The financial situation in the country is critical, Finance Minister Temenuzhka Petkova says. Which means that the good news – the slowing inflation rate (on an annual basis) and Bulgaria’s full accession to the Schengen area at the beginning of the year– seems to be receding to the background in view of the consequences of the political crisis which delayed the voting of the state budget for 2025. The newly formed government scrapped the draft budget drawn up by the previous, caretaker cabinet, and declared it would be submitting its own proposal by 14 February. Meanwhile, it is to announce what remedial measures it is going to put in place with regard to the state treasury.

The budget, the level of costs and the incomes policy have been the subject of heated wrangling between the ruling coalition and the opposition in the country. The trade unionists from Podkrepa Confederation of Labour say they are worried by the fact “there is no clarity regarding mandatory social security relations and the parameters set down. There is no clarity regarding incomes policy either.” The date set down (14 February) for submitting the draft of a budget for the year will likely “engender tensions, there will not be enough time to look into the draft thoroughly or to draw up reasoned opinions, hence there will be room for mistakes”, they say.

The experts from the other major trade union in the country – the Confederation of Independent Trade Unions in Bulgaria, CITUB – are demanding an incomes policy that will include a minimum 10% rise of salaries, and guarantees of a pay rise rate in the mid-term that would take working conditions in Bulgaria closer to the working conditions in the other EU countries. They want the budget to be discussed and voted as soon as is possible – 6-7 weeks, and the reason for this is that the end of March will see the expiry of the current revenue and expenditure act for 2024.

“This automatically leads to a stagnation of expenditure policies. There is significant strain in a multitude of systems and it is essential that the cabinet use common sense – and provide for the optimal increase in salaries,” says CITUB president Plamen Dimitrov.  

“There is so little time but, at the end of the day, what matters are policies. The incomes policy can be guaranteed, with an increase in salaries of at least 10% for everyone – to be put in place retroactively as of 1 January. Because the minimum salary has gone up by 15% since the beginning of the year, salaries in the private sector - by 13-14% - nominally every year in the past three years. But the increase in the public sector has been 8-12%, i.e. it has been lagging behind. So that if we don’t have a rise in salaries of no less than 10%, the public sector will become very uncompetitive, and nobody would want to work there. And what we want is high quality services – in education, in healthcare, in social services. The government has the obligation of maintaining the level of payment for the people it is paying, in compliance with the labour market, thus guaranteeing that the people employed in the public sector will have the motivation to meet the expectations of the public as regards the quality of the services offered.”

The Confederation of Independent Trade Unions in Bulgaria has registered a 4.2% rise in prices in Bulgaria over the past year, based on their regular study of the consumer prices of 20 basic and essential goods.

One of the debates in the country since the beginning of the year has focused on the price of bread. After the zero VAT rate on bread was scrapped – it was introduced as an economic measure during the pandemic – and the previous 20% VAT rate was reinstated as of 1 January, the price of bread has gone up significantly in most towns in Bulgaria.

“Saying that reducing VAT on certain goods and services brings down the prices is absolutely untrue. We, trade unionists have always been against reducing VAT rates because that means less money flowing into the budget, money that should go to help individual producers and commodities, to the social sphere, to healthcare and education.”

Bulgaria continues to have the lowest wages out of all other countries members of the EU. At the same time the consumer prices of certain essential commodities and utilities are highest, even when compared to countries close to Bulgaria. What is worrying is that the people in Bulgaria who are poorest will grow poorer, and faster than before, the experts at the CITUB say. The people affected most are people earning the minimum salary as well as retirees living on an average or a small pension. The trade union organization has calculated that the subsistence income for a three-member household (two parents and one child) should be no less than 2,650 Leva (approximately EUR 1,355) per month. And that is not possible if the employed household members are working for a sum close to the minimum salary or 1,077 Leva (EUT 550) per month. Life is not easy for pensioners receiving a monthly pension of around 800 Leva (EUR 409) either.

All prices have gone up since the beginning of the year, says Anka Stoyanova, a pensioner from Sofia:

“What I am seeing is that everything I bought at the market today is more expensive than last year. My pension is not very big, it is average, and for now I am managing to pay the utilities, I am not relying on my children for now. I believe that the blame for what is happening in the country rests with politicians. The young should be better off, they should be paid more, after all they have children to look after and that costs more.”

Inflation is real, prices are going up, says Tanya Vassileva, who works at one of the major markets in Sofia.

“The money I earn when I sell a week’s produce is not enough to restock. People are definitely worried, but I hope that now there is a government people will calm down.”

Translated and posted by Milena Daynova
Photos: BTA, BGNES, BNR-Vidin