Social partners and government discuss unpaid wages

The non-payment or late payment of wages has become a widespread problem in Bulgarian enterprises and a major source of industrial conflict. In June 2003, trade unions, employers' organisations and the government met to discuss the issue and consider possible solutions.

On 11 June 2003, a tripartite meeting was held on the initiative of the Confederation of Independent Trade Unions in Bulgaria (CITUB) to discuss the issue of unpaid wages. The meeting brought together representatives of the government, employers’ organisations and CITUB and its member branch federations, along with trade union officials from some of the companies involved.

The non-payment or delayed payment of wages has become a general practice among Bulgarian enterprises and is a matter of considerable concern for the social partners and government, which believe that a solution must be found, given the very high level of wage arrears and its severe social consequences. During the past 10 years, the non-payment or late payment of wages has become one of the main sources of labour conflicts and strikes in Bulgarian companies. The International Labour Organisation (ILO) Committee of Experts on the Application of Conventions and Recommendations, examining the implementation of the ILO Convention (No. 95) and Recommendation (No. 85) on the protection of wages, has commented that the phenomenon of unpaid wages is spreading and that an 'ingrained culture of non-payment' has developed.

According to data from the National Statistical Institute (NSI), one of the largest problems is found in 'non-financial' companies in the public sector, which employ 329,000 workers. As of March 2003, the wage arrears in such companies stood at some BGN 209 million (approximately EUR 105 million). As a result of the restructuring of this sector, over the year from March 2002 to March 2003, 8% of employees were made redundant, while at the same time the companies' liabilities rose by 11.9%.

At the beginning of the meeting in June, the president of CITUB, Jeliazko Hristov, emphasised that delayed or non-payment of wages has become a widespread practice, noting the following points:

  • in the event of financial problems in companies, employers often rely on the patience of their workers, who prefer to keep their jobs even without receiving their remuneration;
  • employers often fail deliberately to pay wages in order to increase their cash flow. This leads to a situation whereby employees essentially provide their employers with interest-free credit;
  • payment of wages is delayed by months in hundreds of enterprises, and thousands of employees receive just a small advance payment on their wages. Many companies do not pay even the minimum wages stipulated by the Labour Code;
  • the situation in the public sector is similar. Often public employees become 'creditors' of the state because every year in some municipalities there is a delay in salary payments to the staff of schools, hospitals, and especially municipally-run firms; and
  • despite the importance of the problem, no previous governments have seen its resolution as a priority.

During the debate at the meeting, reasons cited for non-payment or late payment of wages by employers included the following:

  • the insolvency of the firm's clients and 'mutual indebtedness';
  • lack of available cash;
  • high levels of debts to the state and the social insurance funds;
  • ineffective management; and
  • lengthy stoppages of production.

Representatives of CITUB's branch federations presented figures highlighting the extent of the problem in particular sectors or companies:

  • in March 2003, in public sector metalworking and steel manufacturing enterprises, the value of overdue wages was almost 10 times more than the amount in their remuneration funds;
  • in 2003, wage arrears exceed those in 2002 by 27.8% in transport and communication companies, 24.7% in heating and electricity supply companies and 23.2% in healthcare;
  • the companies reported to have the largest debts to their employees are Bulgarian State Railways (BGN 29 million), Terem (BGN 5.6 million), Stomana (BGN 4 million), Balcancar Holding (BGN 3.5 million), Agrobiochim (BGN 2.23 million) and Bulgartabac Holding (BGN 1.21 million);
  • in the light industry sector, 35 companies examined owe a total of BGN 2.94 million to their staff and BGN 7.71 million to the National Insurance Institute;
  • in the chemicals industry, delayed wages total BGN 6 million and delayed social insurance contributions BGN 5.2 million; and
  • because there is no legislation protecting employees' wages in the event of their employer's bankruptcy, workers in a number of bankrupt companies have lost overdue wages due to them. For example, employees have lost BGN 10 million at Varna Shipyard (Varnenska Korabostroitelnitsa), BGN 4 million at Torovi Zavodi, BGN 2.12 million at Vidachim and BGN 248,000 at Trema.

The participants at the meeting were united in their opinion that the non-payment or late payment of wages is a violation of labour and human rights. They agreed that this practice, together with the low level of wages, is increasing the number of 'working poor' in Bulgaria. The importance was stressed of introducing legislation to provide wage guarantees and protect workers' rights in this area. Given the extent of the phenomenon, the participants emphasised the importance of the involvement of all social partners in resolving the problem.

CITUB announced to the other participants at the meeting that it had decided to organise a 24-hour strike in November 2003 in those companies with wage arrears.

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Add new comment