Pension reforms postponed due to trade union opposition

At the end of 2009, as part of the discussions on the 2010 budget, Bulgaria’s Minister for Labour and Social Policy proposed a rise in women’s pension age by three years from 60 to 63 years from 2012 onwards. Shortly after the proposal, intensive public debate took place on the issue. The trade unions mounted strong opposition to the reforms and, in the end, the government announced that the implementation of the pension reform would be temporarily postponed.

Government pension proposals

Bulgaria’s Minister for Labour and Social Policy, Totyu Mladenov, formed the Consultative Council, comprising experts on the pension system. At the end of 2009, the Ministry of Labour and Social Policy (Министерство на труда и социалната политика, MLSP) presented to the public and social partners a package of measures for pension reform, proposed by the Consultative Council. The measures include proposals for financial stability and the improvement of the pension system, as part of the discussions on the budget for 2010. Two particular options recommend longer years of service to address the widening gap in state funds that has become evident in the last couple of years. The first proposal requires social security contributions of 40 years for men who want to retire at the age of 63 years. On the other hand, women hoping to retire would need to have a minimum of 37 years of service and be aged at least 60 years. This compares with the current 37 and 34 years of service for men and women, respectively, under the existing regulations. Under the second option, women’s pension age would increase by four months a year between 2012 and 2019, eventually reaching men’s pension age of 63 years. A further increase would begin in 2021, which would bring the pension age up to 65 years for both sexes within the subsequent five years.

Trade union opposition

The government proposal provoked strong opposition by workers. Following the announcement of the proposals in late 2009, the Confederation of Independent Trade Unions in Bulgaria (Конфедерация на независимите синдикати в България, CITUB) carried out an opinion poll (in Bulgarian) among its members, in which over 43,000 workers and citizens took part. Of these, just 2.6% supported the government proposal. More than 28,000 participants expressed their readiness to participate in protest actions against the proposals. The trade unions insisted on organising a public debate over the future pension reform and threatened to resort to demonstrations and campaigns.

On 9 February 2010, CITUB and the Confederation of Labour Podkrepa (Конфедерация на труда Подкрепа, Podkrepa CL) held a consultative council. Both confederations confirmed their opposition to the government plans to raise the retirement age, as the proposal includes measures to lengthen working lives and contribution periods.

Other reactions

Shortly after the proposal was announced, intensive public debate arose over the issue of women’s retirement age, in the broad framework of the economic crisis and unfavourable labour market situation. Other significant subjects of debate included the growing budget deficit, the transformation of the pension system, inadequate social security benefits and the forthcoming reforms in the healthcare system.

Employer organisations, non-governmental organisations (NGOs), economists and experts all took part in the public debate on the government’s pension proposals. The employer organisations did not show any particular enthusiasm regarding the proposals or in participating in the debate. Their main demand concerned the reduction of social security contributions.

Meanwhile, a spokesperson for the Independent Council for Pension Reform, Lachezar Ivanov, proposed that the pension system should be reformed in a way whereby everyone is responsible for their own pension savings. The basic weakness of the current pension model, according to Mr Ivanov, is that people do not own their pension.

Commentary

A day after CITUB and Podkrepa CL issued their joint statement on plans for national action against the proposed pension reforms, the government announced that the discussions and the implementation of the pension reform would be temporarily postponed.

Asia Goneva, Confederation of Independent Trade Unions in Bulgaria (CITUB)