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National Action Plan for Employment for 2001 - Republic of Bulgaria
Source: National Resource Center for Vocational Guidance
Passed by decision 293 / 27.04.2001 of the Council of
Ministers
February 2001
Sofia
The National Action Plan for Employment 2001 has been prepared by the Ministry of Labour and Social Policy in collaboration with other ministries and agencies, the nationally represented employers’ organizations and the nationally represented employees’ organizations, as follows:
The “Macroeconomic policy” Chapter has been prepared by: the Ministry of Finance (MoF), the CL “Podkrepa”, the Confederation of Independent Trade Unions in Bulgaria (CITUB), the Bulgarian Industrial Association (BIA), the Bulgarian Chamber of Commerce and Industry (BCCI), and the National Association of Municipalities in the Republic of Bulgaria;
The “Labour market development and employment policy issues” Chapter has been prepared by: the Ministry of Labour and Social Policy (MoLSP), the National Employment Service (NES), the State Agency for Youth and Sports (SAYS), the Ministry of Education and Science (MoES);
I pillar “Improvement of the employability” has been prepared by: MoLSP, NES, MoES, SAYS, the Ministry of Economy (MoE), MoF, the Ministry of Transport and Communications (MoTC), the Ministry of Regional Development and Public Works (MoRDPW), the Ministry of Agriculture and Forests (MoAF), the National Agency for Vocational Education and Training (NAVET), CITUB, BIA;
II pillar “Entrepreneurship development” has been prepared by: the Small and Medium Enterprises Agency (SMEA), BIA, BCCI, the Foreign Investments Agency (BFIA), MoE, MoF, SAYS, MoAF;
III pillar “Promotion of adaptability in business and of the employed therein” has been prepared by: BIA, MoLSP, MoES, MoAF, CITUB;
IV pillar “Strengthening the equal opportunities policy” has been prepared by: MoLSP, BIA, BCCI, CITUB, MoAF and CL “Podkrepa”.
1. Macroeconomic Policy
The period 1996 – 1997 was extremely difficult for the Bulgarian economy. Following a two-year period of low economic growth (1994 – 1995) the Bulgarian financial system entered upon severe crisis in the second half of 1996, followed by total collapse of the economy. It resulted in an extremely strong decline of the GDP of –10.1% for 1996 and –7% for 1997. The inflation increased sharply and in 1996 the average yearly inflation reached 123%. Bulgaria was facing a hyperinflation crisis, in the first two months of 1997, being the major reason for the strong decrease of the population’s real income.
The dynamics of the elements of total consumption of the Gross Domestic Product indicates that in the period 1996 – 1997 the gross basic capital formation has declined most strongly (by more than 20% per annum). The low investment activity was delimited by the extremely volatile economic situation in the country, which narrowed strongly the planning horizon for the companies’ activity, and by the high cost of the investment goods. In 1996 the total of consumption (-35%) and the total consumption expenses of the Government (-2.6%) strongly fell off. During this period the state budget was burdened with huge payments of interest over the state debt. In addition, the budget took over some extrinsic expenditures related to the bank crisis in the country. At the same time there were meager opportunities for external financing of the budget deficit. In 1997 a strong decline of the households’ final consumption expenses (-17.2%) was registered, because of the significant decrease of the real income in the first months of the year.
The period of stabilization of Bulgarian economy started in the second half of 1997, following the launch of the new economic policy of the Government elected in May 1997 (the basic element of this policy being the introduction of a Currency Board in the country). As early as in the second half of 1997 the registered growth rates were between 2% and 3%. The period of economic growth extended over the next two years. Thus, in 1998 the Gross Domestic Product increased by 3.5%, and the preliminary data for 1999 indicates a 2.4%.increase.
The expectations for the GDP growth to be between 4% and 5% after 1997 were higher than the actually accomplished results. The causes to that were the series of external shocks influencing the Bulgarian economy. The Asiatic crisis in the beginning of 1998 affected the Bulgarian economy by decrease in external demand and international prices of commodities which turned out to be crucial for the Bulgarian industry. The financial crisis in Russia from August 1998 had even stronger negative impact over the Bulgarian economy when some countries in the region sharply devalued their national currencies. The external demand, which was the motor of the humble economic growth in the period between 1994 - 1995, and of the growth of other Central and East European countries, was unable to contribute to the GDP growth. In fact, the growth of GDP in the last two years was generated by the increase in the domestic individual demand caused by the actual increase of the population’s income and by the higher investment demand. The latter started growing as early as the third quarter of 1998 and this is quite normal, as the investment activity is highly sensitive to any unfavorable changes in the macroeconomic situation, where upon stabilization its levels are restored with certain time lag.
The growth of the GDP was reported to be 5.2% in the first half of 2000 - the highest ever since 1990. The largest contribution to the growth in the first half of 2000 had the net export of goods and services – for the first time in the past three years, followed by the internal demand – consumption and investments. Obviously, the Bulgarian producers use successfully the favorable situation in the global economy to expand production volumes. The expectations for the whole 2000 are that the growth of GDP will not be lower than 5%.
During both 1998 and 1999 the increase of the gross basic capital formation shows extremely high rates – 32.9% and 25.3%, respectively for 1998 and 1999. In the first half of 2000 this component of the GDP preserved its high rates of growth and the gross basic capital formation increased by 14.2% against the same period of 1999. The rapid increase of investment activity stands both as an indicator for reaching economic stability in the country, and is a good basis for accomplishing improved efficiency of the Bulgarian economy in the next years.
