While hundreds of thousands of permits are issued to foreigners, pensioners with 40 years of service lose half their pension for working more than 20 hours a week. Meanwhile, OECD pressure signals a rise in the retirement age to 67 and beyond.
Croatia is experiencing historically low unemployment. In June 2026, the registered unemployment rate fell to 3.3 percent, while the survey-based rate, comparable to the rest of the European Union, stands at 5.6 percent. Only 62,000 people remain registered with the Employment Service, a significant portion of whom are structurally unemployable. In Istria, the figure is even more dramatic at 1.9 percent, meaning it is nearly impossible to find an available worker.
To fill the labor market gap, the state has turned to mass importation. During 2024, 206,529 residence and work permits were issued, predominantly in the construction and tourism sectors. A year later, after the administration was deliberately slowed down and tightened, the number dropped to approximately 170,000. If the influx from Bosnia and Herzegovina, Serbia, Nepal, India, and the Philippines were to cease, key parts of the economy, from logistics to manufacturing, would come to a halt.
Paradoxically, a country importing a six-figure number of people from the other side of the world simultaneously legally restricts its own labor force that knows the language and conditions: its own pensioners. Of the approximately 1.23 million people receiving a pension, only slightly more than 50,000 are working. At the end of last year, there were only 36,000 employed individuals over the age of 65. Eurostat data reveals that as many as 89.4 percent of employed pensioners in Croatia work part-time, the highest share in the entire Union. This is not a result of mentality but a direct consequence of restrictive regulations. For comparison, the employment rate in this age group reaches 17.6 percent in Estonia, 14.5 percent in Latvia, and 12.6 percent in Lithuania.
As of January 1, 2026, amendments to the Pension Insurance Act are in force, presented as a step forward. A pensioner over 65 can now formally work full-time, but with the condition that only half of their pension is paid out simultaneously. For an average old-age pension earned with full service, this means a loss of approximately 400 euros per month. In other words, the state has introduced a penalty for anyone who wants to work eight hours a day in their seventies.
This model is an exception in Europe. In the vast majority of EU member states, pensioners who have reached the statutory retirement age can work as much as they want while retaining their full pension. This is the case in Germany, which abolished the last earnings limit in 2023, as well as in Austria, Italy, the Czech Republic, Poland, Scandinavia, and the Baltic states. There, working alongside a pension is not "permitted" but assumed. A smaller number of countries take a certain percentage, but from wages, not pensions: Greece charges an additional ten percent, and Spain nine percent on earnings. Interestingly, until 2024, Greece deducted a third of the pension from working pensioners but abandoned this system as unsuccessful. Thus, Croatia, at the beginning of 2026, introduced a solution that even Greece has abandoned.
In addition to the pension restriction, the issue of contributions also arises. From the salary of an employed pensioner, 20 percent is allocated for pension insurance, while the employer pays an additional 16.5 percent for health care. However, the pensioner already has health care coverage based on their status, regardless of whether they work or not. The paid pension contributions should theoretically translate into an increase in the pension through recalculation, but only after a minimum of one year of insurance coverage, which for part-time work means two calendar years. The process is not initiated automatically but only upon request. There is no annual adjustment based on contributions.
While domestic pensioners face administrative hurdles, a broader discussion about raising the retirement age is on the horizon. According to the OECD report "Pensions at a Glance 2025," the average retirement age in the EU for men will rise from 64.7 to 66.7 years, and for women from 64 to 66.6 years by the late 2060s. The goal is to preserve the financial stability of pension systems without cutting benefits or increasing contributions.
In Croatia, the current retirement age for a regular old-age pension is 65 with 15 years of service, and for women, it was raised to 64 as of January 1, 2026, with a transition period until 2029/2030 and full equalization with men by 2030. However, given that almost all OECD members are raising the retirement age, and Croatia is rapidly aging and negotiating membership in that organization, it is hard to expect it to remain outside this trend.
An analysis covering 32 countries shows that two-thirds of European states will raise the retirement age for men, and three-quarters for women. Denmark will reach 74 for men, followed by Estonia at 71, and Italy, the Netherlands, Sweden, and Cyprus at 70 by the late 2060s. The lowest age of 62 will remain in Slovenia and Luxembourg. Turkey records the largest jump: from 52 to 65, an increase of 13 years. Denmark will see a rise of seven, and Estonia, Italy, Slovakia, and Cyprus at least five years.
For women, the range is similar. Currently, the highest age is 67 in Denmark, the Netherlands, Iceland, and Norway, and the lowest is 49 in Turkey. By the late 2060s, Denmark will also have an age of 74 for women, Estonia 71, and Italy, the Netherlands, Sweden, and Cyprus 70. Turkey will again see the largest increase of 14 years, from 49 to 63, while Italy will raise its age by 6.2 years.
Demographic indicators further intensify the pressure. According to the OECD, in 2025, for every 100 people aged 20 to 64, there were 33 people over 65. By 2050, this ratio will rise to 52, while in 2000 it was only 22. Croatia is simultaneously aging rapidly and aiming for formal OECD membership during 2026. So far, conditions have been met in 20 of 25 committees and 25 of 26 subcommittees.
The issue of raising the retirement age to 67 was decisively rejected by Croatian citizens in a 2019 referendum. The initiative "67 is too many" clearly demonstrated how politically explosive the topic is. Now, as the government calls OECD accession "the final foreign policy goal," it is increasingly certain that this issue will return to the agenda sooner or later.
A country where 200,000 foreign workers are employed, while its own pensioner with forty years of service is charged half their pension for the right to work eight hours, has not only a problem with the labor market and pension system but also with the general attitude of the state towards its own citizens.
