EMCC European Monitoring Centre on Change

Bulgaria: ERM comparative analytical report on Public support instruments to support self-employment and job creation in one-person and micro enterprises

  • Observatory: EMCC
  • Topic:
  • Published on: 12 January 2012



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Nadezhda Daskalova
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Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

As in the other post-socialist countries, Bulgaria experienced enormous restructuring of its economy and society as a whole during the 1990s. In the mid 1990s, the job losses were estimated at more than 1.3 million. For many Bulgarians in the beginning of transition, self-employment and micro family business were and still remain the only way to escape unemployment and survive. Self-employment is relatively popular in Bulgaria with self-employed representing about 27 % of all employed in 2009. The micro enterprises represent the backbone of the economy representing more than 90% of the enterprises and 30% of the employment. The governments and social partners developed a set of policies and measures focused on support of self-employment and job creation in micro enterprises. In times of crisis the focus is on training for increasing start-ups and self-employment.

QUESTIONNAIRE

Part 1: Overall policy context

This section aims at giving a brief overview of the general development and status quo of the policy discussion and thereof resulting instruments, measures or initiatives in the field of fostering self-employment and job creation in one-person and micro enterprises (less than 10 employees). Focus is mainly on the developments during the last decade, that is before the global recession. In addition we are asking for your indication of change of policy focus since the recession.

1. General policy approach in the area of self-employment, one-person and micro enterprises at the national level


1.1. Has there been a policy focus/debate on the specific challenges facing entrepreneurship as tool for job creation before the global recession? If so, since when and for how long?

Table 1: Presence of policy focus/debate on entrepreneurship as facilitation for job creation before the crisis
 

Yes, continuously since xx? (Please indicate year)

Yes, on and off in the last 10 years

(Please indicate ‘X’ where it applies)

Yes, has been in focus, but since xx it is no longer part of the policy focus (Please indicate year)

No, it has never had policy focus before the recession

(Please indicate ‘X’ where it applies)

Self-employment  

x

   
Hiring the first employee  

x

   
Hiring additional employees/creating additional jobs in micro enterprises  

x

   


1.2. What is the main focus in policy documents or strategies in relation to public or social partner based support instruments for fostering self-employment or job creation in one-person and micro enterprises? (Please indicate ‘X’, multiple answers possible)

Table 2: Main focus in the policy documents or strategies
 

Entrepreneurship (Business development in general)

Job creation (Employment)

Growth (Competitiveness)

Others (please specify)

Self-employment

X

X

   
Hiring the first employee  

X

   
Hiring additional employees/creating additional jobs in micro enterprises  

X

X

 

1.3. Please elaborate on the answer given above (with a focus on those developments aimed at employment creation and growth) and indicate if the financial recession has caused a change of focus:

Table 3: The policy content and significance of the financial recession
Self-employment
Elaboration of content (please describe and also indicate whether it is treated explicitly/implicitly)

The debates and policy elaboration on the role of self-employment have been part of the labour market policy but gained momentum not until 2000 and are developing on ebbs and flows in the last ten years depending of the economic context and labour market situation. Self-employment is considered to have an important role for entrepreneurship development and job creation. It is explicitly treated in:

- Legislation and strategic documents on the labour market – providing measures and main directions for promotion, support and development of self-employment and entrepreneurship

Employment promotion act (2001) http://www.az.government.bg/Legislation/ZNZ.htm

Employment strategy 2004-2010 (http://www.mlsp.government.bg/bg/docs/strategy/employment%20strategy.doc) and Updated Employment strategy 2008 -2015 (http://www.mlsp.government.bg/bg/docs/Labour_Market_Strategy_2008-2015.pdf)

- Active labour market policy - the annual National action plans for employment, the first being adopted in 2002, contain programmes and measures for promotion of self-employment, including training and financial support for self-employment, some of them presented

- Research

A project of the Institute for Social and Trade Union Research ‘Social Finance for Support to Self-Employment’ (2004- 2005), supported by the ILO, paid special attention to the legal and institutional framework of micro financing and development of self-employment and SMEs in Bulgaria and to the needs and attitudes of unemployed people for self-employment.

The three research reports related to the project are available at: http://www.ilo.org/public/english/region/eurpro/budapest/publ/employ/socfin.htm

A Survey on self-employment in Bulgaria provides interesting insights in the current state and challenges to self-employment. One of the main concerns is that a large part of self-employed operate in the grey economy due to the lack of resources and complex regulatory regimes. (Loukanova, P., Self- employment in Bulgaria, 2010)

Change due to the financial recession

Please tick:

Yes: x

No: □

If ‘Yes’, please elaborate:

The policy focus shifted to training and promotion of entrepreneurial skills, considered as part of the flexible labour market options and a possibility to preserve and increase employment against the background of shrinking labour demand. Part of the activities are implemented under OPHRD due to restricted budget spending on ALMP.

Hiring the first employee
Elaboration of content (please describe and also indicate whether it is treated explicitly/implicitly)

Hiring the first employee appears in the debates on ebb and flow but has never been special focus of policy debates. However, one of the first Ordinances on employment promotion (1991) contains provisions of subsidies for hiring the first employee.

