Head Asst.Prof. Atanas Vladikov University of Plovdiv, Bulgaria [email protected], http://pu-fisn-sotirova-vladikov.eu A PRESENTATION OF: 07 April 2011 Hotel Dubrovnik, Zagreb, Croatia Employment Policies Employment Policies in Bulgaria in Bulgaria Efficiency Misunderstood & Efficiency Misunderstood & Equity Distorted Equity Distorted
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Head Asst.Prof. Atanas Vladikov University of Plovdiv, Bulgaria
07 April 2011 Hotel Dubrovnik, Zagreb, Croatia. Employment Policies in Bulgaria Efficiency Misunderstood & Equity Distorted. Head Asst.Prof. Atanas Vladikov University of Plovdiv, Bulgaria [email protected] , http://pu-fisn-sotirova-vladikov.eu. A PRESENTATION OF:. Slide 2 of 18. - PowerPoint PPT Presentation
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Head Asst.Prof. Atanas VladikovUniversity of Plovdiv, [email protected], http://pu-fisn-sotirova-vladikov.eu
A PRESENTATION OF:
07 April 2011Hotel Dubrovnik,Zagreb, Croatia
Employment Policies Employment Policies in Bulgaria in Bulgaria
From about 200,000 Unemployed in 2008, this number reached 368,000 Unemployed in Feb./2011 and keeps going up. Unemployment in Bulgaria is STRUCTURAL by nature. Individuals do want to work, but companies would not be able to sustain the crisis, if they keep their workforce employed for longer periods.
Unemployment: The New Spinning-Up Spiral
Jan./2007 – Feb./2011
Slide 7 of 18
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To keep the Inflation Down (2007=8,4%; 2011=2,4%),
Unemployment returned on levels of 2007
(2007=9,7%; 2011=9,7%)
There is high social price for having stable
monetary policy!
Monetary Priorities: High Social Price for Low Inflation
Slide 8 of 18
9
Present Labor Market Situation: (Feb./2011)
Slide 9 of 18
10
Present Economic IndicatorsFor Bulgaria
Slide 10 of 18
~ 250,000 individuals are paid the Min. Wage (Trade Union Data); ~ 25% of Bulgarians live on or below the Poverty Line; ~ 1,1 mln. retired Bulgarians receive monthly pensions less or equal
to the Poverty Line; All employed on Governmental programs get an amount equal to
100% of Min.Wage; Monthly allowances per with permanent disabilities (70% of Min.W.); Monthly allowances per student mothers (100% of Min.W.); Consumer Fees on Doctors/Dentists/Physicians (1% of Min.W.); Student Guarantees on Credits (% of Min.W.); Legal System Cases for Personal Wealth (Times of Min.W.); Others;
Slide 11 of 18
Why the Minimum Wage is ImportantFor Bulgaria?
In contrast to developed economies and some countries from the Central and Eastern Europe, Bulgaria applies ULTRA-NEO-LIBERAL STRATEGY, where budget stability is the primary goal.
A third consecutive Government maintains the following:1) Strong deregulations of labor markets (Workers virtually do
not have any rights - incorrect understanding of the EU Concept for Flexicurity);
2) Pressure of growth of wages and pensions;3) Dumping tax policy /10% Corporate Tax, and 10% Tax
on Incomes of Individuals; This Flat Tax Rate policy favors corporations, at the expense of income of individuals and households/;
Present Government PoliciesAnti-Social, and Anti-EU policies
Slide 12 of 18
For the previous Government, priority number one was accession of Bulgaria to EU, as a full member state;
For the new Government, priority number one is Bulgaria’s entry to the ERM-II (in 2011), and the EuroZone (in 2013);
Conclusion: Combating the Crisis and Exit-Strategy from it are not a priority. The Government relies on strong restrictive budget measures and strict conformity to the financial discipline, imposed by the Currency Board in order to get stabilization and natural transition to economic growth;
Present National Prioritiesof Bulgaria
Slide 13 of 18
The newly elected Government forecast that unemployment would be about 10% on an annual basis (for 2011);
Trade Unions forecast that rate of unemployment will be about 15% for 2011;
Bulgarian Industrial Association (An Organization of Employers) forecast that this rate will be 20% for 2011;
The reasons the three forecasts to be different is the problem with inaccurate data collection & interpretation. From methodological point of view, all three forecasts are sound, but in reality, labor market analysts tend to defend greater levels of unemployment (what the reality is) than what the official Governmental analysts forecast.
Three Forecasts for the Rate of Unemployment
Slide 14 of 18
• Different /“alternative”/ modes of employment are utilized /subsidized employment, pay-by-the-hour employment, temporary employment, etc./
• Payment of labor is typically very low; • Often, working time is composed of irregular time intervals or work by
accident; • Often, there is a high level of workforce turnover; • Many labor malpractices prevail (payment without social and tax
deductions, work abuse, physical punishments, etc.);• It is primarily used in Bulgaria a special instrument, called “National
Employment Action Plan” /NEAP/;1) In 2009, NEAP was worth 175 mln. BGL (€89 mln.)2) In 2010, NEAP was scheduled in two halves- only 65 mln. BGL
(€33 mln.), having in mind, that it is scheduled for Q1 and Q2 of 2010; Nothing has been announced for the execution of the second half;
3) NEAP in 2010 is not a STIMULUS PLAN, but an AUSTERE MEASURE!!!!
4) NEAP in 2011 is the same as the one in 2010;
Slide 15 of 18
Specifics of The Secondary Labor Market in Bulgaria
Market fundamentalists /who have serious positions among employers and the Government/ believe that unemployment may be combated by:1) Further tax and social security reliefs for the
business;2) Payment (SETTLEMENT) of state dues to the
business, based on validated agreements, contracted by the previous government;
3) Speedy return of VAT back to companies;4) Forecast and future actions to stabilize the
labor market in the period 2011-2012;
Predominant Scenario for Combating Crisis and Unemployment
Slide 16 of 18
“Alternative” economists and trade-unionists alarm for: the real danger of jobless economic growth; possible “lost decade”; increase of the “working-poor” class; transfer of crisis costs to employees; businesses apply “EU-prices”, but preserve “Bulgarian”
wages, which distorts the pivotal ratio for competitiveness (w/p);
businesses “leech” economic and purchasing power of workers, through wide-spread labor abusing, and contractual malpractices;
State provide no stimuli for businesses to create sustainable job occupations;
Slide 17 of 18
Additional Alarming IssuesFor Bulgaria
THANK YOU!
Head Asst.Prof. Atanas VladikovUniversity of Plovdiv, [email protected], http://pu-fisn-sotirova-vladikov.eu