for Croatia’s economy. Demographic headwinds are generating labor shortages Croatia faces significant demographic headwinds, constrained by continuous population decline and rapid aging. Over the last decade, the country has lost 400,000 residents (figure 1a)—a staggering figure that positions Croatia among the top five of the European Union’s most affected nations. This trajectory stems from falling birth rates and sustained net migra- tion outflows, particularly affecting rural and economically disadvantaged regions. If current trends continue, projections suggest a further 19.1 percent drop in population over the next three decades. The demographic decline is compounded by rapid aging. The proportion of el- derly people—those aged 65 and older— surged from 17.9 percent in 2012 to 22.5 percent just ten years later, with forecasts indicating it could reach 30 percent by 2050. Figure O.1: Population trends in Croatia a. Population change by 10-year period b. Working age population and dependency % working population Old-age dependency ratio (rhs) ratio 0,68 0,38 100,000 100.000 68% 38% 0,36 0,67 36% 0 0 67% 34% 0,34 0,66 -100,000 -100.000 65% 32% 0,32 30% -200,000 -200.000 64% 0,65 0,3 Percent 28% -300,000 -300.000 63% 0,64 26% 0,28 -400,000 24% 0,26 -400.000 62% 0,63 22% 0,24 -500,000 -500.000 61% 20% 0,62 2002-1992 2012-2002 2022-2012 0,22 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 0,61 0,2 natural change of population 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 net migration % working population total population change old-age dependency ratio (rhs) Source: European Commission Eurostat database. Leveraging Immigration for Croatia’s Prosperity 10 These demographic shifts have created unprecedented pressures on Croatia’s labor market, with increasing shortages of workers and skills. The ratio of job vacancies to the registered unemployed population has plummeted in the last decade, indicating continued tightening in the labor market. Since 2016, job openings have consistently outnumbered available unemployed individuals (figure 2), leaving many businesses struggling to fill crucial roles. Recent surveys show that Croatian firms are 50 percent more likely to report difficulty filling positions compared to their peers in Central and Eastern European countries.1 The situation has been particularly acute in specific sectors, with construction and hospitality experiencing the highest vacancy rates, as well as strategic sectors such as healthcare and research. Firms have increasingly struggled to find cross-cutting digital skills.2 Geographically, high-emigration regions have seen the largest reduction in the ratio of employed to vacancies (figure 2), particularly Pannonian Croatia. This highlights the link between emigration, particularly of highly skilled workers, and labor and skills shortages. Figure O.2: Ratio of registered unemployment to job vacancies 4,5 4.5 4,0 4.0 4.0 3,5 3.5 3.5 3.0 3,0 3.0 2.5 2,5 2.5 2.0 2,0 2.0 1.5 1,5 1.5 1.0 1,0 0.5 1.0 0,5 0 0.5 0,0 21 22 6 19 7 18 3 0.0 15 3 2015 011 2017 2 04 17 20 2007 6 2012 9 2010 08 2005 05 2020 14 0 Q 2008 200 01 2018 201 2023Q3 201 0 0 2013 201 2021 20 20 20 20 20 20 20 20 20 2006 20 20 2011 20 20 23 2 2016 2 20 2014 2019 2004 2009 2022 Source: Croatian Employment Services (CES) (2004 – 2023). Croatia High emigration NUTS3 regions Croatia croatia Low emigration NUTS3 regions High emigration NUTS3 high emigration regions nuts3 regions Low emigration NUTS3 low emigration regions nuts3 regions Looking ahead, Croatia might need more than 300,000 workers by 2035. The demand for labor will continue to increase in the coming years fueled by economic growth, although at a moderate pace. Estimates of net job creation based on projections of economic activity show a mild increase of around 36,000 workers between 2022 and 2035.3 On the other hand, given natural population trends, projections of the labor supply estimate an average annual decline of around one percent during the same period,4 leading to a cumulative drop in the workforce of 1 European Commission (2023). 2 World Bank (2022a). 3 CEDEFOP (2023). Projections based on historical elasticities of employment to GDP growth (0.2) in developed economies (ILO, OECD, and World Bank, 2015), and given the expected long-term economic growth in Croatia during the 2030s (1.7% in per capita terms or 1.1% in absolute terms, World Bank, 2022b), lead to slightly larger cumulative numbers – 65,000 net additional jobs between 2022 and 2035. 4 UN DESA (2024). Overview 11 291,000 people by 2035. As a result, Croatia can face an increase in labor shortages of 327,000 workers in the absence of policy changes in the coming decade (figure 3). Figure O.3: Projected changes in labor supply and demand in Croatia (2022-35) Thousands 100 50 0 Labor - 50 Shortage - 100 327,000 - 150 Workers - 200 - 250 - 300 - 350 Supply Supply Demand Demand Source: Own elaboration based on UN DESA (2024) and CEDEFOP (2023). Immigration is being leveraged as a potential solution to address skills needs Demographic challenges can be addressed through different channels. Croatia’s 2033 Demo- graphic Revitalization Strategy outlines different key prioritizes. One focuses on stimulating the environment for families and youth, in order to help increase the birth rate and labor force participation. Currently, there is an untapped workforce among several groups such as women, youth, and older individuals who work less than their European peers (World Bank, 2024). The 2033 strategy also aims to reduce emigration outflows and promote the return of part of the diaspora and their descendants. However, some of these policies, even if successful, will take time to be effective and will not be enough to fill the large projected gaps in the workforce. Croatia has increasingly turned to immigration as a solution to these workforce challenges. Foreign-born residents comprise 12.7% of the population, though many are long-term settlers from neighboring countries who have already obtained Croatian nationality. Recent years have witnessed a sharp surge in labor immigration, with annual first-time work permits for foreign citizens rising from under 10,000 before 2016 to close to 80,000 in 2023. In per capita terms, Croatia went from being among the bottom five countries in the EU with the lowest issuance of first-time work permits for migrants by the time of EU accession to now ranking second (figure 4a). The refugee population has also grown significantly, reaching 27,000 in 2023, largely due to displacement from Ukraine following Russia’s invasion in 2022. This shift has reversed historical migration patterns, resulting for the first time in a positive net migration balance since 2022 (figure 4b). This means that Croatia now has more individuals coming into the country than leaving. Leveraging Immigration for Croatia’s Prosperity 12 Figure O.4: Immigration of foreign-born individuals in Croatia a. First-time work permits per capita Malta Croatia Cyprus Lithuania Poland Slovenia Hungary Portugal Luxembourg Ireland Slovakia Finland Spain Denmark Romania Latvia Sweden Netherlands Estonia Czechia Greece 2013 Germany Bulgaria 2023 France Austria Belgium Italy 0 10 20 30 40 50 60 work permits per 1,000 inhabitants b. Migration inflows and outflows in Croatia 80,000 80.000 70,000 70.000 60,000 60.000 50,000 50.000 40,000 40.000 30,000 30.000 20,000 20.000 10,000 10.000 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 immigrants Immigrants Emigrants emigrants Source: European Commission Eurostat database and CBS (2024). Note: Immigrants are those arriving in Croatia from abroad and emigrants are those that leave Croatia to reside in a third country. The profile of immigrants has significantly evolved in recent years. While historically dominat- ed by workers from neighboring Western Balkan countries, Croatia is now receiving migrants from more diverse places, with the fastest growing group being South and East Asians, par- ticularly from Nepal, India, the Philippines, and Bangladesh. The new wave of foreign workers is predominantly male in their prime age (figure 5), with an average age of 37.3 years. Overview 13 Figure O.5: Profile of foreign-born individuals in Croatia 20% 70% male have tertiary education mostly 40% 27% 14% low of work in hospitality in -skilled permits are in constructiong manufacturing Migrants provide important economic benefits to Croatia by addressing critical labor short- ages and bolstering the welfare system. Foreign workers are actively contributing to the domestic economy. Generally, they have high employment rates — in some cases exceeding those of native Croats — because their legal status is often tied to employment. Immigrants are primarily concentrated in high labor demand sectors, with over 80 percent working in construction, tourism and hospitality, and manufacturing. Beyond their direct labor contribu- tions, migrants stimulate the economy through local consumption and tax payments. Recent simulations suggest that increased immigration yields modest but positive welfare effects for both non-migrant residents and Croatia as a whole (Bossavie et al. 2024). There are relevant challenges associated with immigration The arrival of an increasingly diverse group of foreign workers may also create challenges if not well-managed. Inadequate information among foreign workers leaves them vulnerable to exploitation and prevents them from reaching their full potential. Many arrive without suitable skills, while language barriers and cultural differences can impede their integration into Croa- tian society. Evidence suggests substantial skills underutilization in the labor market. Foreign workers are twice as likely as Croatian nationals to work in positions below their qualification Leveraging Immigration for Croatia’s Prosperity 14 level,5 not only due to limited language skills, but also to imperfect recognition of foreign cre- dentials. Immigrants also face higher risks of poverty, substandard housing conditions, and labor rights violations. Barriers to immigrants’ integration not only have negative repercussions for immigrants themselves but also for Croatia’s economy. When immigrants cannot fully utilize their skills and experience, the country suffers reduced productivity. For instance, when an immigrant engineer works as a technician, Croatia loses the opportunity to tap their expertise, particu- larly valuable in sectors that demand those skills. This underutilization of talent and lower productivity leads to lower earnings, which in turn reduces both tax revenues to finance public services and consumer spending that can support economic growth. Imperfect integration also affects public sentiment toward immigration, which has become more negative in recent years. Public support for immigration has declined, with only 33 percent of citizens viewing it positively in 2023, down from 42 percent in 2021, placing Croatia below the EU average. This decline coincides with accelerated migration inflows. Attitudes vary sig- nificantly across demographic groups, with older, less educated, and rural residents holding more negative views. Recent surveys highlight growing concerns about cultural differences and integration, though many still acknowledge the economic necessity of foreign workers. Without addressing immigrants’ integration challenges, public attitudes toward migrants may deteriorate, potentially threatening social cohesion. Figure O.6: Integration challenges and public perceptions a. Share of vulnerable workers b. Public opinion on immigration 40% For the culture 35% 2020 30 24 47 30% 25% 2023 39 22 39 20% 15% 10% 2020 36 24 41 economy For the 5% 0% Share of workers with Overcrowding rate Share of persons at risk Share of Overcrowding of poverty occupational downgrading Share of or exclusion 2023 39 22 39 workers with rate persons occupational at risk of downgrading poverty or 0 20 40 60 80 100 exclusion % foreign born domestic born bad neutral good Source: European Commission Eurostat database and European Social Survey. 5 22.5% of foreigners in 2023 were overqualified for their jobs compared to 13.5% of natives, according to Eurostat data. Overview 15 Croatia has developed its immigration system in recent years Croatia has made significant strides in developing a comprehensive immigration system over recent decades, with particular emphasis on meeting evolving labor market needs. The country’s Strategy for Demographic Revitalization until 2033 aims to achieve a sustainable pos- itive net migration balance, marking a crucial shift in the national policy. The 2020 Aliens Act eliminated the quota system and introduced exemptions from labor market tests for shortage occupations and seasonal work. Further reforms in 2025 aim to extend work permit durations from one to three years, simplify the process of changing employers, and implement stricter employer requirements regarding financial standing, worker qualifications, and domestic-to-for- eign employee ratios. Croatia has also been proactively developing bilateral labor and social security agreements with several countries in the OECD, the Western Balkans, and Türkiye to facilitate labor mobility and ensure the portability of benefits for migrant workers. Croatia’s streamlined and partly digitized permit process has become a competitive advan- tage, particularly in sectors facing labor shortages. The efficiency of the system is evident in its processing times of two to eight weeks for cases not requiring labor market assessment, notably faster than other EU countries such as Germany or Spain, which can last one to six months (IOM, 2024). The expedited processing times is a key reason for migrants increasingly to choose Croatia over other EU destinations despite receiving lower wages. The country has also made some progress in enhancing migrant services to improve the overall migration experience. Foreign workers with valid documentation receive full access to Croatia’s healthcare system, and the Croatian Employment Service offers various active and passive labor market programs to eligible migrants, including access to unemployment benefits. Recognizing language as a crucial barrier to workplace effectiveness, the government has introduced an innovative voucher scheme for Croatian language training. This voluntary program requires employer contributions of 30-50 percent of total costs, demonstrating a collaborative approach to integration support. Important gaps in the migration system remain Challenges remain in several areas that have implications for the foreign workers’ labor market outcomes in the country. These challenges include: (i) gaps in the governance frameworks and imperfect coordination between stakeholders; (ii) limitations in the selec- tion process of foreign workers to import the skills needed in the labor market; (iii) limited provision of services to foreign workers that hamper their integration process; and (iv) data gaps that prevent more informed migration policies from being implemented. Some gaps exist in Croatia’s immigration governance framework. An overarching migra- tion strategy to coordinate responsibilities across government and non-government actors is currently not in place. This results in a fragmented system with limited coordination, especially between the national and local levels. The country has also yet to develop key bilateral agreements with major source countries of immigrant workers such as Nepal, India, and Bangladesh, and a stronger oversight of the work carried out by recruitment Leveraging Immigration for Croatia’s Prosperity 16 Figure O.7: Migration challenges in Croatia Data Integration Gaps in collecting, transferring and service delivery and using data for migration The system of supporting services policy making. for migrants does not address the increasing integration needs. Governance Selection ○○ Gaps in the migration process framework. Room for better ○○ Imperfect coordination alignment to attract across stakeholders. skills needed in the ○○ Limited oversight of labor market. recruitment agencies. agencies. The latter generate potential risks for migrants and impact on the availability of the required skills in the labor market. The current system involves recruitment agencies in both Croatia and the source country, which drives up costs for migrants, and could result in indebtedness and the acceptance of substandard working and living conditions by migrants. The selection process of foreign workers has room for improvement to better align with labor market needs. While progress has been made, a vision for the types of migrants and entry channels required could be further developed. Challenges include delays in re- sponding to labor market needs, limited incentives to attract higher skills, and information asymmetries between firms and workers. This has led to persistent skill mismatches and vulnerabilities for foreign workers. Integration support for foreign workers remains fragmented and underdeveloped. Language training, credential recognition, and navigation of local bureaucracies are key challenges, especially for newcomers from more geographically distant countries of origin. Economic migrants in Croatia heavily rely on support from their employers. In general, services are fragmented across different public and private providers, and migrants face barriers in ac- cessing them due to language, imperfect information, and digital divides. Overall, Croatia Overview 17 lags behind EU countries in terms of integration policies (figure 8). This can negatively impact migrant workers, employers, and broader social cohesion. Limited data availability hinders the implementation of evidence-based policies. Currently, data on the composition and profile of the migrant population is limited. Challenges include lack of detailed demographic and skills data, fragmentation and limited standardization of data, imperfect interoperability of systems across ministries, and delayed information sharing with local authorities. Figure O.8: Measure of integration policies across EU countries 100 90 80 70 60 50 40 MIPEX Index (0-100) 30 20 10 0 L C L A V T L ZE N R K E U T X U N LT T LD N YP K EU A P A ES BE SW IR PO U PR LU ES LT N R R SV LV U FR BG IT FI SV RO M C C N G H D A H D Source: MIPEX (2020). Note: The MIPEX score is based on a set of indicators covering eight policy areas (labor market mobility, family reunification, education, political participation, permanent residence, access to nationality, anti-discrimination, and health). A maximum of 100 is awarded when policies meet the highest standards of equal treatment. Policymakers can further invest in actions to better harness the potential benefits of immigration Croatia can strengthen its migration policies, drawing on global practices and innovative models. There are five broad areas where policy makers can focus their efforts to better har- ness the economic and social benefits of well-managed immigration for long-term economic development: (1) enhancing the governance framework; (2) strengthening regulations on re- cruitment agencies; (3) better aligning the selection process to economic needs; (4) further investing in integration support for migrants; (5) and better leveraging technology and data to improve the overall migration system. ○○ Croatia can develop a comprehensive migration strategy that identifies priority migrant pro- files crucial for its economic development, supported by concrete action plans, timelines, and adequate funding. This strategy should encompass mechanisms to attract, train, and integrate foreign workers effectively, incorporating public awareness campaigns to align public sentiment with national priorities. Leveraging Immigration for Croatia’s Prosperity 18 ○○ To reinforce formal migration pathways, Croatia can expand its network of bilateral and multilateral labor and social security agreements with key sending countries. These agree- ments can facilitate data sharing, ensure the portability of benefits, and strengthen legal protection for mobile workers. ○○ Global Skills Partnerships (GSP) present a particularly promising model for Croatia. This in- novative approach involves training workers in their countries of origin, focusing on the skills demanded in both sending and receiving nations. GSPs ensure mutual benefits, addressing brain drain concerns and meeting Croatia’s specific skills needs. The GSP framework aligns naturally with Croatia’s objectives for a more responsive immigration system to labor mar- ket needs. The country can leverage its established shortage occupation list, recent TVET reforms, existing relationships with origin countries, and various financing mechanisms to implement an effective GSP model. #1 Policy Recommendations Responsible Institutions Ministry of Demography and Immigration, Ministry Developing migration and of Interior, Ministry of integration strategies Labor, Pension System, accompanied by Family and Social Policy, detailed action plans Ministry of Science, Education and Youth, and Strengthening local governments the immigration governance Ministry of Labor, Pension Broadening the scope and infrastructure coverage of Bilateral Social System, Family and Social Policy, Ministry of Foreign and Security Agreements European Affairs, CES Develop skills training Ministry of Labor, Pension and mobility programs System, Family and Social (for example, Global Policy, Ministry of Foreign and Skills Partnership) European Affairs Overview 19 #2 Policy Recommendations Responsible Institutions Improving the licensing and regulation of recruitment agencies Strengthening regulations and enforcement on Strengthening monitoring Ministry of Labor, recruitment agencies Pension System, Family and incentive mechanisms and employers for recruitment agencies. and Social Policy Monitoring and enforcement mechanisms, particularly for employers ○○ Croatia needs to establish recruitment agencies’ licensing and monitoring to reduce migrants’ costs and enhance their legal protection. This includes developing comprehensive training of agencies, improving performance transparency with rating systems, and promoting industry self-regulation through professional associations. ○○ For employers, Croatia should invest in robust monitoring and enforcement mechanisms to ensure labor law compliance. This requires implementing risk-based inspections and balancing penalties for violations with incentives for compliance. Leveraging Immigration for Croatia’s Prosperity 20 #3 Policy Recommendations Responsible Institutions Enhancing the Labor Aligning Market Information CES, Ministry of Labor, Systems (LMIS) to include Pension System, Family and the selection process forecasts of skill and Social Policy of foreign workers with occupation demands labor market needs Making the application more transparent, trackable, Ministry of Interior, CES and streamlined ○○ Croatia can strengthen its labor market information system through comprehensive data collection, advanced analytics, and expanded consultation with employers and unions. A robust system would enable migration policies to better address projected shortages and regional investment plans. The UK’s Migration Advisory Committee offers a valuable model for assessing skills needs and informing responsive immigration policies. ○○ The selection process would also benefit from greater transparency to ensure that both em- ployers and migrants clearly understand the eligibility requirements and evaluation criteria. Overview 21 #4 Policy Recommendations Responsible Institutions CES, Ministry of Science, Better matching and usage Education and Youth, of foreign workers' skills Ministry of Foreign Affairs, Croatian Agency for Science and Higher Education Ensuring a more effective matching of Improving access skills and integration to services for Ministry of Labor, Pension of migrants in the integration of System, Family and Social foreign workers in Croatia the labor market Policy, CES, Ministry of Interior Foster one-stop-shop and case management Local governments approaches ○○ Croatia can improve information provision to migrants during recruitment, offering detailed job information and requirements in migrants’ native languages. This approach reduces costs, protects workers, and improves job-skill matching. ○○ Strengthening systems to recognize foreign qualifications is essential for maximizing mi- grant employability and addressing skills shortages. This requires enhanced cooperation with origin countries on quality assurance standards. ○○ Integration support for migrants can be expanded through comprehensive service provision such as orientation programs, language training, and improved access to labor market pro- grams. International evidence shows that language courses integrated into initial training programs significantly improve labor market outcomes. ○○ One-stop-shop service centers offering centralized information and services through case management models can provide more effective assistance. The delivery can be enhanced by offering services in multiple languages and through various channels. Local authorities can lead outreach efforts and service innovation, while central authorities can encourage local experimentation, evaluating and scaling up successful initiatives. Leveraging Immigration for Croatia’s Prosperity 22 #5 Policy Recommendations Responsible Institutions Implementing digital Ministry of Interior, Leveraging data solutions to enhance Ministry of Justice, Public integrated migration and technology for management Administration and Digital Transformation, CES effective migration systems Ministry of Interior, Enhancing data CBS, CES, different collection efforts ministries with roles on migration ○○ Enhanced data collection on immigrants would enable more informed policy making. A centralized dashboard tracking immigrant profiles, skills, and integration outcomes can help optimize service delivery to meet evolving needs. Local authorities can develop tailored monitoring systems that feed into national frameworks. ○○ Administrative process digitization can streamline procedures, improve service access, en- hance inter-agency coordination, and support enforcement efforts. Encouraging migrants’ adoption of the Croatian eID is crucial for facilitating digital government interactions. ○○ A more data-driven, technology-enabled, and coordinated approach to migration governance can position Croatia to better address its evolving labor market and demographic challenges. Overview 23 Looking ahead: a collaborative future As Croatia navigates the complexities of immigration, it is essential for both policy makers and citizens to recognize the potential for growth and innovation that a diverse workforce can bring. By embracing immigration as an important human resource strategy, the country can tackle labor shortages and stimulate sustainable economic development. The policy measures discussed in this overview can help Croatia create a more effective, equi- table, and resilient immigration system that benefits both native and foreign-born populations while supporting the country’s long-term development goals. Success will require sustained commitment from all stakeholders, but the rewards—a more vibrant, thriving Croatia—are well worth it. Leveraging Immigration for Croatia’s Prosperity 24 1/ Background and Context Leveraging Immigration for Croatia’s Prosperity 26 This chapter analyzes the main immigration trends that have emerged in Croatia in recent years and how attitudes toward migration have evolved in light of these patterns. Section 1.1 provides a brief context of the demographic challenges that Croatia faces that have led to in- creasing labor shortages and demand for foreign workers in the country. Section 1.2 describes trends in the arrival of foreign-born individuals in the country (both economic migrants and forcibly displaced populations), comparing them to other countries in the European Union. It also depicts asymmetries in the arrival of migrants across host regions in Croatia. Section 1.3 analyzes the profile of foreign workers in Croatia, including their age, gender, and education levels. Section 1.4 focuses on immigrants’ labor market outcomes and integration challenges in Croatia. Finally, section 1.5 studies perceptions of the Croat population toward migration, and how they have changed since the increase in inflows of foreign workers in the last years. Section 1.1. Demographic Challenges in Croatia Croatia is at an important turning point, with demographic trends showing a continued de- cline in its population. Over the last three decades, the population has progressively fallen by 560,000 people, including a decrease of 400,000 in the last 10 years alone (left panel of figure 1). During that period, the country ranks fifth in terms of demographic decline among European Union countries, only after Latvia, Lithuania, Bulgaria, and Romania. The decline in Croatia’s population can be partly explained by demographic shifts. On the one hand, the country’s birth rate fell from 9.8 to 8.8 births per 1,000 people between 2012 and 2022. On the other hand, death rates have accelerated from 12.1 to 14.8 per 1,000 people during the same period. In addition, net migration outflows (the number of people leaving the country minus the number of people arriving) significantly contributed to the population decline and accelerated in the decade until 2021. This is further supported by the fact that the population has fallen more rapidly in underdeveloped and less populated regions (right panel of figure 1), which at the same time have experienced higher emigration rates. Overall, the decline in the population due to natural changes (based on trends in fertility and mortality) and aging is expected to continue in the future. Projections indicate a further decrease in the population of 19.1 percent over the next 30 years (SCD, 2024). Background and Context 27 Figure 1: Population trends in Croatia a. Population change by 10-year period b. Population changes and poverty rates by region 100,000 100.000 20 00 10 Population change over 2011-21 (percent) -100,000 -100.000 0 -200,000 -200.000 -10 -300,000 -300.000 -20 -400,000 -400.000 -30 -500,000 -500.000 -40 2002-1992 2012-2002 2022-2012 -50 natural change of population -60 net migration 0 20 40 60 80 100 total population change Poverty rate in 2011 (percent) Source: Eurostat database and World Bank (2024a). The decline of the population is compounded by progressive aging in the country. Between 2012 and 2022, the proportion of the population aged 65 and above rose from 17.9 percent to 22.5 percent, and it is expected to reach 25 percent and 30 percent of the total population by 2030 and 2050, respectively.6 Furthermore, the old-age dependency ratio climbed from 26 percent in 2011 to 35.6 percent in 2022 (left panel of figure 2) and it is forecasted to be above 50 percent by 2050. This puts substantial strains on Croatia’s healthcare and pension systems, public spending on elderly care and welfare services, and increases the demand for workers in these sectors. As a result of these changes, labor supply is not keeping pace with labor demand. Despite recent increases among the working-age population, labor force participation remains low, particularly among the youth which, at 44 percent, stands among the lowest in Europe.7 This, combined with population decline and aging, has resulted in a reduction of the labor supply. Since 2016, the number of annual vacancies has been higher than the annual average of reg- istered unemployed, showing a tightening in the labor market, a trend that has been exac- erbated by EU accession. According to the European Commission Business and Consumer Survey (2023), the proportion of firms experiencing difficulties in filling open positions is 50 percent higher in Croatia than the average in Central and Eastern European (CEE) countries.8 6 OECD (2023a): Economic Survey, Croatia. 7 European Commission (2024). 