Change due to the financial recession

Please tick:

Yes: □

No: X

If ‘Yes’, please elaborate:

Hiring additional employees/creating additional jobs in micro enterprises
Elaboration of content (please describe and also indicate whether it is treated explicitly/implicitly)

Creating additional jobs in micro enterprises is explicitly treated in the labour market legislation – EPA, and active labour market policies. Policies are focused on: Promotion of entrepreneurship of unemployed people through training, counselling, including on the use of financial resources for starting an own business; development and enlargement of the network of the business incubators and business centres, development of public private partnership in provision of services for staring up and development small business. Legislation and research on SMEs’ development treated this issue implicitly and considers it as a factor both for job creation and for increasing the competitiveness of the micro and small businesses. (Reports on SMEs development are available at: http://www.mi.government.bg/eng/ind/econ/docs.html?id=162491)

However, the focus of the national SME policy, including micro enterprises, is on increasing their competitiveness. The priority areas of intervention in this respect according to the National Strategy for SMEs’ development in Bulgaria 2007-2013 are innovation, clusters, protection of environment and energy efficiency, creating business friendly environment, training and entrepreneurial spirit promotion, financial support. The policy focus was on easing the start-ups and sustaining the businesses, including micro and small business, more entry and exit opportunities and quality administrative services. Limiting administrative and regulative burden on business as whole, including micro enterprises, is an focus also of the Programme for Better Regulation 2010-2013

Change due to the financial recession

Please tick:

Yes: X

No: □

If ‘Yes’, please elaborate:

Hiring additional employees/creating additional jobs in micro enterprises is considered an important tool for employment creation in times of low demand for labour. Changes due to recession include:

- Extension of the range of persons entitled to the subsidy for job creation when they start their own business to include persons affected by the consequences of the economic downturn

- More prominent focus on training for entrepreneurship and start-ups under the operational programmes co-funded by the ESF

- Extension of services to businesses provided for start-ups and operational micro and small enterprises under projects and programmes in the framework of the OP HRD, OP Competitiveness and Rural Development Programme

2. Disincentives for self-employment and job creation

The following two questions will investigate whether there has been a change in the political agenda which has forced new political initiatives that may result in disincentives for job creation and business development (e.g. considerations regarding public budget).


2.1 Have public measures (e.g. with the aim to increase public revenue or cut public spending) led to disincentives for self-employment or job creation in one-person or micro enterprises before the financial recession? (Please briefly describe the major developments/initiatives (max. 300 words)

Presently, the Bulgarian enterprises work in a legislative environment which is to a great extent harmonised with the operating European law (acquis communautaire). The main issues, however, are related to the effective application of this law.

In spite of a very favourable tax environment and some other improvements in the business environment in the last years, the licence, permission, and registration regimes did not impact positively the SME sector as it was expected.

Despite the decreasing number of regulations the micro enterprises claim that new regulations replaced the old one. Many of them also claim against the introduction of the obligatory registration of labour contracts and the introduction of obligatory minimum social security thresholds.

Most often the smaller enterprises face difficulties to find funds for innovation and development due to difficult access to credits and programmes, high interest rates and requirements for collateral.


2.2 Have public measures (e.g. with the aim to increase public revenue or cut public spending) led to disincentives for self-employment or job creation in one-person or micro enterprises as a result of the financial recession? (Please describe – max. 300 words)

The research in the period when the economic crisis touched the Bulgarian SMEs revealed that in 2009 37% enterprises indicated the bureaucracy as a reason for the worsening market conditions, and 27% - the bad quality of the administrative services and corruption. In 2010, the institutional environment for business worsened slightly.

At the beginning of 2011, the access to finance is strongly hindered for over 90% of all SMEs. Mostly hindered are the micro enterprises, as well as firms in the sphere of services.

Increased social security contributions paid by the employer and an expected increase of the statutory minimum wage are mentioned as disincentives for engaging with business, at least with legal business. Many of the micro enterprises as well as self-employed said publicly they will be forced to move to the informal economy.

3. Representation of/lobbying for self-employed and micro enterprises


Are self-employed and micro enterprises in your national context explicitly or implicitly (e.g. entrepreneurs or SMEs in general) represented by the following types of organisations (e.g. for lobbying, defending their interest etc.)?

Table 4: Representation of self-employed and micro enterprises
 

Self-employed

Micro enterprises

Employers’ organisations

No

Yes, implicitly, Union for Private Economic Enterprise (UPEE)

Target group - SMEs. Full list of its members includes 2,129 employers/companies, of which 1,277 micro enterprises (UPEE information).

Target group - SMEs.

Employees’ organisation

No

No

Not-for-profit organisations

Yes, implicitly, Association of home workers (Associated member of the Confederation of Independent Trade Unions in Bulgaria)

Target groups: home workers – with employer and self-employed home workers

Yes, implicitly, National skill crafts chamber which is member of the UEAPME and also Associated member of the Confederation of Independent Trade Unions in Bulgaria

Target groups: Self-employed craftsmen, craftsmen registered as sole traders, micro craft enterprises, all craft enterprises

Yes, explicitly, Association of micro enterprises http://www.bam-bg.org/

Others

No

Yes, implicitly, Executive Agency for Executive Agency for Small and Medium-sized Enterprises Promotion to Ministry of Economy, Energy and Tourism. Target groups: micro, small and medium sized enterprises

Part 2: Identification and description of relevant recent support instruments

The following section asks for the identification of public or social partner based support instruments initiated during or after the recent economic crisis (that is, 2008 onwards). These measures might have, but must not necessarily have been triggered by the recession. Measures may also have been initiated earlier, but changed in order to adapt to the recession or other recent developments. Rather than a comprehensive list of all instruments available at national, regional or local level, the most important, most innovative, most interesting and most effective tools are to be described. Thereof, a selection of up to three ‘Good Practices’ to be described in more detail is to be made.

