SOCIAL PROTECTION IN REPUBLIC OF CROATIA, 2019

(ESSPROS METHODOLOGY)

In 2019, the share of social protection in the GDP of the Republic of Croatia amounted to 21.8%, which represented an increase of 0.2 percentage points compared to 2018. The GDP in current prices increased¹⁾ by approximately 17 billion kuna, while total social protection expenditures increased by approximately 4.3 billion kuna.

Concerning receipts, social contributions were the most frequent ones (60.1% of all social protection receipts in 2019). General government contributions followed with 36.1%.

Social protection benefits accounted for 98.2% of total social protection expenditures in 2019. By type of social benefits, those in cash were the most frequent ones (64.2%). By characteristics, non-means-tested social protection benefits (both in cash and in kind) were the most frequent ones (95.0%).

Comparing the data by social protection functions, the largest share of social benefits was spent on relieving the financial burden related to the Old age risk (34.5% of all social protection benefits), followed by the Sickness/Health care function (33.8%). The least resources were spent on the Housing function (0.1%).

Comparing the data on the share of costs for the social protection in the national GDP with the EU Member States, the Republic of Croatia fell behind the EU-28 average by 5.9 percentage points in 2018. Viewed by shares of social protection functions in GDP in 2018, the Old-age function fell behind the EU-28 average by 3.6 percentage points, the Sickness/Health care function by 0.8, the Unemployment and Housing functions by 0.5 each and the Family/Children and Social exclusion function by 0.3 percentage points each, while the Survivors function exceeded the EU-28 average by 0.4 and the Disability function by 0.2 percentage points.

Comparing the data on social protection expenditures per inhabitant with EU Member States, calculated in purchasing power standard (PPS), the Republic of Croatia fell behind the EU-28 average by 50% in 2018. According to this indicator, expenditure on Survivors function was on the same level as EU average, while the other social protection functions in the Republic of Croatia were below the EU average, and in absolute terms, the Old-age function fell behind the most.

1) The data on the gross domestic product used in this First Release have been taken over from the official web page of the Croatian Bureau of Statistics: https://www.dzs.hr/Hrv_Eng/Pokazatelji/MSI%20BRUTO%20DOMACI%20PROIZVOD.xlsx.

 

Revision of data

Data for the period from 2016 to 2018 have been revised due to the inclusion of  new non-profit institutions in the ESSPROS survey coverage (Social protection provided by non-profit institutions), inclusion of new social benefits in several ESSPROS schemes and collecting the additional data on EU funds used for financing various social services. Data collected in the ESSPROS survey could be subject to revisions in the future due to finding new data sources, improvements in the usage of existing data sources or further harmonisation of data with the ESSPROS methodology.

Pension insurance, first pillar

The increase in total expenditures in this scheme in 2019, as compared to 2018, was mainly caused by an increase in expenditures in the Old age function due to the growth of the old-age and anticipated old-age pensions. The increase in expenditure was also recorded in the Survivors function due to the growth of survivors’ pensions.

Basic health insurance

The main reason for the increase in scheme expenditures in 2019, as compared to 2018, was an increase in expenditures on in-patient medical care. The increase was also recorded in out-patient medical care, salary compensation during sick-leave and maternity leave as well as medicine expenditures.

Employers’ social protection

The increase in total expenditures in this scheme in 2019, as compared to 2018, was mainly caused by an increase in expenditures in the Sickness/Health care function In 2019, as compared to 2018, the number of days spent on sick leave paid by the employer (up to 42 days of sick leave) increased, which was the main cause of the increase in salary compensation during sick leave. The increase in expenditure was also recorded in the Family/Children function due to the growth of lump-sum cash benefits, and in the Unemployment function due to increase of the redundancy compensation.

Social welfare

The main cause of the increase in the scheme expenditures in 2019, as compared to 2018, was the increase in expenditures in the Disability function that refer to personal disability benefit, assistance and care supplement and the accommodation of persons with disability in social welfare homes.

Family benefits

The main cause of the increase in the scheme expenditures in 2019, as compared to 2018, was the increase in expenditures in the Family/Children function that refer to parental leave and other maternity and parental supports, and to child allowance.

Social protection in City of Zagreb

The main cause of the increase in the scheme expenditures in 2019, as compared to 2018, was the increase in expenditures in the Family/Children function that refer to subsidy for stay-at-home parent and expenditure for pre-school education.

Other social assistance at the local level

The main cause of the increase in the scheme expenditures in 2019, as compared to 2018, was the increase in expenditures in the Old age function that refer to assistance in carrying out daily tasks (mostly EU grants) and in the Family/Children function that refer to the expenditures on pre-school institutions and birth grants.

Social protection provided by non-profit institutions

The main cause of the increase in the scheme expenditures in 2019, as compared to 2018, was the increase in expenditures in the Old age and Disability functions that refer to assistance in carrying out daily tasks (mostly EU grants) and in the Social exclusion function that refer to the other benefits in kind.

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NOTES ON METHODOLOGY

Sources and methods of data collection

Data on social protection in the Republic of Croatia presented in this First Release are collected by gathering administrative data from reporting units.

Coverage and comparability

The ESSPROS is a harmonised system that serves as an instrument of the analysis and comparison of financial flows of the social protection. The objectives of the ESSPROS are to provide a comprehensive and coherent description of the social protection in the EU Member States and candidate states for the membership in the European Union, financing of social benefits, and to establish a system suitable for the international comparability and harmonisation with other statistics.

