Representatives of the government, trade unions and employers are agreed that the public services and public companies should be reformed, with the reduction of the number of employees to be carried out only if necessary and in compliance with the Labour Act and the agreement between the social partners, Labour and Pension System Minister Mirando Mrsic said after the meeting.

Trade union representative Mladen Novosel said that "there is no agreement between trade unions and the government on layoffs" but if the government established that somewhere in the public sector "there is a certain surplus", the procedure for downsizing the work force was clear.

The trade unionist said that the unions insisted that the savings projected at HRK 2 billion should be invested into the creation of new jobs and into incentives to small and medium-sized enterprises.

Minister Mrsic said that the rationalisation in the public administration would be conducted through the reduction of paid overtime, cancellation of part-time employment contracts and through material savings, all of which should lead to saving two billion kuna. Public companies' management will be instructed to carry out belt-tightening measures in line with the agreements with the trade unions, he added.

We must carry out restructuring and belt-tightening as we have the declining GDP and personal spending, with state spending remaining at the 2008 level, that is before the crisis. We must reduce state spending and we enjoy popular support for that, Mrsic said.

This position was supported by the Croatian Employers' Association (HUP) president, Ivan Ergovic, who said that the private sector had undergone restructuring and reduced salaries and the number of employees, which the public sector has not yet done.

It is necessary to distribute the burden of the crisis evenly, he added.

The government's guidelines for the 2012 budget were supported by the social partners, with the trade unions noting that a higher Value Added Tax would increase living costs.