July 2004 saw the publication of the findings of a World Bank survey of poverty in Bulgaria, which will contribute to future anti-poverty policy. Using a poverty threshold of BGN 102 (EUR 52) a month, the study finds that one in seven of the population are poor. Trade unions have criticised the poverty line used in the report as being too low, while employers see it as realistic.
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July 2004 saw the publication of the findings of a World Bank survey of poverty in Bulgaria, which will contribute to future anti-poverty policy. Using a poverty threshold of BGN 102 (EUR 52) a month, the study finds that one in seven of the population are poor. Trade unions have criticised the poverty line used in the report as being too low, while employers see it as realistic.
On 20 July 2004, the Ministry of Labour and Social Policy submitted for discussion to the social partners and other interested organisations and institutions the results of a poverty survey conducted in 2003 with financial support from the World Bank. Similar surveys were carried out in 1995, 1997 and 2001. They indicate that since 1997 there has been a tendency for poverty to decrease in Bulgaria. This is thought to result mostly from getting inflation under control after the introduction of a 'currency board' (a mechanism involving a fixed exchange rate and restrictive monetary policy) in mid-1997 and achieving annual economic growth averaging 4%-5% in the past six years.
Assessing poverty
The 2003 World Bank poverty survey involved 3,715 households across the country. The size and design of the sample, as well as the instruments and methods used, sought to maintain comparability of the results with the preceding surveys.
The expert team that analysed the survey data examined 45 definitions of the 'poverty line', which resulted from the combination of different: definitions of 'total consumption expenditure' and 'net income'; ceilings - eg 50%, 60% or two-thirds of median net income or total monthly consumption expenditure; and treatments of various household members.
The selected poverty line was 60% of median total consumption expenditure per capita, according to an OECD 'equivalent scale' (this gives the first adult household member a weight of 1.0, a second adult member a weight of 0.7 and children a weight of 0.5 each). This worked out as a threshold of BGN 102 (EUR 52) per month per equivalent person. Using this definition, the poverty rate - ie the share of the population below the poverty line - stood at 14% in 2003. There were 409,000 poor households, in which 1,113,000 people lived.
The report also uses other poverty measures: the depth of poverty; the severity of poverty; the 'coefficient of differentiation'; and the 'coefficient of polarisation'. As a whole all those indicators registered positive trends in 2003 compared with the previous survey in 2001. According to the research team, there is now a lower poverty rate, a lower rate of differentiation and polarisation in society, and less poverty depth - ie the poor in 2003 are on average less poor than those in 2001.
Poverty profiles
Using the poverty threshold identified above, the report identifies differing rates of poverty for various groups of people as follows.
In terms of ethnicity, the smallest ethnic group, Roma people, are the most affected by poverty and the largest group, ehtnic Bulgarians, are least effected - see table 1 below.
| Roma | 64.3% |
| Turkish | 23.5% |
| Bulgarian | 9.4% |
Source: World Bank survey.
With regard to different sizes and types of household, the highest levels of poverty are found among families with three or more children and among single parents - see table 2 below
| Adults without children | 9.6% |
| Two parents with one child | 10.7% |
| Two parents with two children | 14.5% |
| Two parents with three or more children | 47.9% |
| Single mother with children | 26.1% |
| Single father with children | 28.8% |
Source: World Bank survey.
The lower the educational level of the head of the household the more at risk of poverty is the household - see table 3 below.
| No education | 45.6% |
| Primary education | 20.3% |
| Secondary education | 8.1% |
| Special secondary education | 4.7% |
| University education | 3.6% |
Source: World Bank survey.
Unemployed people and pensioners are, unsurprisingly, more likely to be poor than those in employment. Those unemployed people who have no benefit entitlement or are 'discouraged' have the highest poverty rates - see table 4 below.
| Employed | 7.6% |
| Unemployed | 29.5% |
| - registered without benefit entitlements | 40.3% |
| - non-registered | 27.8% |
| Non-active | 23.7% |
| - discouraged unemployed | 59.4% |
| - pensioners | 20.6% |
Source: World Bank survey.
Factors determining poverty risk
According to the report, the main factors on which poverty depends are the education, economic/employment status and demographic structure of households. Notably:
completing primary education decreases the risk of poverty two times, general secondary education 2.3 times, and special secondary or university education approximately three times;
each employed person decreases the risk of poverty in the household where they live by 33%. Each unemployed person increases the poverty risk of the household by 50%; and
households with two or more children, single parents with children and households with no children have double the poverty risk of households with one child.
Political context
The final version of the poverty report will be published at the end of 2004. It will contain an analysis of regional poverty distribution and map poverty at regional and municipal level. It will help form the basis for social policies aimed at poverty reduction and for approaches and mechanisms as part of a new 'anti-poverty' policy. The key issue is the adoption of an 'official' poverty threshold that has been absent until now (BG0310202F). This will make it possible to monitor on a continuing basis the quantitative and qualitative aspects of poverty. It should also help in the establishment of clear and appropriate incomes policy mechanisms, and especially in the determination of the national minimum wage, the minimum pension and the guaranteed minimum income (BG0406103F).
Social partner and public reaction
The survey's findings aroused considerable interest among the social partners, as well as the media and general public. The only point undisputed in the debate is a need for further surveys and analyses to form the basis for action.
Trade unions criticise the proposed monthly poverty threshold of BGN 102. They see this is unrealistically low and as misrepresenting the real poverty situation in the country. They also do not agree with the survey's used of consumption rather than income in calculating the poverty line. Trade unions cite data indicating that the 'absolute' poverty line (BGN 120) is much higher that defined through the 'relative' poverty method used in the report. The unions' view receives some support from National Statistics Institute (NSI) data related to international comparisons made by Eurostat, indicating that the Bulgarian poverty threshold exceeds EUR 70 per month and indeed approaches EUR 180 when 'purchasing power parities' (PPPs) are used.
In the view of employers, the proposed poverty threshold is realistic in terms of the economy's scope for conducting anti-poverty policy and introducing new minimum income levels. A higher poverty threshold would create unduly high hopes of a rapid increase in incomes, especially among poor people, and could exceed the possibilities of business to pay higher wages at the present stage.
Commentary
Experts have been prepared, in information and technical terms, to calculate an official poverty threshold for a long time. This could be done on the basis of monthly observations of household budgets. Poverty surveys, similar to that conducted by the World Bank, contribute to the collection of additional important information on the issue. However, launching a poverty panel survey with more detailed information, for example in relation to 'secondary poverty' will be of great importance. Secondary poverty, which is not rare in Bulgaria, relates to occurrences in households (even those with a good level of income) that lead to strong negative changes in the structure and volume of expenditure and make it impossible to remain over the poverty level. Such risks are greater in a society without well-established and functioning social security and social protection systems. It will be exceptionally useful to examine health status and its impact on poverty. This will not only give information in on secondary poverty, but will send clear messages to the health insurance system, insuring companies and the state social protection network. (Lyuben Tomev, Institute for Social and Trade Union Research)
Il-Eurofound jirrakkomanda li din il-pubblikazzjoni tiġi kkwotata kif ġej.
Eurofound (2004), Survey finds one in seven people below poverty line, article.
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