Bulgaria: Latest working life developments – Q3 2017
Tensions between employers and unions over employers’ demands for seniority pay and the abolition of social insurance thresholds, and their proposals on calculating the minimum wage, are the main topics of interest in this article. This country update reports on the latest developments in working life in Bulgaria in the third quarter of 2017.
Employers demand abolition of seniority pay and social insurance thresholds
In July 2017, employers in Bulgaria demanded that seniority pay, based on length of service and professional experience, should be abolished. According to the Bulgarian Industrial Association (BIA), the Association of Industrial Capital in Bulgaria (BCCI), the Bulgarian Chamber of Commerce and Industry (BCCI) and the Confederation of Employers and Industrialists in Bulgaria (CEIBG), additional pay for the length of the working service (seniority pay) discriminates against young workers. The employers said that abolishing seniority pay would give all employees equal opportunities, as young and inexperienced workers would no longer be paid less.
The size of seniority pay is determined by a 2007 Decree of Bulgaria’s Council of Ministers and is equal to 0.6% for each additional year of working experience. Employer organisations also demanded the removal of the thresholds for minimum insurance income by occupation and economic activity. Employers refused to negotiate the level of the insurance thresholds for 2018 until an adequate model for determining the country’s minimum wage was adopted. The employers also want to reach an agreement with the trade unions on a range of minimum and maximum limits for determining the minimum wage.
Calculating the minimum wage
According to employers, the ‘poverty line’ is a suitable lower limit, because all the parameters relevant to the quality of life have been taken into account and it is calculated on the basis of objective statistical indicators. The employers also say that the requirements of Article 3 of ILO Convention No. 131 should be implemented as part of Bulgarian labour legislation so that, while determining the minimum wage, the needs of workers and their families are taken into account, as well as:
- the overall level of wages in the country;
- the cost of living;
- social benefits;
- the standard of living of other social groups.
The employers want the maximum limit to be determined as an average ratio between the minimum wage and the average wage in the countries of the European Union where such a ratio is applicable; they point out that in six Member States there is no monthly minimum wage at all.
At a press conference of the employer organisations in July 2017, Bojidar Danev (BIA) and Vassil Velev (AICB) described the workers as ‘lame, lazy and criminals’, while Kiril Domuschiev (CEIBG) said the unions were ‘harmful’ and ‘obstructing the development of the country and the economy’.
Trade unions have complained to the International Labour Organization (ILO), the European Commission and the European Economic and Social Committee about the ‘aggressive behaviour’ of the employers.
The employers have asked the Commission for Protection against Discrimination (CPD) to intervene in the seniority pay issue. The trade unions warn that there will be protests if seniority pay is abolished. The education branch of the Confederation of Labour (CL Podkrepa) stated that the Bulgarian education system employs nearly 100,000 teachers and directors and their average age (53 years) is the highest in Europe, with 75% of teachers and directors entitled to seniority pay (which accounts for 35% of their income). According to the unions, abolishing seniority pay ‘will blow up the education system and will force the readiness to strike of thousands of Bulgarian teachers’.
The Council of Ministers insisted that normal social dialogue should be resumed at the National Council for Tripartite Cooperation (NCTC). This was scheduled to discuss the proposal for removing seniority pay on 28 September 2017, but as yet there is no official statement. The social partners are convinced that the NCTC will try to restart effective social dialogue.