PM Boyko Borissov and trade unions were barely aware of the storm of public reactions and quakes that they were to cause, when they contracted the main parameters of the pension reform in the cold winter afternoon of last Sunday. Bulgaria has been a boiling cauldron of explanations, accusations, threats and excuses ever since. Meetings, declarations, statements and ultimatums are shaking the society. The issue has quickly turned from social into a political one and some observers have even started to mention the falling apart of the governing coalition.

What did actually inflame passions, exacerbating political relations to such a degree and causing the outrage of business?

There are two main things about the reforms just formulated. The first one is related to yet another temporary suspension of the retirement system reform, adopted during the rule of the first cabinet of Boyko Borissov. Its initial version envisaged gradual equalization of retirement age for men and women, increasing it by 4 months each year, until it reaches 65 years of age. Now it is 60 years and 8 months for women and 63 years and 8 months for men. The reform was temporarily frozen by the coalitional center-leftist government with the argument that the not so large life expectancy of the Bulgarians (on what’s average for Europe) should be taken into consideration, along with poor labor and life conditions. The ice age should have lasted by the end of this year and the schedule envisaged should have been restored as of 2015. However, pressed by trade unions, the second Borissov cabinet agreed last Sunday to continue the pause over the next year as well, when an overall package of pension reforms is to be contracted. “This is not good news,” President Rossen Plevneliev commented.

The second reason for the stormy reactions against the authorities’ social policy is the proposal of Finance Minister Vladislav Goranov the citizens to be given the right to choose whether to pay installments for a second mandatory pension in private universal pension funds, or to give the money to the National Social Security Institute. Until now the so-called second pillar of the retirement system was based only on those private funds and over EUR 3.5 bln. got accumulated there. Officially the new idea is explained with the good intention for “a greater choice and more democracy to be provided to people” and that is not a nationalization of the private retirement social security system, as expert and business circles claimed.

Both changes in the retirement model envisaged and contracted were not missed by business, as its interests were directly affected. Economy needs qualified manpower and these are people with longer experience, as young and educated ones leave the country on a large scale – that is how employers explain their will for continuing of the retirement age increase. The decision for the inclusion of the state social security system as a player on the retirement security market, expropriating the enormous resource of EUR 3.5 bln handicaps private funds, which are threatened by a large-scale reflux of clients and a bankruptcy of their business. This is the main reasoning of employers against the second important decision of the government for a change of the retirement system.

“Even smaller changes in the social sphere should be made after really serious discussions and careful judgment,” former Social Minister Ivan Neikov commented. Most experts defend the same stance – that the reforms are urgent and not well comprehended. The rightist Reformist Bloc stated firmly that it couldn’t accept this “dangerous idea”, as it actually expressed a leftist and populist policy. We will see maybe as early as tomorrow, at the parliamentary vote of the new pension reforms whether the fragile parliamentary coalition will fall apart. One should also bear in mind the fact that PM Borissov is very sensitive towards public opinion and sometimes tends to act spontaneously and in the last minute. So, observers say the controversial decisions might be withdrawn at 11:55.

English version: Zhivko Stanchev