PRESIDENT TUDJMAN ADDRESSES PARLIAMENT ON STATE OF THE NATION PT. 3

( Editorial: --> 7545 ) 5. Social Policy and Welfare According to the Constitution, Croatia is a social State. This provision is based on Christian social teaching, the social teaching of the Radić brothers, and on the positive views of the Croatian left. The importance of social policy stems from the need to ensure social justice and social peace as the basis of normal social development, taking due consideration of the centuries-old social suffering of the Croatian people, demographic regression, displacement and emigration. Our social policy must match European association and be committed to it, that is, to the European Social Charter and European social experience. Since the very start of aggression against Croatian territories, the Croatian Government also had to respond to the situation - in addition to the overall defensive efforts - by a social programme for accepting and caring for displaced persons from Croatia as well as for refugees from Bosnia and Herzegovina and the Federal Republic of Yugoslavia. In war-time years Croatia cared - mainly on its own - for half a million to a million displaced persons and refugees. Within the scope of accepting the UN peacekeeping role, Croatia tried in vain to secure the quick return of displaced persons and refugees. Concurrently with the liberation of the occupied areas, and with the peaceful integration of the Croatian Danubian Region, the Croatian Government has systematically developed a comprehensive programme of integral care for the victims of war, for reconstruction, return and reconciliation. Special institutions have been established for that purpose (the Office for Displaced Persons and Refugees, the Ministry of Reconstruction, the Ministry of Homeland War Defenders, the National Reconciliation Committee). We are entering 1998 with a finally completely liberated Croatia, with substantial social results, but also with the tragic consequences of war and human suffering, extensive destruction of entire areas, mined and burned land, a great number of displaced and missing persons and refugees, huge adverse economic and social effects, and a great number of people who lost their property and employment during the war. All these have a very negative bearing on the improvement of the standard of living of both employed and retired persons. In addition to an appropriate economic programme, such circumstances also require a very broad and meaningful social programme. The Croatian State would have been impossible if it had not founded its existence and defence on democratic and humane views focused on the interest of all its people. Our overall and social policies must be based on concern for the people and on the respect of the dignity of all citizens, on care for the living conditions of all and especially of the vulnerable segments of the population. It can with no exaggeration be claimed that there is hardly a country world-wide which has proportionally allocated so many resources as Croatia into various social programme forms. Such allocations bear witness to the fact that Croatia was a social country at the highest level even in the circumstances in which it established its independence and in spite of all the consequences of aggression, occupation and war. In terms of various target groups, the 1997 allocations from the state budget and extra-budgetary sources for the implementation of the Government’s social policy were as follows: - Homeland War Defenders, 5.2 billion kuna (health insurance, employment, disablement and family pensions, business loans, share distribution); - displaced persons, refugees and returnees, 3.5 billion (accommodation and health care, reconstruction, building and equipment of homes and apartments); - retired persons, 1.8 billion (health insurance, accelerated retirement pensions, and pensions of persons from other republics of the former SFRY); - relief, 0.5 billion (food in relief institutions); - family, mother and youth welfare, 0.8 billion; - unpaid worker relief, 0.3 billion; - pupils and students, 0.3 billion (standard of living, apartments, free textbooks); - political prisoners, 31.8 million; - victims and participants in World War Two, 0.3 billion (personal and family disablement pensions, aid, living cost allowances); - promotion of trades and small-scale entrepreneurship, 32 million. Moreover, owing to the above-mentioned circumstances budget revenues were reduced by 1.5 billion (because of lower taxes). As a whole, the state budget directly allocated 9.5 billion kuna to the social programme. This accounts for 27.3 percent of the overall budget, or for 8.4 percent of the gross domestic product. If other welfare payments (distributed shares, loans, free land etc.) are added to budget allocations, the total welfare cost becomes considerably higher. In 1997 it totalled 15 billion kuna, or 43 percent of the budget and 13.3 percent of the gross domestic product for the same year. Within the scope of welfare, 221,398 persons (4.6 percent of the population) had welfare cards in 1997, while 350,000 citizens availed themselves of various forms of welfare; this includes continuous care for