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Gray economy in Bulgaria is brightening up, but still not enough

Photo: BGNES

The Association of Industrial Capital in Bulgaria (BICA) has presented a National Map of undeclared employment prepared by it. It is the undeclared employment that is the most common gray practice that is found on the labour market in Bulgaria. The project is part of the efforts of businesses to improve access to employment and reduce gray practices in wage labour.

In recent years, there has been a lightening of the economy in Bulgaria, show data from the Association of Industrial Capital. Since 2010, the organization has been assessing the size of the informal economy through the "Economy of Light" index. According to the collected information, if in 2010 the gray sector accounted for 36.65% of the Bulgarian economy, today it is 21.48%. Despite the positive trend, it remains well above the EU average. Efforts in this direction should not weaken, because gray practices burden decent companies, depriving them of competitive advantages and harming employees. This was said at the round table organized by the Association of Industrial Capital in Bulgaria on "Presentation and discussion of the National Map of Undeclared Employment" by the Chairman of the Board of the organization Vasil Velev.

The forum brought together representatives of the state administration, branch and civil organizations, employers and employees.

The experts who have worked on the manifestations of gray practices in wage labour are adamant that the pandemic has proven the need to declare employment and income. Those who did not declare their income could not take advantage of the measures taken by the state to support businesses and people. The Deputy Ministers of Labour and Finance Lazar Lazarov and Marinela Petrova, who took part in the event, united around this position.

According to BICA's analyzes, the most widely used form of undeclared employment is the operation of a contract with fictitious clauses and additional payment of a non-taxable amount in cash. The most vulnerable to this type of practice are the sectors of Trade, repair of motor vehicles and motorcycles, Construction, Agriculture, forestry and fishing, Transport, storage and postal services, Hotels and restaurants, Mining and extractive industries.

As a form of counteraction against undeclared employment, the experts propose a review and update of the national labour legislation in order to create legal preconditions for preventing undeclared employment and reduce the motivation for these practices.

Another proposal is for health insurance to be paid in full by employees. Currently, 60% of the health insurance contribution is paid by the employer and 40% by the employee. This proposal is expected to significantly reduce the economic interest of the employer from undeclared work and increase the economic interest of the employees not only to work under an employment contract, but also to be insured on the full amount of their gross wages.

Compiled by Miglena Ivanova

English Rositsa Petcova

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