1. Selection of region(s) when total coverage of the entire regional and local level is too comprehensive

When providing the brief overview and the three ‘Good Practices’ in this section of the questionnaire, measures and instruments at national level have to be included. We would in addition ask you to include regional and local level initiatives where relevant. Nonetheless, a complete coverage of regional and local levels may not be possible for all countries (e.g. because of a high degree of decentralisation resulting in a wide range of respective measures characterised by considerably heterogeneity). At the same time, it can be assumed that for instruments targeting at supporting self-employment and the creation of employment in one-person and micro enterprises the local administrative level is of considerable importance. If so, such measures will be designed to fit to the local characteristics and needs, resulting in a wide variety of different approaches. In this case, one or few local areas or regions may be selected to be covered in this report. Details on the selection are given in table 5.

Table 5: Administrative level/region(s) covered for the following research (max. 50 words per region)

Administrative level relevant for the rest of the questionnaire

National level, regional level

If a specific regional/local are is selected, please provide the following information

Name of region

Yambol

Motivation for selecting this region

The district of Yambol is selected to show the social partners organisations support to micro enterprises’ development, i.e., the Yambol Chamber of Commerce and Industry, which is regional member of the BCCI – one of the six representative employer’s organisations. The Yambol CCI is very active in the realisation of projects to support the local businesses and labour market.

Additional reason is the high level of unemployment in some municipalities in the Yambol district.

Facts about the region e.g.

- Geographic location

- No. of inhabitants

- Business structure (sector, size)

- Labour market

- Specific characteristics if applicable

Situated in the south-east part of the country.

Inhabitants – 140,669 persons (2008). In 2009, the unemployment rate is 8.8% (higher than the average for the country); in some municipalities it is about 10 to 17%. The employment rate is very low – at 45,2%

2. Brief overview of recent instruments to foster self-employment or job creation in one-person and micro enterprises


2.1. Please provide a brief description (max. 800 words) of public or social partner based instruments recently initiated (2008 onwards) to support self-employment and job creation in one-person or micro enterprises.

Measures covered by the European Employment Observatory Review on self-employment 2010, European Commission, Directorate-General for Employment, Social Affairs and Equal Opportunities are to be omitted to avoid duplication (see Part 3 of this questionnaire).

Table 6-1: List of recent instruments

Title

Насърчаване на работодатели-микропредприятия да наемат безработни лица за първите пет разкрити работни места

Encouragement of employers-micro - enterprises for hiring unemployed on the first five new jobs

Aim/objective

Measure aims at job creation through facilitating the hiring of additional employees (Provided in art. 50 of the Employment Promotion Act)

Description of support

Employers - micro enterprises registered under the effective legislation receive a subsidy covering the social security contribution for a period of twelve months for the first five jobs created and filled by unemployed persons who are hired upon referral by the divisions of the National Employment Agency. The employer is obliged to hire the employees on labour contract at least for 24 months.

Target group

micro-enterprises, unemployed

Initiator and other actors involved

Ministry of Labour and Social policy, NES, upon approval by the Social partnership council at local branches of NES

Duration (please also indicate whether the measures has been initiated due to the recession)

2002 - at present according to Amendments to the EPA (2002). Included in the annual NAPEs

Table 6-2: List of recent instruments

Title

Насърчаване на предприемачеството

Entrepreneurship promotion

Aim/objective

Entrepreneurship promotion and job creation

Description of support

Unemployment benefits as start-up capital (according to the art. 47, 48 of the EPA)

- Any unemployed person/persons entitled to unemployment benefit and wishing to start an own or joint business shall be provided with a lump sum in lieu of unemployment benefit for the account of the Unemployment Fund upon approval of a business project by the division of the National Employment Agency

- Any persons who have received a lump sum may be provided additionally with financial resources in the form of a loan for training in the field of the approved project

- reimbursement of the costs of outside consulting services and/or ancillary services used

- additional subsidy for hiring other unemployed family members

Support for start-up as a micro enterprise under the SMEs Act (art.49 of EPA) and hiring the first employee

- any unemployed person may be provided with resources for costs for start-up as a micro-enterprise or agriculture producer upon a business project approved by the local division of the National Employment Agency

- subsidy for social security contributions

- reimbursement of the costs of outside consulting services and/or ancillary services used

- additional sums are provided for vocational training

Target group

Unemployed persons entitled to unemployment benefit

Initiator and other actors involved

Ministry of Labour and Social policy. The measure is provided by the EPA and is implemented by the National Employment Agency, upon approval by social partners as members of the social partnership councils at local offices of NEA

Duration (please also indicate whether the measures has been initiated due to the recession)

Since 1991, in 2002 included in the EPA

Table 6-3: List of recent instruments

Title

Програма „Кредит без лихва за хора с увреждания”

