The government had not at all analysed the effects on the regions and on business when setting the minimum wage. It will approach the average of over 70% in Vidin, Kyustendil, Blagoevgrad, Smolyan and a number of other cities. This is what the economist Shteryo Nozarov, economic advisor of BIA.
"This means that employers do not see effective labour productivity, there is a prerequisite for redundancies. Production costs are rising, smaller companies are threatened with bankruptcy, larger ones are laying people off. 60% of social security contributions are borne by the employer. In most European countries, the minimum wage is taxed. Under the new rule, the minimum wage crowds out the average wage," he said.
He said it was manipulative to compare the minimum wage with the average. "Minimum wage is a basic wage and average wage is a gross wage. When we say someone is on 780 BGN, it means they have 0 days of work experience. If you put seniority class and other payments, the amount becomes different," he said.
For his part, Atanas Katsarchev, chief economist of the trade union "Podkrepa", said that in Bulgaria two thirds of households are below the standard of living necessary for a normal life. "About 1/3 are below the poverty line. This is about 2 million people, 700 000 of them are people with disabilities, which makes 500 BGN per person for survival - something completely impossible. Businesses say there is no money, but you can't live on the current money either," he stressed.
According to him, you have to have at least 22 years of work experience to offset the tax with social security contributions. "We are one of the few countries where the minimum wage is taxed. Households have about 8.8 million deposits - 50 per cent are under BGN 1000. 600 people have over 1 million BGN. We have a very large scissors that shows an uneven distribution," he noted.
