Unemployment in Bulgaria is at minimum rates, yet will there be an increase in wages?

Photo: knsb-bg.org

The profit of non-financial enterprises for 2016 alone is estimated at 20 billion leva and this upward trend continues so that, with a better distribution of the revenue coming from what we produce, it is absolutely possible that the current average wage of 1100 Bulgarian leva could reach the sum of 1900 leva, even more, over the next 4 years, said Plamen Dimitrov, leader of one of the leading trade unions in Bulgaria – CITUB (The Confederation of Independent Trade Unions). According to the organization, the income growth in the private sector last year was close to 15%, while in the budget systems it was at about 11%. Trade unions interpret this good news as a sign of change that will lead to a more tangible approximation of the country’s income ratios to the average European levels, as measured by the standard purchasing power and the price difference.

Another positive development reported by the trade unions is the record low unemployment rate in Bulgaria, which has dropped below 5% and this virtually confirms the existence of manpower shortage for the needs of the labor market in this country:

Low unemployment is due to the fact that employers hire all types of people, no matter whether they are suitable for the job or not", Plamen Dimitrov says. “This trend is deepening dramatically. If the business climate survey in 2016 showed that about 40% of the companies put the personnel problem at the forefront, at the end of 2017 already 75% of employers point to this as a major hindrance to their business. From then on, all people seeking a job got hired and this led to a reduction in unemployment at a rapid pace. I think that, for this reason, unemployment will continue to decrease. It will reach 2-3%, and according to statistics this is regarded as zero unemployment. That is why it is necessary to look for workforce outside the country, but not to hire Ukrainians and Moldovans, but to look at the Bulgarian diaspora in Ukraine and Moldova and how these people could be encouraged to return and settle in Bulgaria. Also, Bulgarians from the border regions of Serbia should be given an incentive to return. Last but not least, the authorities should think about ways to attract back to Bulgaria the people who left because of the low incomes and bad living conditions during all these years of the transition period in Bulgaria.

In the words of Plamen Dimitrov, most of the employers in Bulgaria operate observing all labour code regulations and they are pulling the economy forward, yet the state needs to take strict measures against businesses not observing these regulations. The state here owes a lot to its citizens, it has to show the will to put an end to grey economy practices and bring all business turnovers into the daylight, says the trade union leader. Some recently published data of the NSI comes as a confirmation of his words, according to which the state treasury is losing about 6 billion leva annually from undeclared wages. With an average salary for the country of 1060 leva, the average wage officially declared at the National Social Security Institute is 821 leva. According to the survey, the differences between the declared and actually received sums exceed 1000 leva. More from Plamen Dimitrov:

There is a business stratum that continues to operate unfairly and be part of the grey sector. It is not at all small, because the volume of the grey economy accounts for 30% of the country’s GDP. This is a huge sum amounting to 30 billion leva. This includes the turnover of companies as this turnover is not subject to taxation and social security payments. These are places where the wages are paid off the books based on what the respective employer decides. Therefore, the whole business should not be placed under a common denominator as being unfair and concealing profits. The measures that the state will take against unfair employers will be beneficial to everyone and will not create conditions for unfair competition with the rest of the business, which holds a two-thirds share of the economy. This will help the normal wage movement upwards. The economy is driven by purely market-based mechanisms, so the lack of manpower will also force the businesses to go out of the grey sector.

English version Rossitsa Petcova
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