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COVID-19 EU PolicyWatch

Database of national-level responses

Eurofound's COVID-19 EU PolicyWatch collates information on the responses of government and social partners to the crisis, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for case BG-2020-11/494 Updated – measures in Bulgaria

COVID-19: Income support for workers

КОВИД - 19 мярка: Подпомагане на работещите в реалния сектор

Country Bulgaria , applies nationwide
Time period Temporary, 13 March 2020 – 31 July 2021
Type Legislations or other statutory regulations
Category Employment protection and retention
– Income support for people in employment (e.g. short-time work)
Author Eva Dimitrova ( for Eurofound)
Case created 12 April 2020 (updated 19 July 2021)
Related ERM support instrument

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 ceiling on newly incurred public debt of up to BGN 10 billion (approx. €5 billion) for 2020.

By doing so, the Bulgarian government is able to 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 can be considered both economic and social.

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

A requirement for benefiting employers is that they shall not 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 of it and at the same time receive compensation in proportion to the reduced working hours.

Updates

The following updates to this measure have been made after it came into effect.

28 June 2021

The measure has undergone additional change while maintaining the same deadline for now: 31 July 2021.

The change is regarding the requirement of a decrease in turnover. With a 30% drop in turnover, the state will support 50% of the insurance income for the persons falling into the economic activities that will be supported, and the insurance income will include the insurance contributions due by the employer for the persons. With a decrease in turnover by 40%, the aid from the state will remain in a ratio of 60/40, where 60% of employers will receive for their employees.

This means that the 60/40 ratio is maintained if there is a 40% drop in turnover, and if there is only a 30% drop in turnover, then the ratio is already 50/50.

04 June 2021

The measure 60/40 for employment support will be extended by two months - until 31 July 2021.

15 March 2021

The term of the employment retention measure, known as 60/40, should be extended until 31 May 2021. This has also been approved by the National Council for Tripartite Cooperation (NCTC).

During the additional period of implementation of the measure, the amount of state support will amount to 60% of the insurance income and the insurance contributions due by the employer for October 2020. The additional financial resource for extension of the measure is 147 million. BGN, which are expected to preserve about 100 thousand jobs.

29 December 2020

The social partners approved an extension of the 60/40 scheme until 31 March 2021. This became clear after an extraordinary online meeting at which the National Council for Tripartite Cooperation (NCTC on 29 December 2020).

The amount of state support remains 60% of the insurance income and 60% of the insurance contributions due by the employer for the month of October 2020. Until 15 January , 2021, employers will be able to submit applications for payment of funds for the period from 1 October to 31 December 2020. Applications will be considered and funded as before. The financial resources necessary for the implementation of the measure will be at the expense of the NSSI budget and will be transferred to the respective employer by bank transfer from the National Social Security Institute.

07 October 2020

Due to deterioration of the epidemic situation in Bulgaria, the government prolonged the programme until the end of 2020.

A new point in the programme states that an employer, who has received funds for maintaining employment, shall pay the employees a salary in the amount not less than the amount of the insurance income for August 2020.

01 July 2020

The programme was amended in June 2020. The amendments included:

  1. Prolonging the application period with three months. Initially the programme was planned to last until end of June 2020. Now it has been extended to 30 September 2020.
  2. Extension of eligibility criteria. During the second wave of the programme (1 July - 30 September 2020), the measure focuses on the hospitality industry, in particular on seasonal workers. In comparison to the first wave, all workers in healthcare, who do not have a contract with the National Health Insurance Fund, may apply for compensations, including dentists. Nurseries, kindergartens and training centres may apply as well.
  3. Additional funds. The programme foresees additional funding for tourism and transport sectors amounting BGN 290 (€145) per employee monthly. Increasing state's contributions to 80% of workers' wages. The industry specific programme is thus now being popular as measure '80/20'.

Use of measure

More than 80% of employees can benefit from the measures and most of the employers 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

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 Negotiated Negotiated
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

During the negotiations, the social partners were active in drafting the measure. 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 have played a key role in contributing to 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.

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)

Citation

Eurofound (2020), COVID-19: Income support for workers, case BG-2020-11/494 (measures in Bulgaria), COVID-19 EU PolicyWatch, Dublin, http://eurofound.link/covid19eupolicywatch

Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process. All information is preliminary and subject to change.