The ESSPROS consists of the Core System and two modules. The Core System consists of a stable, annually collected set of data on receipts and expenditures of the social protection, while modules provide additional sets of statistical information on particular forms of the social protection.

The Core System collects, at the annual basis, data on the social protection in gross amounts (that is, before the recipient of the social protection benefit pays for them any kind of taxes, contributions or other compulsory provisions).

For the Republic of Croatia, 17 active social protection schemes have been identified and included within the ESSPROS coverage:

Active schemes

1. Job mediation and unemployment rights
2. Pension insurance – first pillar
3. Health insurance – basic
4. Health insurance – supplemental (for the time being only the Croatian Health Insurance Fund)
5. Familiy benefits
6. Social welfare
7. Assistance in settling of housing costs
8. Assistance in settling of heating costs
9. Social welfare in City of Zagreb
10. Employers’ social protection
11. Pension insurance – second pillar
12. Rights of Croatian Homeland War defenders and members of their families
13. Health protection at work
14. Rights of civilian victims disabled during war and members of their families
15. Rights of military personnel disabled during war or peacetime period and members of their families
16. Other social assistance at the local level
17. Social protection provided by non-profit institutions

ESSPROS Scheme 2 (General pension scheme – first pillar) encompases all pension beneficiaries under special regulations.

The module on pension beneficiaries serves to collect information on pension beneficiaries and on characteristics of pensions.

Definitions and explanations

Social protection encompasses all interventions of public or private bodies intended to relieve households and individuals of the financial burden of the defined set of risks or needs, provided that there is neither a simultaneous reciprocal nor an individual arrangement involved (intervention where the recipient of social protection is obliged to provide simultaneously something of equivalent value in exchange).

Risks or needs expressed in the ESSPROS methodology as functions of the social protection scheme that require the social protection are listed below.

Sickness/Health care – the risk of sickness comprises the maintenance of the income and support in cash in connection with a physical or mental illness, excluding disability. The health care need covers maintenance, restoration or improvement of the health of the people protected, irrespective of the origin of the disorder.

Disability covers support in cash or kind (except health care) in connection with the inability of physically or mentally disabled people to engage in economic and social activities.

Old age includes income maintenance and support in cash or kind (except health care) in connection with old age.

Survivors imply income maintenance and support in cash or kind in connection with the death of a family member.

Family/Children include support in cash or kind (except health care) in connection with the costs of pregnancy, childbirth and adoption, bringing up children and caring for other family members.

Unemployment implies income maintenance and support in cash or kind in connection with unemployment.

Housing includes assistance in settling of housing costs.

Social exclusion not elsewhere classified covers benefits in cash or kind (except health care) specifically intended to combat social exclusion where it is not covered by one of the other functions.

The function of social protection refers to the primary purpose for which social protection is provided, irrespective of legislative or institutional provisions.

The observation unit is the social protection scheme. According to the definition, the social protection scheme is a distinct body of rules, supported by one or more institutional units, governing the provision of social protection benefits and their financing.

The expenditures of social protection schemes are the following: social benefits, administration costs, transfers to other schemes and other expenditure.

Social protection benefits, as the most extensive social protection expenditure, consist of transfers, in cash or in kind, by social protection schemes to households and individuals to relieve them of the burden of the defined set of risks or needs. Social benefits refer exclusively to cash payments, reimbursements and directly provided goods and services.

Administration costs are the costs charged to the scheme for management and administration thereof.

Transfers to other schemes are unrequited payments made to other social protection schemes.

Re-routed social contributions are payments that a social protection scheme makes to another scheme in order to maintain or accrue the rights of its protected people to social protection from the recipient scheme.

Other expenditure means miscellaneous expenditure by social protection schemes.

Receipts of social protection schemes are the following: social contributions, general government contributions, transfers from other schemes and other receipts.

Social contributions are the costs incurred by employers on behalf of their employees or by protected persons to secure entitlement to social benefits.

Employers' actual social contributions are payments made by employers to insurers to secure entitlement to social benefits for their employees, former employees and their dependants.

Employers' imputed social contributions are the costs incurred by employers by granting social benefits or by promising social benefits payable in future, to their employees, former employees and their dependants, without involving an autonomous insurer, and without maintaining segregated reserves for that purpose in their balance sheets.

Social contributions paid by protected persons are payments made by individuals and households to social protection schemes in order to obtain or keep the right to receive social benefits.

General government contributions are costs to general government of running government-controlled non-contributory schemes, and financial support provided by general government to other resident social protection schemes.

Transfers from other schemes mean unrequited payments received from other social protection schemes, which primarily includes social contributions re-routed from other schemes.

Other receipts include miscellaneous current receipts of social protection schemes.

Purchasing power standard (PPS) is an artificial common currency eliminating the effect of price level differences across countries. Theoretically, one PPS can buy the same amount of goods and services in each country.

Module on pension beneficiaries

Pension beneficiaries are defined as recipients of one or more periodic cash benefits of a social protection scheme falling within seven pension categories (disability pension; early retirement benefit due to reduced capacity to work; old-age pension; anticipated old-age pension; partial pension; survivors' pension; early retirement benefit due to labour market reasons), but person who receives more than one pension is counted only once – double counting is to be avoided.

 

Abbreviations
bln	billion
ESSPROS	European System of Integrated Social Protection Statistics
EU-28	European Union (28 Member States)
GDP	gross domestic product
mln	million
PPS	purchasing power standard
Symbols
0.0	value not zero but less than 0.05 of the unit of measure used

 

 

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Prepared by:
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