Since the beginning of 2001 the tax and social insurance rates were decreased with view of improving the business climate within the country and facilitating further growth of the companies’ investment activity. As from the beginning of 2001 the profit tax went down from 25% to 20% for bigger companies and from 20% to 15% for small and medium-sized companies (with annual taxable profit not exceeding 50 thousand BGN). The levels of social security charges applicable to the third category of labour were reduced from 35% to 32%.
Fixing the currency rate as a result of the introduction of the Currency Board in the country played a stabilizing role for the dynamics of prices in two aspects. On one hand, this increased the opportunity for longer-term forecasts of the environment by the producers who use imported raw and input materials, and by the importers of end-users consumption goods. The confidence of economic subjects in the stability of the economic policy carried out by the Government increased. On the other hand, the external prices of tradable commodities turned out to be a factor restricting the local prices of the local producers. This became possible along with liberalization of the export trade regime. In 1998 the average annual inflation dropped to 22.3% (where in 1997 it was 1,082.3%), and in 1999 it went further down to the level of 1.8% - the lowest annual inflation for the entire period of transition to market economy. In 2000 the inflation grew above the expected levels and for the period January – November 2000 against the period January – November 1999 it is 10.3%.
The key factors, amongst other, influencing the price dynamics after the mid-1997, are:
In January 1999, by virtue of the Bulgarian National Bank Act, Bulgarian lev was fixed to the EURO at the same proportion as the German mark. Bulgarian National Bank buys at a fixed rate all currencies of the countries-members of the Euro-zone. The money supply under the conditions of a currency board increases in line with the money demand, at that keeping the stability of the interest rates. In 1999 the broad money increased in nominal value by 11.5%, which is perfectly enough for the development of economy.
Because of the deterioration of Balance of Payments from the beginning of the year and the threat that the increase in the crude oil prices could led to an increase of the deficit on the Current Account, in the first half of the year were activated the measures included in the Budget Act, through which the budget deficit was reduced from the planned 2.7% of the GDP to 1% of the GDP. In the first half of 2000 the fiscal policy was more restrictive compared to the same period of the preceding year, where the primary surplus of the consolidated budget was at the level of 9.5% of the GDP, and the cash surplus respectively 4.7%.
An increase of Bulgarian economy exports was observed in the second half of 1999, where the key factor is the growth of the external demand because of positive growth in the economies of the countries within the European Union, where 50% of the Bulgarian export is to be found. The data about the development of other countries, which are important trading partners of Bulgaria are also optimistic. As from the middle of 1999 the Russia’s economy started gradually to recover after the shock devaluation of Rouble in 1998. In Bulgaria the favorable effect of the growth in the Russian economy was felt in the fourth quarter, when the exports to Russia for the first time registered increase of 8.9%. The rates of growth accelerated also in the CEFTA countries (except for Romania). The Bulgarian export to CEFTA dropped by 45.89% in the first quarter of 1999, by 24.1% in the second and by 8.7% in the third. In the fourth quarter, however, a growth of 38.9% was reported. It is still not possible to talk about sustainable tendency toward restoration of the Bulgarian exports to these countries, but its dynamics throughout the year gives grounds for positive expectations.
In the second half of 1999 Bulgarian exports to the Balkan countries showed exceptionally high rates of growth. As per data of the Bulgarian National Bank it has increased by 144.0% for the third quarter of 1999 against the same period of 1998, and the increase for the fourth quarter is by 164.3%. Partly, these high rates of growth could be explained by effecting transactions postponed because of the conflict in Serbia, but it is also worth to take into account the increased demand for import in this region after the end of the military activities.
In the period January – August 2000 the exports, expressed in USD, increased by 19.5% against the same period of 1999. In the same period the imports of the Bulgarian economy by 16.1% increased, too. The key factors contributing to the increase of the volume of import are the increase of the investment activity of the Bulgarian companies and the increase of the international prices of crude oil1. As a result of all the factors influencing the export trade of the Bulgarian economy the balance of the Balance of Trade for the period January – August 2000 was a negative 727.3 million USD, by 45.7 million USD lower than the balance for the same period of the preceding year. For the same period the deficit on the current account was 361.3 million USD and is gradually improving, as compared to the same period of 1999.
In 1996 the financial system in Bulgaria went through perhaps the most severe crisis in its recent history. The major shortcomings in the regulatory mechanism and in the supervision by the Central Bank, together with the poor management of the commercial banks, the financing of linked companies, illegal transfers of assets to other companies, the lack of hard budget restrictions for the state companies etc., resulted in quick accumulation of bad debts within the banking system. The loss of trust in the commercial banks resulted in quick withdrawal of deposits by citizens and companies. According to some sources, during the crisis of 1996 – 1997 the deposits withdrawn amounted to $ 830 million2. As a result of the crisis fifteen commercial banks were closed, their assets representing about 25% of the total assets of the banking system.
The measures undertaken for closing the insolvent commercial banks had disciplining effect for the rest. The capital adequacy of the commercial banks in Bulgaria exceeded 35% by the end of September 2000, which is an exceptionally good result and can even be interpreted as an excessive unwillingness of the commercial banks to grant loans for risk projects. Immediately before and after the introduction of the Currency board commercial banks concentrated most of all in high liquidity investments. By the end of September 2000 about 42% of the bank assets were deposits in other banks, and mostly in foreign banks.
The loan portfolio of the commercial banks, which should be the most profitable part of their assets, shrunk dramatically during the crisis of 1996 – 1997. Tightening of the legislative framework and the supervision on the part of the BNB made the commercial banks exceptionally cautious when granting new loans. It was expected that this component of the bank assets would quickly restore its share following introduction of the Currency board and the decrease of the nominal interests on loans as a result of stabilization of economy. Practically, the increase of the credit to non-governmental sector occurred with slower rates than the preliminary expectations. However, in the period 1998 – 2000 an increase of the credit to the non-financial institutions was observed. In the first half of 2000 the loans to households have increased nominally by 9.2% against the same period of 1999, and the BGN loans to private companies – by 34.2%, the foreign currency loans – by 5.9% (recalculated in USD).
