The latest data shows that citizens owe 56 billion kuna and that interest on their loans is tied to foreign currency clauses, while they receive salaries exclusively in the kuna.
If the kuna is devalued by 20 percent, the loan burden would increase by as many as 11 billion kuna, to 67 billion, the SSSH said in a statement on Tuesday.
Such announcements can be responded to only with a request for an increase in salaries, the SSSH said.
Citizens are not only indebted, they buy imported products for which there are no domestic substitutes, so the negative impact would be twofold - apart from increased interest rates, living costs would rise as well.
Stagnating income and rising living costs would make it difficult for citizens to repay their loans, banks would try to protect their usurious profit, and the entire system would be jeopardised due to the sudden inability of banks to collect their claims.
If the kuna is devalued, the country's foreign debt will increase by more than three billion kuna annually, causing financial, economic and social chaos, the union federation warns.
The devaluation of the kuna would additionally discourage any form of saving in the national currency and reduce the savings deposits of persons planning to seek housing loans - given the announced cancellation of tax benefits for young couples buying their first flat, it seems almost impossible for a citizens under the age of 35 to own a flat, the union federation says.
In a country where exports depend on imported raw materials and technologies to up to 70 percent, such a measure would not stimulate export, the union federation says, expressing doubt about the competence of those claiming that this measure would increase the competitiveness of Croatian exports.