the 43,426 participants and victims of World War Two. The 1998 budget envisions 11.4 billion kuna for overall welfare payments - 29.04 percent of the budget or 9.05 percent of the gross domestic product. In the pension system the number of retired persons has increased disproportionately, and their standard of living has declined as compared with the pre-war period (because of demographic ageing, transition of the economy to market conditions, and particularly because of the inherited high number of early retirees, and of the consequences of the war). It will suffice to mention that only 16 percent of retired persons have a full length of service for retirement. This indicates that the problem of low pensions cannot be dealt with simply by a unilateral increase; rather, different retiree categories have to be taken into account. The number of employed persons per retiree in 1997 has dropped to one-half of the 1990 ratio, from 3 to 1.6. Croatian authorities have endeavoured to maintain the standard of living of retired persons as much as feasible considering the circumstances. In 1997 total pension and associated expenditure increased by 33.4 percent, and the number of beneficiaries by 3.7 percent. As a whole, average pensions increased by as much as 28 percent. However, the pensions of all categories did not increase at the same rate, and certain categories are still too low in spite of gradual increases over the past few years. Serious improvement of the difficult social position of retired persons requires a prompt reform of the entire pension system. The Government will soon present to the Croatian National Parliament a new Pension Scheme Bill which ought to enter into force on January 1, 1999. Pensions can be increased by linking them to actual salaries, that is, to the paid personal contributions to the pension fund, by a more appropriate retirement age in keeping with the demographic structure of the population and the experience of other countries, by introducing stricter disablement criteria, and by matching pensions to the cost of living and the extreme material potential of the State. With the reform which is being prepared Croatia would join other European States in terms of the solution of one of the major and most difficult problems affecting the developed world. At all events, the pension scheme requires a more rigorous monitoring of disablement insurance, and higher efficiency in the collection of funds due to pension insurance funds: at present the rates are less than 90 percent in the workers’ fund, 70 percent in the handicraftsmen’s fund, and only 40 percent in the farmers’ fund. A meaningful and appropriate reform of the pension scheme is one of the strategic commitments of the Croatian Government. In 1997 the number of persons receiving one or another form of unemployment benefits amounted, on a monthly average, to 223,093 persons. The percentage of formally registered unemployed persons was 15-17 per cent, but the actual unemployment rate according to international methods was 10 percent. At the same time, Croatia already feels the lack of manpower, not only in the construction and tourist industries, but also in some municipal services in Zagreb and in the interior. The reduction of unemployment and provision of full employment of young people is one of the fundamental social tasks of Croatian authorities, and it can obviously be accomplished only by successful economic development. In addition to long-term programmes, the Croatian Government must also prepare more immediate short-term measures focused on employment, particularly of highly educated young people, in order to prevent negative impacts throughout the range from the family to the entire State. Employment mobility should be stimulated in particular (islands, war-affected areas), as well as additional worker training and requalification focused on job maintenance or on new production and other requirements. While seriously monitoring unemployment, employment agencies should also implement more efficient employment policies. The implementation of such policies requires not only amendments to the respective law, but also an efficient change of moral and psychological attitudes throughout society. The legacy of the past system, and the social problems due to transition and war-time circumstances, are currently the most serious problems affecting Croatian society and the State. Their solution can only be accomplished by the active involvement and contribution of all people, and all social subjects and factors - from individuals and families to entrepreneurs and the church, from cultural and scientific institutions to all associations, the trade unions in particular. Social problems are very serious issues, especially because the public at large expected that all questions would easily be dealt with after the achievement of national sovereignty. However, social problems also oppress all other countries, including the most developed ones, which have not faced such hardships as Croatia. At any rate, catastrophic petty political and demagogic claims about the general impoverishment of the middle classes and fabulous riches accumulated by a hundred tycoons are totally