Social partners agree minimum social security thresholds

In August 2006, the sectoral level social partners launched the fifth annual sectoral negotiations on minimum social security thresholds. The resultant signed agreements cover 50 economic activities, employing 1.2 million workers.

Each year, under the Law on the Budget of Mandatory Social Security Insurance, the social partners at sectoral level must negotiate and approve minimum social security thresholds for the main economic activities and occupational groups. These thresholds represent the minimum monthly income for social insurance purposes, on the basis of which social insurance contributions are calculated. In 2002, the thresholds were introduced as a legal requirement within the Social Insurance Code, together with an amendment in the Labour Code for the registration of employment contracts (BG0307101F).

The tripartite working group, established at national level to coordinate the procedure, held four meetings to organise the sectoral negotiations for 2007. The group also discussed the percentage rate increase of the minimum social security thresholds for economic activities without a social partner agreement.

Content of agreements

The results of the sectoral negotiations to set the minimum social security thresholds for 2007 may be considered as the best achievement in this area to date – in terms of scope and growth – since this mechanism was established five years ago. Agreements were signed for 50 economic activities, compared with 42 agreements for 2006. The parties to these agreements are the trade unions of the Confederation of Independent Trade Unions in Bulgaria (CITUB) and the Confederation of Labour Podkrepa (CL Podkrepa), as well as the employer organisations of the Bulgarian Industrial Association (BIA) and the Union for Economic Initiative (UEI).

The negotiated minimum social security thresholds cover some 60% of all employees in the country who have an employment contract. The agreed average increase of the minimum social security thresholds for 2007 is 12.6%, relative to 2006.

The growth rates of the agreed minimum social security thresholds vary by sector and economic activity. The social partners have agreed an average increase of 15% or more for 20 economic activities. For 12 further economic activities, the average agreed growth is within the range of 10%–14%. Due to the failure of negotiations for the remaining 18 economic activities with agreements, the increases of minimum social security thresholds in these sectors were determined by parliament.

Moreover, the threshold negotiations also apply to the following nine occupational groups: legislators, senior officials and managers; professionals; technicians and associate professionals; administrative staff; service workers and sales workers; skilled agricultural and fishery workers; craft and related trade workers; plant and machine operators and assemblers; and elementary occupations. The increase for the groups ‘technicians and associated professionals’ and ‘craft and related trade workers’ is 14% higher on average than the rate for 2006, while the increase for ‘administrative staff’ and ‘plant and machine operators and assemblers’ is 13% higher on average.

Views of key actors

The trade unions and employers appeared satisfied by the greater scope and results of the negotiations. Setting minimum social security thresholds and extending minimum wages at sectoral level are perceived as a means of combating undeclared wages and unfair competition, with the aim of curtailing the illegal economy.

Experts, including some representatives from the International Labour Organisation (ILO), have followed the Bulgarian experience with interest and regard it as an example of good practice.

Commentary

Most of the sectoral agreements stipulate the agreed minimum social security thresholds as minimum wages for the different occupational groups. This creates the prerequisite for a further extension of minimum wages for each sector by the Ministry of Labour and Social Policy (MLSP), as established by the Labour Code.

The extension procedure of the agreed minimum social security thresholds requires the active involvement of the social partners and the preparation of a joint statement on the extensions to the Minister of Labour and Social Policy, Emilia Maslarova.

Nedka Koleva, CITUB