Factsheet for case BG-2020-11/494 – Updated – measures in Bulgaria
|Country||Bulgaria , applies nationwide|
|Time period||Temporary, 13 March 2020 – 31 July 2021|
|Type||Legislations or other statutory regulations|
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 18 October 2021)|
|Related ERM support instrument|
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:
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.
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:
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.
|Applies to all workers||Applies to all businesses||Does not apply to citizens|
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:
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.
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.
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.