Programme ‘Credit without interest for people with disability’

Aim/objective

Providing equality and improvement of living conditions for people with disabilities through encouragement of self-employment and entrepreneurship of people with disabilities and encouragement of hiring employees

Description of support

Subsidy for the reimbursement of the interest paid on credits received from the Micro credit Guarantee Fund upon approval of business project

Target group

Persons with disabilities - One-person enterprises, micro enterprise where a person with disability is employed

Initiator and other actors involved

Ministry of Labour and Social policy. The measure is included in the National Action Plan for Employment and is implemented by the National Employment Agency branches, upon approval of social partners as members of the social partnership councils at local offices of NEA; National guarantee fund and trade banks are also involved

Duration (please also indicate whether the measures has been initiated due to the recession)

2005 – at present

The number of beneficiaries increased in the years of recession

Table 6-4: List of recent instruments

Title

Програмата за по–добро регулиране 2010 – 2013

Programme for Better Regulation 2010-2013

Aim/objective

Improvement of the business environment and competitiveness of the Bulgarian economy through improvement of regulation and decreasing the administrative burden on business by 20% up to the end of 2012

Description of support

The Programme targeted at the establishment of a better and sustainable regulatory environment considering the new realities in times of crisis. The programme includes:

1. Improvement of the administrative regulation

2. Impact assessment of the regulations

3. Improvement of the administrative service through the introduction of e-government.

Target group

All types of companies, including micro enterprises

Initiator and other actors involved

Council of ministers, Council for economic policy, nationally representative organisations of employers, Economic and Social council, Ministries, Inter-institutional group for monitoring of the programme

Duration (please also indicate whether the measures has been initiated due to the recession)

2010 -2012

The programme develops further the Programme for Better Regulation 2008 -2010 and considers the difficult situation of the business and lack of resources in times of crisis.

Table 6 -5: List of recent instruments

Title

Програма “Активни услуги на пазара на труда” (АУПТ)

Programme ‘Active Labour Market Services‘(ALMS)

Aim/objective

To offer information and active labour services to assist economically disadvantaged individuals in poor communities to extend and use their human capital productively, particularly in the context of changing economic and labour market conditions and restructuring processes, including through promotion of entrepreneurship

Description of support

Support under the loan agreement with the World Bank

The three new services under the 3rd call for proposals are: Small Business Assistance (SBA) – financing of advisory/training services; Rented Business Incubator (RBI) – provision of premises, equipment and services; and Virtual business Incubators (VBI) - offering services both for start-up and for developing small business.

Target group

Registered unemployed people, including long-term unemployed from poor communities; Employed people that have received notification for dismissal; micro/small enterprises, which have started the business within the last 24 months, which will create jobs for the unemployed people

Initiator and other actors involved

Ministry of Labour and Social Policy, NEA, social partners through the Social partnership councils at local branches of NEA

Duration (please also indicate whether the measures has been initiated due to the recession)

2005 -2009

(Since 2010 these measures are realised under the OPHRD)

Table 6-6: List of recent instruments

Title

„Квалификационни услуги и обучение на заети лица – фаза 2”-OП РЧР

Qualification services and training of employed persons- stage 2 – Operational Programme Human Resource Development (OPHRD)

Aim/objective

Training for increasing productivity and creation of conditions for sustainable employment

Description of support
Target group

Self-employed, employees in micro, small, medium-sized and large companies

Initiator and other actors involved

Ministry of Labour and Social policy, NEA, social partners

Duration (please also indicate whether the measures has been initiated due to the recession)

2008-2013

The measure is related to the recession as the main focus of the NAPE 2010 is the preservation of the existing employment and limitation of unemployment. The training is considered the main factor for increasing employability and entrepreneurship in the new situation

Table 6-7: List of recent instruments

Title

Проект „Собствeн бизнес – смяна на професията”

Project ‘Own business – change of occupation’

Aim/objective

Support to social adaptation and employment through motivational training and vocational training for self-employment

Description of support

The project is included in NAPE 2009

Allocation of resources for training

Provision of motivational and vocational training, training and individual consultations for starting own business

Target group

Tobacco producers and workers dismissed by the Bulgartabak holding laid off due to the crisis

Initiator and other actors involved

Confederation of Independent Trade Unions in Bulgaria (CITUB)

NEA and its local branches in Blagoevgrad, Haskovo and Plovdiv, Workers education college, Independent trade union of tobacco workers affiliated to CITUB

Duration (please also indicate whether the measures has been initiated due to the recession)

March – December 2009

The project is related to the mass lay-offs due to recession and restructuring (privatisation) of the Bulgartabak holding

Table 6-8: List of recent instruments

Title

Проект “Пак ще успеем”

Project ‘We shall succeed again’

Aim/objective

Support to increasing employability and employment through key competences training and vocational training for self-employment

Description of support

Allocation of resources for training

Provision of key competences training and vocational training for qualification on part of the profession ‘collaborator in micro and small business’, training and individual consultations for starting an own business

Target group

Teachers and school personnel dismissed from the educational institutions

Initiator and other actors involved

Confederation of Independent Trade Unions in Bulgaria (CITUB)

Workers education college, Union of Bulgarian teachers affiliated to CITUB

NEA and its local branches

Duration (please also indicate whether the measures has been initiated due to the recession)