With the aim to improve the liquidity of the commercial banks and to create greater incentive to increase their lending operations in July 2000 the Government decreased the level of the statutory bank reserves from 11% to 8%.
The commercial banks have not changed significantly their lending policy and still grant primarily short-term loans to cover turnover costs. The loans are granted upon availability of adequate collateral (between 110% and 150% of the amount of the loan) and mostly to customers with good reputation and creditworthiness. Regardless of the sustainable tendency of decreasing the base interest rate, the interest rates on the loans preserve their relatively high levels.
The dynamics of the deposits indicates that, though slowly, the banking system regains trust. One of the reasons for the slow return of the deposits withdrawn at the time of the banking crisis are the low, and in real terms even negative, interest rates on the deposits. Another possible reason is the low level of the real income in the country, which does not enable significant increase of the people’s savings. The change of the balances on deposits of the non-financial enterprises is influenced to great extent by their financial status and by the seasonal changes of their cash inflows and outflows.
As a result of the severe economic crisis in 1996 the real wage dropped rapidly, and during the first two months of 1997 it reached exceptionally low levels. In February 1997 the real monthly wage in the public sector dropped to about 32% of its level by the end of 1995, and the average wage in the budget sector was about 19% of its level by the end of 1995 (in real terms). During this period the change of the nominal wages followed with certain time lag the change in the overall level of prices in the country.
After introduction of the Currency Board in Bulgaria and the reduction of inflation started a period of gradual increase of the real wages. In 1998 the real average wage increased by 20.7% compared to 1997, and in 1999 by another 9.1%3 compared to 1998. The process of increase of the real wages continued also in 2000, although with lower rates. In the first half of 2000 the wages increased by 4.5% in real terms compared to the same period of 1999.
A new normative mechanism was adopted for regulating the increase of the funds paid for wages in the public sector, which linked their dynamics to the financial status of the companies and the servicing of their debts to various groups of creditors. This aimed at improving the financial discipline of the state companies. The better situation of the state budget enabled to effect significant indexing of the wages in the budget sector and bring them up to levels close to the ones from the period prior to the beginning of the economic crisis in the country, and also to reduce the difference between them and the average wages in the real sector.
The dynamics of the wages in the private sector gives grounds to conclude that private entrepreneurs have maintained strict income policy within their companies and possibly have linked closely the dynamics of the funds paid for wages with the dynamics of the productivity of labour. The objective of the Government is to apply the same principle to the changes of the income from wages in the public companies. According to data from NSI and reports of the Ministry of Labour and Social Policy, from 1999 onwards the companies more often observe the requirements of the normative framework in this area and their behaviour becomes much more closer to the one of the private employers.
2. Development of the Labour Market in the Republic of Bulgaria
During the past years Bulgaria has undertaken fundamental reforms aimed at building up civil society and market economy. Implementation of these reforms includes stabilization of the government institutions, successful completion of the programme for restructuring and liberalization of the economy, transformation of the banking system and development of the modern social sphere.
In 2000 the economic activity coefficient4 in Bulgaria accounts for 48.8%. For the men this indicator is 54.0%, and for the women 44.0%. These figures are lower by about 10 points than the respective ones observed in the EU. In Bulgaria the difference in the economic activity between genders is smaller than in the EU (in Bulgaria it is about 10 points, whereas for the EU it is 20 points).
The economic activity rate is characterized by significant deviation by geographic areas. The highest economic activity rate is reported for the Districts of Kardjali (58.0%), Smolyan (55.9%), Sofia-town (54.9%), and the lowest in Montana (40.6%), Vidin (41.8%), Sofia-district (42.5%).
During the last ten years development of the labour market in the country follows the major tendencies and processes in the development of country’s economy – restructuring of sectors and industries, privatization, liquidation of ineffective industries and activities, launching new operations/activities.
Ever since 1990 every year is reported a reduction in the overall number of the country’s population as a result of the negative natural growth and the influence of migration processes. In 1999 the average annual number of the country’s population is 8,210,624 persons. The relative share of the population in active age increases during the analyzed period and in 1999 reaches about 58.1%. This comes as a result of entry into the active population group of individuals born in the years characterized by high birth rate. In the period 1990-1999 the relative share of persons under active age goes down to 17.2% as a result of decrease of the birth rate for the country. As a result of these processes in the coming the number of people, who will enter the group of active age population years will decrease further.
For the period 1993-1999 the workforce5 decreases as a result of the influence of demographic and economic factors (except in 1997 when no changes are observed). The highest is the decrease in 1994 compared to 1993 (by -4.4%) and in 1999 compared 1998 (by -3.5%). The average number of workforce in the country in 2000 is 3,361,400 persons.
According to the data of the Labour Force Survey the key characteristics of the workforce (average annual figures for 2000) are the following:
The transition to market economy is characterized by substantial decrease in the labour force demand.
In 1999 the average annual number of employed persons in the country is 3,081,1906 persons. As compared to 1998, their number is lower by 2.3% under the influence of the processes related to the structural reform in the economy and social sphere (closure of non-profitable enterprises and activities, reduction of the number of staff in enterprises undergoing restructuring and into the budget sphere, etc.) and the insufficient investments for development of the business in the country. Compared to 1990 the number of employed persons is less by 1,006 thousand people.
