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Georgi Stoev: disposable real incomes of the Bulgarians increase significantly after the country's accession to the EU

Photo: dnevnik.bg

Bulgaria's economy has grown with nearly 74% since the country's accession to the European Union ten years ago. It is important to note that accumulated inflation during that ten-year period amounted to 41% only. In other words, the Bulgarian economy grew in real terms with nearly 25%, economic expert from Industry Watch Georgi Stoev told Radio Bulgaria. Moreover, salaries saw a 170% increase in the past 10 years. The wage growth exceeded significantly the increase of the country's gross domestic product which resulted in a substantial growth of the disposable real income of the population, Georgi Stoev said and added:

“Labor productivity in Bulgaria has been growing at a very good pace and the increase of the salaries makes up for the lack of workforce in some industries. For instance, the salaries in the processing industry in Bulgaria's second largest city Plovdiv have increased with nearly 10% in the past twelve months. Moreover, most employers from Plovdiv Industrial Zones are planning an 8% increase of the salaries each year. That is why we should perhaps reconsider all types of demands related to political interference in the wage-determination process.”

The highest regional imbalance in terms of purchasing power and wealth of the population is registered between the capital Sofia and the other Bulgarian regions. There is a huge concentration of economic activity and economically active population in that city and wages in Sofia are two or three times higher as compared to other Bulgarian regions.Moreover, the imbalance between North and South Bulgaria is shocking. Only 29% of all employed Bulgarians live north of the Balkan Mountain Range. The good news is that some industries such as the IT and the outsourcing industry offer similar salaries in Sofia and other Bulgarian cities. We should note that wages in the IT sphere in Sofia and Plovdiv are almost equal. Currently, Plovdiv is in the focus of those industries, but soon they will be interested in other Bulgarian cities with universities such as Veliko Tarnovo, Blagoevgrad, Burgas, etc, Georgi Stoev further says and adds:

“The biggest problem in North Bulgaria is that people working there produce low added value. The regions in that part of the country must attract investors who open few jobs, but with high added value. North Bulgaria and all depopulated areas need such types of investors, rather than ones that created in the recent years hundreds or even thousands of job positions with low added value. Thus, investors will not be disappointed with the lack of personnel and people living and working in those regions will be happy, because their labor productivity is high and their remuneration rises quickly. ”

Has Bulgaria managed to shorten the distance with other countries from Central and Eastern Europe in terms of wealth of the population and wages or it has lagged behind even more?

“Yes, it shortened that distance and this is proved by the Eurostat statistics. However, it is interesting to note that the regions in Bulgaria have been developing at different gears. For example, Sofia is wealthier than some Greek or Portuguese regions. Meanwhile, some Bulgarian regions remained the poorest in the whole EU. That is why I would advise people who make such types of analyses to compare separate regions in the EU, rather than countries, especially in times when investors are mainly interested in given cities or districts."

How Bulgaria's accession to the Eurozone would influence prices of items and services?

“There is no reason to expect any price increase, because we are already using Euros as reserve currency. The moment we formally substitute the Bulgarian Lev for Euro some traders may try to hike prices, but at the end of the day our market is open and competitive and the country's economy pays most of the imported investment goods in Euros. That is why we should not expect that prices will go up the day we officially adopt the Euro.”

English version: Kostadin Atanasov

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