Bulgarian trade unions, employers disagree over 2014 draft budget

By bne IntelliNews October 30, 2013

Bulgarian trade unions refused to endorse the government's draft budget for 2014, while employers' representatives approved it with plenty of caveats, Dnevnik daily reported on Oct 29. 

The trade unions are against the proposed plan to demonopolise the state-run national health insurance fund by allocating some of the collected healthcare contributions to a second fund, the organisations said at a sitting of the tripartite council that discussed Bulgaria's budget for 2014. They approve of the idea to have the minimum wage raised to BGN 340 (EUR 173.8) from the current BGN 310 and the maximum pension increased to BGN 840 from the current BGN 770. However, they insisted that in the future the size of minimum wage should change automatically (for instance by indexing it to the level of inflation and the growth of the average wage).

The representatives of employers in the country endorsed the idea for a second health insurance fund on the grounds that such a reform would introduce competition in the healthcare sector and thus lead to a reduction of unnecessary costs. In addition, the employers' organisations rejected the proposals for an increase in the minimum wage and a rise in the maximum social insurance contribution, arguing that these measures would boost the grey economy and force employers to lay off workers. The Bulgarian business also questioned the government's idea to create a BGN 500mn fund that will finance capital projects on the basis of lack of transparency.

Meanwhile, both employers and trade unions agreed that the government should spend more money on employment programmes and remove the retirement age for military personnel.

The representatives of the business sector emphasised they are sceptical about the 1.8% GDP growth in 2014 the government projects. According to the Association of the Industrial Capital in Bulgaria, the economy will expand by 1.3-1.5%, while the Bulgarian Industrial Association sees growth somewhere in between 0.8-1.2%.

Bulgaria's government will target a budget deficit of 1.8% of GDP in 2014, equal to BGN 1.47bn (EUR 750mn) in absolute terms. The state intends to spend BGN 32.35bn next year, up by 1.2% from the estimated expenses in 2013. The bulk of the increase in expenditures will represent higher spending on social programmes, education and healthcare. Revenue is expected to grow by 1.6% to BGN 30.86bn. Tax proceeds are seen rising 6.5% to BGN 24.3bn on the back of recovering external demand and improving business climate in the country that should support investment and household consumption.

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