Lower coefficients and the abolishment of some entitlements, such as Christmas and holiday bonuses, would balance out the wage budget for this year and result in a HRK 1.76 billion savings and there should be no need for further cuts until the end of the year, Mrsic told a press conference.

Education workers have been exempt from the latest cuts and their coefficients will be increased to supplement the abolishment of some entitlements, after which the coefficients will be reduced by 3% but their salaries should grow a little, he said.

He explained that the intended cuts in salaries for 230,000 employees in public and state services was not related to a budget revision or Croatia's rating being downgraded recently by agencies to junk level, but to negotiations on branch collective agreements.

We were aware that unions would not concede to abolishing long service entitlements and so the government decided to lower wage coefficients, said Mrsic.

He rejected claims by unions that the government had tricked them when it said it would not touch salaries, adding that the only other option was to shed jobs.

Had we come to an agreement with unions concerning long service entitlements, we would not have to lower coefficients, he said.