Low qualification levels an obstacle to economic competitiveness

Employer organisations in Bulgaria consider the country’s forthcoming accession to the EU on 1 January 2007 as representing a serious challenge for the labour market. The employers have pointed to the major problems of the labour market, namely: the widening gap between workers’ qualifications and vocational education; the mismatch between workforce demand and supply; a limited level of vocational skills; and a lack of modern vocational competencies.

Problems facing labour market

Bulgaria’s largest employer organisation – the Bulgarian Industrial Association (BIA) – has highlighted how the low qualification levels among workers constitutes one of the most severe problems facing the Bulgarian economy, particularly in light of the fact that this situation appears to have worsened over the years. Moreover, surveys reveal that demand greatly exceeds supply not only of blue-collar workers – for example, turners, millers, welders and builders – but also of managerial level employees.

Employer organisations have been particularly vociferous in stating that the country’s vocational education system is not ready to meet the demands of the labour market. This shortcoming, they argue, has been especially evident during the past seven to eight years of high economic growth, which has been accompanied by the widespread introduction of new technologies. According to BIA, the educational system is the only national system where the reforms have failed to succeed and where corrupt practices continue to flourish. The association also points to a lack of real competition among the universities. In 2006 alone, over 18,000 young Bulgarians have chosen to study abroad.

The latest studies commissioned by the Ministry of Labour and Social Policy show a decline in the number of Bulgarian citizens willing to migrate to EU countries (BG0610029I). Nonetheless, an increasing number of employers have expressed their concerns that the European labour market will drain the country of all of its skilled workers. The employers contend that Bulgaria is too late in formulating its national vision on how to revive the country’s labour market.

These worries have been compounded by another unfavourable trend. Along with the demographic crisis in Bulgarian society and the unreformed educational system, the proportion of unskilled workers has increased in some regions.

Reluctance to invest in training

Another significant problem concerns the lack of willingness among employers to invest in the training of their workforce. One of the employers attributed this to the seemingly widespread practice of employers looking for and hiring qualified workers whose training has been financed by another employer. Ostensibly, most entrepreneurs are not prepared to invest in the qualification of workers who can easily leave them for another employer; thus, they are faced with the dilemma of whether to enhance their workers’ qualifications or to ‘poach’ a trained worker from another company.

As a result of these findings, BIA has raised the issue of refunding the expenses of employers who invest in the training of their employees. The association’s management believes that the matter could be solved by amendments to the labour laws or through regulation via an ethical code on relations between employers.

BIA has added that it considers the insufficient qualification levels as sufficient reason for employers to oppose the trade unions’ demand for continued accelerated growth of the minimum wage. The association believes that this would only compound the lack of initiative already existing among the workforce in maintaining and upgrading their skills.

View of Ministry of Labour

The Ministry of Labour and Social Policy is of the view that the situation will only change if employers adopt an proactive approach. The first economic and social development pact, signed on 26 September 2006 between the government, the employers and the trade unions, provides for the stipulation that, during the coming three years, the employers will ensure that at least 8% of workers and employees undergo various training and upgrading courses (BG0609029I). The ministry’s analyses indicate that this percentage is currently below 1%, compared with an EU average of about 11% (BG0605029I). This situation has a direct negative effect on the competitiveness of the Bulgarian economy.

Commentary

Rapid restructuring and upgrading of the Bulgarian educational system and of vocational training is needed to allow for the integration of Bulgaria’s labour market into the EU. Organisations representing the employers and trade unions argue that these systems must be improved to raise the skills of the workforce to a level that is capable of meeting the requirements of technological and personnel developments. The social partners also insist on the need for a new migration policy to minimise the negative effects of insufficient qualification levels among the workforce in the labour market.

Zlatka Gospodinova, Balkan Institute for Labour and Social Policy (BILSP)

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