2009

The project is related to the lay-offs in the public sector (education) due to recession

Table 6-9: List of recent instruments

Title

Насърчаване стартирането на проекти за развиване на

самостоятелна стопанска дейност” - OП РЧР

Encouragement of starting up projects for own business development - under Operational Programme Human Resource Development

Aim/objective

Support for start-up of own business through provision of training and services

Description of support

Activities under the Component 1

Professional qualification in entrepreneurship and management, micro and small business

Training and support for: development of a business plan, project proposal in view of participation in Component 2

Activities under the Component 2

Provision of grants for: start-up of own enterprise; training of the hired personnel; purchase of equipment and materials; carrying out repairs; remuneration of the self-employed and the personnel for up to 3 months

Activities under the Component 3

Consultancy services to the new born enterprise; market place analysis; assessment of the human and financial resources of the started business; elaboration of marketing strategy

Target group

Unemployed willing to start own business

Initiator and other actors involved

Ministry of Labour and Social Policy, NEA, social partners

Duration (please also indicate whether the measures has been initiated due to the recession)

2008-2013

The measure is related to the recession as a means to cope with the low labour demand

Table 6-10: List of recent instruments

Title

Програма „Развитие на селските райони 2007 – 2013”,

Мярка 312. Подкрепа за създаване и развитие на микропредприятия

Rural Development Programme 2007 – 2013

Measure 312 ‘Support for the Creation and Development of Micro-Enterprises’

Aim/objective

The aims of the measure are to:

- encourage the growth and creation of employment in micro enterprises for non-agricultural activities;

- encourage entrepreneurship in rural areas;

- promote the development of integrated rural tourism in rural areas

Description of support

The aid is provided in the form of investment subsidy (the projects are for 24 months)

Support for investments and related external services, marketing and management development activities in non-agricultural sectors - Purchase of new machinery and equipment, including computer software and specialised equipment, the market value of assets; Purchase of vehicles for non-agricultural activities directly related to the activity; Construction and/or reconstruction or improvement of buildings; preliminary costs of fees for architects, engineers and consultants, legal services and feasibility studies, techno-economic assessment and analysis, acquisition of patents and licences, including preparation of a business plan to diversify the business; Costs for advertising and publication of promotional materials. Amount of aid: 70% of the total eligible project costs; The maximum contribution will be up to €200,000, and investment for land transport - up to €100,000; the minimum amount of total eligible costs of the project is €5,000; the maximum total eligible costs of the project is €400,000, and in case of investments for producing energy from renewable sources €1,000,000.

Target group

Natural persons, sole traders and legal entities that are micro enterprises working in non-agricultural sectors in rural communities (231 municipalities in rural areas out of a total of 264)

Initiator and other actors involved

Supported by the European Agricultural Fund for Rural Development (EAFRD). Implemented by the Ministry of Agriculture and Food through State Fund ‘Agriculture’,’Rural Development’ Directorate, Managing authority of the RDP, local initiative groups

Duration (please also indicate whether the measures has been initiated due to the recession)

2007-2013

Despite not initiated due to recession it will have an impact on employment creation and growth of micro enterprises considering the very high and increasing levels of unemployment in rural areas


2.2. In-depth description of ‘Good Practices’

Please choose up to three examples from the above list that can be considered as ‘Good Practice’ (e.g. because of their effectiveness, innovative character or beneficial cooperation among different stakeholders) and describe them in detail.

Table 7: Description of ‘Good Practice’ examples of recent support instruments

Name of the programme/instrument

Програма Активни услуги на пазара на труда (АУПТ )

Цикъл 3. Подпомагане на малък бизнес и бизнес инкубатор

Programme Active Labour Market Services (ALMS)

Cycle 3. Support for small business and business incubator

Is the instrument explicitly addressing any of the following:

Self-employment

Hiring the first employee

Hiring additional employees/creating additional jobs in micro enterprises

Please ‘X’ and/or describe if relevant

x

 

x

Operational level

Local

Regional

National

Please ‘X’ and/or describe if relevant

x

x

 

Rationale/motivation for the instrument

(please describe)

Low labour demand in regions with underdeveloped business and high levels of unemployment. For these regions are suitable active services supporting business development and labour market activation. These services proved to be effective in a long term perspective.

Purpose and aims for the instrument (please describe)

The ALMS programme is part of the ‘Social investment and promotion of employment’ project. The 3rd cycle explicitly targets support for self-employment and small businesses. Its aim is: to promote entrepreneurship in regions with high and sustainable unemployment and poverty; to encourage job openings; to support the growth and stability of micro enterprises.

Initiator
Please ‘X’      
Other stakeholders actively involved in implementation (please name them and describe their roles)

NGOs, social partners, namely chambers of commerce and industry, micro enterprises, regional/local authorities, local branches of NEA, training providers, business incubators – participate in adoption, implementation of the projects, service providing.