8 European Commission Business and Consumer Survey (2023). Leveraging Immigration for Croatia’s Prosperity 28 Emigration has been a key contributor, with the ratio of unemployed to vacancies dropping more rapidly in high-emigration regions, the strongest example being in Pannonian Croatia (see figure 2, panel b). Figure 2: Demographic and labor market trends a. Working age population and dependency b. Ratio of registered unemployment to ratio vacancies 68% 38% 4.5 36% 4.0 67% 34% 3.5 65% 32% 3.0 30% 2.5 64% 28% 2.0 63% 26% 1.5 24% 1.0 62% 22% 0.5 61% 20% 0.0 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 % working population Croatia old-age dependency ratio (rhs) Low emigration NUTS3 regions High emigration NUTS3 regions Source: Eurostat database and Croatian Employment Services (CES) (2004 – 2023). In recent years, shortages have emerged in certain critical sectors and in particular skills. At the national level, shortages have been found across different skills and education levels (EURES, 2022; CES, 2021). Importantly, these shortages are reported to be due to both a lack of workers and needed skills.9 At the regional level, there are variations depending on economic structure and emigration patterns. Vacancy rates (the number of unfilled job openings over the number of unemployed) are the highest in the construction and hospitality sectors.10 In terms of skills, emigration has been associated with skills shortages, including specialized skills pertinent to the country’s Smart Specialization Strategy (S3) sectors like pharmaceuticals, as well as cross-cutting digital skills that are essential both within S3 sectors and beyond (World Bank, 2023). According to data from LinkedIn, the highest net migration of skills was observed in general soft skills such as problem solving, along with various ICT-specific abilities like human-computer interaction and development tools. High-level specialized skills, including pharmaceutical manufacturing, genetic engineering, and organic chemistry, were also among those most frequently lost to migration (see figure 3). Key industries such as research, hospital and healthcare, computer software, IT services, and pharmaceuticals are also experiencing substantial net outmigration. When compared to other recent EU member states, Croatia’s rate of skill migration is high, especially for the top three skills that are leaving the country. Furthermore, changes in the 9 IMF (2024). 10 Ibid. Background and Context 29 demand for skills are accelerating due to megatrends such as the green and digital transitions, increasing the risks of skills mismatches and further skills shortages in the coming years.11 Figure 3: Emigration of skills in high demand Editing System Administration Economics Pharmaceutical Manufacturing Psychology Computer Networking Animation Information Management Organic Chemistry Translation Customer Experience Teamwork Data Science Computer Hardware Genetic Engineering Development Tools Administrative Assistance Time Management Human Computer Interaction Problem Solving -1200 -1000 -800 -600 -400 -200 0 Skills migration (Outflows per 10,000 people) Specialized Industry Skills Tech Skills Business Skills Disruptive Tech Skills Soft Skills Source: World Bank (2023). Moving forward, projections show that more than 300,000 workers will be needed by 2035. Negative demographic trends are expected to continue in the coming years. According to the United Nations Department of Economics and Social Affairs (UN DESA 2024), the population in Croatia will fall by an average of 0.6 percent annually between 2022 and 2035, while the drop in the working-age population will be even higher (around 1 percent annually). This means that workforce availability in the country will drop by 291,000 workers during that period (see figure 4), equivalent to 12 percent of the current labor supply. On the other hand, estimates based on projections of economic activity show a mild increase in the demand for labor, which would require 36,000 additional workers by 2035 (CEDEFOP, 2023)12. As a result, labor shortages in Croatia can increase by 327,000 workers in the absence of policy changes. 11 OECD (2023b): OECD Skills Outlook 2023. 12 Projections based on historical elasticities of employment to GDP growth (0.2) in developed economies (ILO, OECD, and World Bank, 2015), and given the expected long-term economic growth in Croatia during the 2030s (1.7% in per capita terms or 1.1% in absolute terms, World Bank, 2022b), lead to slightly larger cumulative numbers – 65,000 net additional jobs between 2022 and 2035. Leveraging Immigration for Croatia’s Prosperity 30 Figure 4: Projected changes in the labor supply and demand in Croatia (2022-35) 100 36 50 0 - 50 Labor - 100 Shortage (Thousands of workers) - 150 327,000 - 200 Workers - 250 - 300 -291 - 350 Supply Demand Supply Demand Source: Own elaboration based on UN DESA (2024) and CEDEFOP (2023). Section 1.2. Immigration as an instrument to fill labor shortages Croatia has a sizable immigrant population, historically driven by inflows from neighboring countries. By the end of 2022, there were more than 490,000 foreign-born individuals residing in Croatia, or close to 12.7 percent of the total population in the country. This share is slightly lower than the average in the European Union (EU) (see figure 5, panel a). However, a large majority of foreign-born individuals have Croatian nationality and have been in the country for a long time, migrating along ethnic lines after the breakup of former Yugoslavia. When con- sidering migrants as those with a foreign nationality instead of being born in another country, the number is significantly lower (around 70,000 people in 2022). An increasing number of foreign-born individuals have been arriving in Croatia in recent years in response to the existing demographic challenges. More recent immigration trends show that foreign workers have increasingly become a source of labor used to fill shortages. The number of new work permits for foreign citizens has rapidly increased from less than 10,000 per year until 2016 to close to 80,000 in 2023.13 Between 2019 and 2023, more than 250,000 first-time work permits were approved. In the first six months of 2024, 21,000 more new permits to foreign workers were issued than in the same period of the previous year. On an EU-wide scale, Croatia has the largest share of immigrants arriving for work purposes (more than 90 percent), while in the majority of other countries these work-motivated flows represent less than half of the permits granted to foreigners – with a much larger role played by family reuni- fication, education and for other reasons (see figure 5, panel b). 13 Data from Eurostat (first permits by reason, length of validity and citizenship, migr_resfirst). There are no precise statistics on the number of foreign workers in Croatia, so this is approximated by the number of work permits issued. However, these two might differ for two reasons. First, a migrant might change employers and/or the permit might be issued for a period shorter than a year, so the migrant might obtain more than one work permit in a given year. Moreover, some permits are never used or workers who receive them might leave for a third country, leaving the position vacant. Background and Context 31 Figure 5: Immigration of foreign-born individuals in Croatia a. Share of foreigners in EU countries (2022) European Union Luxembourg Malta Cyprus Ireland Austria Sweden Germany Belgium Estonia Spain Portugal Netherlands Slovenia Denmark France Latvia Croatia Greece Italy Finland Lithuania Czechia Hungary Slovakia Romania Bulgaria Poland 0 10 20 30 40 50 Share of foreign-born individuals (as % of total population) b. Type of permits issued in EU countries (2023) European Union Croatia Romania Malta Lithuania Slovakia Hungary Slovenia Poland Cyprus Portugal Czechia Latvia Denmark Finland Luxembourg Spain Bulgaria Sweden Estonia Netherlands Ireland Italy France Germany Belgium Austria Greece 0 20 40 60 80 100 Share of foreign-born individuals (as % of total population) Employment Family Education Other reason Source: Eurostat database. Since 2022, these trends have made the migration balance in Croatia positive, with more peo- ple arriving than leaving. While migration outflows have remained relatively stable at around 40,000 people leaving Croatia every year since 2016, migration inflows have accelerated in line with the increase in the issuing of work permits (see figure 5, panel a). As a result, there was a net inflow of 11,000 people in 2022 and around 30,000 in 2023, reaching a historic high. Leveraging Immigration for Croatia’s Prosperity 32 Inflows of international migrants are unevenly distributed across the country. Between 2021 and 2023, the largest concentration of immigrants was seen in the City of Zagreb (22 percent), Split-Dalmatia County (12 percent), and Istria County (10 percent). As a percentage of the population, the cumulative inflows of migrants during the same period were the highest in Istria (8 percent), Zadar (6.3 percent) and Lika-Senj (5.9 percent) while they were the lowest in Bjelovar-Bilogora (1.4 percent) and Virovitica-Podravina (1.7 percent). As panel b of figure 6 shows, there is a strong correlation between the labor market conditions in a given county and its capacity to attract inflows of foreign workers, with those with a lower ratio of unem- ployment over job vacancies receiving more immigrants. This highlights labor market needs as a key driver to attract inflows of foreign workers to a given county. Figure 6: Migration flows in Croatia and regional correlation with labor market conditions a. Migration inflows and outflows in Croatia b. Migration inflows and labor market conditions 80,000 9 R² = 0.3342 Migration inflows 2021-23 (as % of the 70,000 8 HR036 60,000 7 50,000 6 HR033 HR032 40,000 5 HR050 HR031 HR034 HR037 30,000 4 HR062 HR035 population in 2020) HR065 HR024 20,000 3 HR061 HR027 HR026 HR028 HR063 10,000 2 HR064 HR023 HR025 0 HR022 HR021 1 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 Immigrants 0.0 0.5 1.0 1.5 2.0 Emigrants Ratio of registered unemployment over vacancies (2021-23) Source: CBS (2024). Note: On figure 6b, every point represent a county in Croatia. HR021 = Bjelovar-Bilogora; HR022 = Virovitica-Podravina; HR023 = Požega-Slavonia; HR024 = Brod-Posavina; HR025 = Osijek-Baranja; HR026 = Vukovar-Srijem; HR027 = Karlovac; HR028 = Sisak-Moslavin; HR031 = Primorje-Gorski Kotar; HR032 = Lika-Senj; HR033 = Zadar; HR034 = Šibenik-Knin; HR035 = Split-Dalmatia; HR036 = Istria; HR037 = Dubrovnik-Neretva; HR050 = City of Zagreb; HR061 = Međimurje; HR062 = Varaždin; HR063 = Koprivnica-Križevci; HR064 = Krapina-Zagorje; HR065 = Zagreb Immigrants are increasingly arriving not only from neighboring countries but also from farther places, particularly from South and East Asia. Historically, immigration to Croatia has been dominated by linguistically and culturally close individuals from the Western Balkans and still today around 85 percent of long-term immigrants come from those countries (UN DESA, 2024). Around 380,000 migrants were born in Bosnia and Herzegovina and close to 50,000 in Serbia. However, recent trends show a more diversified pool of workers arriving in the country. Of the 234,400 people who arrived between 2019 and 2023, 21 percent were Croatian returnees, 20 percent were from Bosnia and Herzegovina, 10 percent were from Serbia, and 5 percent were from Kosovo. On the other hand, 17 percent arrived from Asia. Asian foreign-born workers, especially from Nepal, India, the Philippines, and Bangladesh, are the fastest-growing group of immigrants, accounting for 26 percent of inflows in 2023 (see left panel of figure 7). In 2024, there was a deceleration in the issuance of work permits to Bosnian and Herzegovinian work- ers, in contrast to a rise in permits granted to workers from Serbia, Nepal, India, and North Macedonia. Additionally, the latest figures show that employers are now recruiting workers from two new countries, Uzbekistan and Egypt, expanding the list of the top ten nations from which labor is sourced. This diversification of countries of origin is due in part to the decreasing Background and Context 33 pool of foreign workers from traditional countries of origin in the Western Balkans, but also due to a change in regulations. A small part of the foreign-born individuals in Croatia move to other EU countries while keep- ing their legal status and validity of work permits in the country. Non-EU foreign workers can move between EU countries. During that period, the worker stays in the social welfare system of the country from which he or she is posted, and social security contributions are paid in that country as well. In these cases, the Croatian Institute for Pension (HZMO) issues an A1 certificate to the employer, which proves that the employer is for a certain period exempt from paying contributions in another member state where the worker works temporarily. According to HZMO data, 11,891 A1 certificates were issued for third-country nationals in 2023, which ac- counts for 27 percent of all A1 certificates that were issued for so-called ‘expatriate workers’.14 This is an increase in comparison to previous years (1,422 certificates were issued in 2022 and 9,360 in 2021). Given that the total number of work permits between 2021 and 2023 reached 160,000, the processing of 22,000 A1 visas for foreigners implies that around 13-14 percent of foreign workers were staying in other EU countries during that period. The exact number is difficult to estimate as one worker may be issued with more than one A1 permit. The number of refugees and asylum seekers has also rapidly increased in the last decade. Inflows of forcibly displaced populations are also on the rise, from less than 1,000 in 2013 to close to 27,000 in 2023 (see right panel of figure 7). This increase has been driven by the arrival of Ukrainians since 2022 due to Russia’s invasion of Ukraine, accounting for close to 90 percent of the total number of refugees in the country and 19 percent of people arriving in Croatia in 2023, compared to only 2 percent in 2021. While the arrival of refugees has spiked, the number of asylum petitions remained very moderate. In 2023, 50 permits were approved, compared to 21 permits in 2021. By the end of 2023, the total number of asylum permit holders in Croatia was 951, of whom 608 are men and 343 are women. Figure 7: Foreign-born individuals in Croatia, by region of origin a. Number of new work permits to b. Number of refugees and asylum seekers immigrants 90,000 30,000 80,000 25,000 70,000 60,000 20,000 50,000 15,000 40,000 30,000 10,000 20,000 5,000 10,000 0 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Western Balkans South Asia Ukraine Other origins Other Asia Rest of the world Source: Eurostat database. 14 Forbes Hrvatska (2024). Leveraging Immigration for Croatia’s Prosperity 34 Section 1.3. Profile of immigrants in Croatia Data gaps limit a comprehensive understanding of the profile of immigrants in Croatia. Cur- rently, the data provided by the Croatian Bureau of Statistics (CBS) regarding Croatia’s external migration only report aggregate figures of the annual immigration of foreign nationals by their countries of origin, sex, and age. The CBS does not break down these figures by other important characteristics, such as education level or the reasons for migration. The dynamic nature of labor migration and the absence of detailed data make it challenging to construct an average demographic profile of foreign nationals in Croatia. Consequently, assessments of the extent and structural features of labor immigration to Croatia rely on information from the Ministry of Interior, which includes the number of residence and work permits issued, and the number of granted temporary and permanent residencies, among other data points. Immigrants in Croatia are increasingly male and of working age, relocating to Croatia to fill jobs in sectors experiencing a shortage of workers. Figure 8 presents trends in the age and gender profile of foreign workers in Croatia during the last decade based on statistics from the CBS. In the first few years after joining the European Union, the split between male and female immigrants was relatively even (around 55 percent male). However, in the last decade, the profile of a typical immigrant has changed, and now closer to 70 percent of immigrants are men. For example, in 2023, among the total number of people who moved to Croatia from abroad, men accounted for 68.5 percent. In terms of age, the profile of immigrants arriving in Croatia has also evolved in recent years, becoming more concentrated among the prime working age groups. While there has been an increase in the inflow of immigrants of all age groups, arrivals of foreigners between 15 and 54 years of age have been particularly common. In 2021 the average age of foreign workers was 37.3 years, which is considerably younger than the average age of the Croatian population at 44.3 years. Figure 8: Trends in the age and gender of foreign workers in Croatia a. Number of immigrants by age group b. Number of of immigrants by gender 30,000 45,000 40,000 25,000 35,000 Number of immigrants number of immigrants 20,000 30,000 25,000 15,000 20,000 10,000 15,000 10,000 5,000 5,000 0 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Less than 15 years 35 to 54 years Males 15 to 34 years 55 years or over Females Source: CBS (2013 – 2022). Background and Context 35 In terms of skills, immigrants have on average lower education levels than the Croat popu- lation. According to the OECD Database on Immigrants in OECD and Non-OECD Countries (DIOC) of 2015, immigrants in Croatia are slightly less likely to have tertiary education levels compared to the native population (figure 9). On the other hand, they are over-represented among those not having completed upper-secondary education. Data on more recent skills levels of the migrant population in more recent years are very scarce, as household surveys do not capture well enough the immigrant population in the country and administrative data do not collect comprehensive information on the education level of this group. Still, the EU Labor Force Survey reports rates of tertiary education of 20 to 21 percent among migrants during 2021 and 2022, still lower than the rates observed for the non-migrant population (around 25 to 26 percent). Figure 9: Education level and migration status among the population aged 25-64 70 61% 57% 60 50 40 30 23% 24% 19% 20 16% 10 % 0 Non-migrants Immigrants low medium high Source: OECD DIOC. Foreign workers currently constitute an increasingly higher share of the workforce in the construction and tourism sectors. Estimates of foreign workers in a particular sector are based on the number of work permits issued. In 2023, the top three sectors with regard to the number of permits issued were construction (69,000, or 40 percent of the total issued permits), tourism and hospitality (46,000, or 27 percent), and manufacturing (24,000, or 14 percent) (see figure 10). According to CBS data, 118,156 workers were employed in the construction industry in 2023. Based on permit data, this would imply that 58 percent of workers are third-country nationals. However, given the data limitations and the fact that a worker may have multiple permits, business associations in the sector estimate this number to be closer to 40 percent. As a comparison, the number of used permits for foreign workers in the construction sector in 2020 was 14,154, accounting for 14 percent of the employed in this sector. By the end of 2024, it is expected that the number of third-country citizens working in construction will exceed 85,000, while in tourism, it will range between 50,000 and 55,000, up from 46,000 the previous year. This sectoral concentration helps explain the gender and skill patterns recently observed among the migrant population, as they tend to be male dominated and require lower skills levels (particularly construction). Leveraging Immigration for Croatia’s Prosperity 36 Figure 10: Number of residence and work permits issued per sector 80,000 70,000 60,000 50,000 ˝number of issued work permits 40,000 30,000 20,000 10,000 0 Construction Tourism and Industry Transport and Trade Hospitality Communications Source: MoI (2023). Section 1.4. Integration challenges for migrant workers Integration of foreign workers is fundamental to maximize the benefits of migration for both migrants and Croatia. In broad terms, migrants’ integration is the process through which migrants become accepted into the economic, social, cultural, and political spheres of the host society. This report particularly focuses on the economic aspect, measured by the ability to access employment opportunities and the quality of such, as well as the quality of living standards in comparison to the population born in Croatia. Economic outcomes of migrants depend on the skillset they bring to the country, but also on the barriers they face to use those skills in the host labor market. Better integration of migrants enhances their income potential, benefiting them and their families. Croatia can also benefit from a greater integration of migrants as it helps enhance productivity in the economy, increases tax contributions, reduces reliance on social assistance or other support, and minimizes risks of social tensions (Bossavie et al., 2024). Given the increasing presence of foreigners whose ability to stay in the country depends on their employment status, employment rates among this group are high. Third-country nation- als usually enter the country once they already have a work and residence permit. This is the reason for the high employment rates of foreigners, particularly those of males. In 2023, 92 percent of working-age foreign-born males were employed, compared to 69 percent of male Croats (figure 11). The employment rates between female foreigners and female Croats are more similar, with 62 percent employed female Croats in comparison to 53 percent of female foreigners. However, it is important to note that the number of female foreigners is significantly lower than that of males. Background and Context 37 Figure 11: Employment rates based on sex and nationality 100 Employment rates (as % of population 15-64) 90 80 70 60 50 40 30 20 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Male foreigners Male croats FEMale foreigners feMale croats Source: Eurostat database. However, foreign workers in Croatia face important challenges to integrate in the labor market, particularly related to occupational downgrading, due to language barriers, skills mismatches, and imperfect recognition of foreign credentials. The issue of occupational downgrading is more pronounced among foreign workers than for Croats. Occupational downgrading occurs when workers are employed in positions that require lower skills or qualifications than they possess, and this is the case for 22.5 percent of foreign workers in the country, compared to 13.5 percent of Croats. The higher prevalence of occupational downgrading among migrants is due to different factors such as the imperfect recognition of foreign credentials and the lim- ited proficiency in Croatian among many migrants, particularly those who do not come from Western Balkan countries. Croatian language proficiency is not a prerequisite for acquiring a work and residence permit but has important implications for the productivity and safety of foreign workers. A 2019 study on the labor market integration of third-country nationals in the EU found that the lack of language skills of the foreign workforce is a key constraint for their integration (European Commission, 2019).15 This challenge has rapidly become more wide- spread in the last years with the arrival of more immigrants from farther places that do not have the same knowledge of Croatian as older waves of migration from neighboring Western Balkan countries.16 Skills mismatches and lack of recognition of foreign qualifications are other main challenges for the integration of immigrants in Croatia (European Commission, 2019). Croatia has higher stringency in regulated professions – where individuals need to obtain an authorization to provide services – compared to other EU countries. There have been around 300 of such occupations in Croatia (representing 31 percent of the workforce) compared to 200 in the EU (22 percent), and restrictions in these professions are more severe (World Bank, 2020). Recent (from October 2023) amendments to the Act on Regulated Professions and Recognition of Foreign Professional Qualifications prescribe a proportionality test aimed at preventing unjustified requirements restricting access to regulated professions, while over 300 15 European Commission (2019). 16 Butković, Samardžija, and Rukavina (2020). Leveraging Immigration for Croatia’s Prosperity 38 measures in 50 activities and professions with the goal of their further liberalization have been implemented within the National Recovery and Resilience Plan (NRRP).17 However, significant barriers in many of the professions remain. Migrants also face a higher risk of poverty, living in poor housing conditions and experiencing violations of their labor rights. According to the 2021 data, migrants also suffer from higher poverty rates and social exclusion compared to the native population (figure 12). In terms of housing, more foreign workers live in overcrowded conditions and are less likely to own a home. By law, employers are not obliged to provide accommodation for workers, although they often use housing as an additional incentive to attract foreign workers. There are also reports of migrants facing violations of their labor rights.18 Figure 12: Integration indicators of foreign workers in Croatia 91,60% Home ownership rate 87,20% 31,40% Overcrowding rate 37,50% Share of persons at risk 21,40% of poverty or exclusion 32,40% 0% 50% 100% Nationals Third-country nationals Source: European Migration Network (2022). Note: These indicators are based on 2021 surveys representative of the population of 18 years and older. Section 1.5. Attitudes towards immigration Attitudes of the Croat population towards immigration have slightly deteriorated in the last years and are less positive compared to other EU countries. Attitudes towards migrants have been historically among the least accepting, with Croatia ranking in the bottom 10 countries worldwide according to Gallup data from 2020 (Esipova, Ray and Pugliese, 2020). The most recent European Social Survey, conducted in the second half of 2023, provides insights on how 17 https://mingo.gov.hr/o-ministarstvu-1065/djelokrug/uprava-za-trgovinu-i-politiku-javne-nabave/ slobodno-trziste-usluga-i-roba/liberalizacija-trzista-usluga/7028 18 Markusic (2023). Background and Context 39 perceptions have evolved recently compared to results from mid-2021, prior to the accelerated inflows. 19 Results from these two rounds of surveys reveal that Croatian residents’ attitudes towards the acceptability of immigration have slightly worsened, with the share of citizens con- sidering that migration has mostly positive impacts on the country declining from 42 percent to 33 percent in only two years (see figure 13). Attitudes about immigrants vary depending on their background, with people being more amenable to a larger inflow of immigrants sharing the same race or ethnicity as the majority of Croatians, than to the arrival of immigrants of a different race or ethnic group. Concerns about migrants taking natives’ jobs and potential lack of integration into the culture and lifestyle are among the top worries (Parmač Kovačić, 2024). Between 2021 and 2023, there was a discernible uptick in the belief that immigration poses a threat to Croatia’s cultural integrity and can worsen living standards. This shift is also reflected in the perceived effect of immigrants on Croatia’s overall quality of life, with average survey scores indicating a drop, from 5.2 in 2021 to 2.9 in 2023. Figure 13: Trends in public opinion on immigration For the culture 2020 30 24 47 2023 39 22 39 2020 36 24 41 economy For the 2023 39 22 39 0 20 40 60 80 100 % bad neutral good Source: European Social Survey (2020, 2024). Note: Based on the questions: (i) Would you say it is generally bad or good for Croatia’s economy that people come to live here from other countries? (ii) And, using this card, would you say that Croatia’s cultural life is generally undermined or enriched by people coming to live here from other countries? Responses range from 0 to 10, where 5 is neutral, 0 to 4 is negative or bad, and 6 to 10 is positive or good. Perceptions of immigration’s costs and benefits vary across social and demographic groups. Young adults, specifically those between 15 and 24 years old, stand out for their predomi- nantly positive views on immigration’s outcomes—a sentiment shared by 44 percent within this cohort. In stark contrast, those aged 55 to 64 are equally likely to perceive immigration negatively. Education levels also correlate with immigration perceptions as those with higher 19 https://sociologija.hr/2024/07/25/stavovi-gradana-o-novim-useljenicima-2-jasne-konture-podjela-po-pitanju-koristi-i- troskova-od-useljavanja/ Leveraging Immigration for Croatia’s Prosperity 40 educational levels are less likely to view immigration negatively. While over 40 percent with the lowest education level see immigration’s downsides, this view diminishes to a third among high-school graduates and a quarter among those with tertiary education. Conversely, the most educated are more likely to see immigration positively. Urban residents are more inclined to view immigration favorably compared to their rural counterparts, with a 20-percentage-point difference between the largest cities and rural areas. Gender and immigrant status show no significant impact on these attitudes, while the influence of household income is significant but not linear, hinting at other contributing factors. The latest survey conducted in 2024 shows more pessimistic views among Croatian citizens regarding the inflow of foreign workers. The survey reveals that 46.2 percent are dissatisfied, citing cultural differences and increased crime rates as primary concerns. Men, older citizens, and those with lower education levels are more likely to be dissatisfied, while younger citizens show less discontent. Recent research highlights cultural gaps over economic factors as the main issue.20 Despite the dissatisfaction, 67.9 percent of supporters see cultural diversity as an advantage, and 58 percent believe foreign workers reduce unemployment in labor-deficit sec- tors. The highest levels of dissatisfaction are found in Koprivnica-Križevačka and Brod-Posavina counties, with positive views in Istria, Primorje-Gorski Kotar, and Zagreb. In general, there is a positive correlation between the prevalence of foreign workers (who tend to be located in more urban and coastal areas) and positive attitudes towards migration. Overall, immigration offers an important pathway to support the labor supply in Croatia, but it also carries important challenges that require the strengthening of migration systems. Chapter 1 provides evidence of how the immigration of foreign workers is becoming increas- ingly relevant to address the labor and skills shortages in the Croatian labor market. However, the diverse profile of migrants that increasingly come from more culturally distant places also poses new challenges for the Croatian economy. Many migrants face strong linguistic and information barriers that limit their integration process, and, on average, foreign workers are more likely to face higher risks of social and economic exclusion. Furthermore, attitudes towards migrants are becoming more negative with regard to cultural differences and their integration (or the lack of it) in Croatia. In this context, investments in the migration system are key to managing flows of migrant workers and supporting their integration and their beneficial effects on the Croatian economy. 20 Lilek (2024). 