The economic and social situation in Bulgaria

Social dialogue and industrial relations in Bulgaria are conducted in a hostile environment of political instability, sluggish economic growth and low take-up of EU funds, with unpopular reforms in the offing in areas such as healthcare, education, the pension system and social assistance.

There is a trend towards decentralising collective bargaining and halting the extension of sectoral collective agreements, which is gradually whittling away the number of workers covered by such agreements. The minimum wage remains one of the cardinal tools for influencing incomes policy, but any increase is coming up against increasingly stiff resistance from employer organisations. The immediate task for the trade unions is to improve sectoral and industry dialogue and create a procedural framework for collective bargaining at the various levels.

High economic growth is not the only foundation for implementing a new incomes policy with a catch-up effect: another option is to have the State play a growing role in the distribution and redistribution of wealth. This means that the way to tackle poverty and social exclusion is not just with more and better jobs, but with fairer taxation, and solidarity and social systems that work better. The social impact of the new economic governance and the European Semester is tangible. Restrictive policies are undermining potential ways of overcoming the economic crisis and getting a recovery in employment. The main thing that needs to be done to create a new type of growth is to stimulate consumption and investment.

The 'supply economy' imposed in Bulgaria through unprecedentedly low taxes, flat-rate taxation and consistent reduction of social security contributions – all measures to help and support business – has run its course, without providing economic prosperity, adequate employment and better living standards. Instead, social division and income inequality have deepened