Target groups        
Please describe the target groups (sector, age, level of education, gender)

Unemployed, employed under the treat to be dismissed, micro and small enterprises in poor and underdeveloped regions with high unemployment level

Funding        
Please describe the funding of the instrument/programme (national and European sources, budget available)

Funding by World bank under the loan agreement

co - funded by the state budget

The total cost of the project is € 50.8 milion, including € 12.8 million from the Bulgarian government Over € 2.5 million are allocated for business support under this cycle. Funding for individual project under the Support for small businesses is € 25,000; Funding of individual project for business incubator is € 25,000 (Virtual business incubator) and € 50,000 (Rented business incubator)

Activities    
Please describe the activities of the programme or institutional initiative as detailed as possible

The 3rd cycle of the programme includes three services:

Support for small businesses

Virtual business incubator (VBI)

Rented business incubator (RBI)

Support for small businesses: counselling on business planning, accountancy, finances, legislation, marketing, support for networking, support for start-ups/extension of business, access to financing, training on entrepreneurship, project elaboration

The activities under the project VBI and RVI include: for unemployed - expert support for business start-up, including training and training materials and guides elaboration, consulting, expert support for firm registration; for micro-enterprises – support, counselling, knowledge for development and implementation of their business plans. Activities under the projects for RBI also include premises and equipment for tenants from the target groups under the project.

Results (Effectiveness)      
Please describe the results e.g. number of beneficiaries, advised enterprises

Over 100 projects have been approved and implemented, 76 of which are for providing services for business support and the rest are for establishment of virtual incubators and rented business incubators. There is no reliable data on the results.

Challenges in order to reach the objectives e.g. for the organisation offering the instrument, the entrepreneurs (Please describe); and if available how these have been overcome

Low commitment on the part of some beneficiaries to engage after the conclusion of the project.

Low capacity for project elaboration and implementation

Assessments of the effectiveness e.g. investments made in order to reach the objectives of the programme (outcome vs. investment) (Please base this assessment on evaluations when possible)

According to the World bank assessment the effectiveness of investments is excellent. The assessment report reads: ’The analysis of the implementation data and the programme results, related to the direct beneficiaries, leads to the conclusion that the ALMS programme is one of the most successful ones, implemented by the NEA with a percentage of successful projects of approximately 89%’. According to WB evaluation report, the ALMS programme contributed to the establishment of a vital structure of real, reliable and applicable procedures which the government recently is applying in the framework of the Human resource Development Operational Programme. ‘The NEA is preparing a package of programmes under the Active labour market initiative for financing under the OPHRD. This improved the sustainability prospects of this component of the project and sets the first real cross – fertilisation between the Word bank project and EU structural funds in Bulgaria’.

Outcomes (Efficiency)  
Increasing self-employment, growth and employment e.g. number of start-up and/or jobs created etc. (please describe, preferably based on evaluations, otherwise on experts’ assessment)

There is no reliable data on the number of the unemployed that started a business and about the new jobs created. 

The target for the project as a whole - provision of different labour market services to 25,000 persons was exceeded.

Please provide link to evaluation documents if possible

The assessment reports of the World bank is available at:http://www.az.government.bg/EFunds/AUPT/042006/Results/INTERIM_REPORT_AUPT_2_en.pdf

http://www.az.government.bg/EFunds/AUPT/042006/Docs/AM%20Final.pdf

Example 2:

Name of the programme/instrument

Проект “Собствeн бизнес – смяна на професията”

Project ‘Own business – change of occupation’

Is the instrument explicitly addressing any of the following:

Self-employment

Hiring the first employee

Hiring additional employees/creating additional jobs in micro enterprises

Please ‘X’ and/or describe if relevant

x

   

Operational level

Local

Regional

National

Please ‘X’ and/or describe if relevant

X

x

 

Rationale/motivation for the instrument

(please describe)

The measure is included in the National Action Plan for Employment 2009

The mass lay-offs in the times of crisis required measures and programmes in support of employment and self-employment for large groups of workers affected by the consequences of the economic downturn or restructuring of some branches/big companies.

Purpose and aims for the instrument (please describe)

Promotion of self-employment, creating entrepreneurial spirit

Support to social adaptation and employment through motivational training and vocational training for self-employment

Initiator
Please ‘X’      
Other stakeholders actively involved in implementation (please name them and describe their roles)

The project is initiated by the Confederation of Independent Trade Unions in Bulgaria (CITUB) and is implemented in partnership with Workers education college, and Independent Trade Union of Tobacco Workers affiliated to CITUB.

NEA and its local branches in Blagoevgrad, Haskovo and Plovdiv, and social partners participated in the approval of the funds allocated to this measure at national level and approved the candidates to be included through participation in the National Employment Council and Social partnership Councils at local branches of NEA

Target groups        
Please describe the target groups (sector, age, level of education, gender)

Tobacco producers and tobacco workers dismissed from the Bulgartabak holding in the towns: Blagoevgrad, Haskovo and Plovdiv

Funding        
Please describe the funding of the instrument/programme (national and European sources, budget available)

The funding at €261,160 is provided through the state budget in line with the funds allocated to this measure in the National Action Plan for Employment

Activities    
Please describe the activities of the programme or institutional initiative as detailed as possible

Motivational training

Training on key competences – ICT competency

Training on entrepreneurship including modules on marketing, forecasting and planning, accountancy, remuneration, etc. (second qualification level – 660 training hours)

Elaboration of manual on entrepreneurship

Results (Effectiveness)      
Please describe the results e.g. number of beneficiaries, advised enterprises

A total of 600 participants have been included in different activities under the project

Challenges in order to reach the objectives e.g. for the organisation offering the instrument, the entrepreneurs (Please describe); and if available how these have been overcome

The implementation of the project does not face any challenges

However, the team responsible for the project claims for excessive paper work and changes of requirements in the process of implementation of the project.

