Minimum wage in Croatia: sectoral and regional perspectives

In this paper, we identify the sectors and regions in Croatia most affected by minimum wage changes. By using four criteria, we identify 13 low-wage sectors. The analysis also reveals five regions (counties) in which the minimum wage can play an important role. Low-wage sectors in Croatia are found to be manufacture of textiles, manufacture of clothing, manufacture of leather and related products, manufacture of wood and of products of wood, manufacture of rubber and plastic products, manufacture of furniture, construction of buildings, specialised construction activities, retail trade, food and beverage services, security and investigation activities, services to buildings (cleaning etc.) and personal services. We analyse the employment and wage changes for these low-wage sectors in the period 2009-2015. It turns out that tradable low-wage sectors are highly affected by minimum wage changes due to a high concentration of employees with wages just above the minimum wage. However, during the recession, these sectors had a smaller employment decline and higher wage growth compared with both the manufacturing industry as a whole and non-tradable low-wage sectors.