2/ Diagnostic of the Legislative and Institutional Immigration System in Croatia Leveraging Immigration for Croatia’s Prosperity 42 This chapter provides an overview of the migration system in Croatia that governs the flow of foreign-born individuals into the country, their selection, conditions of stay, employment, and services provided to facilitate their integration. Section 2.1 presents a framework to as- sess the immigration system in Croatia. Based on this framework, section 2.2 focuses on the relevant legislative instruments, including strategies, laws and regulations, and bilateral and multilateral agreements, that cover the issue of immigration in Croatia. Section 2.3 analyzes the institutional framework of all different ministries and agencies in Croatia that have a man- date to regulate, cover, or provide services to immigrants. Section 2.4 studies the system of entry, stay, and employment. Finally, section 2.5 assesses the provision of services to support migrants’ socio-economic outcomes in Croatia. Annex 1 covers the same aspects, but for asylum seekers and refugees in Croatia. Section 2.1. Framework to analyze the immigration system The effectiveness of Croatia’s immigration system, which governs how foreigners enter, reside, and integrate, can be explored using the framework presented below (see figure 14). The foun- dation of an immigration system lies in a country’s governance structures. These encompass all strategies and legal frameworks that dictate various facets of the immigration journey, for both economic migrants and those seeking asylum or refuge. This includes the regulation of entry, the safeguarding of migrant rights, and the integration of both economic migrants and refugees. Additional elements of a country’s governance structures are bilateral or multilat- eral agreements that manage different migration elements between countries of origin and destination, spanning from pre-deployment to repatriation, and may include establishing legal channels for labor migration, exchanging data and information, recognizing skills, or providing training. The governance framework also entails the institutional architecture, which, guided by national strategies and legal mandates such as alien and asylum laws, delineates the duties and responsibilities of various ministries and agencies involved in immigration and asylum. It further includes the various mechanisms in place to ensure good coordination and coopera- tion among these entities. Under the governance foundation, three main pillars emerge covering the management of migration flows: entry, employment, and integration. 21 The first pillar relates to the admis- sion system. For economic migrants, the government first decides on the quantity and type of migrants entering a country in any given year, for example, by choosing quotas for different types of visas. Best practices increasingly link labor migrants’ selection processes with job vacancies in specific sectors based on assessments of labor demand. In order to improve the matching of skills and reduce occupational downgrading, some countries include a system of verification and certification of migrants’ skills during the entry process. At the entry stage, best-practice migration systems ensure the enforcement and implementation of regulations 21 Another important aspect is the exit and return of migrants, particularly in the context of high temporary migration as is the case in Croatia. However, given the limited initiatives and regulation in this area, it is not included in this framework. Diagnostic of the Legislative and Institutional Immigration System in Croatia 43 governing recruitment agencies to protect migrants against any potential abuse and to maintain quality of the matching between migrant workers and what firms demand. For asylum seekers, the provision of refugee status and acceptance to the country is based on legal obligations both from domestic legislation and from signed international humanitarian conventions and agreements. International humanitarian law grants rights to asylum seekers even before their case has been resolved, such as access to legal aid and basic services. During the application process, identity verification and registration protect against refoulement and allow for rapid needs assessments of different groups of refugees and asylum seekers. This evaluation, in turn, facilitates the immediate provision of humanitarian assistance to cover basic needs such as shelter, cash, food, clothing, health care and mental health care. Figure 14: Framework to analyze the immigration system in Croatia Governance Legislative framework Institutional arrangements Bilateral/multilateral agreements Entry Employment Integration Selection mechanisms Flexibility of work permits Access to housing Quantity restrictions Enforcement of labor law Access to social services Recruitment Access to social protection Access to education Skills certification Access to ALMPs Path to longer-term residency Family rights The second pillar covers all the employment aspects for labor migrants and refugees. Under this pillar, interventions can address migrants’ barriers to accessing job opportunities. Best practices from well-developed systems include work permit arrangements and the flexibility to switch employers, the enforcement of labor regulations to protect the rights of labor migrants, early assessment and certification of qualifications, skills, and educational attainments, lan- guage training and access to specific Active Labor Market Policies (ALMPs), and inclusion in the diverse menu of social protection instruments such as pensions or unemployment benefits offered to migrants. For asylum seekers, this second phase shifts the focus from humanitarian response to more sustainable livelihoods. Leveraging Immigration for Croatia’s Prosperity 44 The third pillar includes the longer-term socio-economic integration of migrants in the host society. Given that migrants tend to have more barriers and worse economic outcomes than the native population, integration is supported by the provision of and access to national welfare systems and public services such as housing, education, health, and other social services, as well as inclusion in national ALMP programs that facilitate their activation in the labor market. Migrants progressively have rights comparable to the native population. Interventions under this pillar tend to enhance and consolidate the economic and social integration of migrants in the host country. Ultimately, longer-term integration in host countries for those migrants who decide to stay also includes pathways for family reunification and long-term residence permits that, in some cases, can lead to citizenship. Section 2.2. Legislative framework for immigration Croatia’s legislative framework is in the process of adapting to changing migration trends in the country (figure 15). Article 246 of the 2020 Aliens Act mandated that parliament to establish principles for implementing a comprehensive immigration policy for a period of at least five years, which did not occur. However, amendments to the law in 2025 have led to the deletion of this article, and instead mandate the Strategy for Demographic Revitalization until 2033 as the foundation for migration and integration policy. In the recently adopted Strategy for Demographic Revitalization until 2033, special atten- tion is given to migration policy. The Strategy, adopted in parliament in March 2024, has two main strategic goals: (1) to enable a stimulating environment for the family and youth; and (2) to achieve balanced population mobility. For the second goal, the objective is to move from -1.2 percent of net migration in 2021 to +3.0 percent by 2033, and to achieve a higher ratio of people living in rural areas. With regards to the immigration of foreign workers, the strategic guidelines suggest: (i) developing a comprehensive migration policy; (ii) establishing an office to coordinate and supervise the implementation of measures and assess the effects of mi- gration and integration policies; (iii) improving the system of collecting migration statistics; (iv) encouraging local governments to develop integration programs in local communities; (v) sensitizing the public about migrants to prevent discrimination, racism, and xenophobia; and (vi) developing policies tailored to the specific needs of local environments and their inhabit- ants, particularly in assisted areas. Diagnostic of the Legislative and Institutional Immigration System in Croatia 45 Figure 15: Legal domestic framework for migration and international agreements 2033 or 2015 2020 2021 2022 2023 2024 2026 beyond Migration strategy Strategy for Demographic Revitalization discontinued in 2015, until 2033 tackles the return of Croats with no new migration abroad and immigration of foreigners to strategy formulated support the demographic transition Aliens Act Aliens Act 2020 replaces the former annual Amendments to the 2020 Aliens Act (130/2011, quota system for work permits with market presented in October 2024 to extend 74/2013) test system permit validity and introduce protection Annual measures for foreign workers quota system for work permits EU Council includes Croatia as a member state of the Schengen area MOU signed with North Macedonia to enable easier mediation in finding labor between these countries (validity – 5 years) Bilateral Cooperation Protocol signed between Croatian Employment Service and Turkish Employment Agency (ISKUR) (validity – 2 years) Memorandum of Cooperation on Labor Markets between Croatia and the Philippines to enhance institutional capacity and employment 2.2.1 Domestic legal system Entry and stay The legal basis for the entry, stay, and exit of foreigners is established under the Aliens Act, outlining the necessary procedures and criteria. The law 22 defines different classes of foreign- ers in Croatia and establishes the rules on travel documents and the issuance of documents to those who do not have them. With regards to the visa regime, as of January 1, 2023, the Re- public of Croatia is a member state of the Schengen area and fully applies the provisions of the Schengen acquis, in accordance with the Decision adopted by the EU Council on December 8, 2022. The Act regulates short-term, temporary, long-term, and permanent residence stays available to foreigners. Temporary residence for the purpose of work is granted as a residence and work permit. Long-term residence can be granted to a citizen of a third country who has had temporary residence, asylum, or subsidiary protection in the Republic of Croatia for a continuous period 22 Official Gazette, 133/20, 114/22, 151/22 - https://www.zakon.hr/z/142/Zakon-o-strancima. Leveraging Immigration for Croatia’s Prosperity 46 of five years up to the date of the submission of the application. 23 At the time of the decision on the request for the approval of long-term residence, the citizen of a third country must have an approved temporary residence, asylum, or subsidiary protection in the Republic of Croatia. Additionally, they must have an uninterrupted five-year residence permit and meet the following criteria: possession of a valid travel document, sufficient financial means, health insurance, knowledge of the Croatian language and Latin script, and they must not represent a threat to public order or national security. The 2020 Aliens Act and its amendments in 2025 facilitate a temporary and permanent residency process for descendants of Croats in the diaspora. With the recent amendments, a new temporary residence category has been introduced for Croatian emigrants and their descendants from third countries, allowing them to apply for citizenship immediately after residence approval, work without permits, and access education. This category, now man- aged by the Ministry of Demography and Immigration, includes various purposes such as family reunification and education. They are also exempt from income tax for five years. The new law also facilitates permanent residence for those with a certificate from the Ministry and three years of continuous temporary residence in Croatia. Additionally, in 2020 a new type of long-term D visa was introduced for third-country nationals who have been granted temporary residence for work, family reunification, study, research, or secondary education. The 2020 Aliens Act also prescribes the possibility of regulating temporary residence for so- called digital nomads, foreigners who perform work for foreign employers digitally (see more details on digital nomads in Box 1). Box 1. Digital nomads In 2021 Croatia introduced a digital nomad visa, enabling foreigners interested in working remotely to live in Croatia. The country has implemented a policy that allows non-EU foreign nationals to apply for this visa, which is valid for up to one year and can be extended. Although it is called a digital nomad visa, in practice it is a type of residence permit for foreigners inter- ested in working as freelancers or entrepreneurs in Croatia. The digital nomad visa does not allow individuals to work for a Croatian company or business. Those interested in working for a Croatian company need either to obtain a Croatian work visa or an EU Blue Card. To be eligible for a Croatian digital nomad visa, one must meet the following requirements: be a citizen of a non-EU/EEA country; have a stable monthly income of around €2,539.31 per month; be either self-employed or a freelancer. Digital nomads are exempt from paying local income taxes in Croatia, as per Article 9 of the Personal Income Tax Act. The rationale behind this exemption is that digital nomads will 23 A citizen of a third country is considered to have continuously resided in the Republic of Croatia if, within a period of five years, he or she was absent from the Republic of Croatia several times for up to ten months in total or once for up to six months. Diagnostic of the Legislative and Institutional Immigration System in Croatia 47 spend their earnings on local services and goods, such as housing, food, and travel, thereby benefiting the Croatian economy. This policy is designed to attract highly skilled professionals from around the world to live and work remotely in Croatia for extended periods. Interesting- ly, the initiative to introduce a visa for digital nomads was started by a Dutch entrepreneur residing in Split, Jan de Jong. In a very short time, Croatia has become one of the most desirable destinations for digital nomads. The country even has its Digital Nomad Association (DNA), which aims to develop and promote Croatia as a prime destination for digital nomads. The Croatian digital nomad visa was ranked as the number one digital nomad visa by the Global Nomad Guide (Bradbury 2021). In 2023, the total number of applications for a digital nomad visa was 1,485, with 532 being approved. The highest number of applications was received from Russia (629), Ukraine (231), and the USA (168). Employment The 2020 Aliens Act established a new model of employment for third-country nationals, re- placing the previous system of annual quotas. The former quota system required forecasting the number of permits for each sector on an annual basis. According to the Ministry of Labor (2023: 2), this model was ineffective in addressing the rapid changes in the labor market and the economy in general. The 2020 Aliens Act changed the entry system by removing the annual quotas and introducing a new system that improves the ability to meet the growing demands of the labor market. The law also stipulated exceptions to the labor market test (which is typi- cally used to ensure that no domestic workers are available for employment) for shortage oc- cupations and for seasonal work up to 90 days in agriculture, forestry, hospitality, and tourism. Amendments to the current Aliens Act were accepted in February 2025, aimed at further improving the needs of the labor market by extending the duration of work permits to three years. The amendments to the Aliens Act were under public consultation until March 14, 2024. More than 200 comments were received as part of public consultation, and the final draft of the amendments to the law was presented by the government in October 2024 and accepted five months later. The amendments include extending the validity of permits for residence and work from one to three years, and permits for seasonal workers in agriculture, forestry, tourism and catering from the current six to a maximum of nine months. In addition, citizens of third countries who want to change employers in the same occupation after a year do not have to obtain a new residence and work permit, while the extension of the EU Blue Card from two to four years is also included. With the extension of the validity of the EU Blue Card for highly educated individuals from 24 to 48 months, the amendments also allow individuals who do not have an educational qualification but possess skills, specifically in the IT sector, to obtain one. These skills will be demonstrated through work experience, which will be assessed by a commission appointed by the Ministry of Labor, Pension System, Family and Social Policy. It is also proposed to retain the condition that the holder of the Blue Card must have a monthly salary of 1.5 times the average gross salary in Croatia. Leveraging Immigration for Croatia’s Prosperity 48 The amendments include further protection measures for foreign workers. The law stipulates that a foreign worker must not receive a lower salary than that received by employees in Cro- atia in comparable job positions. Furthermore, in case they lose their job, foreign workers are allowed to be unemployed for a period of 60 days before they lose their work and residence permit. If the employer provides accommodation for the worker, they have to provide proof of adequate accommodation for foreign workers, which must be attached to the application for a residence and work permit. An obligation is introduced for the third-country national or the employer to notify the competent authority of the termination of the employment contract within five working days, compared to the previous 15 days. Furthermore, a foreign worker cannot be employed by an employer who has been convicted of criminal offenses related to labor relations, social security, or general safety, nor by an employer who has been sentenced to a misdemeanor sanction for the most serious offenses. The maximum ratio of foreign to domestic workers is determined depending on whether or not the occupation is listed as a shortage occupation. For non-shortage occupations, the ratio has changed from previously requiring ¼ of domestic workers to now requiring 16 percent. The number of allowed applications for foreign workers also depends on the number of work- ers that are employed. For example, an employer who employs 50 EU citizens will be able to submit up to 50 work permit requests for third-country nationals. Employers with more than 250 employees will not have these limitations. Regarding employment in shortage occupations, the employer will need to employ eight percent of domestic workers, citizens of the European Economic Area or Switzerland. Moreover, according to the new amendments, an employer who wants to hire a foreign worker must have at least one worker who is a citizen of Croatia or a member state of the European Economic Area or the Swiss Confederation employed full time and uninterruptedly in Croatia for the last year (instead of six months as currently prescribed). Exit and repatriation To prevent negligence, employers are required under the amendments to the Aliens Act to provide a financial guarantee for third-country nationals, covering repatriation costs if needed. To prevent instances where foreign workers, despite having valid work permits, are not employed by their employers and are sent back to their countries, a new policy will require employers to issue a financial guarantee. This involves providing a promissory note to Croatia and the Ministry of Interior for each third-country national entering on a visa, to be submitted within five days to the relevant police authority. Given the average gross salary up to the end of 2023, employers would need to secure €1,620 per foreign worker to cover repatriation costs for third-country nationals who are in Croatia illegally. This measure is designed for situations where a worker does not commence work as stipulated in the contract, or if their contract is terminated for reasons other than the worker’s fault or immediate termination, within their first three months of employment in Croatia. However, this financial guarantee would not apply to seasonal workers. In addition, there are stricter penalties for those employers who do not register the foreign workers, as they should be blacklisted and not be able to hire foreign workers. 2.2.2 Enhanced cooperation models with third countries Given the increasingly limited inflows of workers from the Western Balkans, there is growing awareness of the need to enter agreements with new countries of origin to ensure predictable, stable, and safe migration flows to the country. Broadly speaking, the Ministry of Labor (2023: 18) identified the following countries as key sources of labor import: (i) countries from which Croatia has already seen significant or increasing labor force entries; (ii) countries known for Diagnostic of the Legislative and Institutional Immigration System in Croatia 49 their high-quality and specialized workforce; (iii) culturally similar countries to facilitate quicker assimilation into the Croatian labor market; (iv) countries that could help ensure labor-force circulation; and (v) countries with which Croatia can cultivate a more profound collaborative relationship in the labor market, particularly in the exchange of best practices. Croatia has grown in recent years its cooperation with other countries by developing social insurance agreements. Social security contracts are signed to ensure better coordination of social security systems, that is, pension and health system benefits, family benefits, and other benefits, such as unemployment benefits. These agreements can be a conducive factor in a worker’s decision to move to Croatia for work. As an EU member, Croatia applies the EU regu- lation on the coordination of the social security system with EU member states plus the EEA and Switzerland. In addition, Croatia has developed these types of social security agreements with North Macedonia, Canada, Quebec, Bosnia and Herzegovina, Serbia, Australia, Türkiye, Albania, Montenegro, and South Korea. The government has also initiated the procedure for signing social security agreements with the USA, Israel, Ukraine, Argentina, Chile, and Kosovo. In 2023, the Government also formally initiated the procedure of signing an agreement on co- operation in the field of social security with the Philippines. This includes health and pension insurance for both Filipino workers in Croatia and Croatian workers in the Philippines. In 2024, the government and the Croatian Employment Service started negotiations with the Republic of India for signing a Memorandum of Understanding (MoU) on labor and manpower mobility. This MoU aims to address the labor mobility of Indian citizens who perform work under em- ployment contracts in the Republic of Croatia. Similarly, the country has deepened cooperation with key partners by establishing bilater- al labor agreements and protocols of cooperation. Bilateral labor agreements can provide guidance for the governance of regular labor migration between two or more countries. For example, in 2022 Croatia signed an MoU with North Macedonia, which enables easier medi- ation in finding labor between the two countries.24 The MoU is signed for the duration of five years, during which the CES will collaborate directly with North Macedonian employment ser- vices. The cooperation of the two employment services will take place through the exchange of experiences in the areas of improving public employment services, providing services to employers, providing services to job seekers, and international mediation. In January 2024, the Bilateral Cooperation Protocol was signed between the Croatian Employment Service and the Turkish Employment Agency (İŞKUR) of the Republic of Türkiye. Within the scope of the Protocol, the two parties will cooperate in exchanging information on labor market devel- opments, employment policies and instruments especially for disadvantaged groups, public employment services models, labor market statistics and analysis, the digital transformation of services, and the development and implementation of joint projects. The Protocol is signed for the duration of two years. The last Memorandum of Cooperation was signed in October 2024 between Croatia and the Philippines, which will focus on enhancing institutional capacities in the labor market of both countries and the exchange of information. 24 Hrvatski zavod za zapošljavanje (HZZ), also referred to as the Croatian Employment Service (2022). Leveraging Immigration for Croatia’s Prosperity 50 Section 2.3. Institutional setting for immigration Croatia’s immigration management system includes a complex pyramid of different actors (figure 16). The number of institutions and departments within institutions with mandates on immigration has expanded to address new types of migration, and larger volumes. Rec- ognizing the dynamic nature of migration, other departments within institutions have been required to explicitly focus on immigrants. For example, given the increased scope of work on migration, in 2019 the following additional organizational units were established within the Ministry of Interior – the Directorate for Immigration, Citizenship and Administrative Affairs with two sectors: the Administrative Affairs and Citizenship Sector and the Sector for Aliens and International Protection. Figure 16: Institutional framework of Croatia National Level Regional Local Level Level Ministry of Spatial Planning, Directorate for Construction Construction, and Reconstruction and State Assets Ministry of Directorate for Family and Municipalities Labor, Pension Social Policy System, Family and Directorate for Labor Market and Social Policy Employment Government of Republic of Croatia Ministry of Directorate for Europe Foreign and Directorate for Consular Affairs European Directorate for Multilateral and Affairs Global Affairs Directorate for Immigration, Divisions Administrative Citizenship, and Administrative Affairs for Illegal Affairs Migration and (including Ministry of Directorate for European Affairs, Border Control aliens) Interior International Relations, and European Union funds Police Police Station General Police Directorate Administration Ministry of Directorate for Higher Education Police Officers Divisions for Science, Aliens for Illegal Education and Directorate for Support and Migration and Youth Development of Education System Border Control Ministry of Directorate for Legal Affairs in Health Health Directorate for Public Policy Management for Demographic Revitalization and Immigration Ministry of Directorate for Public Policy Demography and Implementation for Demographic Immigration Revitalization Directorate for Public Policy Implementation for Immigration Diagnostic of the Legislative and Institutional Immigration System in Croatia 51 The Ministry of Interior (MoI) is responsible for drafting policy and managing a large number of migration matters. The responsibilities pertaining to MoI include controlling and managing migratory movements through border crossing points, suppressing irregular migration, and overseeing the immigration of foreigners and the reception of asylum seekers, including the management of the national reception centers in Ježevo and Tovarnik, and the transit reception center for foreigners Trilj. MoI is responsible for issuing residence and work permits, which is a sine qua non for working in Croatia, return and readmission, reception and registering the asylum application, examining applications and reaching a decision, and for the implementation of the acquisition of Croatian citizenship by birth, and the cessation of Croatian citizenship. Following the latest elections in April 2024, Croatia established the Ministry of Demography and Immigration. The Ministry is in charge of demographic policies, such as measures for in- creasing the birth rate, balancing age structure, family policies, and child benefits. Moreover, the Ministry, together with other organizing bodies, is responsible for proposing policies for return migration of the Croatian diaspora as well as their reintegration into Croatian society. The Ministry of Demography and Immigration has also taken over tasks related to demogra- phy from the former State Office for Demography and Youth (now added to the Ministry), and tasks aimed at obtaining the conditions for the return and inclusion of the Croatian diaspora from the State Office for Croats Outside the Republic of Croatia. The Ministry of Foreign and European Affairs is the central authority responsible for foreign relations, agreements, and visa policy.25 This Ministry is in charge of approving visas to third country nationals, of which there are two types. The first is a short-term visa (visa C), for up to 90 days in each period of 180 days. The second is a long-term visa (visa D), which is issued for one or multiple entries, with a validity period of up to six months and with an approved dura- tion of stay up to 30 days. Visa D is usually issued to third-country citizens who are granted a temporary stay or a work permit, but still need a visa to enter Croatia. The Ministry of Labor, Pension System, Family and Social Policy is responsible for coordinating social protection and jobs policies, including oversight of the employment of third-country nationals by the Croatian Employment Service. Additionally, the Ministry administers the pen- sion insurance system, social security policy, and promotes social dialogue and partnerships with employers and trade unions. It supports social welfare institutes that manage the provision of social welfare benefits and that are tasked with appointing guardians for unaccompanied minors. Given the multidisciplinary nature of migration, other institutions under MoL, such as the Croatian Pension Insurance Institute and the Labor Inspectorate, play important roles in the immigration management system. For example, each employer is obliged to register for- eign workers at the Croatian Pension Insurance Institute (HZMO). The Labor Inspectorate is in charge of inspections and professional tasks related to labor and workplace safety. The Croatian Employment Service (CES) plays an important role in the process, conducting labor market tests and providing opinions to MoI on the employment of foreign workers. The labor market test determines whether there are any available persons in the unemployment records in Croatia, and, depending on the result, allows the employer to request the employment of foreigners. In the process of issuing a residence and work permit when the labor market 25 Article 12, Croatian Aliens Act - https://www.zakon.hr/z/142/Zakon-o-strancima. Leveraging Immigration for Croatia’s Prosperity 52 test is required, the CES needs to issue a positive opinion on the hiring of the foreign worker, which is utilized by the Ministry of Interior as a basis to issue these permits. The CES will issue a positive opinion based on the checks of the employer and potential employee, in order to ensure that they have met all the required conditions.26 In addition, the CES creates a list of occupations with shortages for which the labor market test is not needed. About 85 percent of immigrants come through the shortage list rather than as a result of a labor market test. The Ministry of Science, Education and Youth is tasked with the provision of educational opportunities for minors and the facilitation of Croatian language instruction. It manages the translation of academic diplomas and certificates, and supports the continued education of individuals who have been granted international protection. Furthermore, the ministry is in charge of offering subsidized student dormitory accommodation to asylum seekers who possess regular student status, and is responsible for the recognition of foreign educational and professional credentials. The Government’s Office for Human Rights and the Rights of National Minorities plays an important role in the governance of migrant integration in Croatia. It orchestrates collab- oration between ministries, non-governmental organizations, and other entities involved in the integration into society of individuals who have received international protection. In the realm of anti-trafficking efforts, it compiles reports on the enforcement of international agreements aimed at combating human trafficking, which have been ratified by the Republic of Croatia.27The office is Croatia’s representative at the European Integration Network (EIN), which is a forum, bringing together representatives of national public authorities from all EU member states (plus Iceland and Norway) to promote cooperation on integration activities among EU member states. Regarding data collection on migration and international protection, the Croatian Bureau of Statistics, the Croatian National Bank, and the Ministry of Interior play key roles. The Croa- tian Bureau of Statistics implements the Labor Force Survey (LFS) and the Survey on Income and Living Conditions (SILC), as well as other labor market related statistics. It also collects statistics on the movement of people, gathered from MoI. Meanwhile, the Croatian National Bank collects and analyzes statistics related to personal transfers, which are sent by migrants as remittances. The Ministry of Interior regularly publishes on their website data on asylum and international protection approvals. Under the Ministry of Labor, the CES publishes statistics on labor market tests and deficit occupations, while the Croatian Pension Insurance Institute (HZMO) publishes data on the number of insurers, with additional information on those marked as third-country nationals. 