Main Characteristics of Employment in Bulgaria During the Transition Period

Prof. Dimiter Shopov, DSc

In the economic terminology,employment is associated with the economic realization of thelabour force, or, more precisely, with the extent to which thelabour force participates in the social work process, in the production of goods and services for the market. In accordance with the economic logic, a natural priority of every contemporary state is to develop policies, and, if needed, plans and programs, contributing to the attainment of full, effective and freely chosen employment, as an integral part of its economic and social policy. [1, I,3-4].

The role of the state in reaching full employment follows directly fromthe recognition of labour as basic human right[1] and should be considered as a means of its fulfillment. [1, I, 1].

The contribution of the state to reachingeffective employment stems fromthe necessity to maintain a stable rate of economic growth, a high rate of employment, as well as to provide a salary, sufficient to give workers and employees the opportunity to maintain a decent living standard. [4, paragraph 4, 1]

The contribution of the state to the maintenance of freely chosen type of employment follows most of all from the free and voluntary character of contemporary work – an expression of democracy in labour relations of the right of the free citizens to freely chose their employment in accordance to their training and conceptionswith their needs and interests[2] .

The employment of the labour force in our country over the years of transition to market economy has several basic characteristics.

The first basic characteristic of employment in our country, during the years of transition to market economy, isthe significant decrease of the number of persons employed[3]. While in 1990, the average yearly number of persons employed was 4096,8 thousand, in 2003 this number fell to 3020,6 thousand [9, 96], which is a decrease of 1076,2 thousand, i.e. of 26,3%.

The most dramatic drop in employment has been registered in 1991 and 1992, when the number of persons employed fellrespectively by 532,8 thousand and 823,1 thousand persons compared to the number of persons employed in 1990, i.e. by 13% and 8,1%. During the period 1994-1996, a more steady development of the number of persons employed was reported, but in the subsequent years the decrease continued, so that in 2001 the number of persons employedhas reached 2968,0 thousand persons, or1128,8 thousand or 27,7% less than the respective number in 1990.

There are several fundamental reasons for the decrease of employment levels during the period in question:

  • Unfavorable demographic trends – drop in the birth-rate, aging of population, higher mortality in general and particularly for productive population etc.;
  • Higher emigration – there is no national statistical data on this issue. Nevertheless, statistical data gathered by some organization demonstrates that the number of people having left the country without returning for more than a year is between 350 and 700 thousand persons. Even without any special analysis of these data it is logical to conclude that the emigration process is increasing the downward trend in the active population numbers, and, therefore the number of persons employed as well.
  • The bankruptcy of the economic community of the countries of Central and Eastern Europe and the consequent crisis of the national economy, the decrease of internal consumption , of exportsetc.

A second fundamental characteristic of employment in our country during the years of transition to market economy is the significant decrease of the number of persons employed in the public sector of the economy and the huge increase of the number of persons employed in the private sector. As a result of the restructuring of property in our country, the number of persons employed in the public sector of the national economy, has decreased from 3555,1 thousand in 1990 to 782, 8 thousand in 2003, which is a difference of 3072,3 thousand persons, i.e. by 79,5%. At the same time, the number of persons employed in the private sector of the national economy has increased during this period from 241,7 thousand to 2237,9 thousand persons, which is an increase of 1996,6 thousand persons, or by826,1% [calculated on 9, 111-113]. It is worth mentioning that the number of persons employed in the public sector of the national economy has decreased in greater numbers than the number of employed persons in the private sector of the national economy has increased. Therefore, the private sector has not been able to absorb 1075,7 thousand persons from the 3072,3 thousand persons that have lost their jobs in the public sectorduring this period.

The third basic characteristic of employment in our country during the years of transition to market economy is the restructuring of the of persons employed in the different sectors of the national economy -agriculture and forestry, industry, and services. During the considered period [according to 9, 100 - 113]:

*the number of persons employed in agriculture and forestry has stayed roughly the same (757,5 thousand in 1990 and 758,5 thousand in 2003), but their relativesharegrew from 18,5% in 1990 to 25,1% in 2003;

*the number of persons employed in industry decreased by 997,3 thousand persons, or by 54,4%, and their relative sharein the overall number of persons employed of the national economy also decreased significantly – from 44,8% in 1990 to 27,7 % in 2003.

