HIGHER WAGES AND PENSIONS TO COST BULGARIAN BUDGET 400M LEVA

The increase in the minimum wage and pension demanded by trade unions, effective July 1 2011, would cost Bulgaria's state Budget about 400 million leva, calculations by the National Social Security Institute (NSSI), which handles all state benefits spending, and the Labour Ministry showed.

The increase of 5.3 per cent in the minimum salary, proposed by the Confederation of Independent Trade Unions in Bulgaria (CITUB), would widen NSSI's deficit by a further 290 million leva, which could be covered with funds from the state Budget in the form of value-added tax (VAT) from taxpayers, including pensioners.

Social security funds were expected to run up a deficit of 1.39 million leva, but figures released in January showed that the shortfall would further deepen because of lower Budget receipts.

Estimates of the Labour Ministry showed that the proposed hike in the guaranteed minimum income to 290 leva would result in an increase of social spending by about 95 million leva in the second half of the year.

According to the Bulgarian Industrial Association (BIA), however, raising minimum wages should be considered when drafting the 2012 Budget and after an assesment of the revenue performance in the first six months of 2011.

In turn, CITUB insisted that the increase in wages should be introduced in July to compensate for the decline in incomes and the higher prices over the past two years.