Incentives to entrepreneurship and development of the private business in the country are prerequisites for the growing average annual number of employed in the private sector. Since 1997 their relative share is dominating in the overall totality of the employed. The relative share of the employed in the private sector increases by 3.8 points compared to 1998 and reaches 64.8% in 1999. The employed in the public sector continue to decrease and reach 1,085,162 persons, by 11.8% less than in 1998 and by 73.5% less than in 1990.
Observed is a sustainable tendency of increasing number of employed in the private and their decrease in the public sector. It is necessary to mention that the value of decrease of the employed in the public sector is not compensated by increase of theemployed in the private sector. This imposes the need of developing measures for stimulation of the entrepreneurship on one hand, and on the other, encouraging the employers to create jobs and introduce flexible forms of employment.
The employment rate in Bulgaria for 2000, according to the Labour Force Survey, is 40.6%. In nine Districts it is higher than the average for the country, and in the remaining nineteen - lower. The variation spread, as a difference between the highest value (District of Kardjali - 51.7%) and the lowest (District of Vidin - 28.2%) is 23.5 points.
According to the data of the Labour Force Survey the major characteristics of the employed7 (2000) are as follows:
Data about unemployment in the country are available from the administrative statistics of the NES and the Labour Force Survey of the NSI. Although these two sources cover one and the same indicators, they are not identical but complementing each other:
The National Employment Service reports the number of persons in active age registered at the Labour Offices, who declare that they are unemployed, that they are active bob-seekers and are available to start an appropriate job or to be enrolled in a course for vocational qualification.
The data form the Labour Force Survey give more broader information concerning persons who are looking for a job not only through the Labour Offices, but also by establishing direct contacts with employers, collaboration of relatives, acquaintances etc. The Labour Force Survey gives information about the job-seekers in broader age range: persons above the age of 15 years, who identify themselves as unemployed (whereas the unemployed registered at the Labour Offices are between 18 and 55 or 60 years, respectively for the women and men). With the Labour Force Survey is reported also the so-called effect “discouraged workers”, i.e. persons, who are willing to work but are not actively seeking jobs because they think it is impossible for them to find any.
In the analysis of the profile and dynamics of the unemployment have been used data of the NES.
The level of unemployment for 2000 is 18.1%, by 4.4 points higher than the one reported for the preceding year. As per the Labour Force Survey from December 2000 the level of unemployment in Bulgaria is 16.4%, where the average for the European Union is 8.1%, where the minimum value is 2.1% (Luxembourg), and the maximum 13.7% (Spain).
The pressure on the labour market, measured as a ratio between the average annual number of unemployed and the respective number of vacant jobs, in the period 1992 – 1999 is characterized by dynamic changes. The strongest is the pressure on the labour market in 1993 - 71 unemployed per one job vacancy. Most favorable is the tendency in 1996 - 26 unemployed per one job vacancy.
In 2000 for one job vacancy compete 64 persons in average. The highest is the pressure in the District of Pleven (255 unemployed per 1 job vacancy), and the lowest in Sofia - town (21 unemployed per 1 job vacancy).
In the period 1990-1999 the number of unemployed in total for the country changes first of all under the influence of the economic factors. The period till 1993 is characterized by a tendency of growing unemployment. The downward trend in the number of unemployed is observed till the middle of 1996. Further on, in 1997, 1999 and 2000 a new increase of the number of unemployed is reported (as a result of acceleration of the process of the structural reform in the country – actions, which have not been undertaken by the former governments).
In 2000 the average monthly number of unemployed is 693,481 persons, by 31.6% higher than in the same period of the preceding year. The increase of employment results from the undertaken structural reform, closing of inefficient enterprises and activities, dismissal of workers from enterprises in liquidation, of the reforms in the state administration and social security system. During the last months is observed a tendency of increasing registration at the Labour Offices of those involved in the shadow employment and/or in the domestic farmyard. This is explained with the reform of the health insurance system – receipt of vouchers for a family doctor and dentist and payment of the contributions to the health insurance bank by the municipalities for the people without income. At the same time, another factor triggering the massive registration at the Labour Offices of persons who have not yet supplied their workforce on the regional labour market is the provision in autumn of free textbooks to children from socially disadvantaged families.
According to the data from the administrative statistics of the National Employment Service, the key characteristics of the job-seekers are as follows:
As a result of the inherited structure of the regional economies and the progress of reforms in the country major differences are observed between the individual regions with regard to the demand and supply of labour force.
According to the administrative statistics of NES, the level of unemployment in Bulgaria in 2000 is lowest in the town of Sofia (5.2%), Districts of Gabrovo (11.7%) and Pernik (15.1%), and the highest – in the Districts of Targovishte (33.5), Razgrad (30.2%), Montana (28.4%), Vidin (28.1%), Smolyan (27.6%), Vratza (26.7%), Shoumen (25.7%) and Pazardjik (25.6%).
Comparison of the data from the Labour Force Survey with the ones of the Labour Offices (the administrative statistics of the NES about the registered unemployed) for 2000, indicates an existence of shadow employment in the country. This method for detection of shadow employment is used in many countries. As per data of the European commission, the size of the non-announced economy in the EU may be assessed between 7% and 16% of the GNP of the EU, to which would correspond between 7% and 19% of the total announced employment. Worrying is the fact that, analyzing the data of the last three Labour Force Surveys, it is found that the value of shadow employment in the Republic of Bulgaria increases. This is confirmed also by the fact that many people register at the Labour Offices in order to be able to get advantage of certain benefits or preferences.
