Bulgaria: Latest working life developments Q3 2018

Pay increases in the public sector, a new Cooperation Agreement for the labour market and the government’s response to rising living costs 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 2018.

Public sector workers to receive 10% pay increase

Following the end of the government session on 12 September, Minister of Finance Vladislav Goranov confirmed that the government has proposed including an additional BGN 1 billion (€511 million as of 19 October 2018) in the 2019 budget to finance a 10% wage and salary increase for employees in the public sector. [1] According to Minister Goranov, the pay rise is feasible thanks to the efficient implementation of the 2018 budget and the increased collection of revenues.

The government expects that this wage and salary increase will positively affect the whole labour market by increasing all income in the country to a greater or lesser degree. The increase in the public sector applies to all 433,000 employees.

Minister Goranov emphasised that the pay increase will be awarded on a case-by-case basis, with raises of more than 10% available to high performing employees. The minister also confirmed that secondary school teachers will have their pay increased by 20%. This is because the national budget forecast has earmarked BGN 362 million (€185 million as of 19 October 2018) for wage increases for pedagogical staff in the secondary education system.

The government’s announcement was welcomed by trade unions. According to Plamen Dimitrov, President of the Confederation of Independent Trade Unions in Bulgaria (CITUB), the country faces a demographic crisis and there is no alternative other than to increase wages and salaries. [2] The announced increase is not only urgently needed, but also insufficient when taking into account working conditions and qualifications. Also, because of the rare and uneven pay rises in the public sector, there are structural imbalances and lower wages and salaries in some organisations (culture organisations, social services, etc.).

According to Kaloyan Staykov, from the Institute for Market Economics, the announced increase is not surprising, but it is worrying that no substantial administrative reforms or staff optimisation measures are planned.

Trade unions sign new cooperation agreement

On the eve of the World Day for Decent Work (7 October), a Cooperation Agreement was signed between the two national representative trade union confederations – CITUB and CL Podkrepa – and the General Labour Inspectorate Executive Agency. This is the second Cooperation Agreement to be concluded (the first one was signed on 7 October 2009) and it is designed to reflect the new labour market situation in Bulgaria and guarantee compliance with labour laws. The agreement was signed in the presence of Biser Petkov, Minister of Labour and Social Policy, who is going to act as a guarantor for its implementation.

A major provision of the agreement is the establishment of regional councils to reinforce cooperation between company-level unions and labour inspectors. As well as reporting on labour violations, company-level unions will be invited to attend labour inspections. Both will also discuss labour-related problems within the regional working conditions councils.

Plamen Dimitrov (CITUB) believes that the agreement sees information sharing as a way to provide the basis for suggesting legislative amendments in terms of decent remuneration. [3] The agreement also favours the process of collective bargaining and therefore more workers can be organised into unions as a poverty reduction measure.

Data presented by the General Labour Inspectorate Executive Agency show there were 32,880 labour inspections, 5,900 of which were made based on warnings and led to trade unions logging 41 warnings of labour violations. As a result, a total of 135,300 violations were reported and relevant measures were enforced in order to improve the working conditions in Bulgarian companies.

According to Rumyana Mihaylova, Executive Director of the Inspectorate, the agreement’s measures on cooperation between parties will result in better control by the Inspectorate and better working conditions in Bulgarian companies.

State aid to combat rising living costs

Keeping in mind the deflation process that occurred over the last few years, there is currently a steady increase in wage and salary levels (between 8% and 11% annual nominal increase). Nevertheless, the situation is worsening because of the steep increase in the price of natural gas (by 10.8% as of 1 July 2018 and another 14% as of 1 October 2018). This has led to an average increase of 23% for hot water and central heating, and a 2% increase for electricity (consumer prices). Employers expect prices in energy-intensive industries to rise too, as a secondary effect.

In order to compensate for these rising living costs, trade unions came to an agreement with the government on increasing the value and the scale of state aid for energy consumption by ensuring an additional BGN 43 million (€22 million as of 19 October 2018) in financing. [4] This state aid aims to support people who are ‘energy poor’.

 

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