According to the International Labour Organization, successful collective bargaining can contribute to reducing income inequality within the society. The social dialogue between employers and trade unions in Croatia did not achieve much with regard to reducing income inequality. This is the consequence of many factors, primarily related to a low level of mutual trust between employers and trade unions, lack of tradition and persistence in collective bargaining, low capacity and goodwill of the social partners.

In the new IPF Note, Predrag Bejaković, Marijana Bađun and Martina Pezer explain why trade union membership in Croatia is decreasing, analyse collective agreement coverage rate, identify weaknesses of the collective bargaining system and give recommendations for its improvement.

In order to achieve a greater impact of collective bargaining on reducing income inequality, the capacity of social partners needs to be strengthened and sectoral-level bargaining needs to develop. The social partners’ awareness regarding the topic of income inequality should increase. The cooperation between trade unions and the Croatian Employers’ Association, including its branch associations, needs to improve, which can only happen if the level of mutual trust increases. Also, the trade unions’ work needs to become more coordinated. The Government should accept collective bargaining as an important instrument for solving problems arising in the labour market and propose a legislative and institutional framework for developing collective bargaining. The role and significance of the Economic and Social Council also needs to change. Education, together with occupational health and safety and workers’ mobility, should get more attention in collective bargaining in the future. Finally, a stable system for monitoring data related to collective bargaining and industrial relations should be developed.