In the field of employment applicable is the Unemployment Protection and Promotion of Employment Act, which is in force from 01.01.1998. The Act has been drafted in line with the EU requirements and on the basis of experience of the developed European countries. Upon execution of the rights and obligations provided for in this act no limitations or privileges shall be admitted based on race, nationality, ethnic background, origin, gender, age, religion, political preferences, membership in trade union organizations or movements, public status, property or health status. The Act settles the public relations for insurance against unemployment, the promotion and support of the employment, the vocational qualification and re-qualification, the mediation for provision of information and employment of Bulgarians abroad and of Bulgarian and foreign nationals in the Republic of Bulgaria. The Act creates conditions for the up keeping and protection of the labour market through promoting the productive and freely chosen employment.
The Ministry of Labour and Social Policy elaborates, coordinates and carries out the state policy for insurance against unemployment, promotion of the employment, vocational qualification and re-qualification of employed and unemployed and provides the protection of the national labour market. Basic principle in the work of the ministry in the process of elaboration and implementation of the employment policy is the partnership with the institutions and the non-government organizations.
A major fundamental mechanism of implementation of the state policy with regard to the labour market is the principle of social partnership, including of the tripartite principle. By virtue of the Unemployment Protection and Promotion of Employment Act under the MoLSP have been established the following bodies:
The system of the employment services in the country was established with the technical assistance of the EU member countries and it strengthens continuously. The National Employment Service carries out the endorsed policy through a network of 9 regional services, 122 local Labour Offices (1 students’ Labour Office) and 143 affiliated branches.
The Employment Services implement series of measures and programmes targeted on the unemployed persons and the employers with view of increasing the employment.
Before 1998 the active policy on the labour market used to be governed by Acts of the Council of Ministers. Since 1.01.1998 this is done with the Unemployment Protection and Promotion of Employment Act. The active policy focuses on the unemployed persons, the employers, the employed persons and the social partners aiming at creation of favorable conditions for promotion of employment and reduction of the pressure on the labour market.
Broad range of measures and programmes, provided for in the UPPEA are applied in the country, particularly in the following areas:
3. Issues of the Employment Policy
Fundamental reforms on the labour market in the past ten years brought substantial changes in the patterns of labour force demand and supply in the country. As a result, in the period 1991-1999 the supply of labour force exceeded the demand thus resulting in the formation of massive number of unemployed labour force.
Putting into effect the Programme “Bulgaria 2001” the Government undertook definitive actions for restructuring the Bulgarian economy. This process involved liquidation and privatization of a number of state-owned enterprises and discharge of many of their employees. Furthermore, in parallel to that are implemented respective actions for economic growth, increase of employment and income.
The employment policy in the country faces the following problems:
The priority actions aiming at resolving these problems will be focused to:
2001 Employment Policy
Pillar I of the Employment Directives of the European Commission: Improvement of the Employability
The employability (aptitude for employment) is a combination of capabilities of the individual for work, developed with the help of the system for vocational education and training and the system for employment, in line with the needs of the labour market. Improvement of the population’s employability is one of the key factors for increasing the level of employment and reducing the unemployment. It is a result, both of the state policies carried out aiming at promotion of employment and vocational qualification, and of the individual motivation and possibilities for employment.
The new technologies and the changing organization of labour are a prerequisite for the mismatch between the vocational qualification profile of the labour force and the requirements for quality of the vocational knowledge and skills:
The current status of the labour market and the existing characteristics of the labour force outline the necessity to focus both the actions of the state and of the social partners, in 2001 too, towards eliminating the negative factors related to the qualitative characteristics and labour realization of the workforce.
Therefore, in 2001 the priority actions for improvement of employability shall be oriented to:
From this perspective and in compliance with the requirements evolving from the Euro-integration processes, in 2001 the actions shall be focused in the following directions:
1. Fight Against Youth Unemployment
Guideline 1 of the Employment Directives of the European Commission - “Every unemployed young individual will be offered a new start prior to expiration of six months after him/her lapsing into a status of unemployment, in the form of training for qualification, work practice, job or any other measure promoting employment.”
Objective: To reduce the number and, respectively, the relative share of unemployed young people up to the age of 29 to 25% of the total number of registered unemployed at the end of 2001, and of unemployed young people up to the age of 24 to 15% in the total number of registered unemployed at the end of 2001. In 2001 20% of the persons who have passed through training for vocational qualification shall be unemployed young people.
1.1. Current status
In the period January-October 2000 the unemployed young people up to the age of 29 years represent 29.9% (as opposed to 31.4% for the period January-October 1999) of the total number of registered unemployed. The relative share of unemployed young people up to the age of 24 in the total number of unemployed is 16.7% (as opposed to 17.4% for the period January-October 1999), and among the unemployed young people up to the age of 29 years – 55.8% (as opposed to 55.3% for the period January-October 1999). Majority of these are young people with low level of education or with completed level of education, but without acquired vocation or specialty. Bearing in mind that the young people are major source of generated inflow of labour force, their employability is an important indicator for the future status of the employment.
1.2. Responsible Institutions - MoLSP, MoES, MoF, NES, MoE, MoRDPW, MoAF, MoEW, the nationally represented employers’ organizations and employees’ organizations.
1.3. Plan of the activities
1.3.1. Measures undertaken from a preceding period:
1.3.2. Newly starting activities:
1.3.3. Measures to be prepared for decision-making and execution:
Objective: Provision of opportunity to those young people who drop out from the educational system to acquire respective level of education and of appropriate vocational training with view of their future employment.
Responsible Institutions: MoLSP, NES, MoES, Inspectorates for Education, District and Municipal Administrations, NGOs.
