October 16, 2019 / 9:55 AM / a month ago

Croatia to raise public sector wages, postpone VAT cut

ZAGREB (Reuters) - Croatia’s government will propose raising salaries for all public sector employees by 6% next year, Prime Minister Andrej Plenkovic said on Wednesday.

“In order to be able to do that we will propose a postponement of a VAT cut by one percentage point,” he told parliament in a state of the nation address.

The government planned to cut VAT to 24% from 25% from Jan. 1, 2020. Such a VAT reduction would deprive the state budget of some 2.0 billion kuna ($296.62 million).

Croatia’s teachers has been on strike since Oct. 10 demanding a wage hike of some 6%. They said they would not stop the strike until their demands were met.

Last month, the government agreed to raise the salaries of doctors and nurses by 7%.

Croatia has run a budget surplus in the last two years and hopes to maintain a positive budgetary performance in the coming years as one of the key conditions for meeting the criteria for adopting the euro currency by 2024.

The government is facing a general election in late 2020.

Reporting by Igor Ilic; Editing by Alex Richardson

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