Background information

Key tax and spending measures have been implemented under the revised 2020 state budget, allowing for a budget deficit of BGN 3.5 billion (€1.75 billion) and increased the ceiling on newly incurred public debt of up to BGN 10 billion (approx. €5 billion) for 2020.

By doing so, the Bulgarian government can implement a measure that will cover 60% of the wages of employees in affected sectors that would otherwise have been laid off, including the social security contributions that are to be paid by the employers (over 1.2% of 2019 GDP).

The application procedure is made as convenient and fast as possible. It can be carried out electronically, in front of the labour offices or through a licensed postal operator.

The programme focuses more on the labour market and maintaining employment than on directly supporting business. In this sense, this measure has economic and social implications.

Three waves of the programme have been announced by now:

1. From 13 March 2020 until 30 June 2020.
2. From 1 July 2020 until 30 September 2020.
3. From 1 October until 31 December 2020.

Content of measure

The Bulgarian government adopted the Emergency and Measures Act to compensate businesses affected by the pandemic. The programme covers companies, whose activities have been prohibited by restrictive measures related to COVID-19 and companies, whose turnover decreased by 20% compared to the same period in 2019.

The industries that were not included in the first wave of the programme (13 March - 30 June 2020) were agriculture, financial and insurance activities, government, education, human health and social work, households as employers, activities of extraterritorial organisations and services.

Benefiting employers cannot dismiss employees for whom they received wage compensations after the end of the state of emergency for an additional period equal to that for which they were compensated. Employers will be able to establish part-time work for the whole enterprise or units and receive compensation in proportion to the reduced working hours.

Use of measure

The measure was implemented for 28 months (10 months in 2020, 12 months in 2021 and 6 months in 2022), pursuant to Decree No 55 of 30 March 2020 laying down the conditions and procedures for the payment of compensation to employers to maintain the employment of employees during the state of emergency. The duration of the programme has been extended several times, and P.M. No. 151 of 2020 has been amended seven times.

More than 80% of employees and most employers can benefit from the measures in the country. Until mid-April 2020, over 800 companies have benefited from the measure.

According to the Employment Agency, the measure known as '60/40' covers 5.4% of the country's workforce. In addition, the measure contributed to keeping unemployment at just over 8% in June. Regionally, the most favourable effect was in the districts of Gabrovo and the capital Sofia, and the weakest - in Vidin and Sofia region.

As of 30 June 2020, 10,000 employers' applications for a total of 177,000 employees have been approved and submitted for payment. The NSSI data on the compensations paid under measure 60/40 shows that the average amount of assistance per employee varies, in March it was BGN 308 (€154), in April it increased to BGN 515 (€255) and it dropped again to an average of BGN 400 (€200) in May 2020.

According to estimations of the Bulgarian Prime Minister, during the first two waves of the programme, the measure has helped 300,000 workers to retain employment.

In September 2020, the Solidarity for Bulgaria Association and the Friedrich Ebert Foundation presented a report that analyses the effectiveness of the current support measure. In the report the researchers argue that there is a considerable delay of payments for many applicants, which worsens the economic climate as employers are left out without necessary resources for months. Furthermore, they criticise the programme's framework for being dependent entirely on employers' decision to apply for the subsidy or not, which in some cases might put workers in unfavourable positions. In addition, the report states that around BGN 330,000 (€165,000) of the paid compensations were returned and there is a missing explanation as to why. Subsequently, the involved associations demand amendments in the scope of the programme which should include:

• more initiation rights for the workers;
• easier and time efficient application, processing and payment protocol;
• transparent data for rejected and returned applications and payments;
• subsidies of up to 100% of the wages for employees, earning less than BGN 800 (€400).

Before Christmas, the government announced that the scheme will continue to operate until September 2021. For the measure 60/40 next year, BGN 600 million are planned, which will reach the month of September.

So far, BGN 627 million have been paid under this measure, and according to the Minister of Social Affairs, between 250,000 and 300,000 jobs have been preserved with it. However, a significant part of the resource remained unspent - in the spring because of it the budget of the Unemployment Fund of the National Social Security Institute was updated by BGN 1 billion.

According to data presented at the end of September 2021, the state-owned companies are classified as being most benefited under the measure. Up until the middle of September 2021 the total amount of compensations paid equal BGN 1.5 billion. There are 13,307 companies that have received funds since the release of the measure in 2020. The average compensation per employee is BGN 575 and the average number of employees compensated per company reaches 21.

The highest overall compensation amounting BGN 45.5 million is paid to “Troyanovo-North Mine” which is part of the state-owned company “Mini Maritsa Iztok EAD”. Other state-owned companies are rated among the top five beneficiaries. These are “Troyanovo- 1 Mine” (BGN 38.4 million), Bulgarian Posts (BGN 32.6 million) and “Troyanovo-3 Mine” (BGN 29 million). Both “Troyanovo- 1 Mine” and “Troyanovo-3 Mine” are part of the state-owned company “Mini Maritsa Iztok EAD”. The company “ARSENAL JSCompany” is compensated with BGN 30 million.

From 15 April 2020 to 25 August 2022, the state aid of 242 payments (BGN 1,995,388.2) to 13,677 employers (support for at least one month) supported 341,877 workers and employees according to the summary data of the National Insurance Institute (NOI).

