FACT SHEET
1. What assignment has the Bank received?
The Government of Croatia (GoC) has committed to reform the public sector wage setting mechanism with the main goal of making the system more equitable, transparent and internally consistent, while at the same time maintaining fiscal sustainability. The reform features as one of the key elements of Croatia’s National Recovery and Resilience Plan (NRRP) endorsed by the European Commission. The GoC is aware that the current system is complex, unfair and lacks transparency.
The reform is expected to affect over 240,000 employees. The new system will be simpler, easier to understand and more transparent. It will adopt features that leading administrations have been putting in place over recent years such as a grading system, a job complexity evaluation methodology and job coefficients that truly reflect the complexity of each job position. This all will make the system fairer, moving it closer to achieving an equitable system that rewards ‘same jobs with the same pay’. It will also incorporate performance incentives to make sure that the best public employees get rewarded.
The Ministry of Justice and Public Administration (MoJPA) leads the preparation of legislation for the new public sector wage and for this purpose may consider some of the technical inputs and options that are being provided by the World Bank.
The World Bank task is carrying out a technical analysis of the current system and using international practice to develop options and recommendations that allows the Government to develop an implementable reform proposal for a new public pay system.
The Government of Croatia has sought the World Bank’s assistance to draw from its rich pool of highly experienced international staff and leading experts in the field of public administration and governance and coupled with country-specific knowledge provided by local consultants. The World Bank brings global best practices with similar types of reforms. In its work, the World Bank pays particular attention to the quality of the final product and its outputs undergo several stages of quality assurance processes.
2. What are the specific activities assigned to the World Bank?
The World Bank performs this assignment, under the guidance of the Coordinating Body appointed by the GoC (comprising of ministries of: Finance; Justice and Public Administration; Labor, Pension System, Family and Social Policy; Science and Education; Health, and Culture and Media).
Work carried out by the Bank has been organized into four interrelated components:
Component 1. Institutional and legal assessment of the system - The World Bank examined the current system of pay setting in Croatia, including the legislation governing the system of pay and job complexity coefficients and the actual used practices to apply that legislation on an ongoing basis. It reviewed the best international practices in the EU and OECD countries and prepared four in depth country case studies (Slovenia, Austria, Lithuania, Denmark) that were presented during a workshop in the spring of 2022.
Component 2: Technical evaluation of the existing system – The World Bank assessed the current system, focusing on its internal fairness, fiscal affordability and competitiveness compared to the private sector.
Component 3: Proposals for Reform – The World Bank, based on the previous analytic work, international trends and the team’s technical experience has proposed viable options and recommendations for the new public wage system including a new pay grade structure, considering budgetary implications of the reform.
Component 4: Implementation Strategy and Change Management – The World Bank proposed a strategy to facilitate the design and implementation of this reform including stakeholder engagement and change management activities.
3. What is a RAS and why is it used to support the preparation of the Wage Reform?
RAS are customized advisory services offered by the World Bank to all its member countries, but mostly used in middle and high-income countries. RAS are requested and paid by the client using their own or third-party resources, in Croatia’s case, as for most of the EU countries, the European Structural and Investment Funds (ESIF) are regularly used to finance these types of advisory services. RAS support countries to design or implement better policies, strengthen institutions, build capacity, inform development strategies, and contribute to the global development agenda. Through these services the World Bank is able to provide global best practices, cutting-edge knowledge products and bring leading global experts to address these various challenges.