*the number of persons employed in services in 2003 droppedby 79,3 thousand compared to their number in 1990, but the relativeshareof this group of persons employed of the national economy has increased from 36,7% in 1990 to 47,2% in 2003.

The fourth basic characteristic of employment in our country in the years of transition to market economy is the relatively low efficiency of employment[4]. This is indicated, among other factors, by the low level and the unsatisfactory dynamics of the Gross Domestic Product per capita. According to data of the National Statistical Institute [10,223; 11,204;12,298], the Gross Domestic Product per capita in our country in US dollars, in prices and exchange rate leva/US dollar for the respective year was 1922 US dollars in 1990, then it was 2538 US dollarsin 2003, or the growth rate is only 8,1% for the period of 14 years. At the same time, Austria has a Gross Domestic Product per capita of 31375US dollars , Belgium – 29107US dollars , Great Britain -30208US dollars , Germany- 29113US dollars , Greece - 15 649US dollars, Denmark - 39 410US dollars , Ireland – 38 477US dollars , Spain – 20 027US dollars, Italy – 25 545US dollars, Luxembourg - 59 735US dollars, Nederland – 31 601US dollars, Portugal – 14 049 US dollars, Finland - 30| 846US dollars , France – 29005US dollars , Sweden – 33 668US dollars.

If we compare the average Gross Domestic Product per capita in 2003 in the countries of the European Union of 15(27554 US dollars ) with the same indicator for Bulgaria, same year (2 538) we will find out that the efficiency of employmentin our country measured by this indicator is about 11 times lower. Moreover, the efficiency of employment in our country for the same year is 2,16 times lower than the efficiency in Poland, 2,38 times lower than in Slovakia, 1,34 lower than in Turkey, 3,22 times lower than in Hungary, 3,3 times lower than the efficiency in the Czech Republic, [calculated according to 12, 298].

An evidence of the unsatisfactory dynamics of the Gross Domestic Product per capita in our country is also the fact that after the initial collapse of the economy, which resulted in the abrupt decrease of the Gross Domestic Product of the country in the period 1990 -1994, the growth rate of the efficiency of employment has been so low that the decreased level of this indicator recovered only in 2002 – a problem, which had already been resolved in the other countries of Central and Eastern Europe in 1993-1995 .

Another confirmation of the low efficiency of employmentin our country comes from the low level of the average salary and the unfavorable changes in its purchasing power. In2003, the average monthly grosssalary was 284 leva [6, 69], and the net salary was approximately 200 leva. The social minimum per person employed for this year was estimated to be 226,96 [13, 182-183], so it is evident that the most part of the employed persons could be classified as “working poor”, i.e. they belong to the group of persons with inefficient employment. The lower purchasing power of the salary is another factor that should not be overlooked. If we take as a basis the purchasing power of the average salary in our country in 1990, the purchasing power of theaverage salary in 2003 was only 32,4% of its initial level, which meansa loss of 65,6% . [9, 83]

An important fact showing the low efficiency of employment is the low level of the average minimal salary for the country and thedecrease of its purchasing powerduring the years of transition.

The average monthly minimum salary for the country in 2003 was 110 leva. in 2005, it has been increased to 150 leva. This did not change, however, the characteristics of employment of the lowest paid workers and employees in our country in the years of transition and, in view of its present level, it is evident that all persons that have received the minimum salary in the period 1999 – 2003 and continue to receive it in 2005 can be classified in the group of the “working poor”, i.e. as persons with inefficient employment. The worsened purchasing power of the minimum salary for the country should be added to these considerations. If we accept as a basis the purchasing power of the minimum salary in 1990, then in 2003 it had already lost 69,1% of thepurchasing powerit had during the year before the beginning of the transition. [9,83]. In other words, persons receiving the average minimum salary in our country could buy in 2003 only 30,9% of the goods and services they had been able to buy with the average minimum salary in 1990.

There are other facts to be added in support of the thesis of the low efficiency of employment in our country – the low level of salary per person in the household and the lowered level of its purchasing powerduring the years of transition to market economy.