26 See subsection 2.4 for more details on the process and requirements. 27 European website on Integration (n.d.) - https://migrant-integration.ec.europa.eu/country-governance/ governance-migrant-integration-croatia_en. Diagnostic of the Legislative and Institutional Immigration System in Croatia 53 Section 2.4. System of entry and stay of immigrants 2.4.1 The de jure system of entry and stay In order to work in Croatia, foreign citizens must have a residence and work permit. The employer who wants to employ a non-EU citizen in a profession for which they have received a positive labor market test, or that is part of the exception lists of occupations with skills shortages for which no test is needed, must apply for a residence and work permit to the Ministry of Interior. The application process is fully online, managed by the Ministry of Interior with information available on the e-Građani website. Exceptions to the labor market assessment include: (i) the list of exempted occupations that have sizable labor shortages; (ii) seasonal employment of third-country nationals in agriculture, forestry, catering or tourism (for up to 90 days during one calendar year); or (iii) groups listed in Article 110 of the Aliens Act (journalists, researchers, EU Blue Card holders, and so on). The list of exempted occupations that have sizable labor shortages takes into account different regional needs. As a result, some occupations may need a labor market test in some counties but not in others that face significant shortages. Figure 17: The process of hiring a non-EU national in non-shortage occupations in Croatia Permit duration based on Ministry of employment Interior decides contract (up to Employer on permit one year) submits request issuance - Extension CES conducts for residence - Designated possible without a labor market and work permit police repeating labor Employer test and issues (within 90 days administration market test requests a positive or of positive CES or station permission negative opinion response) from CES (15 days) If the occupation of a non-EU citizen is not on the exceptions list, there is a prior comprehen- sive labor market test and a set of administrative steps to be followed to secure a residence and work permit. The process includes the following steps: (i) employers request permission from the Croatian Employment Service (CES); (ii) the CES assesses if there are unemployed persons that would meet the employer’s requirement for the role (the so-called labor market test). During the test, the CES examines the situation of the domestic labor market, and, de- pending on the results, issues a positive or negative opinion. The result of the labor market test procedure according to the Aliens Act is the issuance of a positive or negative notification. This test should be undertaken by the CES within 15 days. If the employer receives a positive notification, meaning that the labor market test showed that there are no available persons in the unemployment register who meet the employer’s requirements for employment, the employer can request a residence and work permit within 90 days from the date of receiving Leveraging Immigration for Croatia’s Prosperity 54 the notification of the labor market test result. Furthermore, the CES also checks the ratio of employed domestic to foreign workers, ensuring that the number of domestic (or EU) workers is not less than one-sixth of the total number of employees. The CES also checks if the worker, via the employment contract, meets the conditions that the employer requested in the labor test market, and decides on the recognition of foreign professional qualifications if it is a reg- ulated profession. Finally, the CES also assesses whether firms comply with all the precepts and obligations in the legal framework. Once the employer receives a positive response from the CES for the test (if needed), the employer submits a request for the issuing of a residence and work permit. This step has to be followed within 90 days from receiving (via email) a positive response from the CES. The request for the issuance of a residence and work permit is then decided by the Ministry of the Interior through the designated police administration. The application is submitted to the police station via email, according to the place of intended stay. The designated police administration or station should make a decision within 15 days of receiving a proper request. Residence and work permits are issued for the time that the work is performed based on the expiry of the contract, for a maximum of three years. The permit can also be extended without repeating the labor market test or requesting an opinion from the CES if the employer and the worker remain the same. The entire process is designed to be completed within one month. However, some employers report delays, sometimes extending to several months, during which there is no dedicated portal to monitor the application status, leaving email correspondence and in-person visits to the police station as the only means of communication with the au- thorities. The application for an extension of a residence and work permit is submitted to the police administration or police station no later than 30 days before the expiration of the said permit (15 days in the case of seasonal work). Figure 18: The process of hiring a non-EU national in shortage occupations in Croatia Extension possible Permit duration based on Ministry of employment Interior decides contract (up to Direct on permit 1 year) application for Employer permit on CES needs a website worker in Exceptions to the labor market test: a shortage –– The CES’s list of exempted occupations that occupation have sizable labor shortages –– Seasonal employment in agriculture, forestry, catering or tourism (for up to 90 days) –– Groups listed in Article 110 of the Aliens Act (journalists, researchers, Blue Card holders...) Diagnostic of the Legislative and Institutional Immigration System in Croatia 55 Previously, if a migrant worker changed employers, they needed to obtain a new residence and work permit, but this will no longer necessarily be the case under the new amendments. Earlier, the system for issuing residence and work permits to third-country nationals restricted them to working only for the specific employer and position for which the permit was issued. Any change in job or employer necessitated a new permit application process, which includes administrative steps and fees. This process was burdensome for both the authorities and the individuals involved. Furthermore, if a third-country national’s employment ended, their permit would be revoked, even though they often already had a new employer, requiring a new permit application. According to the new amendments, the worker can change jobs after a year, for example, and the new employer will only have to request a positive labor test opinion for the worker from the CES. The Ministry of Interior has tightened the conditions for issuing work permits. New conditions are now required for receiving a positive opinion from the Croatian Employment Service. In addition to this, employers and the working conditions they offer are now checked to ensure they are legitimate employers. The MoI has announced plans to step up the monitoring of em- ployers to identify and prevent those who exploit the system, thereby disrupting fair market competition. The aim is to disqualify such employers from the employment system. For exam- ple, employers are now required to provide proof of the qualifications held by foreign workers in shortage occupations to prevent the hiring of individuals lacking the necessary knowledge and skills for those roles. Additionally, there is now a cap on the number of work permit appli- cations an employer can submit, relative to the size of the company and its employment needs. This measure is intended to curb the practice of companies, particularly those created for the purpose of labor importation, from filing excessive work permit applications. Employers are required to maintain a specified ratio between domestic and foreign employees. Additionally, Croatian Employment Service (CES) will only issue a favorable opinion for work permits for for- eign workers if the employer has had at least one domestic worker (from Croatia, the European Economic Area, or Switzerland) on a full-time contract for a minimum of one year. Previously, the duration for this requirement was six months. The scrutiny of employers’ financial obliga- tions is also being intensified. Whereas previously a positive opinion required no outstanding debts in income tax and mandatory insurance contributions, now all public dues will be exam- ined. Moreover, companies looking to bring in foreign labor must demonstrate a certain level of monthly revenue. The threshold is set at €10,000 in monthly turnover for legal entities over six months and €15,000 for individuals as a prerequisite for obtaining work permits. Box 2. Rapid Growth of Employment Agencies in Croatia The number of temporary employment agencies and employment mediation agencies has increased in accordance with the liberalization of regulations governing the employment of foreign workers. The same agency can be registered both as an employment mediation agen- cy and a temporary employment agency. The difference between the two is that employment mediation agencies act as a recruitment agency (so the worker is hired by the firm), whereas Leveraging Immigration for Croatia’s Prosperity 56 temporary employment agencies act as an employer, and send workers to work for different companies for a certain period. According to the records of the Ministry of Labor, Pension System, Family and Social Policy, there were 109 employment mediation agencies and 187 tem- porary employment agencies registered in 2018. These figures have been increasing annually, with growth accelerating in recent years. In 2023, 566 employment mediation agencies and 657 temporary employment agencies were registered. The Labor Act does not stipulate a fixed commission rate for temporary employment and employment mediation agencies, allowing them to potentially charge high fees. The employer can temporarily assign a worker to another EU member state while the worker remains under the social welfare system of Croatia. The Croatian Institute for Pension Insur- ance issues an A1 certificate to the employer, which exempts them from paying contributions in the host member state for the duration of the temporary assignment. According to Regu- lation 883/2004 on the coordination of social security systems, a worker can only be posted after having worked in Croatia for at least one month. However, there have been instances where employers have attempted to send workers to other EU countries immediately after their arrival in Croatia. 2.4.2 Enforcement of the legal system of entry and stay There are some challenges in the enforcement process with respect to: (i) the current labor market test; (ii) the ratio of the number of domestic and foreign workers; and (iii) occupations with shortages on the labor market. The original intention of the labor market test was to pro- tect domestic workers. However, this test has become an exception, as only 10 to 15 percent of employers requested it. The Ministry of Labor (2023) noted that there were cases when some employers have circumvented this by imposing unrealistic employment conditions, such as offering a minimum wage to highly educated workers with substantial work experience. Fur- thermore, while 172,499 permits were issued in 2023, only 90,000 foreign workers registered (see figure 19) with the Croatian Pension Insurance Institute, although it is a legal requirement to do so. For the exempted occupations that have significant labor shortages or seasonal em- ployment of third-country nationals, no labor market test is needed, which means there is no verification of the acquired qualifications or work experience of foreign workers. This may lead to misuses, such as a foreign worker issued with a permit to work in the construction sector found working in the hospitality industry. Furthermore, although the labor market test made by the CES is relatively agile, procedures to obtain the residence permit can be slow at times, causing delays for employers in filling labor shortages. Diagnostic of the Legislative and Institutional Immigration System in Croatia 57 Figure 19: Comparison between permits issued and foreign workers Registered in Croatia 172,499 90,000 Permits issued vs Foreign workers registered Source: Croatian Ministry of Labor (2023). More stringent regulations that were introduced also require adequate enforcement mecha- nisms. In the new law, several aspects are subject to scrutiny: the working conditions offered by employers, the number of permit requests per employer and their fulfillment of public levies, and the introduction of quality controls for foreign workers. Given the number and scope of additional checks and supervision, more resources will be required. The State Inspectorate, which oversees the employment agencies, reported no breaches of regulations that mandate employment activities in the 2023 inspections.28 On the other hand, the total amount of fines paid by employers for violating regulations regarding foreign workers in the same year was €1.1 million, with 12,000 checks in total. Section 2.5. Access to services for economic migrants Services provided to migrant workers tend to be limited. Economic migrants are primarily supported by their employers, who help with obtaining work permits. Under the current reg- ulation, employers are not obliged to provide accommodation for the worker, although they often use housing as an additional incentive to attract foreign workers. According to the new law, if a certain company provides accommodation, this will have to be stated in the employ- ment contract. If the employee pays the rent himself at the employer’s request, he will have to be provided with a rental agreement and the rent cannot be automatically deducted from the salary. Furthermore, the new law stipulates that any change in the accommodation of foreign workers must be reported to the police within eight days. Employers also typically enroll migrant workers in health insurance as part of their work contract. Outside of this support, migrant 28 Turckoric (2024). Leveraging Immigration for Croatia’s Prosperity 58 Figure 20: User journey map for the foreign worker DECISION TO PREPARE ARRIVAL, EMPLOYMENT AND INTEGRATION MOVE TO MOVE LEGAL FORMALITIES Touchpoints APPLY FOR APPLY FOR RESEARCH, APPLY FOR APPLY FOR REGISTER OPEN A BANK DIPLOMA APPLY FOR TEMPorary LANGuage JOB SEARCH JOB VISA ADDRESS ACCOUNT RECOGNITION REUNIFication RESIDENCY VOUCHER REGISTER ARRANGE REGISTER ENROLL UNEMPL. VISA APPLY FOR APPLY FOR SOCIAL FIRST HEALTH LANGuage SUPPORT, REQUIREMENTS WORK PERMIT PERSONAL ID SUPPORT HOUSING INSURANCE COURSE COUNSELING Providers Govt websites, Agency for Job portals, Science Mediation agency, and Higher Employer Croatian Eploy- HR embassy/ Police Police CES portal Education, Police Mediation Banks ment Service (CES) consulate station station (need eID) Professional station agency job portal Health Associations MoI (submitted Private rent- Language CES (if Social Welfare Tax insurance fund MoI,MFA, by employer, al / employ- school, NGO unemployed Institutes (only administration (with help of Consulate including market er-arranged or church during work BIP or with office employer) test if needed), housing group permit) permanent Care: local police station or hospital residency) consulate network Mode of delivery/transaction Information service In-person service / transaction Online service / transaction mvep.gov.hr gov.hr, mup.gov.hr hzz.hr, gov.hr, mvep.gov.hr burzarada.hzz.hr mvep.gov.hr hzz.hr, gov.hr mvep.gov.hr gov.hr gov.hr porezna-uprava.hr website of a bank hzzo.hr Vauceri.hzz.hr hzz.hr azvo.hr socskrb.hr mup.gov.hr Diagnostic of the Legislative and Institutional Immigration System in Croatia 59 workers are responsible for managing their own living and working arrangements in Croatia. Different actors are involved in the provision of services to economic migrants throughout their migration journey. The user journey and service touchpoint map (figure 20) illustrate the process from the moment the foreign worker decides to move to Croatia to their medium-term integration. At the national level, the main public service providers are the Ministry of Interior which manages the work and residence permits through a network of police stations, and the Croatian Employment Service (CES) offices which provide unemployment and job counseling support. However, the bulk of the support services are implemented by the subnational ac- tors and nearly every step is handled by a different provider. Some municipalities have more comprehensive service delivery systems in place for migrants (see Box 3 for the example of the municipality of Zagreb), while in the majority of municipalities those systems are underde- veloped. The additional players providing services to migrants include the mediation agencies that facilitate recruitment and help with permits, and NGO and private providers of language training. Box 3: Service provision for migrants in the municipality of Zagreb Cities and municipalities are becoming increasingly aware of their role in the integration pro- cess of foreign workers and are building relevant migration frameworks. The City of Zagreb published an action plan for the implementation of the Charter of Integrating Cities for 2023 and 2024. From April 2024, the capital city offers free language classes for foreign workers, and also involves civil society organizations in the implementation of several measures, especially those with regards to learning the Croatian language, and convening workshops on Croatian culture and tradition. In September 2024, the City Office for Culture, International Relations, and Civil Society opened a one-stop-shop in collaboration with UNHCR, with the aim of ena- bling foreign workers and refugees to obtain all the necessary information in one place. The one-stop-shop will also provide information on free legal aid available through the Legal Clinic of the Faculty of Law of the University of Zagreb. This information will be accessible in multiple languages, including Croatian, English, Arabic, Farsi, and Ukrainian. In February 2024, the city of Split also began organizing Croatian language courses for foreign citizens who wish to improve or learn it. Through the courses, apart from learning the language, they should also learn about the culture and customs of Split, which will help with the easier integration of foreign workers. The newly adopted amendments to the Aliens Act regulate housing for foreign workers when provided by the employer. The regulation mandates that employers providing or mediating ac- commodation for third-country nationals applying for residence and work permits must ensure the accommodation is appropriate. This includes maintaining a suitable living standard, notify- ing authorities of any changes, ensuring rent is fair and not automatically deducted, providing clear rental agreements, and meeting health and safety standards. The technical conditions for appropriate accommodation will be prescribed by a bylaw, involving the Ministry of the In- terior, the Ministry of Physical Planning, Construction and State Assets, the Ministry of Labor, Leveraging Immigration for Croatia’s Prosperity 60 Pension System, Family and Social Policy, and the Ministry of Health. The State Inspectorate will oversee the control of appropriate accommodation. This regulation is important as there have been instances where foreign workers were housed in inadequate spaces, considering the area and the number of people. For seasonal workers, existing guidelines mandate a mini- mum living space of 14 square meters per individual and at least 44 square meters for a group of six workers, in addition to ensuring proper health and sanitary conditions. For example, washrooms must be separate from living and sleeping areas. Foreign workers with valid documentation have access to the health care system in Croatia. This includes seasonal workers unless they have not paid contributions, in which case they are covered only for emergency care. Despite having access to health care, migrants may still face numerous obstacles that hinder their usage of these services, leading to some unaddressed health needs (figure 21). However, a combination of factors such as unfamiliarity with the health care system or social isolation can deter migrants from seeking medical help. One of the key obstacles when receiving health care in Croatia is the existence of language barriers, which require patients to be accompanied by a person who speaks their mother tongue as well as English or Croatian. Figure 21: Health care coverage of foreigners in selected northern Mediterranean EU countries - 2020 There are no There are no There are no Permanent Temporary differences differences differences be- residents residents between treat- between treat- tween treatment Undocument- have access have access ment of perma- ment of tempo- of EU nationals ed migrants to health to health nent residents rary residents and third-coun- have access to Country care care and natives and natives try nationals health care Croatia Cyprus France Greece Italy Malta Slovenia Spain true partially true false Source: Testaverde and Pavilon (2022). Foreign workers can also have access to labor market programs under certain conditions. According to regulations,29 a foreigner who loses their job in Croatia without being at fault and has temporary residence can register with the Croatian Employment Service (CES) and is en- titled to unemployment benefits. The CES offices provide unemployment and job counseling 29 Labor Market Act, Article 15. Diagnostic of the Legislative and Institutional Immigration System in Croatia 61 support. The CES also offers a range of in-person and digitalized services and resources pri- marily for Croatian job seekers, which could be further adapted to serve as valuable resource also for foreigners. These include online registration for unemployment benefits, job search and CV posting, financial support for the unemployed, career development resources (CV workshops, self-assessment tools), internship and employment subsidies, and training and education support. The agency recognizes foreigners among its target group and positions itself to play a role in integration, sharing information on different services through a leaflet (figure 22).30 Migrants must be registered where they have temporary residence. However, once their benefits run out or their temporary residence ends, they are removed from the unemploy- ment register. Foreigners with temporary residence who register for unemployment benefits are not eligible for active employment programs. However, the changes to the Aliens Act allow foreigners with a valid residence and work permit to be unemployed for up to 60 days within the permit’s validity. During this time, they are eligible to look for a new job and become em- ployed under the Aliens Act. If the migrant is eligible for social support, this is decentralized through Social Welfare Centers. Figure 22: CES leaflet on living and working in Croatia Source: HZZ (2024). 30 https://pravamanjina.gov.hr/UserDocsImages/dokumenti/Vodi%C4%8D%20kroz%20integraciju_ENGLESKI.PDF.pdf. Leveraging Immigration for Croatia’s Prosperity 62 The accessibility of CES online services is sometimes limited for foreign workers. The CES online services are primarily available in Croatian, with options to switch to English or Ukraini- an, although the information is more limited in the other two languages, while some forms (for example, to apply for unemployment benefits) are only available in Croatian. The information services for migrants focus mainly on their rights. Some of them include a process for how to apply, but do not offer an option to apply digitally. In some instances, like the registration process as an unemployed person, the website lists the documents one has to provide but does not include links to all the relevant forms and does not specify how the user can apply. While the website is relatively easy to navigate, the process of downloading, printing, filling out, signing, and scanning forms may lack user-friendliness. The information services provide gen- eral, non-interactive content, lacking diagnostic tools that allow users to input specific details and receive tailored advice. However, certain sections for Croatian users include interactive elements, such as tools to assess employability options (figure 23). Figure 23: CES diagnostic tools for user employability Source: CES website. Students from third countries are able to enroll in higher education institutions as part of quotas for foreigners. They are required to pay tuition fees that are prescribed by the higher education institutions themselves. However, as economic migrants come to Croatia to work for a limited time defined by their permit, they tend not to enroll in formal education, except for Croatian language classes. Diagnostic of the Legislative and Institutional Immigration System in Croatia 63 A new voucher scheme for foreign citizens to learn the Croatian language is currently being introduced. This scheme is similar to previous schemes supporting the development of green and digital skills.31 This training lasts 70 hours, one part more general on culture and general topics, and another part tailor-made for specific sectors (tourism, construction for now). More than 30 companies will provide these services. Employers will have to participate financially as the CES will pay 50 percent of the cost of the Croatian language course for a worker who is employed by an employer with more than 250 employees, 60 percent for those with up to 250 employees, and 70 percent for all others. At the same time, only foreign workers who extend their stay after a year spent working in Croatia can apply for the course, but emigrants and their descendants and asylum seekers can also apply. The goal is to have up to 10,000 beneficiaries of this measure, and the average cost of this voucher is €500. Workers are the ones that have to apply. The language training is currently not mandatory or formally part of an integration pathway, and the financial contribution is the only incentive to motivate users to complete the course. Information brochures will be available for workers, and it is in the employers’ interest to inform workers about the program and suggest they apply. The systematization of language training provision is a significant improvement, although the application process is cumbersome. The information on language courses is centralized on the CES website. Currently, the course listings typically include details such as the the- matic focus, provider, duration, location, enrolment conditions, and delivery mode (in-person or online). The platform lacks the ability to filter courses based on criteria, and the search bar appears to be incompatible with English-language queries. Furthermore, although the course pages list the maximum voucher value, they do not list explicitly how much users are required to contribute under the 30-50 percent co-financing scheme. Once a user selects a course, the site allows them to submit a request online. The application process can be lengthy. To complete registration, users must first obtain an eID, which requires several preliminary steps, including: (i) acquiring a personal identification number from the tax office; (ii) registering for temporary residency at the police station; and (iii) obtaining an mToken, mPASS, or a card reader. However, none of this information is provided on the portal, and users attempting to register as an unemployed person may find themselves blocked with no guidance on how to proceed. A similar bottleneck occurs when trying to register on the Labor Exchange portal or the e-Citizen32 platform. 31 Under the NRRP, the CES continues to provide: (i) employment support (wage subsidies); (ii) work-based learning or apprenticeships; and (iii) self-employment support, with a total budget of HRK 1.1 billion, corresponding to approximately €150 million. These measures come with a training voucher for green and digital skills, with a budget of some HRK 300 million (€40 million). The voucher system allows individuals to identify training needs, suitable training, and accredited providers. The CES will approve the training with respect to two objectives: fostering transitions with green skills (70 percent of total) and digital skills (30 percent of total training) and reaching vulnerable populations (40 percent of total beneficiaries). The voucher is expected to bring significant flexibility to the training offer compared to the current system where training courses must be identified and procured by the CES. 32 https://gov.hr/hr/dobrodosli-u-domovinu/190?lang=en Leveraging Immigration for Croatia’s Prosperity 64 Box 4. Language courses offered by business associations and recruitment agencies In response to the growing inflows of foreign workers and their linguistic needs, a variety of organizations have mobilized to offer support. This includes public open universities, such as the one in Varaždin, which is developing a language course for foreigners, as well as NGOs, business associations, and recruitment agencies. The Croatian Chamber of Commerce, in collaboration with Edward Bernays Polytechnic, has initiated the ‘Welcome to Croatia’ program. This five-day, comprehensive educational program aims to accelerate the integration of international workers into Croatian society, thereby aiding local employers in adapting to the changing dynamics of the labor market. Throughout the program, foreign workers are introduced to the basics of the Croatian language, along with business and social norms, to facilitate their integration into new work environments and the broader community. Targeting employers and agencies that recruit foreign labor, the program is delivered in person. Additionally, as a pilot project in Podravina, TH Consulting—an agency in the mediation and temporary employment of foreign workers in the Croatian agricultural sector—has organized Croatian language classes free of charge. This educational program is aimed at mastering fun- damental Croatian communication skills. The classes will be held at the community center in Lozan, close to Špišić Bukovica, for approximately thirty participants, two to three times a week. The government has also introduced a new model of the adult learning program for foreign workers in the construction sector. The Reform C7.2 R4 within the NRRP introduces a new model that aims at developing green skills and competences in the construction sector for non-EU workers to encourage successful integration to the sector. The reform includes the design and implementation of an adult education program covering green building topics, particularly focusing on sustainable construction practices, energy efficient technologies, the integration of renewable energy sources, and on green construction materials for workers from third countries. 