About the ILO in Bulgaria

Will the pandemic only lead to a temporary slowdown of convergence?

After a lost decade of transition in the 1990s Bulgaria only made progress towards economic gains and shared prosperity in the 2000s based on growth rates of 4 to 6% per year. The Covid-19 pandemic pushed the Bulgarian economy into a recession in 2020 with a decline of GDP of 4 % (EU27: 6%) Forecasts say that GDP will reach its pre pandemic level by the end of 2021. However, uncertainty is high as these predictions assume that Bulgaria will achieve a high vaccination rate and will not face more waves of the pandemic.

The recession hit a country that anyhow has been lagging behind in terms of economic development. Income per capita is only around 50 % of the EU average, the lowest in the EU, while income inequality was the highest among all EU countries as of 2019. That year, Bulgarian regions made up half of the 10 poorest EU regions in terms of GDP per capita. One out of three Bulgarians is at the risk of poverty or social exclusion (EU27: One out of five).

The high growth of the pre-Covid-19 years translated into improved labour market performance and rapid wage growth. Unemployment fell from its peaks in 2001 (20%) and 2013 (13%) to currently 4% in 2019 and only increased by 1 percentage point in 2020. The impact of the pandemic on working hours lost was far bigger. ILO calculations show that 6% of all working hours were lost in 2020 due to lockdowns as compared to the last quarter of 2019 (EU27: 8% of working hours lost). The amount of working hours lost in Bulgaria corresponds to an equivalent of 190,000 full-time jobs. However, the loss in working hours does not automatically lead to the same reduction of employment as working-hour losses include various components: shorter hours, being employed but not working, unemployment, and inactivity. Government measures such as wage subsidies and temporary tax exemptions helped to mitigate the labour market impact and explain the relatively low reduction of employment (-2.3%). A worrying detail is that the number of NEET (youth neither in employment, education or training) is increasing faster than unemployment and stands currently at 22% (EU27: 18%).

However, it should not be overseen that the demographic development of Bulgaria also had a significant impact on the relatively good labour market performance of the country. The population fell from 9 million to 7 million in only 30 years (1990 to 2019). Emigration alone has contributed to a decline of the economically active population of 10%.

Key future challenges of labour market and social policies are the insufficient coverage of the social protection system, labour shortages in certain sectors, skills mismatches, as well as high rates of inactivity among Roma, low skilled workers, and rural population. While Covid-19 did not have very negative employment effects, it put greater pressures on young people and selected sectors like the tourism industry.

The cooperation between the ILO and Bulgaria

Bulgaria is an ILO member state since 1920.

Since the 1990ies the ILO assisted Bulgaria in its economic and labour market transformation and in its accession to the EU in 2007. Two Decent Work Country Programmes (DWCP, 2006 to 07 and 2008 to 09) focused on strengthening collective bargaining, integrating vulnerable groups into the labour market and social protection system, improving occupational health and safety, and supporting pension reforms.

Since then the cooperation is based on specific technical requests from Bulgaria such as the establishment of a minimum wage fixing system, compliance with fundamental labour standards in the textile and manufacturing supply chain of the country, or alternative labour dispute resolution.

Text last updated 8/21.