Assessments of the effectiveness e.g. investments made in order to reach the objectives of the programme (outcome vs. investment) (Please base this assessment on evaluations when possible)

According to the participants and promoters of the project it was effective and the objectives have been reached.

Support for quick reintegration of the people dismissed due to the crisis. There are no official evaluations.

Outcomes (Efficiency)  
Increasing self-employment, growth and employment e.g. number of start-up and/or jobs created etc. (please describe, preferably based on evaluations, otherwise on experts’ assessment)

A total of 600 people have been trained

130 trained in entrepreneurship, of which 70 started an own business (60 men and 10 women, representatives of the minorities: 30 – from the Turkish minority and 10 – from the Roma minority)

Please provide link to evaluation documents if possible

Not available

Example 3:

Name of the programme/instrument

Виртуален бизнес инкубатор – Ямбол

Virtual business incubator -Yambol

(www.yambiz.com/vbi)

Is the instrument explicitly addressing any of the following:

Self-employment

Hiring the first employee

Hiring additional employees/creating additional jobs in micro enterprises

Please ‘X’ and/or describe if relevant

x

 

x

Operational level

Local

Regional

National

Please ‘X’ and/or describe if relevant

x

x

 

Rationale/motivation for the instrument

(please describe)

In the Yambol district the unemployment rate in some municipalities is two to three times higher than the average for the country. For these municipalities with low labour demand and underdeveloped business are suitable active services supporting self-employment, business development and labour market activation, e.g., virtual business services.

The incubation is a kind of support aiming at accelerating the successful development of micro and small enterprises and self-employment through ensuring a set of appropriate resources and services, easy and quickly accessible. Its aim is ‘to produce’ successful micro enterprises sustainable after the period of incubation (the period in which they used services).

Purpose and aims for the instrument (please describe)

The project is carried out in 2007-2008 in the framework of the national programme Active Labour Market Services which is implemented at local and regional level throughout the country.

It aims at stabilising the micro enterprises and encouragement of new job creation and self-employment through providing virtual business services, advice and support at all stages of the business start-up process – from the business idea up to registration and starting the work.

Initiator
Please ‘X’    
Other stakeholders actively involved in implementation (please name them and describe their roles)

Yambol Chamber of Commerce and Industry (member of one of the representative employer’s organisations) is promoter of the project. NEA and Yambol local branch of NEA are involved at the stage of approval

Target groups        
Please describe the target groups (sector, age, level of education, gender)

Registered unemployed and micro enterprises in municipalities with high unemployment (Eshoo, Straldzha, Tundzha, and Bolyarovo)

Funding        
Please describe the funding of the instrument/programme (national and European sources, budget available)

€25,000, co-funded by the World Bank and the Yambol Chamber of Commerce and Industry under the ALMS project

Activities    
Please describe the activities of the programme or institutional initiative as detailed as possible

The activities under the project VBI include: for unemployed - expert support for business start-up, including training and training materials and guides elaboration, consulting, expert support for firm registration; for micro enterprises – support, counselling, knowledge for development and implementation of their business plans, development and stabilisation of business.

Six months distant training include modules as follows: marketing of small enterprise, management, human resource development, finances and accountancy, new technologies and innovations, sources for funding small business, basic competencies on communication in English

Design and elaboration of an Internet platform ‘Virtual business incubator – district Yambol’

Elaboration and issuing ‘Guide for e-training’

Results (Effectiveness)      
Please describe the results e.g. number of beneficiaries, advised enterprises

25 unemployed and 15 employed persons who received advance notice for dismissal have been trained and 10 micro enterprises received training, support and consultations.

6 unemployed persons (4 women) started their own business, 10 micro enterprises receive counselling and create new jobs.

Challenges in order to reach the objectives e.g. for the organisation offering the instrument, the entrepreneurs (Please describe); and if available how these have been overcome

According to project promoters the main challenge (as in almost all programmes) is the administrative burden of these programmes and some unanticipated costs for the beneficiaries.

Assessments of the effectiveness e.g. investments made in order to reach the objectives of the programme (outcome vs. investment) (Please base this assessment on evaluations when possible)

There is no such assessment. The implementation of the project leads to 6 new self-employed and new jobs in 10 micro enterprises at a relatively low cost.

Outcomes (Efficiency)  
Increasing self-employment, growth and employment e.g. number of start-up and/or jobs created etc. (please describe, preferably based on evaluations, otherwise on experts’ assessment)

6 unemployed persons started their own business, 10 micro enterprises received new knowledge and qualification and created new jobs.

The use of ICT provides relatively cheap, quick and flexible support and services for unemployed, self-employed and micro enterprises. The establishment of a virtual business incubator facilitates communication and exchange of experience and thus ensures the sustainability of results.