In 2003, the salary per person in the household was 742 leva per annum, i.e. 61,8 leva per month [9, 72]. Itis evident that all persons that have received this kind of income in the reported families can be classified in the group of “working poor”. Again, the lower purchasing power of the salary per person in the household has to be added to that.If we accept as a basis the purchasing power of he salary per person in the household in 1990, then in 2002 it has lost 80,4% of the purchasing powerit had in the year before the beginning of the transition. In other words,the persons in the reported households could buy in 2002 only 19,6% of the goods and services they had been able to buy in 1990 with the salary per person in the household [9, 83].

The fifth basic characteristic of employment in our country in the years of transition to market economy is the dominant relative shareof persons working full time.In2004, full time employees and workers were 91,3% of thelabour force. There is no data on significant differences in the relative shareof full-time workers by gender – 90,4% of the working men and 92,2% of the working women are employed full time. There are some more significant differences as to the relative shareof persons working full time depending on the form of property. In 2004, the full time employees in the public sector of the national economy are 97% of all employees and in the private sector they are 88,7% of thelabour force [calculated according to 14, 68 - 69].

Moreover, in the period 2001-2004 the number of persons employed full time has increased by 255,8 thousand persons or by 10,4%. Male full time employees have increased during that period by 12,9%, and females – by about 8%. The dynamics of employed persons depends on the form of property – while the number of persons employedfull time in the public sectorin 2004 had decreased to 83,4% compared to 2001, the number of persons employedfull time in the private sector had increased by 432,8 thousand persons or by 31,2% [calculated according to 14, 68- 69 and 15, 58 - 59].

Corresponding to the overwhelming relative shareof full time employment is the relatively low relativeshareof people working part-time.In 2004, those ere working part-time were 2,3% of the total number of the employed persons[5]. There are no significant differences between persons employed part-time according to gender. In 2004, 2,5% of the employed men and 3,2% of the employed women worked part-time. The differences depending on the form of property are slightly bigger –2,0% of the employed persons in the public sector work part-time and so do 3,3% of those employed in the private sector[calculated according to 14, 68 - 69].

During the period 2001-2004, there was a decrease of the relative shareof persons employed part-time. - they were 95,6%,if we take 2001 as a basis The relative shareof male full-time employees decreased to 97,8%, and the relative shareof women – full-time employees – to 93,8%. The part-time employees in the public sectorof the national economy in 2004 were down to 99,4% compared to 2001, and in the private sector- to 94,6% [calculated according to 14, 68 – 69 and 15, 58 - 59].

In relation to this basic characteristic of employment in our country during the years of transition, it is interesting to compare the data about the relative shareof the part-time employees in Bulgaria and in the countries-members of the European Union of 15 in 2003 (Table 1).

Table 1

Comparative data about the relative shareof persons working part time in the Republic of Bulgaria and in the countries-members of the European Union of 15 in 2003 [16 and 17, 66]

%

Counties / Relative shareof persons working part time, %
Bulgaria / 2.2
Austria / 20.2
Belgium / 20.5
Denmark / 21.3
Finland / 13.0
France / 16.5
Germany / 22.4
Great Britain / 25.2
Greece / 4.3
Ireland / 16. 8
Italy / 8.5
Luxembourg / 10.3[6]
Nederland / 45.0
Portugal / 11.7
Spain / 8.0
Sweden / 22.9

The data demonstrates, that the relative shareof persons working part time in the total number of persons employed in our country is several times lower (from 2to 20 times) compared to the relative shareof persons working part time in the total number of persons employed in the different countries-members of the European Union of 15.

If we compare the number of persons working part time in our country to the average number of persons working part time in the countries-members of the European Union of 15 in 2003, we will find out that the relative shareof persons working part time in the total number of persons employed in our country is 8,4 times lower (3,7 times for men and 12, 6 times for women) than the average relative shareof these persons in the countries-members of the European Union of 15 (Table 2).

