BIA DOES NOT SUPPORT THE NEW MINIMUM WAGE PROPOSAL FROM 1 JANUARY 2024

BIA does not support the new minimum wage amount of BGN 993 proposed with Draft Decree of the Council of Ministers on determining the amount of the minimum wage for the country as of 1 January 2024, submitted for consideration by the members of the NCTC, at an extraordinary meeting of the Council convened on 5 October 2023.

The draft Decree on the determination of the minimum wage for the country as of 1 January 2024 is based on Article 244 of the Labour Code, an amendment to which was published in State Gazette No. 14 of 10 February 2023. According to the new provision, "the national minimum wage for the following calendar year shall be set by 1 September of the current year at the rate of 50 per cent of the average gross wage for a period of 12 months, which shall include the last two quarters of the previous year and the first two quarters of the current year."

The approach adopted in Article 244 of the Labour Code undermines and renders meaningless the social dialogue in the field of minimum wage negotiations and erodes the role of the social partners on a key issue for them.

As required by the Directive (Art. 5), the setting and updating of a country's statutory minimum wage should be based on national criteria taking into account:

(a) the purchasing power of statutory minimum wages, taking into account the cost of living and contributions to taxes and social benefits;

(b) the general level of gross wages and their distribution;

(c) the growth rate of gross wages;

(d) labour productivity developments.

According to ILO Convention 131 (ratified and in force for Bulgaria), the elements to be taken into account in determining the level of the minimum wage include:

(a) the needs of workers and their families, taking into account the general level of wages in the country, the cost of living, social security benefits and the relative living standards of other social groups;

(b) economic factors, including economic development requirements, productivity levels and the desire to achieve and maintain high levels of employment.

Both acts require the setting of the minimum wage to be based on social and economic criteria that are absent from Bulgarian legislation.

The adequacy of statutory minimum wages is to be determined and assessed by each Member State in the light of its socio-economic conditions, including employment growth, competitiveness and regional and sectoral developments (recital 28 of the Directive)

Such an assessment is missing in the Partial Impact Assessment accompanying the draft Regulation.

According to the National Statistical Institute, there will be significant disparities between regions and sectors after the implementation of the amendments.

In view of the above, the Bulgarian Industrial Association does not support the draft Decree for setting the minimum wage from 1 January 2024 at BGN 933.