Pay increases are attracting intense interest among social partners and the public, with employers opposing the government’s decision to increase the statutory minimum wage in 2018. The largest trade union in Bulgaria, the CITUB, organised a major national protest in October in support of pay increases, demanding urgent political action to protect labour rights.
Although the National Council for Tripartite Cooperation (NCTC) had discussed the state social security budget for 2018, the planned administrative increase in minimum insurance thresholds and the lack of a transparent mechanism for defining the statutory monthly minimum wage meant that the employer organisations did not support it. Under the budget, the minimum insurance thresholds or minimum insurance income will increase by 3.9%, and the minimum wage will increase by more than 10% from BGN 460 (€234 as of 22 November 2017) to BGN 510 (€260) from 1 January 2018. This means that workers in more occupations will have an income that is below the statutory one.
In 2017, as a result of freezing minimum insurance incomes (PDF), 363 out of 729 minimum thresholds for different economic activities are at the level of the statutory minimum wage, which in many cases makes the insurance thresholds irrelevant. In many sectors, however, the minimum insurance thresholds act as a minimum wage, which is negotiated at sectoral level between employers and trade unions. In cases where there is no agreement, the Minister of Labour and Social Policy decides whether to implement an administrative increase – as in the current case. One of the arguments of employers against this is that an increase in the social security burden on unskilled and low-paid workers could lead to an extension of the grey economy in Bulgaria.
In addition to the increase in the statutory minimum wage for 2018, the government is planning to increase it over the next two years to reach BGN 610 (€310) in 2020. The trade unions, however, are continuing to demand pay increases and the protection of the current labour rights as part of a long-running debate about labour rights. Despite this, the state budget for 2018 was approved by the government on 30 October 2017, and was due to be accepted by the Parliament in November.
During the social partners’ discussions on the state budget for 2018, the largest trade union confederation – the Confederation of Independent Trade Unions in Bulgaria (CITUB) – organised a national protest for pay increases on 27 October 2017 under the banner of ‘Income, Rights, Dignity’. More than 10,000 workers from all economic sectors protested in front of the Council of Ministers. The national protest delivered the Declaration of Working Bulgaria, addressed to the government and employers, calling for action on various key topics involving labour rights.
According to the declaration, attacks against workers’ rights have become routine. It claimed that the employers had previously wanted only to drop seniority pay, now they wanted to remove all additional payments, minimum insurance thresholds and more. The declaration noted that, in developed economies in Europe, working conditions and additional payments are usually negotiated between trade unions and employers, but in Bulgaria, businesses refuse to negotiate – disrupting tripartite dialogue at all levels. It also pointed out that sustainable economic growth cannot happen with a ‘working poor’ labour force, and that social and economic inequalities will continue to grow.
The protesters demanded urgent and decisive measures to:
The CITUB national protest demanded reforms from the government such as an income policy that would achieve 60% of the average European gross domestic product, monthly income levels of at least BGN 800 (€408), and an average monthly wage of BGN 1,700 (€866) by 2022. In addition, the CITUB wanted the minimum wage to provide normal living support, with differentiated amounts paid according to an employee’s level of educational attainment – for example, at least BGN 700 (€357) per month for university graduates at the start of their career. In addition, the protesters insisted that seniority pay should be preserved, as well as the current additional remuneration with annual increases in line with the growth in average pay.
The declaration called on employers to:
The protesters also insisted that the employers needed to understand that state requirements for order and transparency are not ‘administrative burdens’, but part of democracy and legality.
The Minister of Labour and Social Policy, Biser Petkov, has stated that increasing incomes is one of the government’s priorities, pointing out some positive actions such as the increase in the statutory minimum wage in 2018. The CITUB warned that protesters will call for further strikes if their demands remain unheard.
In August 2017, the Minister warned that if the employer organisations refused to take part in discussions on the thresholds, the state authority would take an administrative decision. The trade unions have gained support from the government for a pay increase, but not from the employers. The employers did not react to the national protest, merely repeating their arguments against the increase in insurance thresholds and the statutory minimum wage. The employers are demanding a change in the mechanism for deciding the minimum wage and the removal of insurance thresholds.
The deterioration in communication between the trade unions and employers has made it difficult to reach a common position at the NCTC on wage increases and the preservation of labour rights in the state budget for 2018. The proposed budget received support from three out of five employer organisations: the part concerned with health insurance was supported by two of the employer organisations, but none supported the part concerned with social security. Employer organisations such as the Bulgarian Industrial Association (BIA) do not support the Social Security Act for 2018 because of what they called unjustified increases in the minimum social security thresholds for jobs and economic activities, and in the statutory minimum wage in the absence of a transparent mechanism and criteria for defining it. Tension and demands for wage increases also exist in other economic sectors, for example the security sector, while the convergence of positions with the government has not yet been achieved.