Analyzing education outcomes and skills mismatch in Croatia’s lagging Slavonia region

Amid overlapping crises—climate change, Russia’s invasion of Ukraine, and high inflation—it is imperative for governments to ensure that communities, especially rural ones, do not fall behind. While they play a crucial role in national economies, many “lagging regions” across Europe face complex and persistent challenges that must be addressed. The education sector can help in resolving these issues by implementing transformative efforts, including raising the quality of education and aligning the skills of the local workforce with the needs of the global economy, ultimately promoting local growth and prosperity.

One lagging region in Europe, with a war-torn past, is Slavonia in Eastern Croatia. This region has been experiencing an economic downturn since Croatia’s war for independence thirty years ago, which ravaged Slavonia and destroyed its once prosperous food production industry. Since 2014, Slavonia has received only 2% of the country’s recent foreign investment. In parallel, local human capital has been diminishing, with sharp emigration of younger and skilled workers and a lack of relevant education and skills in the workforce that remains.

Analyzing education outcomes and skills provision in Slavonia

Over recent years there has been a significant decrease in the number of students across all education levels, especially in technical and vocational education and training (TVET) agri-food programs. For example, the agri-food industry alone makes up 29% of the added value in Slavonia, yet only 10% of farmers in the region have received any form of agricultural training, compared to the EU average of 28.9%. Enrollment and graduation in tertiary education remain a challenge, and tertiary education institutions are still weakly aligned with regional workforce needs despite larger enrollment quotas in fields with skills shortages. Graduation rates are significantly lower compared to the rest of the country. Moreover, many graduates leave the region due to low salaries and the lack of suitable job offers.

Graduation in tertiary education since 1995: students who completed a professional or university study program, by place of permanent residence

In order to inform government actions to mitigate the skills mismatch and improve education quality in Slavonia, the World Bank produced a report examining regional education outcomes and skills provision, including TVET and higher education. Our analysis revealed that the performance of Slavonian students on national and international standardized tests, such as the State Matura and the Programme for International Student Assessment (PISA), was significantly below the national average. Achievement on the State Matura exam is also correlated with the risk of poverty, with counties with lower poverty risk attaining better results, and vice versa.

Average achievements of Slavonian students in PISA 2015 and PISA 2018

We also conducted an initial evaluation of regional skills development in five industries identified as priorities for future investments: agriculture and food; wood processing; information and communication technology (ICT); tourism; and mechanical engineering. The results have shown that each of them, except tourism, exhibits a skills deficit, especially a shortage of highly educated workers with industry-specific skills.

Recommendations for aligning education and skills with economic opportunities in Slavonia

To mitigate Slavonia’s skills mismatch and promote the region’s growth in both the short- and medium-term, we recommend the following:

• Strategic documents should present a comprehensive policy mix, key interventions and regional programs that directly respond to the shortage of a well-educated workforce, a plan for reducing fragmentation and redundancy among education programs, and focused efforts to reduce skills mismatch.
• Establishing a regional council on education and skills as an advisory body for education initiatives, connecting stakeholders and facilitating the coordination of regional activities locally and with the national government.
• Designing a robust scholarship program to increase enrollment in tertiary education, along with a job matching mechanism (JMM) for priority sectors in the region with the objective to facilitate a more efficient job search and matching process to connect graduates with local businesses.
• Strengthening lifelong learning (LLL) and adult education and training by seizing and reinforcing existing opportunities offered through the five centers of competence (CoC) in Slavonia could also provide an efficient tool for tackling regional skills mismatch.
• Inaugurating a robust tool to monitor and evaluate these efforts would allow for timely adjustments and corrections in implementation efforts.

A less educated workforce and the skills mismatch represent important constraints to unlocking Slavonia’s growth potential. Our analyses revealed several dimensions to addressing these: there are a few “quick fixes” that could be launched immediately, and medium-term measures to be prioritized. Successful regional reform will greatly depend on the financial resources invested, the commitment of the national and local government, and parallel national-level action in the education sector. And while these recommendations are specifically tailored for Slavonia, they may prove useful for other lagging regions across Europe and beyond that are facing similar skills mismatch, human capital decline, and outmigration of youth.