56 PERSPECTIVES ON BUSINESS AND ECONOMICS | VOL 44 | 2026 emigrants may require incentives and credible economic prospects to consider returning. Immigration Key immigration policies and recent changes have shaped Croatia’s response to the increase in immigration for work purposes. Specifically, the Law of Foreigners outlines the process through which third-country nationals (TCNs) can work in Croatia, because they do not benefit from the right of free movement in the same way as EU nationals. TCNs are individuals not from the European Economic Area or Swiss Confederation but who either are from a third country or are stateless (Ministry of Economy, n.d.). Prior to the 2020 Law on Foreigners, Croatia had an annual quota system that relied on forecasting the number of permits for each sector (World Bank Group, 2025). The 2020 act removed these annual quotas and instead implemented a labor market test system, requiring employers who want to hire a TCN to contact the CES, which determines if people in the unemployment registry could fill the position (OECD, 2025). Shortage occupations and seasonal work up to 90 days in agriculture, forestry, hospitality, and tourism are also subject to exceptions from the labor market tests but do require the positive opinion of the CES (OECD, 2025; World Bank Group, 2025). The list of shortage occupations is flexible, and accounts for supply and demand nationally, regionally, and locally (OECD, 2025). Croatia subsequently updated this act to address the country’s needs. Changes took effect in 2025. Residence and work permits increased from one to three years and seasonal permits in agriculture, forestry, tourism, and catering from six to nine months; TCNs are allowed to change employers in the same occupations after one year without needing a new permit (World Bank Group, 2025). EU Blue Cards, which are for highly qualified TCNs, were extended from two to four years and allowed skills developed through work experience in sectors such as IT to be used in place of educational attainment (World Bank Group, 2025). Protections were introduced for foreign workers, including salaries at least equal to Croatians for similar jobs, a grace period for permits if unemployed, accommodation standards, restrictions on hiring by employers convicted of certain crimes, and financial guarantees to pay for repatriation costs under specific circumstances (i.e., TCNs in Croatia illegally). The legal maximum ratios of foreign workers to Croatians in specific occupations depend on whether the occupations are considered in shortage (World Bank Group, 2025). Despite these improvements, entry into the labor market is not without barriers (World Bank Group, 2025). For example, there is still concern about the process for TCNs to obtain credentials for work within the country. The project SINERGY (Ensuring a Synergistic Approach to the Integration of Third-Country Nationals) formed an Advisory Group of 10 nationals of third countries. The group identified the complex process of foreign qualification recognition, often pushing TCNs to work in lower-quality and lower-paying jobs. The group highlights that TCNs’ medical degrees may take multiple years for recognition (Office for Human Rights…, 2025), which is especially problematic considering high vacancy rates in the health sector (World Bank Group, 2025). In addition to TCNs who obtained credentials outside of Croatia, the group discussed the effect of the labor market test on foreign students educated within the country. Although this test is designed to measure the local supply of workers eligible to fill positions, immigrants who pursued higher education in Croatia are not considered local candidates. The Advisory Group warns that the test is not in the best interests of either TCNs or Croatia, because TCNs face barriers when entering the labor market, and Croatia, the country where these TCNs pursued their education, misses a key opportunity to employ these graduates (Office for Human Rights…, 2025). The Advisory Group’s list of recommendations includes speeding up and simplifying the recognition of TCN qualifications and changes to the labor market test for migrants who finished high school in Croatia. They note that learning the Croatian language sooner would help improve integration (Office for Human Rights…, 2025). These recommendations are important for Croatia to remove barriers to TCN entry into the labor market and match near-term demand; however, the government can improve these measures by further focusing on a durable strategy. Extending EU blue cards and educating students from other countries represent initial steps but do not necessarily support lasting integration. Croatia needs to design a pathway that allows and encourages higher skilled immigrants to stay and work in the country. Furthermore, the emphasis cannot be solely on highly skilled immigrants. TCNs, regardless of skill or educational attainment, should have a path to putting down roots in Croatia. Currently, the CES al-
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