Government and social partners agree new anti-crisis package

In March 2010, after intense debate between the government and social partners, the National Council for Tripartite Cooperation managed to reach agreement on a new anti-crisis package. The measures were proposed by the three parties and aim to support employment, households, business and state finances. However, in April, the government sought to unilaterally introduce measures that may undermine employees’ social rights, threatening the fragile social peace.

Background to negotiations

In February 2010, representatives from the country’s trade union confederations expressed their discontent with the implementation of the government’s anti-crisis programme and insisted on starting negotiations on a new anti-crisis package. The trade union organisations concerned were the Confederation of Independent Trade Unions in Bulgaria (Конфедерация на независимите синдикати в България, CITUB) and the Confederation of Labour Podkrepa (Конфедерация на Труда Подкрепа, CL Podkrepa). In the same month, after consultations, both confederations proposed an anti-crisis package (in Bulgarian) and initiated negotiations with the leadership of the country’s six representative employer organisations.

The social partners managed to reach consensus on almost all measures proposed by both parties. In mid March, they submitted a package of 50 short-term anti-crisis measures to the government and called for negotiations in the National Council for Tripartite Cooperation (NCTC).

Agreement reached

The NCTC negotiations started on 23 March. More than 90 measures were tabled for discussion: 43 of them were proposed by the government and 50 by the social partners. The lengthy and controversial discussions ended in an ‘Agreement on the anti-crisis package containing 59+1 measures’, which was subsequently signed on 30 March.

The 60th measure proposed by the government related to the payment of the first three days of sick leave. At present, employees receive 100% of the regular daily payment for the first day of sick leave from the employer. From the second day onwards, they get 80%, but the sum is covered by the National Social Security Institute (Национален осигурителен институт, NSSI). It was proposed that the employer would pay for the first two days and that the third day would be at the expense of the employee. Trade unions opposed this proposal, claiming that it violates the social rights of employees. However, the Minister of Finance, Simeon Dyankov, stated that the cabinet would use the right to unilaterally add the measure to the package.

Main measures agreed

The package contains measures in support of employment, households, businesses and the state budget. Provisions that are expected to generate the most revenue include privatisation of state shares in big companies, as well as the reduction of expenses in administration, and the sale of carbon emission quotas. Other measures provide for restrictions on public spending, such as stricter financial discipline, a freeze on a planned pension increase for widows and people over 75 years of age, the introduction of a ‘luxury’ tax, and a 10% tax on sums won in the lottery and gambling games.

Measures to support employment and households

The measures concerning employment and households were agreed mainly due to pressure from the trade unions, although they were largely supported by the employers. The most important of these provisions include:

• setting out a mechanism for raising the minimum wage as of 1 July 2010;

• temporarily limiting the increase in state-regulated prices of goods and services of public interest;

• removing the limit on unemployment benefits (recently standing at €120) and setting unemployment benefits at 60% of the insurable income before job loss;

• extending the system of providing food vouchers as a mechanism for supporting the real income of employees;

• introducing a set of measures funded under the Operational Programme for Human Resources Development and the state budget aimed at preserving employment in companies experiencing difficulties – these include the introduction of flexible working hours and specific unpaid leave for economic reasons;

• providing additional funds for subsidised employment under the National Employment Plan;

• increasing workforce mobility through the development of a system for monitoring and distributing qualified workers and employees at sectoral and territorial level;

• implementing the right of the Minister of Labour and Social Policy, Totyo Mladenov, to extend the application of sectoral collective agreements to all companies of the respective industry or branch.

In late April 2010, the government tried to implement its 60th measure unilaterally and proposed some new measures for unused paid leave. The move generated fierce opposition by the trade unions, which even threatened mass protests and strike action.

Commentary

The representatives of the government and the social partners who participated in the negotiations strongly welcomed the spirit of mutual respect, along with the reasonable and constructive debate and cooperation that emerged. All of the parties involved made some concessions and compromises. For instance, the government gave up its plan to increase health contributions and value-added tax (VAT), as well as its taxation measures for the pensions of working pensioners. In the end, however, the good partnership established during the negotiations proved to be short-lived due to the government’s intentions to introduce certain measures which are believed to be in violation of employees’ social and labour rights.

Nadezhda Daskalova, Institute for Social and Trade Union Research (ISTUR)