Download Business 4 Template - Friedrich-Ebert

07 April 2011
Hotel Dubrovnik,
Zagreb, Croatia
Employment Policies in
Bulgaria
Efficiency Misunderstood &
Equity Distorted
A PRESENTATION OF:
Head Asst.Prof. Atanas Vladikov
University of Plovdiv, Bulgaria
[email protected], http://pu-fisn-sotirova-vladikov.eu
(Source: National Statistical Institute)
Slide 2 of 18
Structural Changes of Bulgarian Economy
(1950-2010)
(Source: Council of Ministers Project /Fall-2009/)
Slide 3 of 18
Present Situation
Bulgaria DID NOT SIGN SBA with the IMF
Slide 4 of 18
GDP Chained Growth (by Quarters)
2000 - 2010
4
(Source: Eurostat)
Slide 5 of 18
Pre-Accession Labor Market Compostion
For Bulgaria (2000 – 2006)
* Level of Unemployment is decreasing, but above 10%;
* Employed in Services composed half of all employed in the
economy;
(Source: Eurostat)
Slide 6 of 18
Post-Accession Labor Market Compostion
For Bulgaria (2007 – 2008)
Slide 7 of 18
Unemployment: The New Spinning-Up Spiral
Jan./2007 – Feb./2011
From about 200,000 Unemployed in 2008, this number reached 368,000 Unemployed in Feb./2011
and keeps going up. Unemployment in Bulgaria is STRUCTURAL by nature. Individuals do want
to work, but companies would not be able to sustain the crisis, if they keep their workforce
employed for longer periods.
Slide 8 of 18
Monetary Priorities:
High Social Price for Low Inflation
To keep the Inflation Down
(2007=8,4%; 2011=2,4%),
Unemployment returned on
levels of 2007
(2007=9,7%; 2011=9,7%)
There is high
social price for
having stable
monetary policy!
8
Slide 9 of 18
Present Labor Market Situation:
(Feb./2011)
9
Slide 10 of 18
Present Economic Indicators
For Bulgaria
10
Slide 11 of 18
Why the Minimum Wage is Important
For Bulgaria?
 ~ 250,000 individuals are paid the Min. Wage (Trade Union
Data);
 ~ 25% of Bulgarians live on or below the Poverty Line;
 ~ 1,1 mln. retired Bulgarians receive monthly pensions less
or equal to the Poverty Line;
 All employed on Governmental programs get an amount
equal to 100% of Min.Wage;
 Monthly allowances per with permanent disabilities (70% of
Min.W.);
 Monthly allowances per student mothers (100% of Min.W.);
 Consumer Fees on Doctors/Dentists/Physicians (1% of
Min.W.);
 Student Guarantees on Credits (% of Min.W.);
 Legal System Cases for Personal Wealth (Times of Min.W.);
 Others;
Slide 12 of 18
Present Government Policies
Anti-Social, and Anti-EU policies
 In contrast to developed economies and some
countries from the Central and Eastern Europe,
Bulgaria
applies
ULTRA-NEO-LIBERAL
STRATEGY, where budget stability is the primary
goal.
 A third consecutive Government maintains the
following:
1)
2)
3)
Strong deregulations of labor markets (Workers virtually
do not have any rights - incorrect understanding of
the EU Concept for Flexicurity);
Pressure of growth of wages and pensions;
Dumping tax policy /10% Corporate Tax, and 10% Tax
on Incomes of Individuals; This Flat Tax Rate policy
favors corporations, at the expense of income of
individuals and households/;
Slide 13 of 18
Present National Priorities
of Bulgaria
 For the previous Government, priority number one
was accession of Bulgaria to EU, as a full member
state;
 For the new Government, priority number one is
Bulgaria’s entry to the ERM-II (in 2011), and the
EuroZone (in 2013);
 Conclusion: Combating the Crisis and ExitStrategy from it are not a priority. The Government
relies on strong restrictive budget measures and
strict conformity to the financial discipline,
imposed by the Currency Board in order to get
stabilization and natural transition to economic
growth;
Slide 14 of 18
Three Forecasts for
the Rate of Unemployment
 The newly elected Government forecast that unemployment
would be about 10% on an annual basis (for 2011);
 Trade Unions forecast that rate of unemployment will be
about 15% for 2011;
 Bulgarian Industrial Association (An Organization of
Employers) forecast that this rate will be 20% for 2011;
The reasons the three forecasts to be different is the
problem with inaccurate data collection & interpretation.
From methodological point of view, all three forecasts are
sound, but in reality, labor market analysts tend to defend
greater levels of unemployment (what the reality is)
than what the official Governmental analysts forecast.
Slide 15 of 18
Specifics of The Secondary Labor Market in
Bulgaria
•
•
•
•
•
•
Different /“alternative”/ modes of employment are utilized /subsidized
employment, pay-by-the-hour employment, temporary employment,
etc./
Payment of labor is typically very low;
Often, working time is composed of irregular time intervals or work by
accident;
Often, there is a high level of workforce turnover;
Many labor malpractices prevail (payment without social and tax
deductions, work abuse, physical punishments, etc.);
It is primarily used in Bulgaria a special instrument, called “National
Employment Action Plan” /NEAP/;
1)
In 2009, NEAP was worth 175 mln. BGL (€89 mln.)
2)
In 2010, NEAP was scheduled in two halves- only 65 mln.
BGL (€33 mln.), having in mind, that it is scheduled for Q1
and Q2 of 2010; Nothing has been announced for the
execution of the second half;
3)
NEAP in 2010 is not a STIMULUS PLAN, but an AUSTERE
MEASURE!!!!
4)
NEAP in 2011 is the same as the one in 2010;
Slide 16 of 18
Predominant Scenario for
Combating Crisis and Unemployment
 Market fundamentalists /who have serious
positions among employers and the
Government/ believe that unemployment may
be combated by:
1) Further tax and social security reliefs for the
business;
2) Payment (SETTLEMENT) of state dues to the
business, based on validated agreements,
contracted by the previous government;
3) Speedy return of VAT back to companies;
4) Forecast and future actions to stabilize the
labor market in the period 2011-2012;
Slide 17 of 18
Additional Alarming Issues
For Bulgaria
“Alternative” economists and trade-unionists alarm for:
 the real danger of jobless economic growth;
 possible “lost decade”;
 increase of the “working-poor” class;
 transfer of crisis costs to employees;
 businesses apply “EU-prices”, but preserve “Bulgarian”
wages, which distorts the pivotal ratio for competitiveness
(w/p);
 businesses “leech” economic and purchasing power of
workers, through wide-spread labor abusing, and
contractual malpractices;
 State provide no stimuli for businesses to create
sustainable job occupations;
Slide 18 of 18
THANK YOU!
Head Asst.Prof. Atanas Vladikov
University of Plovdiv, Bulgaria
[email protected], http://pu-fisn-sotirova-vladikov.eu