Construction and hospitality remain hotspots for undeclared work in Croatia

(Photo: Florian Plag/CC BY 2.0)

ZAGREB, 10 June 2026 – Croatian authorities have issued more than 1,100 enforcement decisions under the Law on the Suppression of Undeclared Work since January 2023, highlighting the continued presence of illegal employment practices across the country.

Speaking on Croatian Radio’s programme “U mreži Prvog”, Ivan Vidiš from the Ministry of Labour, Pension System, Family and Social Policy said inspections had revealed undeclared work in almost every sector of the economy, although it remains most common in construction and hospitality.

Vidiš noted that the majority of employers comply with their legal obligations, but a persistent minority continue to engage in practices that breach labour regulations.

According to the ministry, undeclared work typically includes employment without registration for mandatory social insurance, work without an employment contract, or employment without the required work permit. Cases involving foreign workers without valid permits or insurance registration are among the violations identified during inspections.

Contrary to common assumptions, Vidiš said that more Croatian citizens than foreign workers had been found working illegally. Of the workers identified during inspections, around 1,100 were Croatian nationals and approximately 900 were foreign workers.

He stressed that undeclared work creates unfair competition for businesses that follow the rules, as employers using illegal labour can offer products and services at lower costs. The practice is also harmful to workers, reducing future pension entitlements and weakening contributions to Croatia’s pension and healthcare systems.

Authorities have also focused on partial undeclared work, where employees receive part of their salary unofficially in cash. Vidiš described this practice as particularly damaging because such payments remain outside the formal system and do not generate pension or health insurance contributions.

Over the past year, the Ministry and the Tax Administration have carried out targeted inspections of wages in the tourism and construction sectors. According to Vidiš, a significant number of construction employers corrected wage payments, including retroactive adjustments covering the previous six months.

Future inspections will not only examine compliance with minimum wage requirements but will also assess whether workers are being paid correctly according to wage grades and legal obligations.

Representatives of the Croatian Employers’ Association (HUP) welcomed measures aimed at ensuring compliance with collective agreements and wage regulations.

Ivana Šimić of HUP said that employers who respect labour laws must be protected from unfair competition, whether from domestic companies or foreign operators that fail to comply with Croatian regulations.

She noted that while some violations occur due to administrative errors, there are also employers who systematically breach labour rules. Šimić said the current legislation is moving in the right direction by focusing penalties on repeat offenders rather than employers who make isolated mistakes.

Trade unions, however, believe the scale of the problem may be larger than official figures suggest. Višnja Katalinić from the Union of Autonomous Trade Unions of Croatia said limited inspection capacity means the true extent of undeclared work could be significantly higher than recorded.

Katalinić also pointed to challenges faced by foreign workers, describing them as a growing group affected by undeclared employment. She said many foreign workers lack direct access to information regarding their work permit applications, which are submitted by employers and are crucial for their legal residence status in Croatia.

In response, Vidiš said providing accurate information to foreign workers is a priority. The ministry, in cooperation with the European Labour Authority, has produced guidance materials in ten languages covering workers’ rights and obligations in Croatia.

He also highlighted a new recruitment channel established through cooperation with the Philippines. Introduced in 2025, the initiative includes job fairs and government-supported recruitment processes designed to improve transparency and worker protection. Croatian authorities plan to expand the programme to additional sectors beyond tourism in the future.

The government says continued inspections, stronger enforcement and improved worker information remain central to efforts aimed at reducing undeclared work and ensuring fair competition across the Croatian labour market.