Publication: Employment Protection Legislation and Labor Market Outcomes : Theory, Evidence and Lessons for Croatia
In response to prolonged recession, in April 2010 the Croatian Government adopted an Economic Recovery Program to safeguard macroeconomic stability and support faster recovery of the private sector. A central element of the program is revision of labor regulations to create a more dynamic labor market by ensuring labor force flexibility and job security. The goal is to increase the labor force participation rate and ensure that it has the skills and competencies required by the evolving and dynamic private sector. The Croatian Ministries of Finance and labor asked the World Bank for support in design of possible labor legislation reform. The objective of this note is to benchmark Croatia's legislation and help identify legal constraints on achieving a more dynamic and flexible labor market. Changes to employment protection legislation (EPL) can be politically difficult. They therefore need to be preceded by a public information campaign explaining their rationale and by dialogue with social partners. The central message to be conveyed to the public is that relaxing the most rigid provisions of the labor law will eventually lead to better employment prospects, shorter spells of unemployment, less informality, and higher productivity and ultimately incomes. This involves moving from protecting jobs to protecting workers an idea known as flexicurity.
“World Bank. 2011. Employment Protection Legislation and Labor Market Outcomes : Theory, Evidence and Lessons for Croatia. © Washington, DC. http://openknowledge.worldbank.org/entities/publication/54416d4b-7387-5d51-924d-81ebe0248db1 License: CC BY 3.0 IGO.”