Social security system 55

Systematic changes which were launched by the Government of the Republic of Croatia in 2005 are still aimed at an improvement of social services work organisation, system informatisation and improvement of social service quality. In accordance with the reform

objectives, new regulations in the field of social welfare16 were adopted in July 2007, which

simplified the procedure of exercising rights, reduced the total number of rights and introduced the rights which are adjusted in view of the beneficiary category and the objective of rights. Additional HRK 148m is planned to be allocated for implementing the new regulations in 2008, which will be used for covering:

• exemption of child allowance from the family’s total income, which has improved

financial status of families with several members (six and more members),

• introduction of the new right – right to a status of a nursing parent,

• introduction of new remuneration – personal remuneration to a foster parent,

• obligation arising from a right to a temporary support, in accordance with a new

regulation17 under the family law protection,

• costs of employment of new 41 employees in 18 social welfare centres, who will be

engaged in foster care activities.

The reform activities under the SWDP18 continued to be carried out in three components. The

overall reform is performed in co-operation with the World Bank. The objective of the first component is to improve the quality of social services and reduce the scope of institutional welfare. The activities based on pilot projects under the first component are carried out in three counties: initial financing of innovative programmes in providing social services at the community level and of new approaches in social work; support to financially profitable high- quality service aimed at prevention of social problems; deinstitutionalisation and reintegration of beneficiaries into the community; broadening of services provided at the local community level and modification of accommodation services to prevent institutionalisation, within the extended scope of provided services, and improve welfare quality.

16 _{Act on Amendments to the Social Welfare Act and Foster Care Act.}

The second component is aimed at the development of the IT management system for the purpose of: facilitating work of employees in social welfare institutions, simplifying the application filing procedure, increasing transparency of filing the application, ensuring greater control as a result of a possibility to check the information within other systems and reducing the fraud risk. In 2007, the preparation of the second project task of software supply and development was completed in three pilot counties. In 2008, development of the entire software and installation and training of employees are envisaged in the pilot counties and subsequently in the overall social welfare system.

The objective of the third component encompasses the improvement of the social welfare infrastructure by improving the accommodation conditions for beneficiaries in social welfare homes and constructing, i.e. renovating social welfare centres in accordance with the administrative reorganisation of these institutions (ensuring the conditions for a one-stop-

office, installing information and network equipment, smooth operation).

In accordance with the signed Joint memorandum on social inclusion of the Republic of

Croatia19, it has been determined that the persons who are most exposed to the poverty risk

and social exclusion are the following: long-term unemployed persons and economically inactive persons, older persons without pension income, disabled persons, single-parent families and families with a larger number of children, a portion of displaced persons, minorities, homeless and former addicts. The activities and measures through which the set objectives will be realised will be performed in accordance with the National implementing plan for social inclusion (2007-2008). The planned activities are the following: increasing the level of employability of less employable persons, extending the coverage of secondary and higher education, vocational education reform and investment in a systematic promotion of life-long learning, extending the network of social services for children, the elderly and disabled persons, preventing disease or disability, ensuring equal access to health care institutions, developing a concept of social housing, reducing regional differences and a long- term elimination of poverty of older population.

The competent ministries, state institutes and agencies and other bodies responsible for the implementation of specific activities set by the implementing plan participate in the implementation of the measures, as well as representatives of local authorities, social partners, non-governmental organisations and providers of social services. The implementing plan also defines the indicators on the basis of which a degree of performance of activities will be measured and identifies the institutions responsible for the performance of the activities. The first performance report will be presented by summer 2008. The financial resources required for the implementation of individual activities will be provided by the responsible and implementing institutions.

During 2006 and 2007, representatives of the Ministry of Health and Social Welfare participated in the preparation of the Operational Programme for Human Resource

Development 2007 – 200920, under IPA, including drafting of the proposal of the concept of

the project: Establishing Network of Support in Social Integration and Employment of

Disadvantaged and Marginalised groups21, which should be implemented by end-2009. The

project’s objective is to increase employment of those groups that are mostly affected by

19

JIM – Joint memorandum on social inclusion of the Republic of Croatia (signed on 5 March 2007) between the Government of the Republic of Croatia and the European Union.

20 _{Operational Programme for Human Resource Development 2007 – 2009}

21 _{Establishing Network of Support in Social Integration and Employment of Disadvantaged and Marginalised}

long-term unemployment. The proposal of the project concept relates to social employment in organisations that are providers of social services in the community.

Protection of families and children

A systematic protection of rights and interest of children and disadvantaged group has continued to be implemented by the application of the adopted national programmes, strategies and policies. In accordance with the provisions of the European Convention on the Protection of Human Rights and Basic Freedoms, which transferred certain authorities of the social care centres to courts in the procedures of family relation regulation, i.e. in limiting or abolishing parents' rights to parental care, a more efficient protection of children was achieved.

It should be stressed that population policy measures, aimed at demographic recovery, have continued to be implemented. In addition to the measures already taken in that field, as of 1 January 2008, women on maternity leave will have a right to full salary compensation in the first six months, for which around 0.04% of GDP will have to be provided annually.

With the effort to ensure more effective protection of children of divorced parents, new provisions of the Family Act will come in force starting 1 January 2008 which will enable children of divorced parents, to which other parent is denying the right for support, to claim the right for the temporary support from the authorized social care centre. This temporary support can last no more than three years. Given that the resources for this measure are secured by the state, the Act obliges the social care centre to legally file a claim upon the irresponsible parent, to compensate the state budget for the cost incurred concerning the matter. In the 2008 budget, a total of HRK 93 million will be secured for these temporary allowances.

Pension insurance

Within the pension system, which represents one of the components of the overall social security system of the Republic of Croatia, two new acts relating to the pay-as-you-go system were adopted in 2007. More specifically, the Act on Allowance on Pensions Earned under the Pension Insurance Act was adopted, on the basis of which differences will be reduced in the amount of pensions earned for equal years of employment for pension purposes, i.e. under same conditions for the “old” and “new” pensioners. In addition, the Act on Amendments to the Pension Insurance Act was adopted, which will, starting from early 2008, increase the level of early old-age pensions, disability pensions, as well as the level of the lowest pensions by changing the method of its determination. As a result of the application of both acts a total fiscal cost of 0.35% - 0.4% of GDP per year will be incurred in the forthcoming mid-term period.

The Act on Amendments to the Compulsory and Voluntary Pension Funds Act was also adopted, which complements and improves the pension insurance system based on individual capitalised savings and adjusts it to the conditions of a social and economic development of the country.

In view of all the mentioned changes in the pay-as-you-go pension system, a systematic improvement of a financial position of future pension beneficiaries is expected from the beginning of 2008, whereas retaining of the so-called Swiss model for pension adjustment (50%:50%) allows for a long-term maintenance of financial sustainability of the system. Changes in the capitalised system, in view of increased possibilities of assets investment by pension funds in the prescribed types of assets beyond the borders of the Republic of Croatia following the EU accession and creation of a possibility of entry of the European institutions

faster development of that type pension insurance. One of the previously set objectives of the pension reform is thus met in the long-run, which is a transfer of a part of responsibility for ensuring funds for old-age, regardless of the pay-as-you-go system, to an insurer himself, which will, in the long-run, contribute to a decrease in the share of funds for pension consumption.