Table 2

Comparative data about the relative share of persons working part time in the Republic of Bulgaria and in the countries-members of the European Union of 15 in 2003 [16 and 17, 66]

%

Indicators / Average / Men / Women
Relative shareof persons working part time in the total number of persons employed / In the European Union of15 / In Bulgaria / In the European Union of15 / In Bulgaria / In the European Union of15 / In Bulgaria
18.6 / 2.2 / 6.7 / 1.8 / 34.1 / 2.7

The sixth basic characteristic of employment in our country during the years of transition to market economy is the predominant employment of persons employed permanently. In June 2004, the persons employed permanently were 84,9% of the total number of persons employed. In the same year, 83,9% of the employed men and 85,9% of the employed women worked on a permanent contract. The examination of the data about the public and the private sectorof the national economy show that in 2004, 87,7% of the persons employed in the public sector and 83,2% of the persons employed in the private sectorworked on a permanent contract [14, 70].

The data on the dynamic of the number of persons employed on a permanent contract demonstrate a significant difference between the public and the private sector of the national economy. In 2004, the number on permanently employed people wais 212,2 thousand less than in 2001, or a decrease of about 21%. Nevertheless, during the same period the number of permanently employed persons in the private sector increased by 370,4 thousand, or by 39,4% [13, 60; 14, 70].

Corresponding to the high relative shareof persons employed on a permanent contract is the relatively low share of people employed on a temporary basis. In 2004, the persons hired temporarily were 7,4% of all employed people (7,8% for the men and 7,0% for the women); 6% in the private sector and9,7% in the public sector of the economy [14, 70].

The comparison of the data on the dynamics of persons hired on a temporary work contract for 2004 and 2001 demonstrates that the number of people that are hired temporarily because of their unwillingness to work on a permanent contract is growing at a higher rate – in 2004 they were 155,4% with 2001 as a basis; those who were willing to work permanently but could not find such an employment were, respectively, 148,4%, the number of people that are hired temporarily on a probation period has been growing at a slower pace – 122,7; the number of temporarily hired people because of their education has dropped – 81,7% [13, 60; 14, 70].

In relation to this basic characteristic of employment in our country during the considered period, it is interesting to examine the comparative dataabout the relative shareof persons working on temporary work contracts in the Republic of Bulgaria and in the countries-members of the European Union of 15.

Table 3

Comparative data about the relative shareof persons working on temporary work contracts in the Republic of Bulgaria and in the countries-members of the European Union of 15 in 2003 [16 and 17, 68]

Countries / Relative shareof persons working on temporary contracts in the total number of persons employed
Bulgaria / 5.7
Austria / 7.1
Belgium / 8.4
Denmark / 9.3
Finland / 16.3
France / 12.9
Germany / 12.2
Great Britain / 6.1
Greece / 11.0
Ireland / 5.1
Italy / 9.9
Luxembourg / 5. 0[7]
Nederland / 14.6
Portugal / 21.1
Spain / 30.6
Sweden / 15.1

The data in Table 3 shows that this indicator of ourlabour market can be compared to the labour market of Ireland, Luxembourg, Great Britain, Austria and Belgium. Inour country, however, the relative shareof persons hired on temporary work contracts is significantly lower than in Sweden (2,6 times), Finland (2,8 times), Portugal (3,7 times), Nederland (2,6 times). France (2,3 times), Spain (5,4 times) and Germany (2,1 times).

It is also interesting to look at the comparative data on the relative shareof persons working on temporary contracts in the Republic of Bulgaria and the average numbers in the countries-members of the European Union of 15 (Table 4).

Table 4

Comparative data on the relative shareof persons working on temporary contracts in the Republic of Bulgaria and in the countries-members of the European Union of 15 in 2003 [16 and 17, 68]

%

Indicators / Average / Men / Women
Relative shareof persons working on temporary contracts in the total number of persons employed / In the European Union of15 / In Bulgaria / In the European Union of15 / In Bulgaria / In the European Union of15 / In Bulgaria
12.8 / 5.7 / 11.9 / 6.1 / 31.9 / 5.3

The data in Table 4 show that on this indicator – as a total, and according to gender, the relative shareof this group of persons in our country is 2,2 times (1,9 times for men and 2,6 times for women) lower than the average in the European Union of 15.