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Croatia to Cut 20,000 Public-Sector Jobs, Linic Tells State TV

Sept. 21 (Bloomberg) -- Croatia’s government will dismiss 20,000 people in the public sector in an effort to cut costs and stick to its budget plans, Finance Minister Slavko Linic said.

“We have to start reducing the number of employees as there is no more room for lowering salaries,” Linic told state TV late yesterday.

Croatia, set to become the EU’s 28th member next July, is struggling with a recession that’s gripping the Balkans because of Europe’s debt crisis. Prime Minister Zoran Milanovic wants to reduce the former Yugoslav republic’s spending by 4 billion kuna ($700 million) by lowering subsidies to state companies and cutting public wages as it integrates with the west.

The government on Sept. 17 said it is canceling collective job contracts stipulating benefits for public workers to the year-end after negotiations with unions broke down over cuts proposed by the Cabinet.

The World Bank, Fitch Ratings and other credit-rating companies have urged the government to press on with a reduction of the bloated public sector and revamp collective contracts that give vast benefits to public workers.

To contact the reporter responsible for this story: Jasmina Kuzmanovic at jkuzmanovic@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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