site.btaBulgaria's Active, Flexible Employment Policy Prevented Job Loss Surge in 2021, 2022

The packages of measures backed by a number of other tax and fiscal reliefs for business and working parents prevented a surge of unemployment over the last two years, Prof. Dr Iskra Beleva of the Economic Research Institute at the Bulgarian Academy of Sciences said. Bulgaria's active and flexible employment policy is fully aligned with the EU policy of mitigating the adverse effects of the COVID crisis and has cushioned unemployment, she pointed out.

Beleva's report was presented at an International Scientific Conference on "Economic Development and Policies: Realities and Prospects. Challenges and Risks in the Conditions of Overlapping Crises", organized by her Institute on November 21 and 22 and attended by lecturers, scientists and independent experts from Bulgaria, France, Romania and Czechia.

The active labour market policies included a 60/40 scheme of employment retention compensations in which 13,307 companies were paid BGN 2 billion between March 2020 and September 2021 to keep nearly 350,000 jobs. The average compensation per employee was BGN 575, and an average 21 employees per company were compensated. State-owned companies were the largest beneficiaries of that scheme, the economist said. The scheme, however, deepened the sectoral segmentation of the labour market as it prioritized manufacturing, accommodation and food service activities, transport, trade, and vehicle repair. 

Another 80/20 scheme helped 2,050 employers retain 30,000 jobs in accommodation and food service activities, transport and tourism whose companies suspended operations in 2020. The budget of that programme was BGN 29 million. The Keep Me scheme supported enterprises that discontinued their activities as a result of epidemic-control measures. It disbursed BGN 71 million to compensate 58,017 persons, the report said.

Under a project entitled Employment for You, 18,000 full-time or part-time employment contracts for up to six months were concluded with jobless people at the cost of BGN 164 million. A total of 33,954 job vacancies were announced under this project, and BGN 104 million were disbursed for 2021, the Ministry of Labour and Social Policy reported.

Businesses and working families were also offered interest-free loans, micro-credits for SMEs, deferred payment of corporation tax, sectoral assistance of companies through the Fund of Funds, lump-sum allowances, leaves, etc., Prof. Beleva said.

The Underside

An even greater variety of forms and content and better targeting of the crisis-management policies could have been achieved. The focus of the job retention programmes on subsidizing particular sectors and mainly larger employers isolated SMEs, the self-employed and the unemployed, she argued.

Next, the policies had a very broad range of addressees: the employed, the socially disadvantaged (mainly pensioners), and families with children who do not attend school or kindergarten, so everybody received a little something but the support was not prioritized, the economist explained. In her opinion, without targeting the needs such a policy is socially just but economically ineffective.

Another flaw of the support was the insufficient use of training vouchers in the training, upskilling and reskilling programmes in the employment retention package. The efforts to keep the employment level and prevent a rapid growth of unemployment would have produced a more significant economic effect if they were combined with actions for the improvement of the quality of labour power, given the inevitable restructuring of employment in post-crisis conditions. In this sense, the labour market policies that are being implemented lack vision and foresight as they give way to policies backing the pre-crisis employment status quo.