groundless. This may also be concluded from the fact that the number of cars registered in Croatia in 1997 totalled 899,933, which is 13 percent more than in 1990; moreover, the rate of increase of more expensive cars was even higher. As compared to war-time 1992, the number of cars has increased by as much as 40 percent. About 53,000 new cars were registered in Croatia in 1997 alone. Social policy does not lend itself to quick solutions; nevertheless, 1998 must be a turning point in the provision of all conditions, throughout the social and government system, required to make Croatia, as a democratic State and a State of the people, a truly stable social State as well. Only such a Croatia, the centuries-long dream come true, can ensure prosperity, happiness and a life of satisfaction to all its citizens, and, primarily, the lasting continuance and comprehensive economic and cultural development of the Croatian people and of its independent State, regardless of all scheming trends and possible changes in the world of today and tomorrow. 6. Croatian Sports Accomplishments in 1997 The role of sports in the life and development not only of young people, but of society as a whole, is assuming an ever greater importance throughout the world. Croatia is no exception in this regard. Sports are becoming one of the most efficient factors in the establishment of renown of states and promotion of national reputation, whether individual or collective events are concerned at national and particularly at international competitions. Sports are of exceptional, indeed irreplaceable importance in preventing and eliminating all evils and vices which greatly erode modern civilisation (drugs and alcohol, spiritual sterility and emptiness). This is why Croatian state authorities are duly concerned with sports as an important factor within overall social life. 1997 was a very successful year for the leading Croatian sportsmen and sportswomen of all categories and ages. They won a total of 163 medals at major international events - 47 gold, 50 silver and 66 bronze medals. The qualification of the Croatian national football team for the 1998 World Football Championships in France is of outstanding importance. To this one should certainly add the accomplishments of Croatia’s football, basketball, volleyball, handball and boccia teams and clubs on the international scene. The success of the already established Croatian tennis players is now being followed up by a group of young prospects. In boxing, table tennis and some other sports our sportsmen have kept up their successful record. In addition to sports in which we have traditionally had a good record, 1997 also marked the successful appearance of our sportsmen in sports where we have not so far achieved noteworthy results, e.g., in skiing. Some of our national teams and clubs did not in 1997 accomplish the desired and expected results. To be sure, this is also due to a set of unfortunate circumstances, but it is similarly the outcome of inherent weaknesses and confusion in the specific sport or in its management. It is to be hoped that the respective lessons will be drawn from this experience for 1998. In view of our past, traditionally good results, we can realistically expect our national teams and top-notch sportsmen to accomplish new feats at the many major international sports events awaiting us in 1998. The new Sports Law enacted in 1997 created the legislative conditions for the faster and more appropriate development of all sports at the top and particularly at the popular level. One of the essential provisions of the Law has been the settlement of relations and a logical delimitation of amateur and professional sports, particularly in its financial management. In view of the limited funding which the State can allocate to sports, good and efficient management of existing sources and potentials by the sports associations and clubs is of the highest importance for team and individual sports alike. A reasonable and most responsible fund management, whether regular activities or the construction of sports facilities is concerned, is primarily the task of sports officials, but also of all those who provide the required funding. In this connection, let me point out in particular that the Ministry of Education and Sports, and the Croatian Olympic Committee, are responsible for the systematic and efficient implementation of the new Sports Law, and of appropriate policies throughout the State, and in specific centres and counties. Mr. Speaker and members of both Chambers of the Croatian National Parliament, Honoured officials of executive and judiciary authorities, VI. CONCLUSION I have already referred to some essential tasks, awaiting us in the new conditions in 1998, in my last month’s Address to the Croatian National Parliament on the occasion of the promulgation of the Constitutional Amendments and the seventh anniversary of the promulgation of the Croatian Constitution. Nevertheless, at the end of this Address on the State of the Nation in the year in which we truly - and formally on the l5th day of this month - completed the establishment of full State sovereignty, I deem it necessary to summarise the most