Last year Croatia recorded the lowest growth of consumer prices among countries in transition, Polancec said to boos from the people in attendance.
He said the government's objective was accession to the European Union, economic growth and higher living standards, notably for the most vulnerable social groups, and advocated social dialogue.
Speaking to press afterwards, he said he did not reproach the people who booed him, but added that the organisers of the celebration should wonder if this was the best way to conduct social dialogue.
Trade union leaders also delivered speeches, underlining that the motto of this year's celebration was "Politics and Politicians in the Service of Labour and Workers".
"The time has finally come for politicians to put themselves in the service of labour and workers," said Vesna Dejanovic of the Federation of Independent Trade Unions.
Independent Trade Unions leader Kresimir Sever criticised the government, saying that promises were easy to make and easier to break. He said politicians always asked citizens to make sacrifices while never making any themselves.
Tens of thousands of people came to Maksimir Park today in sunny weather. The celebration featured a music programme and saw long queues for the 16,000 bean broth meals that were handed out.
Today's marking of Labour Day began in Zagreb's central square at 10 am, when a procession of about 400 members of all six trade union federations headed for Maksimir Park. They were joined by Deputy Mayor Milan Bandic, who heads the slate of the Social Democratic Party (SDP), the Peasant Party (HSS) and the Pensioners Party for the May 15 local elections, as well as SDP and HSS members.
One of the organisers of the celebration, Niko Gunjina of the Association of Trade Unions, asked Bandic that politicians leave the procession, but Bandic refused.
"Bandic told me he's the boss in town," Gunjina told the press.
Bandic told reporters he took part in the Labour Day procession every year.
The farmers' trade union celebrated May 1 in front of the government building in downtown Zagreb, where some 300 workers with the Sljeme company are protesting for the third day in a row, demanding unpaid wages. They were visited by the presidents of the trade union federations.
Labour Day celebrations were also held in Osijek, Pula, Split and Ronjgi near Rijeka.