Please provide link to evaluation documents if possible

There are no evaluation documents. Information about the project on: www.yambiz.com/vb

Part 3: Annex: Update on recent self-employment study

The recent European Employment Observatory Review on self-employment 2010, European Commission, Directorate-General for Employment, Social Affairs and Equal Opportunities provides insight into support instruments for self-employment. To avoid duplication of this information, we ask you as National Correspondent to omit these measures already covered in your research (Part 2 of this questionnaire), and only update or add any additional details or measures that exceed the information already provided in this report.

Table 8: Additional information on specific instruments to the EEO national report on self-employment:

Title of the instrument

Project ‘Job Opportunities through Business Support’ (JOBS), 2000 – 2009

Additional information

Publications related to the content and assessment of the measure:

1. Project ‘Job Opportunities through Business Support’ (JOBS), 2000 – 2009. JOBS Evaluation final report: draft outline , 2008

2. Iskra Beleva, Promotion of Entrepreneurship: Job opportunities through business support (JOBS), Bulgaria, Discussion Paper, available at:

http://www.mutual-learning-employment.net/uploads/ModuleXtender/PeerReviews/75/Discussion_paper_BG08.pdf

Table 9: Please add any other comments to the EEO national report on self-employment:

The statement in the reference on p. 6 reading ‘There are two examples for such organisations taking part in collective bargaining: the Union of craftsmen in Bulgaria and the Union of home workers’ is not correct. The cited organisations are associated members of the Confederation of Independent Trade Unions in Bulgaria, but do not take part in collective bargaining processes.

Table 10: Please indicate ‘X’ if you have no additional information to the EEO national report on self-employment:

Please indicate ‘X’ if you have no additional information to provide

 

Commentary

As in the other post-socialist countries, Bulgaria experienced enormous restructuring of its economy and society as a whole during the 1990s. The whole economy was transferred from the public to the private sector in less than 10 years. Many large enterprises or even sectors were dismantled with job losses estimated at more than 1.5 million. However, the emerging private businesses did not create enough jobs. In this context, self-employment and establishing micro enterprises are one of the most popular alternatives for ensuring employment. For many Bulgarians self-employment and entrepreneurship still remains the only way to escape unemployment and survive. Self-employment is relatively popular in Bulgaria with self-employed representing about 27 % of all employed in 2009. However, most policy instruments remain largely unchanged since the early 2000s and the crisis does not have impact on their content. In 2009, the focus was placed on preserving employment and training for self-employment and starting business as part of the anti-crisis measures. Vouchers for training in the framework of the Operational Programme Human Resource Development is also an option for training for starting own business. There are many policy documents and active labour market measures and programmes aiming to promote entrepreneurship and to increase the job creation and competitiveness of the micro enterprises on the basis of innovation. However, the main challenge is its effective implementation at local level, namely in regions with high unemployment rate. In times of crisis due to the cut of public spending and budget for active labour market policy the main source for funding the policy aimed at increasing entrepreneurship development and growth of job creation and competitiveness of the micro enterprises is the Operational Programmes cofunded by the ESF.

References

Analysis of the Situation and Factors for Development of SMEs in Bulgaria. SMEs in the Crisis Context, BSMEPA, Noema, 2011, available at:

http://www.sme.government.bg/IANMSP/Documents/000000111/BGBG/SME_Situation-REP_noema_eng.pdf

Annual report on the condition and development of SMEs in Bulgaria, Center for Economic Development , 2008 available at: http://www.mee.government.bg/ind/doc_eco/Annual.Report.SMEs.Bulgaria.2008.EN.pdf

Annual reports on the condition and development of SMEs in Bulgaria, various years. Available at: http://www.mi.government.bg/eng/ind/econ/docs.html?id=162491

Demography of SMEs in the Period 1995-2001, National Statistical Institure, 2002

National Action Plan for Employment for the years from 2002 to 2007, MLSP, Sofia,

http://www.mlsp.government.bg/bg/index.asp

Employment Promotion Act

Loukanova P., Self-employment in Bulgaria, Economic Studies, 2010, vol. 3, pp. 103-129 (in Bulgarian)

Law for Small & Medium-sized Enterprises of Bulgaria http://www.mi.government.bg/eng/ind/econ/docs.html?id=143590

National Strategy for SMEs development in Bulgaria 2007-2013

http://www.sme.government.bg/IANMSP/Documents/000000672/BGBG/National%20Strategy%20for%20SMEs%202007-2013%20final.doc

Operational Program Development of Competitiveness of the Bulgarian economy

2007-2013 http://www.opcompetitiveness.bg/uploadfiles/documents/opcompetitivenesseng_final_2007.pdf

Operational Program Human Resource Development http://www.eufunds.bg/bg/page/11

Pedersini, R., Tomev, L., Bulgaria: Self-employed workers, European Foundation for the

Improvement of Living and Working Conditions, February 2009

Programme ALMS, Interim reports and good practices - http://www.az.government.bg/internal.asp?CatID=28/03/10&WA=EFunds/AUPT/042006/Results.htm

Small and Medium-sized Enterprises in Bulgaria 2002-2003”, Report of the Agency for Small and Medium-sized Enterprises, 2004 http://www.sme.government.bg/IANMSP/Documents/000000111/BGBG/Annual.Report.on.SMEs.2004.BG.pdf

World Bank Report on ALMS. http://www.az.government.bg/EFunds/AUPT/042006/Docs/AM%20Final.pdf

Nadezhda Daskalova, ISTUR



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