3/ Policy Actions to Enhance the Benefits of Migration in Croatia Leveraging Immigration for Croatia’s Prosperity 66 Section 3.1. Strengths and opportunities of the current migration system to enhance migration as a development strategy The system for managing migration in Croatia has been evolving to meet changing needs and contexts. According to the estimates of the Croatian Employers’ Association, assuming that Croatia’s GDP will grow by an average of 2.5 percent annually over the next six years, the country could have from 400,000 to 500,000 foreign workers by 2030, meaning they could make up one quarter of the workforce.33 In comparison to the old quota system, the current system is more flexible and better suited to meet the increased demand on the labor market. This means that it can more quickly respond to market needs, as employers who cannot find workers in Croatia now have the option to search abroad. In comparison to the old system, when employers were limited by the quotas for their particular sector, which was decided on an annual basis, this system enables them to hire foreign workers in a timelier manner. Croatia has also made important regulatory changes and introduced strategic documents to better leverage migration for the country’s development. The recently adopted Strategy for Demographic Revitalization until 2033 has a broad scope and tackles critical issues for the country’s future development. According to this strategic document, the migration policy should include measures to curb further emigration, facilitate the return of Croatian labor migrants from abroad, attract new migrants and descendants of Croatian emigrants, encour- age cross-border circulation, and manage internal migration. The Demographic Revitalization Strategy emphasizes the importance of developing a comprehensive migration policy and improving the system of collecting migration statistics. These are identified as public policy priorities within Strategic Objective 2: Balanced Population Mobility. Additionally, the newly adopted amendments to the Aliens Act address the recruitment and working conditions of migrant workers in order to enhance the protection of migrant workers. These amendments include simplifying the process of changing employers and professions, allowing an unem- ployment period of up to 60 days, and requiring employers who provide accommodation for foreign workers to furnish proof of adequate housing. Croatia’s strategic social security agreements and ongoing negotiations aim to strengthen formal labor mobility pathways and ensure comprehensive social benefits for both domestic and foreign workers. Social security agreements aim to solidify formal labor mobility and im- prove the coordination of social security systems, including pensions, health benefits, family benefits, and unemployment benefits. These agreements can influence workers’ decisions to move to Croatia. Croatia has also simplified and partly digitalized the work permit process for foreigners which is now relatively straightforward, particularly in sectors facing labor shortages like tourism and construction. Work visa processing times range from two to eight weeks, when no labor market assessment is needed. Migrants cite shorter processing times, despite lower wages, as one of the main reasons for choosing Croatia over other EU countries (IOM, 2024). 33 See article - https://www.poslovni.hr/hrvatska/poslodavci-bolje-reagiraju-kad-strani-radnik-vlada-makar-osnovama- hrvatskoga-jezika-4451040 Policy Actions to Enhance the Benefits of Migration in Croatia 67 In comparison, Germany and Spain have longer processing times, typically one to six months, due to labor market tests and qualification checks, though they offer expedited options for highly skilled workers. Italy’s process is also slower, taking two to six months, as it is regulated by annual quotas. On the other hand, the visa process for occupations not on the shortage lists requires longer processing times due to the need for employers to conduct a labor market test. However, challenges in several areas remain and affect the effectiveness of the initiatives introduced in the country. These challenges include: (i) gaps in the governance frameworks and imperfect coordination between stakeholders; (ii) limitations in the selection process of foreign workers to import the skills needed in the labor market; (iii) limited provision of services to foreign workers that hamper their integration process; and (iv) data gaps that prevent the implementation of more informed migration policies. Figure 24: Migration challenges in Croatia Data Integration Gaps in collecting, and service delivery transferring and using The system of supporting data for migration services for migrants does policy making. not address the increasing integration needs. Governance Selection ○○ Gaps in the migration process framework. Room for better ○○ Imperfect coordination across stakeholders. alignment to attract ○○ Limited oversight of skills needed in the recruitment agencies. labor market. Leveraging Immigration for Croatia’s Prosperity 68 Gaps in governance frameworks The migration governance framework in Croatia has gaps in terms of its comprehensiveness and coordination across different stakeholders. Croatia’s Migration Strategy expired in 2015, leaving a significant gap in governance. Without an overarching migration strategy that clearly defines roles and responsibilities, coordination among different government and non-govern- ment actors can be improved, both horizontally – between different ministries with competen- cies for immigration such as MoI and MoL – and, particularly, vertically – among government institutions at central and local levels. Currently, the system operates in a fragmented manner with limited coordination (IOM, 2024). Vertical coordination is particularly important as, while migration policy is decided at the central level, most services provided to foreign workers are given by local institutions. Subnational authorities have reported issues with unclear guide- lines, inconsistencies in national policies, and insufficient funding (IOM, 2024). In terms of cooperation with third countries, Croatia has yet to sign bilateral labor and social security agreements or MoUs with key countries of origin that represent some of the largest inflows of workers, such as Nepal, Bangladesh, Egypt, or Uzbekistan. A key aspect of the regulatory framework that requires more attention is the oversight of re- cruitment agencies. If not adequately regulated, these agencies can make large profits based on information asymmetries, with potential risks for migrants and for ensuring the availabil- ity of the required skills for local firms. Over the last few years, a proliferation of recruitment agencies with limited checks has been reported. The current system of recruitment of foreign workers involves recruitment agencies in both Croatia and the source country, which drives up costs for migrants, and could result in indebtedness and the acceptance of sub-par working and living conditions. Gaps in the selection process Despite recent progress, there is room to improve the selection process of foreign workers for better alignment with the country’s labor market needs. The Croatian National Bank es- timates the need for 400,000 workers from abroad in the next 20 years and emphasizes the need to meet this requirement in a planned and strategic way (IOM 2024). Still, there is yet to be a clear vision of what type of migrants and the corresponding entry channels and programs that are most needed, although the construction and tourism sectors are always highlighted as the key demand industries for foreign workers. The rapid increase in the inflow of foreign workers in Croatia during the last five years has not made a dent in the job vacancy rates, which in 2023 remained at historically high levels at 1.7 percent of total employment (Eurostat, 2024). Among the sectors with the highest vacancy rates are the hospitality industry (2.8 percent) and construction (1.9 percent) which heavily rely on foreign workers, highlighting the need for the migration system to further improve its agility to respond to economic needs. Another key sector with the highest vacancy rates is human health (3.2 percent), partly driven by the emigration of part of its workforce, and the concurrent inability to fill the emerging needs with foreign workers in the context of rigidities in certifying foreign credentials. Challenges in the selection process include lack of forecasting of labor market trends, limited incentives to attract higher skills, and information asymmetries between firms and workers. While the Croatian skills shortage list has been progressively adjusted to account for the needs in the labor market, the monitoring of skills remains focused on recent trends and does not Policy Actions to Enhance the Benefits of Migration in Croatia 69 forecast future requirements, limiting its agility to react to changes in demand. There are no skill, education, or language requirements for incoming migrants, and higher qualifications do not result in better permit conditions. Another important challenge is the imperfect informa- tion between Croatian firms and foreign workers. In many instances, employers do not have access to the verified skills of foreign workers, and reports from recruitment agencies might be misleading. In turn, while job offers from Croatian employers are posted in several recruit- ment agencies in countries of origin, they are not always translated into local languages and workers might not have a good understanding of the job requirements before they accept the offer. All this generates important skills mismatches that reduce the efficiency of the selection process and increase the vulnerabilities of foreign workers. Gaps in integration and service provision With the increasing presence of a more diverse group of foreign nationals in the country, there is also a growing need to ensure better integration in the Croatian economy. As chapter 1 shows, there has been a rapid change in the profile of migrant workers in the last years, with more diversified inflows including from Nepal, India, the Philippines, and Bangladesh. Foreign workers in Croatia, in particular newcomers from countries of origin farther away, face sever- al challenges to integrate into the Croatian economy, particularly related to limited language fluency, skills mismatches, and other barriers such as recognition of foreign credentials and lack of knowledge to navigate local bureaucracies. These challenges result in higher rates of occupational downgrading compared to the native population, reducing the productivity potential in the economy. Despite the increasing needs, integration support remains fragmented and underdeveloped, in particular when it comes to language and retraining courses. Different service providers (central and local governments, training providers, NGOs, international organizations, local organizations) operate with little horizontal and vertical coordination. Subnational authorities report issues with: (i) a lack of timely information on new arrivals; (ii) insufficient capacity and funding for integration services; (iii) a lack of clear guidelines and trained professionals (for example, interpreters, teachers, health care workers); and (iv) training for staff to better serve beneficiaries of international protection (IOM, 2024). Existing comparative data on integration policies from the MIPEX index – available for 56 mostly OECD countries – provide evidence of the gaps in policies and the legal framework to support the inclusion of migrants in Croatian society. According to the last assessment available for 2019, Croatia scored 39 points out of 100 on integration policies, significantly below the average across the studied countries (49 points). In particular, Croatia’s score is the lowest in Europe, even lower than in other less eco- nomically developed countries in the region.34 Limited integration measures may have negative impacts on migrant workers, their employers, and broader Croatian society. For workers, lack of integration increases the risk of exploitation, limiting their agency and their access to key services and employment opportunities. For employers, it increases the risks of lower produc- tivity, skills mismatches, and high turnover given that foreign workers with limited pathways for integration in the country may decide to go to Western European countries where salaries and working conditions are more attractive. For Croatian society, the lack of integration may create segregation and lower wages, in particular sectors where migrants concentrate (for example, 34 MIPEX (2020). Given that the data are from 2019, integration measures recently approved in the country are not included. Leveraging Immigration for Croatia’s Prosperity 70 low-educated workers), with the potential to create social tensions. Perceptions of migration in Croatia are among the most negative worldwide. Croatian citizens put strong emphasis on the need for immigrants to assimilate, and the vast majority are in favor of these workers learning the Croatian language to improve their communication and integration. Data gaps There is a need for a more effective system of collecting data. Improved data availability regard- ing the composition of the migrant population is essential for implementing evidence-based migration policies. Currently, the understanding of the profile of immigrants in Croatia is limited by data constraints. The Croatian Bureau of Statistics (CBS) provides only aggregate annual immigration figures of foreign nationals by country of origin, sex, and age, without detailing other important characteristics like education level, language fluency or other skills, and rea- sons for migration. Assessments of labor immigration rely on data from the Ministry of Interior, which include the number of residence and work permits issued, and the number of granted temporary and permanent residencies. The involvement of employers or intermediaries in the work permit application process for foreign workers, although efficient, is a missed opportunity for collecting data on user needs from the beginning. This lack of detailed data, coupled with the dynamic nature of labor migration, makes it difficult for service providers to understand in advance the demographic profile and needs of foreign nationals in Croatia, causing delays in delivery. The data limitations are pronounced for emigration as well. Currently, the data on the Croatian diaspora are limited and fragmented. Official statistics underrepresent the number of emigrants, as some emigrants do not de-register from their home country when moving abroad. Furthermore, there is limited information on the profile of the diaspora, their skills, investment capacity and interests, to tap its potential engagement for the development of the country. Beyond data collection, there are also challenges in the management and standardization of data, and in the interoperability of systems. This limits the exchange of information and collaboration between institutions with responsibilities for migration. While the ministries of Labor, Education and Health also have a role in migrant integration, they each manage their data independently, which limits cross-sectoral integration towards common outcomes. Sub- national authorities receive limited information on the foreigners on their territory and there are delays receiving it, which affects planning for migrant services and a timely response to migrants’ needs. There is no central dashboard, and no known routines of the institutions in- volved to regularly review the integration outcomes in order to evaluate the effectiveness of the programs and to promote coordination and collaboration. No integration outcomes are tracked at the central level, in the absence of a migration policy and plan. Policy Actions to Enhance the Benefits of Migration in Croatia 71 Section 3.2. Policy recommendations Figure 25: Policy recommendations POLICY RECOMMENDATIONS RESPONSIBLE INSTITUTIONS ○○ Developing migration Ministry of Demography and Immigration, and integration strategies Ministry of Interior, Ministry of Labor, accompanied by detailed Pension System, Family and Social Policy, action plans Ministry of Science, Education and Youth, #1 ○○ Broadening the scope and and local governments Strengthening coverage of Bilateral Social the immigration Ministry of Labor, Pension System, Family Security Agreements and Social Policy, Ministry of Foreign and governance ○○ Develop skills training infrastructure European Affairs, CES and mobility programs (for example, Global Skills Ministry of Labor, Pension System, Family Partnership)) and Social Policy, Ministry of Foreign and European Affairs ○○ Improving the licensing and regulation of recruitment agencies #2 ○○ Strengthening monitoring Ministry of Labor, Pension System, Strengthening and incentive mechanisms Family and Social Policy regulations and for recruitment agencies. enforcement on ○○ Monitoring and enforcement recruitment agencies mechanisms, particularly for and employers employers ○○ Enhancing the Labor Market Information Systems (LMIS) CES, Ministry of Labor, Pension to include forecasts of skill #3 System, Family and Social Policy and occupation demands Aligning ○○ Making the application more Ministry of Interior, CES the selection transparent, trackable, and process of foreign workers with labor streamlined market needs ○○ Better matching and usage CES, Ministry of Science, Education of foreign workers' skills and Youth, Ministry of Foreign Affairs, ○○ Improving access to services Croatian Agency for Science and for the integration of foreign Higher Education #4 Ensuring a more workers in the labor market Ministry of Labor, Pension System, effective matching ○○ Foster one-stop-shop Family and Social Policy, CES, of skills and and case management Ministry of Interior integration of approaches migrants in Croatia Local governments ○○ Implementing digital Ministry of Interior, Ministry of solutions to enhance Justice, Public Administration and #5 Digital Transformation, CES integrated migration Leveraging data and technology management Ministry of Interior, CBS, CES, for effective ○○ Enhancing data collection different ministries with roles on migration efforts migration systems Leveraging Immigration for Croatia’s Prosperity 72 I. Strengthening the governance infrastructure for immigration Croatia can strengthen and develop its legal and institutional framework for migration. Cro- atia can further develop a comprehensive migration strategy to identify migrant profiles that can best contribute to the economy’s sustainability, with specific measures to attract, train, integrate, and retain them. Once the policy direction is established, it needs to be supported by clear plans, specific actions with deadlines, and appropriate budgets. Developing and im- plementing a wholistic integration strategy is also crucial to improve access to social welfare services for foreign workers, ensure fair assessment of their labor, and invest in the development of their skills for the benefit of both the migrants and the Croatian economy. Strengthening the institutional framework, especially regarding the integration of foreign workers, should not be addressed solely at the national level, but also at the local level by developing and implement- ing strategies for local integration. Communities that host migrants and yet have not crafted specific local integration strategies could benefit from integrating such actions into their forthcoming development plans. These actions would involve educating and raising awareness among the population, with an emphasis on the media’s role in this process, potentially taking cues from the initiatives of cities such as Osijek and Zagreb. Capacity constraints need to be taken into account with regards to implementing various integration measures, especially in less developed regions in Croatia. Box 5 gives examples of different framing strategies that highlight the importance of migration for development, in alignment with national priorities and public perceptions. These range from an emphasis on economic benefits and workforce sustainability (Canada, Germany) to regional development (New Zealand), and innovation and welfare support (Sweden). Box 5. Examples of framing migration strategies to the public Canada, “Diversity is Our Strength”. The government emphasizes the role of immigrants in sustaining the workforce and contributing to public pension systems, framing migration as essential for the long-term sustainability of social welfare programs. Germany, “Make it in Germany”. Launched in 2012, this initiative promotes Germany as a desirable destination for skilled workers. The campaign is designed to attract foreign profes- sionals and students by showcasing Germany’s high quality of life and career opportunities. The government communication portrays migration as beneficial, manageable, and controlled and focuses on integration initiatives to address concerns about social cohesion and security. New Zealand, “Work the seasons”. The government communication emphasizes the positive contributions of migrants to spread economic growth also to rural areas. Campaigns often focus on reducing urban infrastructure pressures and enriching the cultural and economic life of smaller towns. Sweden, “Welcome Talent”. Migration is framed as crucial for sustaining the welfare state and fostering innovation. Political messaging emphasizes that immigration supports public services and is necessary for future prosperity, shifting the narrative from burden to benefit. Policy Actions to Enhance the Benefits of Migration in Croatia 73 Croatia could also consider expanding and deepening its bilateral and multilateral labor and social security agreements with key sending countries. These agreements are crucial for improving coordination between countries, strengthening formal labor migration path- ways (including recruitment, entry, employment, and exit phases), and better protecting and supporting mobile workers throughout their migration journey. Key elements that could be incorporated into these agreements with the main sending countries include: (i) types of visa entries depending on the program; (ii) information and data-sharing provisions to reduce in- formation asymmetries; (iii) the portability of benefits; and (iv) legal protection and redress mechanisms. Successful agreements include early consultations with employers to ensure responsiveness to their labor market needs which are reflected in these bilateral agreements. Examples include the Recognized Seasonal Employers Scheme in New Zealand and the Cana- dian Seasonal Agricultural Workers Program. Global Skills Partnerships (GSPs) are bilateral labor and skills agreements between two countries that can significantly enhance the availability of skills needed in Croatia. These programs involve training workers in the country of origin in skills that are in demand in both countries, with the destination country contributing to funding and curriculum development. After training, some workers emigrate to the destination country, while others remain in their home country, ensuring mutual benefits. GSPs address concerns about human capital loss due to emigration by providing formal migration pathways and strengthening the education and training systems in countries of origin to meet international standards. These programs offer a comprehensive skills and migration package, including tailored services and support for prospective migrants, and facilitate coordination between actors in both countries. A Global Skills Partnership model could be highly beneficial for Croatia, considering the need to more effectively manage the immigration of workers to address increasing labor shortages. A Global Skills Partnership could include integration services, such as language acquisition, to mitigate the risks of exploitation, low productivity, and secondary migration to other EU countries. For Croatia, this partnership could target sectors with significant labor shortages, such as construction or tourism. More details on the potential and mechanism of GSPs for Croatia are discussed in section 4.1. II. Strengthening regulations and enforcement on recruitment agencies and employers There is scope to introduce licensing and improve the regulation of recruitment agencies. A comprehensive oversight of this industry can reduce costs and fees that migrants pay while enhancing their protection against any legal violations. Best practices include introducing li- censing requirements, such as recruitment agencies needing to take training programs prior to obtaining a license, renewing it, or retaking these courses if infractions are committed. The stringency of regulations on recruitment agencies should take into account the capacity for enforcement and the potential side effects of increasing informal brokerage.35 Croatia can reduce reliance on recruitment agencies in the matching process by investing in information provision to foreign workers. In certain countries, government-to-govern- ment agreements have helped reduce the costs of immigration, benefiting both workers and 35 World Bank (2016): “Understanding the Malaysian Labor Market and Foreign Labor: The Past, Present and Future Role of Foreign Workers in the Economy”. Leveraging Immigration for Croatia’s Prosperity 74 employers.36 A key component of these agreements is expanding access to information for both employers and migrants, reducing the information asymmetries. This not only reduces reliance on recruitment agencies but also improves matching between firms and foreign workers. Best practices in countries such as Korea or Slovenia include public investments in developing user-friendly websites by the public employment services or different ministries that provide detailed information for foreign workers in their native language, with respect to the migration procedures, including recruitment, jobs, and training opportunities. Improving the performance of recruitment agencies also requires strengthening their incen- tive mechanisms. On the one hand, increasing resources to monitor and enforce regulations on recruitment agencies improves compliance. However, when resources and capacity are limited, there are complementary mechanisms to improve the performance of recruitment agencies. One such way is to make relevant information about recruitment agencies publicly available, including any type of violation, or the worker retention rate, and worker placement. Singapore is a good example of a country that has publicized key performance indicators of recruitment agencies. Other systems also include ratings of recruitment agencies by employers and/or foreign workers based on the application and selection process, and support provided throughout the matching journey. Best-performing agencies can receive public awards and other benefits such as the expedited processing of licenses to incentivize a race for quality. Associations of recruitment agencies can also be encouraged to adopt codes of conduct, rate the performance of individual agencies, and publish the results of these ratings. To enhance the employment system for foreigners in Croatia, it is also crucial to strengthen the monitoring of employers. By implementing control mechanisms and tracking labor mar- ket needs, the requirements of employers seeking workers for their activities in Croatia will be met. Simultaneously, continuous protection of employment rights must be ensured. While workers are eligible to be sent to other EU countries if they meet certain criteria, enhanced monitoring is needed, for example through more targeted inspections. The Croatian Pension Insurance Institute (HZMO) enables e-requests for the issuance of A1 certificates, so this issue is expected to be less problematic in the future as better tracking will be possible. With respect to the enforcement of labor laws and regulations, there can be increased efforts to supervise employers through risk-based inspections, pursuing joint enforcement of immigration and labor regulations. This enforcement should systematically apply both penalties for non-compliers in a consistent way and rewards for compliers. Currently, resources for inspections on employ- ers are limited, leaving space for exploitation. The amendments to the Aliens Act represent an opportunity to improve some of these current challenges, but only if these more stringent regulations do not overburden the hiring process for employers and are also accompanied by adequate enforcement mechanisms. III. Making the selection process of foreign workers more aligned with labor market needs Strengthening the LMIS would enable the migration system to respond more swiftly to labor market needs. The Croatian occupation shortage list can be improved to better facilitate skills monitoring, by becoming a platform to identify and monitor skills and occupations in critical 36 In Malaysia, this type of intervention reduced the costs tenfold (World Bank (2015): “Malaysia Economic Monitor: Immigrant Labor”). Policy Actions to Enhance the Benefits of Migration in Croatia 75 need to inform different human capital policies. This could be done by first gathering com- prehensive data from various sources, including employers and educational institutions, into an LMIS and using advanced analytics to assess skills and occupation demands. The system could be updated in real time, and used to inform migration policies, ensuring that they are aligned with labor market needs. In addition, Croatia could expand the consultative process with employers and labor unions on skills. The United Kingdom is an example of best practice on this front as they created the Migration Advisory Committee which assesses skills needs in the labor market in certain sectors and advises the government on immigration policy matters to respond to those needs. These improvements in the skills monitoring systems would also help adjust educational and training programs, for example, those that would be established through the Global Skills Partnerships, as well as to attract foreign students, especially in those disciplines where Croatia is experiencing labor shortages.37 Clear, transparent, and trackable entry paths for migrants that are aligned with labor market needs are essential to ensure efficiency, reduce costs, and maintain confidence in the admis- sions process. Confusing and opaque application processes create inefficiencies, increase migration costs, and undermine confidence in the admissions system. Enhancing transparency and ensuring that both employers and migrants understand the eligibility requirements and selection criteria for entry are essential. Systems that allow employers and migrant workers to monitor their progress towards entry can boost confidence in the system and enable officials to address bottlenecks more effectively. The entry system should ensure a balance between protecting the employment outcomes of the Croat population and allowing enough agility to meet labor market demands and protect foreign migrants against potential abuses. IV. Ensuring a more effective matching of skills and integration of migrants in Croatia Croatia should also