International review of approaches to tackling child poverty: Croatia

Introduction

Child poverty in Croatia

In 2023, Croatia exhibited low relative^[7] child poverty rates at 16.1% children living in relative poverty before housing costs, compared to 19.4% of children in Scotland in 2023-24.^[8] There has been a reduction of five percentage points in nine years, from 21.1% in 2014 to 16.1% in 2023. As such, it is an interesting example of a country that has seen a significant reduction in child poverty rates in a short period of time. Findings from UNICEF’s Innocenti Report Card show a 11.6 percentage point reduction in child poverty rates before transfers between 2012 and 2021, and a 5.8 percentage point reduction after transfers in the same period.^[9] This reduction followed major events such as the aftermath of the 2008 global financial crisis, Croatia’s EU accession and the Covid-19 pandemic that were turning points in the country’s socio-cultural history and economic growth trajectory. Although child poverty levels dropped most significantly between 2014 and 2023, it is important to understand which key historical factors shaped the nature of reforms that drove this recent reduction. In this case study, we consider the key interventions that facilitated the fall in child poverty in Croatia during the period spanning 1996 to 2023 and examine the important economic, political, social and cultural factors during this time.

Croatia’s history

After independence, Croatia established a liberal democracy, transitioned to a market economy, and achieved upper-middle income status. Joining the European Union (EU) contributed to this by encouraging reforms, enhancing institutions, and providing increased funding.^[10] The history of modern independent Croatia can be divided into five key periods, with each being important for its efforts to reduce poverty:

• 1991 – 1995: Croatian War of Independence and subsequent economic collapse
• 1996 – 2008: Post-war recovery and economic growth efforts
• 2008 – 2013: Global financial crisis and a six-year recession
• 2013 – 2020: EU accession and social policy reforms
• 2020 – present: Covid-19 impact, recovery and recent-year growth

This research examines the period from 1996, following the end of the war, which was a recovery period marked by an increase in social welfare schemes and improved employment levels, up to 2022 when EU-backed measures aimed at alleviating child poverty were implemented.

Economic development trajectory

Following the end of the war, there was consistent growth in economic standards, supported by rebuilding efforts that had cross-party backing. This was accelerated by Croatia’s later accession to the EU. However, the period after 2008 was challenging due to globally disruptive events such as the financial crisis and the Covid-19 pandemic.

Source: International Monetary Fund, Country Data Profile, Croatia, GDP per capita in current USD, 2025^[11]

According to stakeholder interviews, much of Croatia’s reduction in poverty is underpinned by high economic growth, low unemployment and a robust social welfare system that focuses on redistributive measures.

The late 1990s saw gradual economic stabilisation and investment in social programmes.^[12] By the early 2000s, Croatia pursued market-oriented reforms,^[13] improving employment and social welfare. After 2013, more robust family and child benefits, social welfare programmes, and EU-backed initiatives targeted poverty reduction.

Between 2018 and 2021, Croatia undertook a series of reforms including changes to personal income tax; social insurance contributions; reduced VAT rates on major food items; parental leave; more generous child benefits; and a new national allowance for the elderly.^[14]

Absolute poverty reduction, according to the World Bank’s UMI poverty line^[15], has been closely related to positive labour market developments since 2013, particularly among those at the bottom of the income distribution. This was also corroborated by stakeholder interviews. During this period, economic growth translated into job creation and higher wages, driven by growth in sectors that mainly employed lower-income workers such as those in manufacturing, retail, hospitality and food services. This economic growth, together with higher pension incomes, constituted the main drivers behind overall poverty reduction in Croatia. This has been further bolstered by EU funding since 2014. For the at-risk-of poverty metrics, rising labour income and better employment outcomes contributed to more than 50% of the total reduction in poverty from 2013 to 2016, which was the period under study.^[16] Overall employment grew by 17 percentage points from Q1 of 2013 to Q3 of 2024.^[17]

Tackling child poverty in Croatia

Croatia's early post-independence poverty measures did not specifically aim to reduce child poverty. The approach then was heavily centred around economic growth, labour market reforms and reducing overall poverty rates. As the country progressed economically and achieved stability as an upper-middle income country, there has been more focus on targeted measures to reduce child poverty and improve outcomes for children across various indicators, such as early childhood education and healthcare. This has been partially due to Croatia’s accession to the EU which made it subject to multilateral policies and strategies for child poverty reduction.

Recent strategies that focus on child poverty reduction are the Strategy for Combating Poverty and Social Exclusion in the Republic of Croatia (2014 - 2020) and Croatia’s Child Guarantee National Plan 2022, developed as a result of the EU’s European Child Guarantee programme.