Scientific and political discussions in the world often quarrel about the efficiency of welfare
programmes realised primarily through social transfers because it is stated that the welfare
system contains a seed of corruption, primarily disincentive for work. Croatia has relatively high
social expenditures but they are not sufficiently effective in the reduction of inequality and
poverty. The current social protection system in Croatia is a mix of old and new programs that
are continuously being reformed in response to changing social needs and opportunities to
provide social transfers or services more efficiently. The Government is trying to formulate the
mentioned measures pursuant to the principle of social justice, i.e. equal allocation of the burden
of crisis and fiscal consolidation among all categories of society. In that sense, the Government
promised not to reduce the existing social rights. In the paper after introduction remarks,
theoretical framework on social transfers is provided. Economic growth and poverty indicators
are explained in Section 2, while Section 3 is dedicated to the trend of total social costs in
Croatia. International comparisons and analysis of social transfer efficiency in Croatia are given
in Section 4. Section 5 is devoted to conclusion and recommendations with priority of better
adjustment of social transfers towards most vulnerable groups, particularly women.