Expected Outcomes: Creation of a system for covering young people who drop out of the secondary education system to acquire education and vocational qualification; at least 4 forms of training for the young drop-outs (full-time, part-time, self-learning, distance learning) to obtain at least initial level of education and first level of vocational qualification.
2. Fight Against Long-Term Unemployment
Guideline 2 of the Employment Directives of the European Commission – “A new start will be offered to the unemployed prior to expiration of twelve months after their lapsing into a status of unemployment, in the form of a job, training for vocational qualification, work practice or any other measure improving the employability, or more generally, in a combination with individual vocational orientation.”
Objective: In 2001 to ensure reduction of the number of long-term unemployed for more than 1 year by 6%, and of those above the age of 45 years – by 5%. In pursuit of this objective to provide training for additional qualification, for re-qualification or for development of a small business and entrepreneurship to 5% of the registered unemployed with period of the unemployment exceeding 1 year.
2.1. Current status
For the months 1-10 of 2000 the long-term unemployed represent 36.3% (as opposed to 31.8% for the months 1-10 of 1999) of the total number of unemployed persons. These are mainly persons without or with low level of education, whose vocational qualification is inadequate to the contemporary labour market and/or lack of key knowledge and skills, as well as persons who are not motivated for employment and/or vocational training. Significant proportion of them resides in regions characterized by intensive processes of restructuring of the economy and termination of operation of satellite enterprises and workshops, and in small settlements located far away from the industrial and cultural centers. 69.8% of the long-term unemployed (as opposed to 71.0% for the months 1-10 of 1999) have basic and lower education, 71.1% (as opposed to 72.1 for the months 1-10 of 1999) do not have any specialty and/or vocation, and 25.8% (as opposed to 27.1% for the months 1-10 of 1999) are up to the age of 29 years.
2.2. Responsible Institutions: MoLSP, NES, MoE, MoES, nationally represented employers’ organizations and employees’ organizations, District and Municipal Administrations.
2.3. Plan of the activities
The activities are split in two major directions – preventive (front-running) – for persons in risk of unemployment and for unemployed prior to expiration of 12 months after their registration at the Labour Offices; and current – for long-term unemployed.
Special attention will be given to the preventive vocational training, which shall be effected as provision of additional qualification – upgrading and supplementing the existing vocational qualification, as well as for acquisition of key knowledge and skills.
2.3.1. Measures undertaken from a preceding period:
b) Extending the activity:
2.3.2. Newly starting activities:
3. Transition from Passive to Active Measures
Guideline 3 of the Employment Directives of the European Commission – “To pursue substantial increase of the number of persons benefiting from active measures for improvement of their employability.”
Objective: To intensify those activities aimed at fighting against unemployment, which have active nature, and facilitate job creation and recruitment of free workforce. Gradually the active measures shall gain predominant relative share as compared to the passive ones. By the end of 2001 the relative share of the expenditures for active measures shall reach 40% of the total amount of the funds disbursed for protection against unemployment and promotion of employment. These funds shall be directed mainly to the design and implementation of programmes for increasing the individual employability of persons who receive social benefits because of low quality characteristics of their own labour force.
3.1. Current status
In the profile of total resources disbursed from “VTU” Fund the largest relative share is that of the expenditures for passive measures (cash unemployment benefits, part-time hours of work, social insurance contributions, etc. according to the UPPEA) – 67,9%. However, an intensive ongoing activity is observed for application of active measures aimed at reduction of unemployment. Some of the actions of the currently implemented state policy are focused on vocational training of unemployed and employed persons and on effecting the transition from passive to active measures. For example, the UPPEA provides incentives for starting own business activity independently or with other persons. For this purpose the persons are granted, in the form of lump sum, the cash unemployment benefits they are entitled to upon an approved project for starting a business. Along with that, the persons are provided with other auxiliary services too. The National Programme “From Social Welfare to Employment” guarantees savings of the municipal budgets for social assistance through application of active policy measures for inclusion of clients of the Social Assistance Centers and unemployed registered at the Labour Offices into training for vocational qualification and for provision of employment.
3.2. Responsible Institutions: MoLSP, NES, MoES, nationally represented employers’ organizations and employees’ organizations, District and Municipal Administrations.
3.3. Plan of the activities
3.3.1. Measures undertaken from a preceding period:
4. Strengthening the System for Benefits and Taxation Towards Increasing the Employability
Guideline 4 of the Employment Directives of the European Commission – “Will revise and re-focus the systems for benefits and taxation (wherever necessary) and will provide incentives to unemployed when seeking and starting a job, or measures for increasing their employability, and for the employers – incentives for job creation. In addition, it is very important to develop measures such as preserving the work capacity, lifelong learning and other mobile procedures, so that to ensure active participation of the higher-aged workers in the work life.”
4.1. Current status
The system for granting benefits is major source of income to the unemployed with view of preserving and developing their work force.
Entitled to cash unemployment benefits are all the unemployed who have worked under an employment contract or a contract for management or control for at least 9 months during the last 15 calendar months prior to its termination. The benefits level and period of payment are differentiated according to the grounds for termination of the respective contract. Upon initiative of the person or a disciplinary dismissal a period of 4 months is fixed and the level of benefit is 80% of the minimum wage. Under any other grounds for termination of the contract the period is linked to the period of employment (but not more than 12 months), and the level is 60% of the average monthly labour remuneration for the past 9 months. In case of occurrence of a new entitlement to cash benefits within ?-years period after the preceding entitlement, the benefit is set at the level of 80% of the minimum wage for a period of 4 months. The period of payment of cash benefits is considered as period of employment and the persons are insured for pension and health insurance at the account of “VTU” Fund.
The unemployment benefits are 4 types and are payable under certain conditions.