take steps to ensure better matching and utilization of skills. Enhancing the provision of information to migrants can reduce migration costs, protect migrants throughout the recruitment process and during employment, and improve the matching of foreign workers and jobs. The Croatian employment services can cooperate with the employment services of countries of origin in providing more information about specific job opportunities and re- quirements in Croatia in local languages. A good example is the bilateral agreement between Slovenia and Bosnia and Herzegovina where both employment services coordinate and share openings on each other’s portals. The provision of relevant information is particularly necessary in a context where informal brokers remain prevalent in many sending countries (for example, in South Asia). This can be complemented with pre-departure training courses (which can be done online or in-person), providing detailed information about migration procedures and readiness to engage in the Croatian labor market. The timely recognition of qualifications and validation of skills are also crucial for enhancing employability, addressing skills shortages and reducing mismatches that cause productivity losses for the economy. Croatia can strengthen cooperation with the main countries of origin to work on aligning quality assurance, including coordination between the quality assurance agencies as the most effective way to gain trust and facilitate the validation of foreign credentials.38 37 With 3.6% of students from abroad, Croatia has one of the lowest proportion of the tertiary student population in the EU. 38 Carvalho, Rosa, and Amaral (2023). Leveraging Immigration for Croatia’s Prosperity 76 To unlock the potential and facilitate the integration of immigrants in the Croatian economy, Croatia has significant scope to expand its protection and service provision. Migrants, despite the potential economic gains they can obtain during their migration experience, encounter specific challenges and vulnerabilities at various stages of their migration and need adequate protection and support. Amendments to the Aliens Act aim to increase the protection of mi- grants by allowing them to access unemployment benefits before losing their work permit and by forbidding employers with certain sanctions or that are convicted of criminal offenses from hiring them. Nevertheless, important gaps need to be addressed. First, there is scope to better ensure that migrants have better access to redress mechanisms when their rights are violated and resolve disputes with recruitment or employment agencies. In order to facilitate the social inclusion and integration of foreign workers, Croatia could also expand services to this population, including orientation programs, language training, and better access to active labor market programs. Government-run language training programs, as part of introductory training for newly arrived foreign workers, have been seen to have significant positive effects on their labor market integration in different countries in Europe.39 The recently introduced voucher scheme for learning Croatian is a step in the right direction, but there is ample room for simplifying the application process – including providing more information and help and the option to apply in different languages – and scaling the training up, as it is currently limit- ed to 70 hours. Ideally, language courses should be offered as early as possible, for example, pre-departure via a GSP scheme or upon arrival, and it is necessary that these language train- ing opportunities are affordable, easily accessible, and comprehensive. Recent amendments to the Aliens Act, which increase the duration of permits and thus lead to migrants residing in the country for longer periods, increase the importance of migrants’ integration in Croatia. Investing in integration programs not only supports migrants’ labor market outcomes but there is also evidence that they can reduce anti-immigrant attitudes, which is one of the strategic guidelines for immigration under the new Strategy for Demographic Revitalization and supports the political feasibility of these programs.40 The integration outcomes could be strengthened by fostering one-stop-shop and case-man- agement approaches in the service delivery system to migrants. As figure 20 depicts, the migrant workers’ journey to obtain all the required documentation, to register, and to access different services is complex and requires interactions with a wide range of institutions. Online websites can centralize information on different opportunities and requirements for prospective migrants. Once in the country, one-stop-shops can centralize the provision of multiple services and offer support to migrants (including legal counseling, access to housing, education, health care or ALMPs), easing the navigation of a foreign bureaucracy. In turn, case management provides individual support through a collaborative process, following a holis- tic approach, with tracking and follow-ups to meet the specific needs of migrants. Currently, there is only one one-stop-shop in Croatia, which was opened in Zagreb in September 2024 with an innovative and inclusive approach by including immigrants in the steering committee for the plan’s implementation. Central authorities can encourage subnational governments to experiment with innovative solutions for seamless community integration. Examples of case-management approaches used in other countries serve as a building block for service 39 See, for example, Lochmann, Rapoport, and Speciale (2019) in France and Lang (2022) in Germany. 40 Kende et al. 2022. “Integration Policies Shape Ethnic-Racial Majorities’ Threat Reactions to Increasing Diversity.” Science Advances 10(22). Policy Actions to Enhance the Benefits of Migration in Croatia 77 provision to migrants and highlight the need to go further, involving the private sector, NGOs and academia, and testing and evaluating innovative solutions to assess what works best to improve the integration of immigrants. For instance, an innovative one-stop-shop pilot was in- troduced in the Romanian municipality of Cluj to integrate Ukrainian refugees, with the support of the World Bank. The Romanian example shows how digitalized access to social assistance, language training, education, and employment opportunities on one single portal can facilitate service provision to migrants. Similar solutions in Croatia could also enable quicker application processing and decision-making or expand service offerings for foreigners through life events. Support can also be expanded to migrants’ families, such as child education, childcare, and integrating female spouses into the labor market. Section 4.2. provides a deep dive on how to build a digitalized and integrated service delivery system for migrants based on international best practices. Additionally, expanding family reunification pathways for migrants and their families can increase their social inclusion and the attractiveness of Croatia as a destination country, at least in particular occupations where the country struggles to find domestic or foreign workers and has more competition with other EU countries (for example, in the health care sector). Local authorities could be given a bigger role in integration planning and implementation, as emphasized in the new Strategy for Demographic Revitalization. This can be done by ensur- ing decentralized funding and by supporting experimentation and innovation in reaching the set objectives. Funding systems can be developed where local governments with successful integration practices can obtain additional funding, or other incentives. V. Leveraging technology and data to improve the effectiveness of the migration system Enhancing data collection is vital for more informed migration policymaking. This is aligned with the recent Strategy for Demography Revitalization, which includes among the key priori- ties to improve the data collection system on migration. Key information necessary for sound policymaking includes migrants’ mobility patterns, education, skills, and work experience. Cen- suses and periodic nationally representative surveys should incorporate questions to better capture data on immigrants, emigrants, and return migrants, enabling an assessment of their socio-economic outcomes. Moving forward, systematically cross-referencing databases both within and across institutions will enhance compliance with labor regulations and immigration laws. Additionally, Croatia could consider developing specialized migration surveys with de- tailed questions on migration history, skills, constraints, vulnerabilities, and outcomes in the education and labor markets. Furthermore, enhancing data collection on the emigration side would also be beneficial. For example, establishing and maintaining a comprehensive diaspora registry would provide a better understanding of the Croatian diaspora’s skillset. This registry would also be valuable for tracking Croatian emigrants in overseas and European countries and their descendants, who may be interested in re-engaging with Croatia. Digitalization can simplify bureaucratic procedures and facilitate coordination between stakeholders. By digitalizing various processes, budget and human resources constraints can be alleviated, leading to more effective and integrated migration management and ser- vice delivery systems. This also improves the coordination of migration policies across dif- ferent agencies. Enhancing compatibility between various information technology systems can further support these efforts. A positive development already underway is the Ministry Leveraging Immigration for Croatia’s Prosperity 78 of Interior’s cross-operability initiative, which aims to simplify data access from the Croatian Pension Insurance Institute to verify the registration of foreign workers. Additionally, it would be advantageous for employers to track their application’s progress through an online portal, rather than relying on email correspondence with police officials, as is currently the case. A shared data platform would increase the power of existing data in enforcement efforts. Digi- talization can also support the enforcement of migration and labor regulations, reducing the costs of inspections (for example, of employment verification systems cross checked with biometric data). 4/ Deep Dives into Two Actionable Policies for Skills Enhancement and Integration of Foreign Workers Leveraging Immigration for Croatia’s Prosperity 80 Given the salience of skills mismatches and integration challenges, the following chapter provides a deeper dive into: (i) how to build Global Skills Partnerships to formally train and attract workers; and (ii) how to digitalize and centralize services for migrants in one-stop- shops to enhance their integration. The focus on those two gaps among the different policy gaps found in this analysis stems from the high-order relevance for the country of ensuring the selection, entry, and integration of workers with the skills demanded in the labor market. Still, these two angles alone do not address all the challenges associated with migration in Croatia, and other gaps highlighted in this report also need to be addressed to improve the outcomes of foreign workers in the country. Section 4.1 provides a thorough review of Global Skills Partnerships (GSPs) and how they can fit in the migration and development agenda in the country (section 4.1.1), highlighting the key parameters and decision choices in the design and implementation of these types of programs, including financing (section 4.1.2), and the feasibility of such a program for Croatia (section 4.1.3). In turn, section 4.2 looks at how to build a more complete, centralized and user-friendly service delivery system to better address the increasing needs of the migrant population and enhance their labor market outcomes. This includes: (i) better covering integration aspects in the strategic and legal framework; (ii) add- ing measurable targets; (iii) improving coordination between different actors, including data sharing; (iv) digitalizing and centralizing service provision in one-stop-shops; and (v) building dashboards for easier monitoring, evaluation, and the adaptation of services to migrants’ needs. Section 4.1. Global Skills Partnerships (GSPs) 4.1.1. Global Skills Partnerships in the context of the migration agenda in Croatia Global Skills Partnerships aim to address skills shortages in both origin and destination coun- tries while strengthening a formal migration channel. Typically, the destination country agrees to collaborate with resources for the training of workers in the country of origin to participate in the two tracks – ensuring that both countries experience net gains of skilled workers and human capital (see figure 26). This model also ensures investment in the education and train- ing system in the countries of origin to compensate them and ensure they produce qualified workers for markets abroad.41 41 Adhikari et al. (2021). Deep Dives into Two Actionable Policies for Skills Enhancement and Integration of Foreign Workers 81 Figure 26: A GSP model Technical Training Integration (including financial Training and technology (language, transfer from culture the country to awareness) destination) Option to stay Option to migrate –– Skills –– Skills –– Earning –– Earning Country potential potential Country of –– Able to migrate of origin legally and safely destination Source: World Bank (2021) A GSP model can be promising for Croatia given the need to better manage the immigration of workers and ensure they have the skills required for the Croatian labor market. Global Skills Partnerships offer an opportunity to address growing labor and skills shortages in both origin and destination countries in a way that is cost effective and which also ensures that workers are trained to a level that meets employers’ demand in the destination country. A key advantage is leveraging the lower price of training in countries of origin and shared labor market needs, while working together to strengthen the training system to be able to produce workers who can successfully fill gaps in both countries. In particular, the GSP model can also incorporate specific credentials, licensing, and additional soft-skills training to ensure that migrants’ skills are verified, and that they can effectively integrate when they arrive in Croatia. It offers a mech- anism to closely collaborate with the private sector, including small businesses, to help the sector more effectively and ethically recruit internationally, addressing labor needs. Creating a well-managed legal labor pathway for these trained workers can help address the rising immigration needs in a way that ensures both the security and development of the country. Finally, the GSP model offers a blueprint for building strong collaborative partnerships with other countries, given that some of their workers will be prepared with necessary skills to be able to contribute to domestic development goals, along with improving connections and networks between the countries. A GSP also aligns with Croatia’s Strategy for Demographic Revitalization and recent legisla- tive efforts to better manage the immigration process. It would support the goal of achieving balanced population mobility and address net migration goals in a managed way that also ensures the integration of those who come. The government has been investing in ways to make immigration more efficient and effective, including through the 2020 Aliens Act that makes the system more responsive to labor needs and the anticipated amendments that extend the duration of work permits and guarantee further protection for migrants. A Global Leveraging Immigration for Croatia’s Prosperity 82 Skills Partnership would align with these efforts and create even more streamlined pathways for attracting workers with the precise skillsets that Croatia is seeking. 4.1.2. Designing a Global Skills Partnership The process of designing a Global Skills Partnership involves a series of steps to determine how the mechanism will function. The final format of a GSP is flexible and will depend on a series of key decisions, including the sector of focus, the countries involved, and other vari- able parameters that need to be decided as part of the engagement. The implementation of the agreement will also be guided by preparation required in both countries based on the final design decisions. The entire development process of a partnership should be done through collaboration to ensure alignment with the available resources and development goals in both countries. Figure 27: The key steps for designing a GSP Choose Choose a Joint Implemen- a sector country agreement tation partner on design parameters A key element of designing a GSP is the choice of sectoral focus, which should be based on labor market realities and strategic goals. The most important factor in the choice of sector is ensuring that there is a shortage of labor or skills in the domestic labor market that will benefit from attracting properly skilled workers and that there is a demand from employers who are willing to recruit them. The choice of sector also has to be based on the similarity or complementarity of skills needed in the country of origin so that they will be incentivized to train workers, some of whom will stay. Identifying sectors with labor shortages or skills gaps involves conducting assessments of the labor market and clearly understanding the trends and strategic goals. The work being done by the Croatian Employment Services in the preparation of a list of shortage occupations can be valuable and can feed into this analysis. In addition to the links to labor market needs, the selected sector must also be one where the training system of the country of origin is capable of training workers or is prepared to collaborate with destination countries to increase the capacity of their training system to meet the necessary standards for working abroad. Partner countries of origin will have the added incentive to invest Deep Dives into Two Actionable Policies for Skills Enhancement and Integration of Foreign Workers 83 in sectors that will benefit from international investments and alignment with global standards. A relevant sector also has specialized training requirements that indicate the need for the establishment of training curricula. Having a specialized skillset also creates an opportunity to incorporate recognition of prior learning into the agreement. While countries of origin will focus on sectors that could be a source of domestic growth in the future due to international linkages and improvements in training capability, countries of destination will strategically focus on sectors that have immediate labor or skills needs and can boost productivity.42 Other important factors for the choice of a sector are political will, public interest, and the sector’s growth alignment with strategic development goals. Figure 28: The choice of sector depends on labor market needs and development goals Existing skill shortage Potential for Employer remittances and demand skill transfer Specialized Political will training and public requirements interest Source: Adhikari et al. (2021). The choice of a country partner is also strategic and based on shared needs and existing link- ages. For Global Skills Partnerships to be effective, there must first be an alignment on labor market demand in the selected sector for both countries. Negotiating effective collaboration can also be aided by existing foreign policy ties, especially when there are already work visa schemes for workers to access and strong communication between governments in both countries. In Croatia, prior agreements on social security system alignment and existing coop- eration between public employment agencies could serve as a foundation for partnerships on labor mobility. An ideal country partner also has strong labor laws, including their enforcement, which will help ensure that migrants are protected throughout the training, migration, and employment, and will have access to mechanisms to receive and resolve grievances. Another 42 Adhikari et al. (2021). Leveraging Immigration for Croatia’s Prosperity 84 factor for selecting a country partner is to prioritize countries from which there are existing migration pressures. This can ensure that the program will have sufficient applicants to reach its desired size, given the demonstrated demand for migration between those countries. Finally, choosing a country partner with existing language or cultural linkages can reduce barriers to integration that migrants may face upon arrival. Growing diaspora populations in Croatia can offer opportunities for integration support through community organizations and cultural ties, and also demonstrate historical migration demand. Figure 29: Viable country partners for a GSP have similar labor needs and existing ties Which countries have similar labor shortages? Where are there existing foreign policy ties? Which countries have strong labor laws? Where is there existing migration pressure? Where are there existing cultural linkages? Source: Adhikari et al. (2021). After determining the focus sector and country with which to partner, the participating coun- tries jointly agree on additional variable design parameters, including the demographic profile of migrants, employment conditions, training curriculum, recognition of achievements of competence, as well as financing. In addition to the two fundamental components, migration and training, there are other elements that must be mutually decided to finalize the structure of the partnership. First, the countries need to agree on the demographic profile of workers who will be trained and migrate and if they will need to have existing skillsets or education. The countries also need to determine how the migration will be managed, including the length of time in the destination country, whether migrants will be tied to a single employer or freely participate in the labor market, and any other employment condition guarantees. The agree- ment also needs to define the training curriculum, in collaboration between all stakeholders. This includes which elements will be conducted at origin and which at destination, the mixture of theoretical and practical training, the duration, and the integration of language and cultural awareness training. The agreement on training also needs to include the specific procedures for recognizing the achievement of competence. Finally, an agreement between the partici- pating countries needs to be reached on how the training and migration partnership will be financed. With Global Skills Partnerships, it is typically recognized that contributions in some form should come from both countries. Deep Dives into Two Actionable Policies for Skills Enhancement and Integration of Foreign Workers 85 The implementation of a Global Skills Partnership involves preparation and groundwork in both the country of origin and destination. Connections need to be established with employers in both countries to understand their needs and ensure their support for training design, skills recognition, and job offers for candidates. Relevant authorities also need to identify training providers in both countries with the necessary standards. Materials for technical and inter- cultural training will also need to be prepared in collaboration. The two countries should work together to confirm the process required for participants to navigate the selected legal labor pathway and determine what level of support will be provided. Channels should be established to recruit candidates who meet the necessary basic criteria, and processes should be put in place to select participants. This includes an agreement between both countries on the profile of participants, including existing skills levels and other basic criteria to ensure they will have success abroad. It also includes an agreement between both countries on how candidates will be assigned to the home and away tracks. The first criterion for this process should be the preference of the participant because not all will wish to migrate abroad. In addition, other criteria such as additional qualifications (such as knowledge of the language at destination), performance, or random selection can be used to meet established quotas for both tracks. Global Skills Partnerships include logistical planning for the departure and arrival of candidates who will migrate. For those who are registered in an ‘away track’, the additional procedures required for migration can be integrated into the training process. This can include providing logistical support, guidance, and dedicated opportunities for participants to undergo health checks, pass through visa procedures, and receive work permits in accordance with the re- quirements of the relevant authorities in the country of destination. The departure and arrival of candidates in the ‘away track’ should also be coordinated between the relevant authorities in both countries so that migrants can be met after arrival and supported with immediate integration needs. In the destination country, implementation includes continued support for training and in- tegration after migrants arrive. Those who are selected for the ‘away track’ will need support dealing with the bureaucratic procedures in the new country. This can be integrated into the training curriculum through additional technical and post-arrival training, which will also in- clude continued support with language acquisition. In addition to facilitating integration into the destination country, Global Skills Partnerships can include continued services for migrants to maintain connections with their country of origin. Via these models, the government of the country of origin knows exactly who is migrating and can efficiently offer a variety of services that focus on facilitating positive impacts such as remittances or knowledge transfer. The implementation of a Global Skills Partnership also includes ongoing evaluation of the process and its results. The training and migration of skilled professionals is a complicated process, with potential risks if proper protocols are not followed. In order to protect migrants and ensure they do not face exploitative conditions in either country, they benefit from having accessible redress mechanisms to lodge complaints and have them adjudicated. Data should be collected so that both countries can understand migrants’ experiences, as well as the labor market effects in both countries. Data should also be collected to understand the experience of businesses in the country of destination to ensure that their needs are being met and that skilled workers are successfully addressing the preexisting shortages. Strong evidence is important to understand if the arrangement has been successful and can be continued or expanded, including to new sectors or with other countries. Leveraging Immigration for Croatia’s Prosperity 86 Five underlying principles are the basis for successful Global Skills Partnerships. The first is coordination. Coordination is required between government agencies within each country, between countries, and with the private sector to ensure that participants can smoothly move between systems. Additional stakeholders, including industry associations, technical training providers, and potentially international organizations, also require coordination. The second principle is partnership, recognizing that both countries and participants can benefit when the agreement is managed well and equitably. The third principle is standardization, which ensures that training in a dual-track system can prepare workers for employment in both countries. Standardization also brings investment in improving the training system in the country of origin and fosters trust for the destination country that workers who migrate will be well prepared. A systemic approach is another principle of bilateral training and migration agreements which should focus on the long-term development goals of addressing labor market needs in both countries, increasing human capital, and improving education and training systems. The final principle is realistic cost sharing, which recognizes that the costs associated with training workers and building human capital (which, in the absence of agreements, are often assumed entirely by the origin country) should be shared between stakeholders who can all provide fi- nancing in accordance with the benefits they receive.43 For destination countries, sharing the cost accounts for the benefit of a well-managed migration pathway that supplies well-trained workers in planned sectors of need. Figure 30: Underlying principles for bilateral training and migration agreements Coordination Partnership Standardization Systemic Realistic Cost Approach Sharing Source: Gruber (2024). 43 Gruber (2024). Deep Dives into Two Actionable Policies for Skills Enhancement and Integration of Foreign Workers 87 Box 6. Lessons learned from international experience The number of international examples of agreements in the structure of a GSP is growing. Ar- rangements such as the Pilot Project Addressing Labor Shortages through Innovative Labor Migration Models (PALIM)44 in Belgium and Morocco in the ICT sector, the Towards a Holistic Approach to Labor Migration Governance and Labor Mobility in North Africa (THAMM)45 project between Belgium, Egypt, Morocco, and Tunisia, the Australia Pacific Training Coalition (APTC)46 arrangement with Pacific island countries on vocational skills, and the Digital Explorers47 pro- gram between Nigeria and Lithuania have provided valuable lessons learned that can benefit new agreements going forward. Skill recognition and suitability: Previous efforts have shown the importance of ensuring that qualifications gained by workers through the training portion are recognized and accredited in both countries. Agreements rely on the principle that training will smoothly transition to employment in both countries. International experience has shown the importance of involv- ing employers and public employment agencies in the design of training to ensure that skills are being suitably built.48 Financial sustainability: An agreement has a higher chance of financial sustainability if it involves a wide range of stakeholders, including all those who benefit. Being dependent on one source of finance can leave an agreement open to the risk of political changes and time limitations. Welfare protection: Migration is at the center of these agreements and the rights of migrants can be protected throughout the process. International experience has shown the importance of including provisions to monitor and enforce workers’ rights and of providing sufficient con- sular services to offer protection and additional resources. Social integration: A lesson learned from international experience is that agreements should include measures to support those in the ‘away track’ in the process of integration into their new country, including access to local services and connections to diaspora communities. 44 Belgian Development Agency (2019). 45 ILO (2019). 