The shades of gray in Bulgarian economy

Presenting the annual "Bright Economy" Awards
Photo: BGNES

A large part of the Bulgarian economy is operating legally, paying all necessary taxes, salaries and social security contributions. But there is also an economic sector operating illegally or semi-legally and generating about 20-30% of GDP, according to various estimates by trade unions and employers. This was made clear at a forum organized by the Bulgarian Industrial Capital Association (BICA) and the national center for economic transparency, where the study "Bright Economy" was presented. According to it, the share of gray economy in this country has decreased to about one-fifth. The 4.5% growth of legal businesses in 2018 is the highest marked during the last 5 years. The reasons for this are financial and economic stability and measures taken to improve the business environment and to curb gray economy. BICA chairman Vassil Velev has recalled that the gray economy not only damages the treasury, but it is also a form of unfair competition against companies that are working according to the rules.

Still, BICA has reported continuing failures in some government policies. For example, the privileged position of producers of electricity from renewable energy sources continues to exists, as well as the unfair competition of the so-called US thermal power plants in the energy sector.

However, trends are clear and the times of the wild market economy and lawlessness are long gone. Today, it is easier and more profitable to do legal business. The credit for this goes not only to the business community, but also to the state authorities, which have been trying to make it easier and not hinder even the smallest businesses. Keeping this in mind, work is being done to create better legal frameworks and well-functioning justice as their lack scares businesses away and makes them prefer staying in the gray. Big risks of grayness exist in construction, tourism, transport and especially in small businesses, but according to Vasil Velev this should not make us pessimists. "In 1993 Bulgaria's GDP per capita was 3,573 USD. When the currency board was adopted in 1997, the level was 3,810 USD, and in 2017 it was 8,331 or 2.3 times more. And that's thanks to 350 thousand entrepreneurs in Bulgaria. That is why good examples should be popularized," the BICA head said. Some of the good examples received awards. Among them were MP of the United Patriots Coalition, Christian Mitev, the Executive Labor Inspectorate and the Bulgarian office of the Deutsche Welle Radio.

Experts report an acceleration of the trend of Bulgarian economy coming out of the shadow and predict that in five years the gray sector would fall to an acceptable European level of around 13-15%. According to Social Minister Biser Petkov, more and more workers now understand that they are the ones to incur losses by working in the shadow. Currently, they may be pleased to have more money, coming from unpaid taxes and social security contributions, but in the future, their pensions would place them on the brink of survival. The whole of the society also experiences losses as reduced tax and social revenues limit the state's ability to invest in vital public systems such as healthcare, education, and other social systems.

English: Al. Markov

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