According to the annual report of Social Assistance Agency for 2022 a total of 4,038 employers for more than 100,000 employees have been approved to receive 60% of the insurance income of their employees.

Target groups

Workers	Businesses	Citizens
Applies to all workers	Applies to all businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government Trade unions Employers' organisations	Employers organisation European Funds National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Agreed (outcome) incl. social partner initiative	Agreed (outcome) incl. social partner initiative
Form	Consultation through tripartite or bipartite social dialogue bodies	Consultation through tripartite or bipartite social dialogue bodies

Social partners' role in the implementation, monitoring and assessment phase:

• Social partners jointly
• Main level of involvement: Sectoral or branch level

Involvement

The social partners were active in drafting the measure during negotiations. The measure was discussed in detail within the National Council for Tripartite Cooperation (including government representatives, representatives of Bulgarian Industrial Association, Bulgarian Confederation of Independent Unions and others). It was supported by all social partners.

Trade unions played a key role in the development of the measure in specific sectors most affected by the crisis, such as tourism and transport. These industries received additional funding.

In November 2020, the government called for design proposals, as it considers prolonging the programme in 2021.

Views and reactions

The social partners (trade unions and employers' organisations) were involved in the decision-making process on what measures to implement. The government is in constant consultation with them, with further measures to be introduced in the coming weeks.

The assessment of employers is that the measure is not effective enough and does not work in the way everyone expected. The unions believe the opposite, as the emphasis is on maintaining employment. However, so far most of the funds provided have not yet been used, which means that not all employers take advantage of this opportunity and apply. The measure is to be extended until the end of the year, given the phase of the business cycle in which the Bulgarian economy finds itself.

In October 2020, the Confederation of Employers and Industrialists of Bulgaria demanded extension of the programme until mid-2021, as they do not see market recovery in the close future.

In addition, some Media representatives criticised the government for not being transparent enough about the source of the funds and the total amount spent on the programme.

With regard to the "60 for 40" measure, the Confederation of Labour 'Pokrepa' (CL 'Pokrepa') challenged the model and insisted that it was imperative to make a substantial and principled adjustment to this social (above all else) measure, guaranteeing direct and immediate access of employees to the funds provided for its implementation. The model adopted gave employers the sole initiative to implement the measure at their discretion and only in respect of employees designated by them. Given the fact that the model clearly and objectively unjustifiably burdens employers with labour costs without the labour actually being expended, the measure was doomed to failure from its inception. The percentage of enterprises and their employees who have benefited from the 60/40 measure is relatively low, according to CL 'Podkrepa'. Almost half of employees believe that 60/40 helps employers to save money and employees to lose their paid leave. Many workers were forced to use their paid leave back in the winter and spring, and this deprived them of the opportunity to vacation with their families in the summer. It is recognised that the employer is obliged to provide funds for paid annual leave and that, in fact, with this measure, the state is helping employers rather than employees.

Sources

• 30 May 2018: ПМС 151/2020 - Процедура по кандидатстване (www.az.government.bg)
• 30 March 2019: companies are applying for the measure 60/40 (news.bnt.bg)
• 06 April 2020: ЗИД на ЗДБРБ за 2020 г., приет от НС на 06.04.2020 г. (parliament.bg)
• 08 April 2020: 873 молби са подадени по мярката 60/40 (btvnovinite.bg)
• 12 April 2020: International Monetary Fund (www.imf.org)
• 30 May 2020: The measure 60/40 will be valid until September 30 (www.capital.bg)
• 26 June 2020: МЯРКА ЗА ЗАПАЗВАНЕ НА ЗАЕТОСТТА В СЕКТОРИТЕ "ТРАНСПОРТ" И "ТУРИЗЪМ" (coronavirus.bg)
• 18 September 2020: Compensation under measure 60/40 was paid half a year late (news.bg)
• 01 October 2020: Friedrich Ebert Foundation (2020): Analysis of the socio-economic measures for mitigating the COVID-19 crisis. (www.fes-bulgaria.org)
• 07 October 2020: The 60/40 measure will run until the end of the year (www.dnevnik.bg)
• 22 October 2020: CEIB: Measure 60/40 will run until June 30 next year (nova.bg)
• 26 October 2020: Another BGN 450 million goes to the 60:40 scheme (www.banker.bg)
• 29 December 2020: Тристранката одобри удължаване на мярката 60/40 до 31 март 2021 г. (segabg.com)
• 15 March 2021: Мярката 60/40 се удължава до края на май (www.investor.bg)
• 04 June 2021: Обявиха нови икономически мерки в подкрепа на бизнеса (btvnovinite.bg)
• 28 June 2021: Мярката 60/40 с нов дизай (m.focus-news.net)
• 30 December 2021: ПОСТАНОВЛЕНИЕ № 482 ОТ 30 ДЕКЕМВРИ 2021 Г. (dv.parliament.bg)
• 02 January 2022: National Employment Agency - Labour Market in 2021 (www.az.government.bg)
• 04 May 2022: The 60/40 job retention measure will be extended until 30 June 2022. (news.inbalance.bg)
• 01 June 2022: LAST ACCEPTANCE OF APPLICATIONS UNDER THE 60/40 MEASURE (www.bia-bg.com)