The payment of one-off cash and supplementary benefits under the procedure and conditions of the Council of Ministers’ Decree ?100/1998 continued till July 2000. The supplementary benefits were granted with the aim to stimulate and support the unemployed persons in starting and performing of business activity, providing them with an opportunity to participate in commercial partnerships (companies) or to start work under an employment contract.
Taking into account the specific stages of the on-going structural reform and the Updated Plan for action and preparation of the coal-mining sub-sector for accelerated privatization in the period 2000-2001, the Council of Ministers adopted a Decree ?141. The Decree settles the procedure and conditions for payment of one-off cash benefits and provision of supplementary cash to the former employees of made redundant by sole-proprietor commercial companies with state property from this sub-sector. Supplementary cash benefits are granted for acquisition of additional or new qualification, for employment under legal employment relationship, or for starting and performance of business activity independently or with other persons.
The taxation system still does not contain sufficiently realistically justified norms for support to the employability. It is necessary to undertake measures towards increasing the stimulating norms in connection with enhancing the employability, both in terms of incentives for creation of appropriate jobs, and of stimulating the employers to develop the capacity of their personnel.
4.2. Responsible Institutions: MoF, MoLSP, NES, nationally represented employers’ organizations and employees’ organizations, District and Municipal Administrations.
4.3. Plan of the activities
4.3.1. Measures undertaken from a preceding period:
5. Capacity Building Through Acquisition of Period of Employment and/or Qualificaqtion
Guideline 5 of the Employment Directives of the European Commission – The social partners, within the scope of their powers and obligations, shall conclude, within shortest possible terms, agreements for enhancing the opportunities for qualification, acquisition of period of employment or other measures promoting employability.
Objective: Generating possibilities for up-bringing the labour force quality and competence through enhancing the knowledge and developing skills, by means of additional qualification and consolidation/upgrading of the existing one with experience being gained immediately on the job through a period of employment or practice. This measure should cover basically the young people without any period of employment or experience, or without vocational qualification or with qualification that does not correspond to the market needs and the requirements of the employers.
5.1. Current status
Employers prefer to hire workforce that is incorporated immediately into the production process. At this stage, because of financial and organizational reasons, the employers refrain from investing in additional training of staff. This fact imposes the need for application of special actions for provision of employment, through incentives to the employers. The UPPEA has several provisions that encourage the employers in this field – Articles 58-63.
5.2. Responsible Institutions: MoLSP, MoES, NES, MoF, MoE, nationally represented employers’ organizations and employees’ organizations.
5.3. Plan of the activities
5.3.1. Measures undertaken from a preceding period:
5.3.2. Measures to be prepared for decision-making and execution:
6. Development of the Opportunities for Life-Long Learning
Guideline 6 of the Employment Directives of the European Commission – With view of upgrading the skills and facilitating the labour force adaptability, the countries-members and the social partners will focus on developing opportunities for life-long learning, particularly in the field of information technologies and communications. The appropriate measures should be accessible also to workers of higher age.
Objective: In line with the European tendencies and directions for development of employment and for provision of continual possibility for maintaining and improving the status of individual qualification, to provide opportunities for continuing training and for learning, both to unemployed and to employed persons. By the end of 2001 to guarantee inclusion into various forms of continuing training of more than 10% of the unemployed and of more than 7% of the employed persons.
6.1. Current status
In Bulgaria the life-long learning has traditions and is effected in two major directions – training of employed persons in accordance to the conditions of the Labour Code and on the basis of social dialogue, and training of unemployed persons, organized by NES in accordance to the stipulations of the UPPEA. The training of employed is a task of the employers and of the individuals themselves. In the period of transition, under the conditions of economy restructuring and privatization of enterprises, this direction of continuing training is greatly stagnated. Employers train their staff almost only in the cases of introducing new equipment and technologies or organize just the required mandatory training in relation to the occupational safety.
To the opposite, a tendency of increased individual interest in training is observed. Major problem in this case however is the quality of training offered by the providers of adults training, where many of the providers are not licensed because of former absence of regulatory basis. The stipulations of the VET Act and the establishment of National Agency for Vocational Education and Training (NAVET) give an opportunity to introduce, in nearest future, adequate requirements to the quality of training provided by training companies and organizations. Training of unemployed is adequately and regularly organized by NES, in compliance to the UPPEA.
The training delivered is for initial vocational qualification, additional qualification and re-qualification. As a result of the legal provision that the training shall be carried out only for a particular job, in the last years the number of trained unemployed dropped sharply – 2.4% of the total number of unemployed in 1999. This restrictive provision has already been revoked and this brought positive effect towards increasing the number of persons trained in various vocations and subjects.
VET Act legally ensures free access to qualification at the vocational schools and vocational gymnasiums, upon order from physical and/or legal persons.
6.2. Responsible Institutions: MoLSP, MoES, NES, NAVET, nationally represented employers’ organizations and employees’ organizations, MoE, MoC, MoRDPW, District and Municipal Administrations, NGOs.
6.3. Plan of the activities
6.3.1. Measures undertaken from a preceding period:
6.3.2. Investment programmes:
6.3.3. Newly starting activities:
7. Development of the Educational Systems to Facilitate Transition from School to Work
Guideline 7 of the Employment Directives of the European Commission – “Improving the quality of educational systems with the objective to reduce significantly the number of young people who leave school early.”
Objective: To achieve such level of school education, on the basis of its matching to the actual needs and requirements of the labour and public life, that will ensure non-distressful transition from school to work. On this basis the target is by the end of 2001 to provide employment within 6 months after graduation to 30% of the same-year graduates. Also, by the end of 2001 to provide apprenticeship for 10% of the graduates.
