Owing to a sudden mood change among entrepreneurs, the Business Optimism Index HLIPO in March entered deep into the recession quadrant and for the first time, it is below 90 percentage points.

The HLIPO index in March amounted to 82.3 percentage points.

The HLIPO index was affected by lower business expectations for the next six months, which in relation to February dropped by 24.1 percentage points, namely from 93.2 to only 79.2 percentage points, according to the Croatian business weekly Lider which carried out the survey in cooperation with the Hendal market research agency.

Such pessimism indicates poor business results, but it also raises suspicion that the loss from the start of this year could be compensated for in the coming months, the statement said.

Optimism in the tourism sector decreased the most and now amounts to only 80.5 percentage points.
The transport and services sector also recorded the lowest HLIPO index level so far.

The manufacturing sector was hit the most by this trend. The optimism index in this sector dropped to 83.5 points
Monthly business optimism surveys, which were introduced in June 2005, cover 400 big, medium and small companies in the manufacturing industry, construction, retail, transport, services, and tourism.

Gov't to cut salaries in public sector as of April
The government will adopt today a bill on base salaries for the public sector according to which salaries will be cut six percent as of April 1, Deputy Prime Minister Jadranka Kosor said on Wednesday.

Under this law, base salaries for the 180,000 employees in public services will be returned to last year's level, she said after a meeting with leaders of union federations and the Croatian Employers' Association.

The base salary of employees in the health sector, education, science, culture and welfare will be cut from the current gross HRK 5,415.37 to 5,108.84.

Union representative Kresimir Sever said that in the meantime, public servants' unions wanted to resume negotiations with the government in view of reaching some agreement which should be approved by unionists in a referendum.

Today, government representatives did not mention the possibility of cancelling collective agreements in public services, he added.

Kosor said yes to dialogue, but added that the government must do its job, and that a budget revision, which would cut expenses by HRK 5.4 billion, was being adopted also in order to preserve every single job.

Sever said that two union demands were accepted at today's meeting, for an urgent session of the Croatian Privatisation Fund (HFP) Steering Board and for including one union and one employer representative in a task force in charge of forming a new state agency for state property management, which should replace the HFP.

It was also agreed that unions and employers would soon resume talks with Labour Minister Damir Polancec on amendments to the Labour Act, which is one of the prerequisites for closing negotiations with the European Union on social policy and employment.

Employers' Association president Damir Kustrak said he was happy with the budget revision draft, describing it as the first step towards stabilising public finance and resolving the illiquidity issue