Davor Huić
Episode · #42
RITAM POSLA Davor Huić
Guest Davor HuićHosted by Lidija KiseljakMay 3, 2026
Davor Huić
About this episode
What you'll hear in this conversation
When Croatia’s economy slows, the reflex is often to look at businesses. Davor Huić, president of the Taxpayers' Association Lipa, offers a starkly different perspective. He argues that the private sector has already learned to adapt since the 2008 crisis, while the public sector remains stubbornly resistant to change, consuming a disproportionate share of the national output. This conversation unpacks the echoes of past recessions in current economic slowdowns, and examines whether the state is finally ready to implement necessary reforms – or if businesses will once again be left to carry the burden. You will walk away reconsidering who truly drives economic resilience.
Insights from the conversation
What to take from this episode
01
Croatia's state consumes nearly 47% of its GDP, a figure Davor Huić points out is significantly higher than other EU countries at a similar stage of development. The true cost to an economy isn't just tax rates, but the total proportion of national output the state extracts for itself.
02
While Croatia's population shrinks, the public sector continues to grow in employment and salaries, consuming 11% of GDP. This structural imbalance isn't just an expense; it’s a direct transfer of resources from a shrinking productive base to an expanding, self-serving system.
03
The current pressure for public sector wage increases 'eerily reminds' Huić of 2008, when state costs 'slaughtered' Croatia, prolonging its recession to six years while other countries recovered in one to three. The lesson is that internal structural discipline, not just external economic shocks, dictates the depth and duration of a downturn.
04
The 'brazen demagoguery' of politicians who demand entrepreneurs 'do more to fill the budget' fundamentally misunderstands the role of the state. The public sector exists to serve its citizens and create public goods, not to be fed by the private sector as 'a beast that has run out of control'.
05
While the overall GDP is only now at 2008 levels, Croatia's exports have grown by double digits for six to seven years and are now 50% higher than in 2008. This shows the private sector, after shedding 150,000 jobs, can restructure and become globally competitive, even as the state remains stagnant.
06
Every percentage point increase in public sector salaries costs 300 million kuna, and these increases are 'irreversible'. Such commitments are not just expenses; they are permanent additions to the state's structural burden, making any future fiscal adjustment exponentially harder.
07
Croatia consistently writes National Reform Plans based on EU Commission analysis, only to 'forget them until next year.' This cycle of planning without execution reveals a deeper issue: the absence of political will to implement the structural reforms everyone knows are necessary.
08
Recent tax relief measures are 'too mild,' according to Huić, because the overall tax-to-GDP ratio has remained at 47% for years. Unless tax adjustments fundamentally reduce the state's share of the economy, they are merely cosmetic and fail to produce meaningful change.