important tasks facing us in this, the first year of a certainly new period. The first task in our overall domestic policy is the consistent implementation of that State policy with which, in cooperation with the UNTAES provisional administration and the local Serbian population, we accomplished the peaceful reintegration of the Croatian Danubian Region. All State authorities, local government and self-government, and social and economic subjects must: a) provide, as quickly as possible, for the return of displaced persons, and allow for the settlement of refugees and returnees from other regions in the deserted areas; and b) establish, as soon as possible, normal life in all economic, cultural and social spheres within the framework of the overall Croatian system. The Government must take appropriate steps in order to obtain international assistance for the reconstruction of Vukovar and other destroyed areas, and see that such assistance is put to the most important uses, involving not only reconstruction but also subsequent development. Croatia’s reinforced reputation and international position, after our achievement of sovereignty throughout the territory of the State, provides the opportunity for taking more efficient steps in our foreign policy. In this connection, the primary tasks in 1998 are the following: 2.1 Within the scope of completion of the normalisation of relations with the Federal Republic of Yugoslavia, conclude a bilateral agreement on the demilitarisation of the area of Prevlaka, which is a security issue for Dubrovnik and Boka Kotorska. If such an agreement is not signed within three-four months, the Croatian Government should call off its agreement regarding UN monitors at Prevlaka, because this upsets economic life and the development of tourism. 2.2 Conclude the negotiation of outstanding issues with Slovenia. If no bilateral agreement can be reached, international arbitration should be sought. 2.3 Conclude agreements and provide the required solutions for Croatia’s membership in CEFTA, the WTO and OECD. 2.4 Conclude arrangements, with the European Union and the United States, on: a) the agreement on cooperation and trade; b) membership in Partnership for Peace; and c) gradual integration into the European Union and NATO. 2.5 Complete as soon as possible the agreements on Croatia’s special relations with the Federation of Bosnia and Herzegovina, and on the establishment of the Council for Cooperation with Bosnia and Herzegovina. Within this context, conclude agreements on the construction of the Zagreb-Bihać-Dubrovnik motorway with branch roads to Split and Sarajevo, on the free trade zone in the port of Ploče, and on the regime of passage through Neum. The provision of long-term economic development requires the following: 3.1 Sustained implementation of the state policy of social and economic stability. 3.2 Promotion of domestic savings, and domestic and foreign investment, particularly with respect to new technologies. 3.3 More determined completion of privatisation, especially of tourist and other economic facilities. 3.4 Initiate gradual privatisation of public companies in order to obtain fresh capital and new technology, bearing in mind national and state interests. 3.5 Promote exports and employment through the reduction of taxes and contributions on salaries, and, possibly, through provisional tax exemptions for newly-employed trainees. 3.6 Enforce a meaningful protective tariff policy in order to protect and promote national production, but also to prevent monopoly and support price decreases in the national market. 3.7 Ensure the consistent enforcement of the VAT Law and study all the effects of its enforcement during the first year; if required, introduce possible changes for the sake of improvement. Accelerate the restructuring and strengthening of the banking system. The Croatian National Bank must stimulate the reduction of interest rates - among others, by reconsidering deposits in foreign banks. Liquidity between business operators should be improved, especially with regard to state institutions, and health insurance and pension funds. Complete the reform of the pension scheme with a view to increasing pensions as soon as possible, with a concurrent audit of disability insurance abuses. Take the necessary steps in order to eliminate the accumulated judiciary backlogs regarding civil law suits, and cases heard by commercial courts in particular, as well as criminal and offence cases. Since the long-standing lack of promptness of courts gives rise not only to the political-moral dissatisfaction of citizens, but also has detrimental economic consequences (creditor powerlessness, delayed bankruptcy), and the Government and the judiciary are not finding efficient solutions, I move that the situation be discussed by the Committee for the Administration of Justice, or even by the Chamber of Representatives of the Croatian National Parliament. Through agreement with the trade unions the Government ought to provide for salary increases in government administration and the judiciary, and in culture, science and education, because all these activities lag considerably, in terms of salaries, behind the private