46 https://www.aptc.edu.au/ 47 https://digitalexplorers.eu/ 48 https://gsp.cgdev.org/ Leveraging Immigration for Croatia’s Prosperity 88 Support from other stakeholders and the international community Collaboration with the private sector is important for the effectiveness of a Global Skills Part- nership. An agreement is most effective when it is driven by employer demand, while working with the private sector in both countries is important to ensure that skills development is aligned with labor market needs. This includes coordinating directly with the private sector in labor market assessments and in the design of the training curriculum. The private sector is also most attuned to dynamic changes in labor market needs that would require adjustments to the training curriculum. Collaborating with employers in both countries requires additional coordination and planning but strong employer ties can also ensure that the job-matching pro- cess goes smoothly.49 The involvement of the private sector is also important for the principle of partnership, and models that are entirely supported by public funds are essentially providing training for private sector employees free of charge.50 Around the world, the private sector has demonstrated a willingness to fund training when it offers an opportunity to save on costs.51 International organizations can also provide support to facilitate bilateral training and mi- gration agreements. They have the convening power to bring a diverse array of stakeholders to the table, which can help to facilitate coordination. International organizations, such as the World Bank, IOM, and ILO, also have experience in providing support for holistic systems building, including for vocational education and training and for monitoring and evaluation. Within the functioning of a Global Skills Partnership, international organizations can provide analytical and technical assistance in both origin and destination countries to ensure the suitable matching of participants with jobs. This can include outreach to participants and to employers, the profiling of applicants and an analysis of skills demand, and the identification and support of training programs. International organizations also have experience designing mechanisms that facilitate the match between a pool of workers and a pool of jobs. Finally, international organizations have an interest in providing financing for policy interventions that can lead to positive development outcomes. 49 Adhikari et al. (2021). 50 Ibid. 51 Porsche, the automobile manufacturer, has training and recruitment centers in Manila, Mexico, and China. Another example is the Ghana Industrial Skills Development Center, which was founded in partnership with a Dutch textile firm. The Tata group, an engineering firm in India, created a training facility in Singapore to train local workers, which led to spillover effects and eventually contributed to the development of a strong polytechnic and TVET training system in Singapore. Ansu and Tan (2011). Deep Dives into Two Actionable Policies for Skills Enhancement and Integration of Foreign Workers 89 Figure 31: International organizations support with matching mechanisms for workers and jobs Outreach to Outreach to target group employers Potential for Skills demand remittances and analysis skill transfer Skills training provision Identification of (language, soft skills, training programs technical training) Pool of Pool of Matching workers vacancies Financing for bilateral training and migration agreements Global Skills Partnerships generate both fixed administrative costs and variable costs that depend on the number of participants. The total cost of an agreement will depend on the selected model and the nature of the other variable factors. Fixed costs for training include building the capacity of the education and Technical and Vocational Education and Training (TVET) systems and labor inspectorates, and costs associated with new skills recognition pro- cesses. Fixed costs also include salaries for personnel and expanded capacity for government agencies in charge of processing visas and other migration requirements. While necessary for the functioning of the agreement, these costs are also investments in improving domestic systems. Variable costs associated with each participant in an agreement include those as- sociated with selection and recruitment, training, passport and visa fees, travel costs, health and security checks, supportive services for integration, return and reintegration programs, as well as general project implementation and monitoring and evaluation.52 These costs will increase as the number of workers increases, though achieving economies of scale could reduce the per-worker price.53 In Global Skills Partnerships, financing is a collaboration between all stakeholders who ben- efit from the outcomes. Conducting the majority of training in the country of origin reduces overall costs, given the price differences between the countries. There are different ways to distribute costs according to both capacity and level of benefit. In addition, while public 52 IOM (2023). 53 Adhikari et al. (2021). Leveraging Immigration for Croatia’s Prosperity 90 funding on behalf of both countries may be appropriate given the development benefits and positive spillovers from investing in a training and migration agreement, there is room for other stakeholders to contribute. Given the potential associated gains, both the private sector and ‘away track’ participants can also contribute financially. The private sector gains significantly through the creation of a skilled workforce and can contribute, particularly to cover training and migration variable costs. This has been the case in previous agreements such as between Indonesia and Aus- tralia, and with German schemes to recruit health workers. In certain contexts, ‘away track’ participants themselves can contribute to offset certain costs given the monetary gains they will receive from facilitated migration to a country with higher wages. These contributions can also be arranged to ‘kick in’ a set time after migration, once increased earning has begun. Global interest in managed migration means that opportunities for initial funding exist from the international community. Initial funding can be especially useful to provide proof of con- cept and demonstrate the added value for other stakeholders who have lower risk tolerance but would be willing to provide financing once they are convinced of the agreement’s effec- tiveness. For example, a pilot program financed through official development assistance and international partners could then be scaled using public funds.54 Multilateral partners have made specific commitments to support the development of these agreements in different ways. The World Bank is committed to supporting ten Global Skills Partnerships, and the EU Talent Partnerships initiative has an open call for proposals through its Migration Partnership Facility. Other pilot initiatives have been developed with partnerships between IOM and official development agencies such as GIZ. 4.1.3. The feasibility of a Global Skills Partnership for Croatia The EU Talent Partnerships policy and funding framework offers a guide for EU countries on enhancing legal pathways for mutually beneficial international mobility. It focuses on the better matching of labor market needs and skills between the EU and partner countries and promotes direct support from EU countries to citizens of partner countries to study, work, or train in the EU as a way of attracting talent. At the same time, the framework also ensures that EU countries will assist in building capacity in the partner country in different areas related to mutual benefit from international mobility, such as labor market or skills intelligence, vocational education and training, the integration of returning migrants, or diaspora mobilization.55 Talent Partnerships is also a funding framework and has supported several pilots through its Migration Partnerships Facility. The Talent Partnerships framework aims to take a step toward delivering on the EU’s ambition to build balanced partnerships with other countries, including through Global Skills Partnerships models. It offers an option for countries like Croatia to take advan- tage of multilateral interest in better managing migration for development. The EU’s growing experience facilitating labor migration has also resulted in new tools that could be leveraged to support a Global Skills Partnership. Croatia is already a pilot country for the EU Talent Pool that helps connect employers to candidates and could provide lessons learned for matching 54 Ibid. 55 European Commission (n.d., b). Deep Dives into Two Actionable Policies for Skills Enhancement and Integration of Foreign Workers 91 employers with the participants of Global Skills Partnerships. The European Qualifications Framework (EQF) can also be leveraged to ensure that qualifications are recognized and assist in standardizing training between Croatia and its partner country. A Global Skills Partnership (GSP) could also address several underlying challenges in Croa- tia. In the labor market, agreements focusing on labor mobility and skills development could directly address the rising challenges in Croatia of a reduction in the working-age population and increasing skills shortages. With respect to the legislative system for the entry and em- ployment of immigrants, a GSP that more closely links employers with potential employees overseas could reduce challenges with recruitment agencies and information asymmetries for potential migrants. A GSP could also address the rising challenge of integrating new workers in Croatia, by incorporating services focused on integration, such as language acquisition, which reduce the risk of exploitation, low productivity, and secondary migration to other countries in the EU. Finally, a GSP could result in overall better management of migration data and a clearer understanding of the experiences of immigrants in Croatia. A Global Skills Partnership for Croatia could focus on a sector from the list of occupations with sizeable labor shortages. The CES is well placed to collect data and adjust to any chang- ing labor market needs, as well as to collaborate with employers to determine where there is existing demand for foreign employees along with the diagnosed shortages. Understanding the trends in skills needs could also guide decisions on which occupations to target. GSPs are often most effective for middle-skill occupations that require some level of technical training, which ensures that the training element of the partnership is necessary but not overly burdensome or difficult to coordinate with the country partner.56 GSPs could also target low- or high-skills occupations from the shortage list and include additional soft or socioemotional skills as im- portant parts of the training curriculum. Finally, a GSP for Croatia could also take into account political interest in determining sectors that align with the development goals going forward. Box 7. The role of technical and vocational education and training (TVET) Destination country TVET systems can play an important role in the establishment of a Global Skills Partnership. An essential part of a GSP is that it represents an investment in the devel- opment of human capital for two countries, which can be achieved through improvements to the technical and vocational education and training system in the country of origin. The focus on TVET systems is apt given the type of occupations that are best suited to the GSP model. Thus, one of the benefits of a GSP is that it brings into alignment at a sufficiently high standard the capacity of the technical training systems in the two countries. This can be necessary to 56 World Bank (forthcoming, a). Leveraging Immigration for Croatia’s Prosperity 92 improve the quality of the training provided in the country of origin and to ensure that work- ers are satisfactorily prepared for entry into both labor markets, including meeting the often higher demands of employers in the destination country. The Croatian TVET system has recently implemented reforms aimed at improving labor market outcomes for graduates. Croatia’s TVET system has faced challenges in transitioning students from education to work, which is evidenced by the high prevalence of those with vocational education (65.9 percent) among the population of youth not in employment, education, or training (NEETs).57 However, reforms that were recently initiated by the Ministry of Science, Education and Youth have aimed to increase labor market relevance, quality, appeal, and in- ternationalization. The new TVET curriculum implemented from 2023 and the amendments to the VET Act also aim to improve cooperation between schools and employers.58 Finally, the government has adopted a dual technical and vocational training model, which was one of its key priorities in education reform. Together these reforms offer a promising base from which Croatia can collaboratively work with TVET systems in countries of origin to effectively implement a GSP model. The Ministry of Labor, Pension System, Family and Social Policy (MROSP) has already identi- fied ‘target countries’ that could be key sources of labor import, which offer a starting point for determining a feasible GSP partner. The target countries were identified by preferences for countries known for their high-quality and specialized workforce and for being culturally similar to facilitate quicker assimilation into the Croatian labor market.59 A feasible country partner would also have strong labor laws and be facing similar labor shortages as Croatia, ensuring they would be incentivized to collaborate on further skills training.60 The MROSP targets also include countries from which Croatia has seen significant or increasing labor force entries. This would include newly prominent countries of origin like Nepal, India, the Philippines, and Bangladesh. Given that there are still a significant number of immigrants from countries like Bosnia and Herzegovina, Serbia, North Macedonia, and Kosovo, there might also be demand for GSPs with those countries. A feasible country partner could also be determined from countries with which Croatia has existing foreign policy ties or historical demographic ties. Foreign policy ties could include countries with whom Croatia has established social securi- ty agreements or collaboration between public employment agencies. According to the list of MROSP preferences, country partners should be those with whom Croatia can cultivate a more profound collaborative relationship in the labor market. Building on a base of existing collaboration makes such a relationship more feasible. A feasible Global Skills Partnership for Croatia would fit within existing legal and institution- al structures. Migration through a legal labor pathway is one of the core characteristics of a Global Skills Partnership and its adequacy is determined by three components: 1) predicta- ble and timely visa issuance; 2) appropriate skills and salary matches; and 3) alignment with labor market demands.61 In the case of Croatia, the 2020 Aliens Act has already taken steps to address these factors by implementing a new system that is more adaptable and aligned 57 World Bank (forthcoming, b). 58 World Bank (2024b). 59 Ministarstvo rada, mirovinskog sustava, obitelji i socijalne politike (2023). 60 World Bank (forthcoming, a). 61 Ibid. Deep Dives into Two Actionable Policies for Skills Enhancement and Integration of Foreign Workers 93 with labor market demand. While the existing legal channel for the entry of foreign workers is a feasible option, Croatia has also demonstrated willingness to establish independent path- ways such the digital nomad visa. In terms of institutional structures, Croatia can also rely on the participation of several relevant actors. The Croatian Employment Service already plays a significant role in the entry process for foreign workers and has previous experience in bilateral collaboration with countries like North Macedonia and Türkiye. In addition, the private sector has more incentives to actively participate in recruiting foreign labor, given the changes made in the 2020 Aliens Act. A feasible GSP for Croatia could also include certain parameters to ensure that migrants are well selected and prepared to contribute. As part of the design process, Croatia would be able to select the type of candidates to be trained and migrate, including through entrance tests and interviews. Other selection criteria include the background of potential candidates such as technical experience or education, demographic indicators like socioeconomic status or profile, and other skills such as existing language ability. In collaboration with the partner country, Croatia could target certain characteristics to address demographic imbalances currently present among those immigrating. Importantly, Croatia could also incorporate sig- nificant integration training and services to address the increasing need for these skills and knowledge for migrants from less similar origin countries. In addition, the design of the GSP could include language training or could be linked with the new voucher scheme initiated by the CES to teach the Croatian language, which is another existing building block that is in place and could support the development of the GSP. Investment in language acquisition and improved integration would incentivize migrants to stay in Croatia instead of moving to other EU countries. Financing options exist for Croatia to pursue a Global Skills Partnership. As the destination country in a potential GSP, Croatia would be expected to contribute due to the gains associat- ed with receiving a well-trained workforce. However, there are additional sources of financing available from other stakeholders who stand to benefit from such an agreement. Under the EU Talent Partnerships policy framework, member states can submit proposals for funding for GSP-model opportunities with third countries to improve legal pathways and address skills shortages. In other countries, the private sector has played a role in bilateral training and migration agreements, and Croatia, given the changes to the new Aliens Act, faces fewer limitations and is thus more incentivized to recruit foreign labor. Employers who have faced some bureaucratic challenges in hiring foreign workers may also be inclined to support joint ventures with the government that can make the process more efficient. Growing diaspora groups in Croatia can additionally be involved as investors in training opportunities for poten- tial migrants in their home countries. The Heimerer College in Kosovo offers an example of a model for bilateral labor and training that was originally a product of diaspora investment and has now trained almost 2,000 students in specialized health profiles, including some who have since migrated to Germany. For Croatia, a potential GSP could feasibly include some combi- nation of support from public, private, and multilateral actors. A Global Skills Partnership offers a potential mechanism for Croatia to address its own grow- ing immigration needs through enhanced cooperation with other countries. The increasing number of immigrants arriving in Croatia, including from a diversifying set of countries of ori- gin, demonstrates that there is a significant potential pool of foreign workers to fill important labor shortages due to demographic decline and aging. A GSP offers a promising opportunity Leveraging Immigration for Croatia’s Prosperity 94 to effectively manage immigration and collaboratively tailor the training of those workers to meet labor market needs in Croatia as well as those of partner countries. The organized pathway of a GSP can also incorporate training and services to address the other increasing concern of integration challenges for new immigrants. This type of supportive infrastructure can ensure that Croatia is well prepared for its continuing transition from a country primarily of emigration to one of immigration. Countries around the world are actively looking at ways to increase legal labor pathways and gain advantages in the growing competition for labor. As Croatia is beginning to experience many of the same underlying demographic and labor market challenges, the timing is opportune to become a leader in building strong, collaborative GSPs that will be increasingly important in the years to come. Section 4.2. Deep dive (II): Improving digitalization and integration of services for migrants With an increasing number and diversity of foreign workers arriving in Croatia in recent years, a key priority is to build an adequate system of service provision that supports their integration. This includes strengthening the strategic and legal framework to include clear in- tegration goals, providing adequate funding, coordinating different stakeholders, and revisiting the delivery system to put migrants at the center to improve participation and outcomes. This section draws from international best practices to provide guidance on how to enhance the quality of the integration system for foreign workers in Croatia. It first proposes the develop- ment of dashboards with monitoring metrics to track the integration of migrants and assess what services are most needed and by which groups (4.2.1). It then discusses how to build a digitalized and integrated one-stop-shop system of service provision for migrants (4.2.2). 4.2.1. Developing a monitoring system to track integration milestones and tailor adequate services Enhancing the effectiveness of the integration system starts with understanding users’ needs. Gathering accurate data on migrants’ needs, including the services they require and their pre- ferred modes of access, is essential for authorities to enhance user-centricity, usefulness, and the impact of service delivery. This involves collecting survey data and conducting interviews to identify current service usage, major bottlenecks, and areas for improvement. A dashboard providing a holistic picture for the integration outcomes of immigrants can help assess and adjust the service provision to their existing needs. Enhanced data collection can feed into a dashboard that could track the user service uptake and integration outcomes. This would entail data sharing between institutions, joint visualization of the integration outcomes and management routines for relevant institutions to regularly review the data, problem solving and learning from what works, together with civil society and other relevant providers of various services. Such a dashboard could be piloted at the local level to model the service and data integration and then scaled nationally to give the central authorities a view of the integration outcomes. Figure 32 shows an example of the indicators tracked by Eurostat for the member states for foreigners against nationals. Deep Dives into Two Actionable Policies for Skills Enhancement and Integration of Foreign Workers 95 Figure 32: Eurostat migrant integration and inclusion dashboard Employment Unemployment Tertiary educational attainment % of population I 20 to 64 years HR % of labor force I 15 to 74 years HR % of population I 30 to 34 years HR 80 18 80 75 17 75 16 70 70 15 65 65 14 60 60 13 55 12 50 55 11 50 10 45 9 40 45 35 8 40 7 30 35 6 25 2014 2016 2018 2020 2022 2014 2016 2018 2020 2022 2014 2016 2018 2020 2022 citizens of a non-eu country citizens of a non-eu country citizens of a non-eu country citizens of another eu country citizens of another eu country citizens of another eu country nationals of the reporting country nationals of the reporting country nationals of the reporting country Poverty or social exclusion Median income HR Home ownership HR % of population I 18 years and over HR purchasing power standard I 18 years and over % of population I 28 years and over 60 16,000 100 55 15,000 50 14,000 95 45 13,000 90 40 12,000 35 11,000 85 30 10,000 80 25 9,000 20 8,000 75 15 7,000 70 10 6,000 5 5,000 65 2016 2018 2020 2022 2014 2016 2018 2020 2022 2014 2016 2018 2020 2022 citizens of a non-eu country citizens of a non-eu country citizens of a non-eu country citizens of another eu country citizens of another eu country citizens of another eu country nationals of the reporting country nationals of the reporting country nationals of the reporting country Self-perceived health HR Naturalisation rate HR % of population I 16 years or over I % of respective population very bad or bad 14 40 12 35 10 30 8 25 20 6 15 4 10 2 5 0 2014 2016 2018 2020 2022 2013 2015 2017 2019 2021 citizens of a non-eu country citizens of a non-eu country citizens of another eu country citizens of another eu country nationals of the reporting country Source: Eurostat dashboard - https://ec.europa.eu/eurostat/cache/dashboard/migrant-integration-inclusion/ The dashboard can be supported by an integrated migrant information system that enables geospatial management of the supply and demand for integration services. This system would map the needs of the migrants entering the country — such as housing, language training, job counseling, employment, healthcare, and social assistance — against the availability of Leveraging Immigration for Croatia’s Prosperity 96 resources like housing, language courses, school placements, and jobs. This can allow for better guidance of migrants to areas with economic opportunities and service availability. The system should be accessible to local governments, health care and education sectors, social welfare agencies, and, in specific cases, civil society organizations. This process has to be gov- erned by data-sharing protocols that ensure real-time data sharing and customized access, with full compliance with data privacy regulations through anonymization when necessary. This approach has been used successfully in the Czech Republic to manage the response to Ukrainian migrants, ensuring compliance with requirements like school attendance for children. Subnational government units can adopt their own dashboards that better allow them to track their integration objectives. The subnational units have different strengths, may attract different kinds of migrants with different needs, and may opt for different service solutions to these needs or different ways of achieving their uptake. For example, municipalities strong in or interested in leveraging digital solutions may opt for greater digitalization of local services and proactive outreach to foreigners through digital technologies. On the other hand, munici- palities with strong community engagement and volunteering mechanisms may leverage those to better reach the users. As such, while the central dashboard should track mainly high-level outcomes, the subnational government units can opt for additional indicators tracking imple- mentation for their solutions, which can predict improvements on the outcomes with a time lag. See figure 33 for lead indicators selected by subnational authorities in Cluj (Romania), as predictors for improving the employment outcomes of refugees. Figure 33: Lead indicators set by the Cluj municipality for tracking refugee outcomes Predictor indicator May June July Aug Sept 1. Is your child enrolled in an in-person 24% 73% 79.3% 73.5% 88.5% program? (RO school or hubs) 2. Is your child participating in or has 2% 13% 18.3% 24.5% 38.5% your child completed an RO course? 3. Do you consider your childcare covered to be able to perform a full-time - 40% 52.2% - job? 4. Participating in or completed an RO 26% 40% 43.8% 66.7% 66% course? 5. Last month, attended job counseling 0% 66% 51.2%*** 57.1% 62% or actively searched for jobs? Current status: September 2023 Employed*: 35.6% *share of employed financial support seekers Source: Backoffice of suportrefugiati.ro. Note: Low percentages below 50% are in red. Percentages between 50 and 70% are in yellow. Values above 70% are represented in green. Deep Dives into Two Actionable Policies for Skills Enhancement and Integration of Foreign Workers 97 An effective dashboard can track not only the results but also serve as an observatory for what works regionally. The platform “Demografija.info”62 of the Croatian Ministry of Demog- raphy and Immigration successfully started such an initiative, collecting solutions that work locally in tackling demographical challenges. These could be further expanded to migrant integration solutions. What has proven useful for promoting collaboration between the sub- national authorities is to organize solutions by: (i) the initial problem they faced or the prob- lem area; (ii) the solution they deployed; (iii) the path to impact; (iv) what (measurable) results they achieved; and (v) the contact of the responsible person that other municipalities could connect to, promoting collaboration and learning. The UK What Works centers operate in a similar manner (figure 34), allowing an assessment of the effectiveness of the different sectoral programs. This could also help the Croatian central authorities to gain insights on how to both discontinue the programs with little effectiveness and shift funding to those that bring better value for money, and which could be scaled further. Such learning loops would also allow lo- cal authorities to better formulate what kind of enabling legislative environment they need in order to achieve better results more quickly. Figure 34: UK What Works centers Source: Gov.uk website - https://www.gov.uk/guidance/what-works-network. 