Saving Dying Companies is a Great Way to Kill Future Jobs

Do you want your kids to make €650 to €1,300 net per month or do you want them to make €1,500 to €5,000 net per month? And no, they don't have to leave the country like tens of thousands others. They can make their nice salary, live wherever they want to live within Croatia, visit you often and afford to have the grandchildren you hope to have one day. I don't know a single parent who would opt to want less for their children, yet we consistently support governments which take actions that ensure our children will be poorer.

Almost every year our government flounders around trying to ?save? a couple of hundred or maybe even several thousand jobs paying anywhere from €650 to €1,300 per month after taxes. The past few days it was Uljanik Shipyards, last year it was Petrokemija, the oil refinery in Sisak, etc. They have all been ?restructured? many times over the past decades, but nothing substantive ever changed in the way they operated. They have legacy technologies, dwindling market share, double and triple the number of workers they need and strong unions whose leaders conspired with politically-appointed managements to keep things ?stable?.

Until very recently, many of our best and brightest technology minds moved to other countries where they could pursue the work they love and be paid appropriately. With the rise of Croatia's technology companies these bright young minds can stay at home, do what they love and build strong international companies at wages that are competitive in our Croatian wage environment. These are the kinds of jobs most families want for their children, yet our government does nothing to grow them, keep them or attract them from abroad.

The problem with keeping such people here is that they compete on an international playing field, which pays much higher after-tax wages than those paid in Croatia, so it becomes more and more difficult to keep them here. Although an after-tax wage of €1,500 to €5,000 per month sounds great to most Croatians, it doesn't to someone whose friend is making double that in Ireland or the United States.

So, why are our companies so cheap? They aren't, they pay these people relatively competitive pre-tax wages, which magically shrink once the government takes its cut in income taxes and non-income taxes and surcharges. Our government treats these people as if they were hereditary millionaires who need to be punished for their wealth, rather than as engines of our future growth.

The answer to attracting these high paying technology jobs with a future is quite simple, yet no one in the government wants to listen. Just raise the level at which the highest income taxes hit from the current net €2,735 to €4,700, lower the non-income taxes and surcharges, and stop financing the ?saving? of jobs which will disappear in the near future.

The shipyard workers are parading and chanting in front of government offices demanding that we ?save? them. While the bright young men and women who are driving our technological advancement are too busy to march around and too frustrated to shout. When they have had enough, they will just take their laptops, their incomes and their future children to a country which treats them with more respect. With its policies, the government will have all but packed their bags for them.

Image Credit: Du?ko Maru?i?

This is a translation of an original column that was published in Croatia's largest newspaper, Ve?ernji List, on September 3, 2018. See my pearl trees for a complete gallery of my articles for Ve?ernji List and other publications, including The Wall Street Journal.