BIA DOES NOT SUPPORT THE INCREASE OF THE MINIMUM WAGE FOR 2021.

Subject: Draft of Council of Ministers for determining a new amount of the minimum wage for 2021

DEAR LADIES AND GENTLEMEN,

The increase in the minimum wage follows the promises made in the absence of a mechanism, criteria and transparent methodology for its determination, in accordance with the repeated specific recommendations of the EC and is in non-compliance with the principles and requirements of ratified and already applied ILO Convention 131.

The methodology, models, expectations and specific initial parameters used on the basis of which the estimated amounts of the minimum wage, the compensation of one employee and other key indicators of critical importance for the economic condition of individual enterprises, industries and municipalities remain unclear and non-transparent, and above all those - with a low level of added value wages, social inclusion and high unemployment.

The projected growth of around 6.6% of the minimum wage for 2021 does not correspond to the current and expected values ​​of key parameters regulated by ILO Convention № 131, such as the general state of the economy, changes in productivity and inflation, as well as related effects affected by the ongoing epidemic and global impacts on the economy and employment.

In particular, the projected growth does not correspond to declining productivity, GDP and rising unemployment. According to NSI data, seasonally adjusted GDP data according to preliminary estimates show a decline of 8.2% in the second quarter of 2020 compared to the corresponding quarter of last year, inflation since the beginning of the year is -0.5%, and annual inflation for October 2020 compared to October 2019 is 0.8%.

The sharp increase in the size of the minimum wage will create conditions for increasing unemployment in small and medium-sized municipalities, where in the conditions of a pandemic, local employers have great limitations in their activities. Compliance with the requirements for the introduction of a new, larger amount of the minimum wage will force them to lay off employees. This will mainly affect the tourism, services and construction sectors, which are the main employment opportunities for a large part of the population.

In view of the above reasons, the Bulgarian Industrial Association does not support the proposal to increase the minimum wage (MW) from BGN 610 to BGN 650 from January 1, 2021.

WITH RESPECT,

RADOSVET RADEV

Chairman of the Board of BIA