7.1. Current status
The educational system reform focuses primarily on provision of vocational training in line with the labour market needs and oriented towards increasing the employability. The measures implemented for the purpose of developing mobile, adaptive vocational education system are the following: adoption of VET Act, establishment of a National Agency for VET, elaboration of state educational standards. Designed are curricula and syllabi with modules for economic knowledge and entrepreneurship, marketing and management, company law, business-communications, information technologies, foreign language training. The training content includes learning of key skills, skills for teamwork, for resolving critical situations, for decision-making, business communications, corporate culture.
7.2. Responsible Institutions: MoES, NAVET, MoLSP, NES, nationally represented employers’ organizations and employees’ organizations, Municipal Administrations.
7.3. Plan of the activities
7.3.1. Measures undertaken from a preceding period:
a) Continuing:
7.3.2. Measures to be prepared for decision-making and execution:
8. Provision of Better Opportunities for Adaptation of Young People to Technological and Economic Changes - Skills Relative to the Labour Market
Guideline 8 of the Employment Directives of the European Commission – “Provision to the young people of better opportunities for adaptation to technological and economic changes and giving them a chance to acquire skills relevant to the labour market (apprenticeship)”
Objective: Accomplishment of higher relative share of skills related to the new technologies, higher relative share of the key knowledge and skills, higher level of adaptability of the labour force to changes in the labour conditions and requirements of the labour market.
8.1. Current status
The share of unemployed young people up to the age of 29 years for January – October 2000 is 29.9%, where 55.8% are young people up to the age of 24 years. Majority of these is unemployed young people without vocational qualification and with low level of education. The basic reason for this situation is the low quality and inadequacy of the knowledge and skills acquired within the educational system, together with the insufficient linkage of the continuing (continuous) training after completion of certain educational level with the present and future labour market needs. Practically, no out-running and preventive training is carried out, the reasons for that most often being the insufficient economic stability of the enterprises; shortage of resources of the training institutions; absence of real incentives for the employers to arrange training of their staff; inadequate information about the labour market needs. Other key reasons are that the young people already working are employed on jobs with low level of quality of the equipment, low requirements to the product’s quality (which in fact de-qualifies them), along with insufficient information about the requirements of the modern production and directions of production in terms of new technologies, science and technology achievements.
8.2. Responsible Institutions: MoES, MoLSP, NAVET, NES, SAYS, branch ministries and agencies, social partners.
8.3. Plan of the activities
8.3.1. Measures undertaken from a preceding period:
8.3.2. Newly starting activities:
9. Promoting Development of a Labour Market Open to All
Guideline 9 of the Employment Directives of the European Commission – “Paying special attention to the needs of disabled, ethnic minorities and other disadvantaged groups and developing appropriate forms of preventive and active policy to promote their inclusion on the labour market.”
Objective: Increasing the aptitude and opportunities for employment of groups with disadvantaged status on the labour market.
9.1. Current status
The highest level of guaranteeing the human rights, including the right of equal access to the labour market, characterizes our national legislation. In an environment with substantial imbalance between the demand and supply of labour force and high level of unemployment there are limited opportunities for the persons with lower education, without qualification, without labour skills etc. Therefore, it is essential to undertake actions for increasing their competitiveness by ensuring good employability on the basis of vocational training, vocational orientation and motivation, period of employment, labour mobility, etc. Practically, the identified groups of labour force with disadvantaged status on the labour market are: long-term unemployed; young people who have completed an educational level with no vocational qualification; women de-qualified after continuous non-employment because of maternity; members of certain ethnic groups without any or with low level of education and vocational qualification, with inadequate motivation for training and employment; persons with permanently reduced capacity to work. Their total number exceeds 40% of the unemployed. It must be kept in mind that the individual groups mix up, both in terms of total number, and in terms of their allocation by individual measures for employment, including measures for increasing their employability.
9.2. Responsible Institutions: MoLSP, MoES, NES, MoE, MoH, MoAF, MoF, District and Municipal Administrations, nationally represented employers’ organizations and employees’ organizations, NGOs.
9.3. Plan of the activities
9.3.1. Measures undertaken from a preceding period:
9.3.2. Investment programmes –
9.3.3. Newly starting activities:
9.3.4. Measures to be prepared for decision-making and execution:
Pillar II of the Directives of the European Strategy for Employment - Entrepreneurship Development
10. Facilitating the Starting and Development of the Business by Reducing the Expenditures and Providing Additional Incentives for Hiring Workers
Guideline 10 of the Directives of the European Strategy for Employment – Facilitating the starting and development of the business through reduction of expenditures and additional incentives for hiring workers
Objective: Creation of regulatory basis, which enables reduction of costs and administrative burdens for the businesses, focusing in particular to small and medium enterprises (SMEs), with clearly stated and classified by priority incentives for the newly starting SMEs and for businesses expanding their operations and market positions, thus creating conditions for hiring new workers and self-employment.
10.1. Current status
In the focus of Government’s attention stands the improvement of the environment for development of the small-scale business,a long with the promotion of its growth and competitiveness. A National Strategy for development of small and medium enterprises was elaborated and is currently in a process of implementation. Also, the Small and Medium Enterprises Act was adopted, settling the public relations related to carrying out the government policy for promotion of the establishment and development of small and medium enterprises. The Act aims at creation of favorable institutional, regulatory and financial environment for the foundation and growth of small business and entrepreneurship.
In the period of country’s transition to market economy and as a result of the structural reform acceleration a tendency is observed for reduction of the number of employed.
Downward trend in employment was predetermined by the acceleration of the structural reform in the country, where the key element of the reform was the privatization or liquidation of state-o