sector. The Government should present as soon as possible the bill regarding the obligations and rights of state officials. The peace-time structure and deployment of units of the Croatian Army, Air Force and Navy ought to be dealt with. In the implementation of modernisation due account should be taken of the need to reduce budget-financed defence expenditure. Within our overall internal sociopolitical and government life, our main general tasks in 1998 - in addition to those to which I referred specifically - involve the fullest realisation of Croatian democracy, the comprehensive reinforcement of the rule of law, the protection of the freedoms and rights of every man and citizen, and, finally, this being of outstanding importance at the present moment, the meaningful development of the social State and social justice system. In my Constitutional Address last month, I referred to the difficulties and resistances which we must overcome and eliminate; to the steps to be taken by all bodies of State authority in order to achieve, as soon and as fully as possible, in our democratic State and our State for the people, a progressive, prosperous society of equal and happy Croatian citizens. The materialisation of all these highly demanding but, at present, fundamental Croatian national goals, requires the involvement of all social classes, which should be given, Croatian youth in particular, the broadest opportunities for creative activity. I believe that in this process, in the building of our free Homeland, we can count on the sensible participation of all social classes, youth in particular - just as they have, with no coercion and responding to the general call, voluntarily taken part in the Homeland movement and the war for the establishment and defence of the Croatian State. Today, when we have fully defended and strengthened the independence of our State, and established sovereignty throughout our territory, we can pursue with even greater resolve the policy of national reconciliation, in order to preserve national concord, which is also a precondition for successful peace-time construction. In proceeding from the results achieved, and bearing in mind the tasks facing us at the beginning of a new period, I believe I can rightfully request all responsible factors in present-day Croatia to invest their creative efforts into further integration of the Croatian national being in order to reinforce acquired statehood, and in order to build a democratic society and a State of social justice based on equal opportunities for all classes and citizens. With this purpose in mind, it would be particularly appropriate to devise a system of more even distribution of national wealth. The commitment to the social State means first and foremost the enforcement of tax liabilities in proportion to one’s income scale, and the promotion, rather than inhibition, of private small and large scale entrepreneurship. Without this there is certainly no progress, employment or successful social programme. These general goals and tasks can be achieved only if all Croatian citizens and classes, including primarily young people, assume their own share of the responsibility involved in dealing with their individual and specific problems related to life and progress, and with the general requirements and the security of the society and the State. The achievement of all this requires the provision of all the required prerequisites, and the elimination of all social, economic and - in particular - bureaucratic stumbling blocks. When fundamental requirements and interests are involved - whether of the State as a whole or of specific classes or individual citizens - we should ask ourselves what we can do for our Croatian State, but also identify the proper answer to the question of what the Croatian State can and must do for each social class and individual citizen. My reiterated message to the Croatian National Parliament and to the public - the need to continue building democratic Croatia as a true State of social justice - remains to be the overall sociopolitical and economic frame of reference and programme of the State leadership. As soon as possible, already in the current year, the Croatian Government must systematically work out this programme, to be implemented by all bodies of central State authority, government and self-government, through a meaningful strategy of economic development, and concrete legislative and other measures. Within the scope of the powers granted to me by the Constitution I shall do everything required and possible not only to make my programme, as presented in my Address to this Parliament, a mandatory recommendation but also to see that it is enforced as fully and as consistently as possible. Of course, this will be possible only if the building of the prosperous, social and law-governed State - today’s primary national goal - is supported by the concerted efforts not only of all legislative, executive and judiciary authorities, but also by the overall aspirations, efforts and creativity of all Croatian people in all centres and counties, and in all bodies and subjects of social and state life. Thank you for your attention. 271823 MET jan 98