2016 Annual Review of Labour Relations and Social Dialogue Croatia DARKO SEPERIC February 2017  GDP growth, recorded in 2015 for the first time after six years of recession, accelerated further in 2016, with the first estimates pointing to 2.6 per cent growth. The public budget deficit is expected to be lower than 3 per cent of GDP for the first time since 2008, while the debt-to-GDP ratio decreased for the first time since 2007. However, these positive fiscal developments were to a large extent driven by positive macroeconomic developments and windfall revenue.  Due to a dysfunctional ruling coalition, which was preceded and succeeded by periods of a caretaker government, 2016 was mostly lost for reforms, including those outlined in the National Reform Programme, as not much was done on its implementation.  An increase in the share of flexible forms of employment, visible since the 2014 Labour Act reform, continued with the share of temporary workers reaching 24.2 per cent in the third quarter of 2016(compared to the EU average of 14.6 per cent)  Industrial relations in the public sector were marked by negotiations over a 6 per cent wage increase, stipulated in the 2009 agreement, which was triggered by the GDP growth in the second part of 2015. Negotiations with two different governments eventually produced the compromise with the public servants' unions, providing for gradual wage increase during 2017, but no agreement was reached with the public services' unions.