Finance Minister Slavko Linic announced on Thursday that apart from reducing benefits in collective agreements such as Christmas bonuses, holiday cash grants, and transport costs, the government would also lay off about 20,000 employees in the government and public sector.
Speaking on Croatian Television, Linic said the government would downsize the sector because it had assessed that there was no need to further touch into salaries.
Asked to comment on the 2.2 per cent year-on-year GDP decline in real terms in the second quarter of 2012, Linic said he still predicted that GDP would break even at the end of the year.
Speaking of the financial transactions bill the government sent to parliament today, Linic said it was a political message to those doing business that they must pay taxes, their workers and suppliers.
He said this law would make it possible for the government to help other creditors in settlements. "We estimate that in six months we will be able to deal with about 60,000 legal entities who didn't take their obligations seriously."
Asked what would happen to the municipalities and towns that could not fulfil their obligations, Linic said they would have to find the money and start doing as the government - cutting expenses and acting responsibly regarding tax revenue.
The government's policy will be to bail out companies which have a market and programmes that have a future, as well as replace company owners who were irresponsible, he added.