4.2.2. Digitalizing and integrating the service delivery system to support the inte- gration of migrants In order to facilitate migrants’ access to existing services, there is a need to rethink their for- mat and system of delivery. This includes simplifying processes such as applying for language 62 https://demografija.info/objave/regionalne. Leveraging Immigration for Croatia’s Prosperity 98 training vouchers, improving the alignment and completeness of employment service content from the user’s perspective, and utilizing interactive tools to present information services that offer personalized guidance – such as the one offered in Germany (figure 35). For instance, by understanding which parameters are important to migrants when choosing a language course, those criteria should be highlighted and made filterable. Ukrainian refugee women often prioritize factors such as childcare availability or course hours. Co-creation workshops with foreign citizens and service providers can help further refine how existing services can be improved and which new services could enhance labor market integration and outcomes. For both in-person and digital service delivery, it is crucial to understand how these target groups typically access information and the technology they use. For example, migrants from India may be accustomed to accessing government services via their phones and receiving alerts or updates through SMS or apps, such as notifications about subsidies or service updates. Figure 35: Diagnostic tool for options of working and living in Germany Source: Make-it-in-Germany website - https://www.make-it-in-germany.com/en/ Digitalizing more services for foreign workers can help reduce access barriers and streamline processes. This includes extending existing digital services for Croatian users to foreign workers, as well as digitalizing services specifically for foreigners and offering them in multiple languages. A good example is the Swedish Public Employment Service that offers on their website access to services in languages most used by its beneficiaries (besides Swedish, Arabic, Dari, English, Farsi, Russian, Somali, and Tigrinya).63 Digital input allows for translation and transliteration functionalities in service applications, reducing the need for user support to understand and complete forms. This digitalization could be implemented through the e-Građani government portal, by identifying and adding the necessary building blocks to improve migrant access to government services. Croatian authorities could also explore harnessing digital wallets to streamline the diploma recognition process for migrants. By allowing users to securely store and share digital versions of their academic credentials through mobile wallets, the process 63 Swedish Public Employment Service, referred to as Arbetsförmedlingen in Sweden - https://arbetsformedlingen.se/ for-arbetssokande/arbetslos---vad-hander-nu/nar-du-blir-arbetslos Deep Dives into Two Actionable Policies for Skills Enhancement and Integration of Foreign Workers 99 of submitting, verifying, and authenticating diplomas could be made faster and more efficient. This would eliminate the need for physical document submission, reduce administrative delays, and ensure that educational qualifications are easily accessible when applying for recognition. Additionally, using digital wallets could allow for real-time updates and notifications on the status of the recognition process, helping migrants more effectively navigate the system and integrate their qualifications into the Croatian labor market. There is also a need to optimize and incentivize migrants to obtain the Croatian eID to enable digital interaction with authorities. Although foreigners are eligible for an eID, the process can be cumbersome. Support for obtaining the eID should be integrated into the user journey, with guidance provided at key in-person touchpoints, ensuring users can install and set it up during these interactions. Digitalization of services has served in similar contexts to free up valuable human resources for other service provision. To ensure the uptake of offered services, institutions can focus on what matters most to migrants and on empowering them to confidently use online services. While not all migrants will be able to access digital services, enabling more of them to com- plete routine tasks online—such as booking appointments, checking application statuses, or submitting routine requests—can free up valuable time and resources for more critical ser- vices. These could include personalized support like job placement assistance, or language training enrolment support, which are essential for successful integration. Evidence from the one-stop-shop in Cluj, Romania, shows that even elderly and digitally less savvy Ukrainian refugees were able to access digital services with the support of frontline service officers or peer assistance at Ukrainian community events. By saving time on monthly financial support applications processed digitally, institutions were able to allocate more resources to in-person counseling services which can add more value in migrants finding a job. Services provided to migrants through multiple institutions and their separate websites can be integrated into one place, logically integrated as part of the user integration journey. This one-stop-shop could be integrated under the e-gradani or CES platforms. The first interaction of the migrant user with the authorities should be identified, which would prompt the user to set up a user account. The account could allow the user to access all relevant services, all their documents, track their status or receive alerts about relevant law changes, as part of a logical sequencing of an integration plan and make it easy for users to apply digitally for these services, leveraging translation and transliteration functions. Figure 36 gives a visual example of a one-stop-shop for Ukrainian refugees in Romania, while figure 37 depicts the Swedish Migration Agency one-stop-shop to access stay, education, and work permits. By additionally requesting users for information about their needs, the institutions could gain useful infor- mation on the number of beneficiaries that would need a certain service in a given location. These data could also serve to create a migrant integration plan across services, supported by digital tools, allowing progress to be tracked. For foreigners, this first interaction with Croa- tian authorities is the application for a work permit, fully handled by the employer. In Sweden, while the employer initiates the application, the applicant subsequently receives an email and from that point onward is in charge of actually submitting the application, which could be an opportunity also to provide additional data on their needs. Leveraging Immigration for Croatia’s Prosperity 100 Figure 36: One-stop-shop for digital access to services for Ukrainians in Cluj, Romania Source: Suportrefugiati.ro website - https://suportrefugiati.ro/ Note: Figure 36 shows an example of the Romanian one-stop-shop for Ukrainian migrants which allowed the user to set up an account through which they were able to access information and transaction services to apply for financial assistance, study Romanian, enroll their child at school, and receive counseling support to access jobs. The platform combined national as well as local services. Figure 37: The Swedish Migration Agency entry to integration support Source: Swedish Migration Agency website Note: Figure 37 shows the Swedish Migration Agency access to permits to enter, stay, study, and work in Sweden. The user is asked to establish their account, where they can track the status of the applications, review their documents, and so on. Deep Dives into Two Actionable Policies for Skills Enhancement and Integration of Foreign Workers 101 Integrating services under a one-stop-shop could also standardize access and formats. This would involve following a common service blueprint, addressing discrepancies identified dur- ing the review based on a unified standard—such as differences in the language versions of services—and ensuring complete and user-friendly process descriptions. It would also involve providing digitalized access to services, including tips and support for filling out forms, as well as offering user assistance through hotlines, chat, email, or chatbots. Subnational authorities can also take on a more active role in both proactive outreach to users based on their particular needs as well as incentivizing their access and participation in integration services. Offering information on websites or leaflets may not be enough. With the data that the institutions can collect on migrant needs, AI can be leveraged to analyze the data and to send out tailor-made alerts based on the person’s situation or needs. For example, the one-stop-shop used by the County Employment Office in Romania’s Cluj allowed for the filtering of job seekers by various characteristics, sending them alerts or offers relevant for their background and leveraging behavioral insights to nudge them to take action (see figure 38). Additionally, cities can explore incentivizing the uptake of digital services among foreign users by making connections with various city benefits, for example, a city card that allows benefits to be collected in exchange for certain actions, such as the completion of a language course (for instance, the Copenhagen card which promotes sustainable life in the city). Central authorities can encourage local experimentation and innovation to develop effective migrant integration solutions based on the cities’ strengths. These local initiatives can be evaluated based on measurable labor market and community integration outcomes. Central authorities can establish mechanisms to incorporate learning from successful local solutions into national plans and programs, ensuring they are scaled up, properly funded, and that subnational author- ities have the legislative environment that helps them achieve better integration outcomes. Figure 38: Nudging messages to the unemployed with relevant offers based on their profiles Source: Backoffice of the suportrefugiati.ro one-stop-shop. Leveraging Immigration for Croatia’s Prosperity 102 Conclusions Croatia, a historically migrant-sending country, is rapidly becoming a major destination coun- try in the European Union for foreign workers. The country has traditionally had an important share of its residents being born in other countries, the majority coming from the Western Balkans after the breakup of the former Yugoslavia. However, since accession to the EU, the country has seen a rapid increase in the number of foreigners arriving for work purposes. The annual issuance of new work permits accelerated from 600 in 2013 to more than 77,000 in 2023. In per capita terms, Croatia went from being among the bottom five EU countries in the issuance of first-time work permits (0.2 work permits per 1,000 inhabitants) to becoming the second largest recipient of foreign workers in 2023 only after Malta (20 per 1,000 inhabitants). Inflows of foreign migrants are not only increasing, but also becoming more diverse, with South Asia becoming the fastest-growing region of origin. Immigration has the potential to bring important benefits for the Croatian economy, although challenges remain. This report brings evidence of how foreign workers are filling important gaps in the domestic labor market, particularly in sectors such as construction and tourism. Given the continuous needs firms face to fill their vacancies, the negative demographic trends, and the structural transformation in the economy driven by megatrends such as the green and digital transitions, the demand for foreign workers will continue to grow in the coming years. As a result of these trends, migrants are playing and (and will continue to play) a key role in sustaining production and growth in the economy. Migrants also support the economy by consuming and paying taxes in the country. However, the arrival of an increasingly diverse group of foreign workers also entails challenges. First, imperfect information to and protection of foreign workers creates vulnerabilities and risks of exploitation, and prevents them from using their full labor potential. Moreover, foreign workers do not always arrive in Croatia with the needed skills, and language or cultural barriers might limit their integration in the country. Given this, they need help to learn Croatian, navigate bureaucracy, and better integrate cul- turally into their communities. These challenges, if not addressed, can also worsen attitudes towards migrants and hinder social cohesion. The country has put in place relevant policy reforms that strengthen the migration system, but further investments are needed. Croatia has made substantial progress in developing a migration system that better supports labor market needs. In recent years, the country has streamlined and digitalized the work permit process for foreigners, which is particularly efficient in sectors facing labor shortages. Several services are offered to migrants throughout the migra- tion journey although they tend to be small in scale and disconnected. The 2033 Demographic Revitalization Strategy recognizes the demographic headwinds, focusing on boosting fertility and encouraging the return of the diaspora among key solutions. The strategy also includes a balanced migration axis, and it is clear that even the most ambitious population policies may not immediately address labor shortages as effectively as immigration reforms. In this regard, the government has an opportunity to update the migration policy that expired in 2015, aim- ing to improve the selection and recruitment process of foreign workers and to enhance the Conclusions 103 cohesiveness, coordination and funding of services that facilitate training, matching, and their integration in the country. Moving forward, the development of Global Skills Partnerships can offer pathways that ensure the selection, training, and employment of foreign workers with the skills needed. These types of programs can build on the existing strengths of the Croatian migration system, including strong bilateral relations with several countries of origin. For specific sectors, Croatia can participate in the development of curricula and training of workers in countries of origin, working in coordination with governments at origin on promoting certain quality standards and facilitating accreditations and certificates comparable to those available in Croatia. With the rapid inflow of foreign workers and their increasingly diverse backgrounds, there is also a growing need to improve services and systems that support their integration. In- vesting in a well-developed and comprehensive integration system for migrants requires time and resources. First, more data collection and monitoring of migrants’ integration outcomes are necessary to understand what their needs are. Second, a more digitalized and integrative system of service delivery can streamline processes and increase the uptake of different ser- vices. The development of one-stop-shops can centralize information on services available for migrants. Case management can also be included in this setting to provide holistic tailored support to migrants. International evidence shows that investing in migrants’ integration can be cost effective, improving their labor market outcomes, contributions to the tax system, and social cohesion with the native population. The country has a timely opportunity to improve migration systems that enhance the bene- fits of migration while addressing its challenges, setting an example for other EU countries. Many countries around Europe with a much longer tradition of immigration are facing similar challenges to integrate their foreign workforce in their economies and societies. 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Croatian zemalja%20%E2%80%93%20 Law Centre. Available at: https://emn.gov.hr/ priru%C4%8Dnik%20za%20predstavni- UserDocsImages/vijesti/Integracija-izbjegli- ke%20jedinica%20lokalne%20samouprave. ca-u-hrvatsko-drustvo.pdf pdf Sib.hr (2024). In two years, 298 people took Office for Human Rights and Rights of Na- money from the government and returned tional Minorities of the Government of the to their homeland, mostly in Osijek-Baranja Republic of Croatia (2022a). An updated county. Online article, 022024-01. https://sib. edition of the publication Guide to inte- net.hr/vijesti/ostalo-vijesti/4417769/u-dvije- gration - basic information for the integra- godine-od-vlade-novac-je-uzelo-i-u-domov- tion of foreigners into Croatian society has inu-se-vratilo-298-ljudi-najvise-u-osjecko- been published in Croatian and Ukrainian. baranjsku-zupaniju/#google_vignette Available at: https://pravamanjina.gov. hr/?id=1114&pregled=1&datum=Mon%20 Šobak, M. (2023). 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Annexes Leveraging Immigration for Croatia’s Prosperity 112 Annex 1: System of entry, stay employment, and integration of asylum seekers and refugees The Act on International and Temporary Protection specifies two forms of protection avail- able to seekers of international protection: asylum and subsidiary protection.64 Asylum is granted to foreigners who are not in their country of citizenship, or to stateless persons out- side their usual country of residence, who have a well-founded fear of persecution based on race, religion, nationality, membership in a particular social group, or political opinion, and as a result, cannot or do not wish to avail themselves of the protection of that country. Subsidi- ary protection is provided to foreigners who do not meet the criteria for asylum but have valid reasons to believe that returning to their country of origin would subject them to a real risk of serious harm. These individuals also cannot or do not wish to seek protection from their country of origin due to this risk. The process to grant international protection starts when an application for international protection is submitted.65 Following the receipt of the application, an official from the Ministry of Interior (MoI) will expedite the examination process and allow the applicant to testify about all pertinent facts and circumstances that are crucial for the decision on the application for international protection. The MoI is the authority responsible for making decisions on appli- cations for international protection. While there is no right to appeal the MoI’s decision, an administrative complaint can be filed with the court.66 The last amendments of this law, in April 2023, aim to improve the position of applicants for international protection, persons with granted asylum status, and persons under temporary protection. The amendments have enabled applicants for international protection to enter the labor market after a period of three months from the date of application and, provided they do not have financial resources, to temporarily use a housing unit for up to two more years. The legal framework now also includes a provision that ensures a child access to recreational activities in accordance with their age, and outdoor activities during the international protec- tion procedure. Furthermore, the amendments to the law also stipulate that the guardian will take all necessary actions as soon as possible after submitting the application to find family members and reunite the child with the family, which has strengthened the role of the special guardian in caring for unaccompanied minors. The amendments were made to achieve the complete alignment of national legislation with the EU and are in accordance with the recom- mendations of the European Commission. Both individuals seeking international protection, and those granted it, have a set of important social and economic rights. Throughout the approval procedure, an individual seeking inter- national protection has the right to: residence and freedom of movement in Croatia, access to suitable living conditions, medical service, primary and secondary education, information, 64 Official Gazette, 70/15, 127/17. 65 Article 34. 66 Article 38, paragraph 3. Annex 1: System of entry, stay employment, and integration of asylum seekers and refugees 113 legal advice and free legal assistance, religious freedom, and work.67 In the case of a positive response, a notification will come from the Ministry of Interior, and the individuals who have been granted asylum, as well as those under subsidiary protection, are entitled to the following rights: a residence permit, the provision of housing, the opportunity to engage in employment, access to health care services and education, religious freedom, free legal aid, social welfare services, the right to family reunification, support for integration into the community, the right to property ownership, and a pathway to Croatian citizenship in accordance with citizenship legislation. It is important to note that the government of the Republic of Croatia in March 2022, in accordance with the Council Implementing Decision (EU) 2022/382, introduced temporary protection for displaced persons from Ukraine, who have the same rights as those individuals seeking international protection. In contrast to economic migrants, beneficiaries of international protection (BIP) are support- ed by the “Plan for the Integration of Beneficiaries of International Protection” (2017-2019). While few services for them are available online, this group typically receives in-person assis- tance at the Reception Centers, as well as support from NGOs, international organizations, church-based groups, and translators. The Ministry of Physical Planning, Construction and State Assets administers the provision of housing to individuals granted international protection. The provision of housing is avail- able to asylum seekers and those under subsidiary protection who cannot afford housing costs on their own. State-owned apartments or private rentals serve as accommodation for a duration of 24 months following the issuance of the status-recognition decision. Applications for housing are submitted to the relevant social welfare center (referred to as the Center). The Center conducts an assessment and, if it finds the applicant/family can financially support their housing, it will deny the request. Conversely, if the applicant/family has partial funds, the Center will grant housing rights with a requirement to contribute to the costs as per the regulations. For those without any means to pay for housing, the Center will grant full hous- ing rights, with the state budget covering all costs, including rent and utilities. In line with the regulation, individuals seeking asylum and those granted subsidiary protection are not eligible to obtain property ownership. However, this right may be granted to asylum seekers who are recognized as refugees under the Asylum Act. Persons with granted international protection have the right to free legal counseling. Howev- er, in practice, the primary barrier that immediately places these individuals with sanctioned international protection at a disadvantage compared to Croatian nationals is the language barrier. While language often poses a challenge in the exercise of various rights, it is particu- larly significant when it comes to obtaining free legal aid. This is because access to free legal aid involves dealing with administrative bodies, or legal entities, which can be problematic if the individual does not comprehend or speak Croatian. Moreover, the costs associated with translation are not covered by the free legal aid system (Petrovečki 2020: 125). In addition, the Law Clinic of the University of Zagreb Faculty of Law is a voluntary form of teaching in the fi- nal, fifth year of the study program. The legal framework within which the Law Clinic operates is the Act on Free Legal Aid. There are currently eight working groups in the Law Clinic, and 67 Office of Human Rights and Rights of National Minorities, referred to as “Vodič kroz integraciju”, in Croatia. Leveraging Immigration for Croatia’s Prosperity 114 one of them is specifically a group for asylum seekers and aliens.68 Furthermore, there are also NGOs dedicated to helping refugees, such as an NGO Are you Syrious, which has a free shop for refugees, and a volunteer-run integration center. Individuals who have been granted international protection or temporary protection can work without a residence and work permit. The right to work for an asylum seeker is acquired after a period of nine months from the date of submitting the asylum application, provided that the delay in the Ministry of Interior’s decision is not due to the actions of the asylum seeker. A foreigner under temporary protection can immediately access the labor market after their res- idence is regulated and they acquire temporary protection status from the Ministry of Interior. Asylum seekers, foreigners under subsidiary or temporary protection, and their family mem- bers can register with the CES under the same conditions as Croatian nationals.69 Further- more, if a decision on an international protection application has not been reached within nine months by the responsible ministry, and the delay is not attributed to the applicant’s conduct, the applicant and their family members are also eligible to register. Once registered with the CES, an unemployed individual is paired with an employment counselor who provides assis- tance in various areas, including developing a job search strategy, recommending actions to enhance employment prospects, identifying relevant occupations for labor market intermedi- ation, offering labor market insights, advising on educational and training opportunities, and aiding in the creation of a curriculum vitae, among other support services. Potential users can find additional information on ALMP on a designated CES website70 or by contacting Career Information and Counseling Centers (CISOK),71 where it is possible to get advice related to a job search or help with improving a resume. There are currently 17 CISOKs in Croatia. However, both of these websites are only available in Croatian, which poses an obstacle for all those individuals who are not Croatian speakers. Some steps to integrate migrants were taken in 2014, when the Government designed a learning program on the Croatian language, history and culture for refugees and beneficiaries of subsidiary protection.72 Additional actions at state level for integrating workers under international protection include connecting workers with employers, as well as Croatian classes financed by the state (Butković et al. 2022). Although this program was planned to be mandatory, some research indicates that it was implemented only on a case-by-case basis (see, for example, Butković et al. 2022). Regarding access to education, asylum seekers and foreigners under subsidiary protection have the right to higher education under the same terms as Croatian citizens. Furthermore, adults over fourteen years of age who have not completed primary school for various reasons can participate in organized primary education. Primary education for adults is free of charge and state-funded, including for Croatian citizens, asylum seekers, and foreigners under sub- sidiary or temporary protection. For refugee children and children with limited proficiency in Croatian language, schools are required to organize preparatory classes in the Croatian 68 https://klinika.pravo.hr/eng 69 Under Article 14 of the Labor Market Act. 70 http://mjere.hr/ 71 https://cisok.hr/ 72 European website on integration (2014) - https://migrant-integration.ec.europa.eu/country-governance/ governance-migrant-integration-croatia_en Annex 1: System of entry, stay employment, and integration of asylum seekers and refugees 115 language for a minimum duration of 70 hours. Schools should also organize supplementary classes for certain subjects and to enable the simultaneous attendance of part of the regular classes at school. Croatian language classes for children are also conducted by NGOs, such as Center for Peace Studies and Are You Syrious. Asylum seekers or holders of subsidiary protection who are not part of the education system can still learn the Croatian language, history and culture. This is organized at public open uni- versities, primary schools and other institutions they have approval for the implementation of the basic education program for adults. For other groups of foreigners, courses are organized in Croaticum - Center for Croatian as a Second and Foreign Language at the Department of Croatian Studies Faculty of Philosophy, University of Zagreb, which conducts teaching pro- grams (semester classes, one-month courses, and summer schools) and Croatian language tests for non-native speakers. Croatian language courses for adults are also organized by different NGOs, such as Croatian Red Cross, Society of Africans in Croatia, Center for Peace Studies, and Are You Syrious?. At the local level, the city of Osijek was one of the first cities that developed a plan for the local integration of refugees. This was part of an international project INTEGRA, which was aimed at supporting the long-term integration of third-country nationals in five EU member states (Bulgaria, Croatia, Czech Republic, Italy and Slovakia) via knowledge exchange among the selected cities. The main objectives of the INTEGRA project are to enhance the capacity of local authorities in five EU member states to develop and implement initiatives for the in- creased participation of third-country nationals in social and cultural life, through multi-stake- holder cooperation, by improving collaboration among cities and promoting the spread and exchange of practices and policies between civil society and public institutions that are key actors for the integration of third-country nationals, as well as strengthening community co- hesion and improving public perception of migration and diversity through the participation of third-country nationals in relevant advisory bodies and their representation at the local level (Havelka, Šehić Relić and Poljak, 2018). The “Action Plan of the City of Zagreb for the integra- tion of applicants for international protection and persons granted international protection for 2022” encompasses initiatives to inform and raise the awareness of the public using local online and print media, as well as social networks. The plan’s measures are designed to shed light on the integration of individuals applying for or having been granted international protec- tion, to elucidate the circumstances that led them to seek refuge in Croatia, and to acquaint the public with their cultural and traditional backgrounds (City of Zagreb, 2022). The Office for Human Rights and Rights of National Minorities also develops informational resources for international workers. In 2022, it issued an updated version of the Integration Guide, which provides crucial information for the assimilation of foreigners into Croatian society, available in Croatian and Ukrainian. The guide includes essential details about rights and responsibilities, steps for integration, and the services offered. Leveraging Immigration for Croatia’s Prosperity 116 Annex 2: One-stop-shop in Global Skills Partnerships The two policy proposals on chapter 4 are complementary and can generate synergies when simultaneously addressed. At some point in the journey of a foreign worker coming under the GSP, they interact and use different services available to all migrants, and several processes and resources are already in place which can facilitate the development of the infrastructure Figure A2: Potential usage of one-stop-shop services for the Global Skills Partnerships’ program beneficiaries 1. OUTREACH TO POTENTIAL 2. PRE-SCREENING 3. SKILL TRAINING IN 4. JOB MATCHING CANDIDATES IN SOURCE AND SELECTION OF SOURCE COUNTRY AND PLACEMENT COUNTRY CANDIDATES INPUTS REQUIRED FROM ○○ CES ○○ Source ○○ CES (for language vouchers) ○○ CES ○○ Source country country ○○ Source country ○○ Source country Employment Employment Employment Agency Employment Agency Agency Agency (based Selected learning providers on agreed ○○ Employers ○○ HR consulates of: (a) technical, (b) criteria) language, (c) cultural training ○○ Employers OSS FUNCTIONALITIES Provide information Provide Send push messages Integrate with the on the GSP process analytical tool with training information matching platform and criteria to pre-select (EU Talent Pool/ CES candidates Track attendance/ job platform) Pre-test eligibility for interviews training progress via diagnostic tool (based on input Push message data) Provide analytical tool to with job alerts for Create user predict attrition risk and candidates account/ profile and Send status use mitigation strategies submit application uptakes to (push message Push message (integration option candidates reminders etc.) to employer on with EU Talent Poof/ during screening qualified candidate CES job portal} Employers to provide ready for interview Collect language feedback on training proficiency curricula for adjustments Track job scores (for acceptance rates/ information service voucher service Provide supplemental analysis of reasons transaction service volume planning) language training for rejection resources proactive engagement & personalized support service Provide alternative Generate CV (Europass)/ job matches in cases data collection and analytics access CES career of failed matches navigation tools Annex 2: One-stop-shop in Global Skills Partnerships 117 around a GSP (see figure A1). Furthermore, integrating GSP pathways suggested in section 4.1 with the proposed digital one-stop-shop and using digital tools and analytics recommended in section 4.2 can: (i) reduce the financial and human resources needed for the implementation of the GSPs; (ii) reduce dropouts of foreign workers during the process, thus increasing the cost effectiveness of the program; (iii) accelerate labor market integration of GSP beneficiar- ies in Croatia; and (iv) secure a continuous flow of integrated data for piloting, learning, and adjusting different parameters of the GSP program. 5. MIGRATION AND 6. ARRIVAL AND 7. QUALIFICATION PREARRIVEL PREPARATION INTEGRATION SUPPORT RECOGNITION/CAREER PROGRESSION ○○ CES ○○ CES ○○ CES (vouchers) ○○ Source country ○○ Police ○○ Agency for Science Employment Agency ○○ Other service providers and Higher ○○ HR consulates (health insurance fund, Education ○○ Ministry of Interior language schools) ○○ Employers ○○ Local governments ○○ Training providers ○○ NGOs ○○ NGOs Provide digital resources Provide information/ Store information for pre-departure push messages on local certifications and orientation (logistics, registration, qualification completed trainings housing, transport, legal recognition, tax details, rights, administrative eligibility for health care Track career requirements (work services, housing, additional progression =\.data permits, insurance) language training options, and identification of local cultural orientation additional training Apply digitally for work programs needs, use of permit (with fastrack predictive analytics immigration procedure?) Schedule professional to recommend career and personal mentorship progression pathways Provide pre-departure program checklist Push messages to Provide information/ FAQ migrants/migrants Send status updates for on labor rights and redress on upskilling work permit and visa mechanisms opportunities application Track service access, Push message to language proficiency, job employers on migrants' satisfaction, integration estimated arrival progress and issues