Every seventh Bulgarian firm willing to raise wages at the expense of new layoffs

Every seventh firm (15.6%) approves of the proposed administrative wage increases but only at the expense of staff layoffs. The companies which agree with the idea and will not dismiss people are about one percent less - 14.3%. Two-thirds of businesses - nearly 70%, however, strongly opposed the proposal, showed data from a survey of the Bulgarian Chamber of Commerce and Industry (BCCI) on the occasion of the wage increase in 2011 in two versions - by 11.07% or 11.67% proposed by Minister of Labour and Social Policy Totyu Mladenov and the increase in the minimum wage to BGN 290 proposed by the trade unions. Workers and employees with labour contracts are almost equally divided in their opinions - about half of the respondents prefer to keep their job instead of receiving a higher wage. The employees who agree with the idea of a salary increase even at the expense of layoffs are a few more(51.22%).

“If an administrative wage increase is introduced, companies will react by layoffs, particularly in industries which are not on the rise,” believe BCCI’s experts. The majority of businesses (90%) stated that they were not ready, in case of a wage increase, to raise the salaries of all employees at the same rate. Employees, in turn, believe that they will receive a wage increase with clearly specified percentages (over 80%).

According to Tsvetan Simeonov, Chairman of the Management Board of BCCI, the results suggested clearly that the increase in the minimum wage will be followed by a chain reaction aimed at keeping the ratio between the salaries of the different categories of workers in a given enterprise and might lead to tension. “Such an administrative measure will harm the entire economy” – this is the opinion of 90.9% of the executives surveyed. More than half of the respondents indicated that the measure would force firms to pass from the formal to the grey economy sector(53.2%), increase unemployment (37.7 %) and harm the state budget.

Every third employer believes that an increase in the minimum wage would increase state expenditures. According to the Ministry of Finance, about BGN 950 mln will be needed for the implementation of the measure. Some 27.3% of respondents believed that the funds for social security would increase but the system has not been reformed and it is unclear how this money would be spent. Some managers estimated that an 11.67 % increase in salaries would mean bankruptcy.
Today, the Minister of Labour and Social Policy will have an informal meeting of the social partners.

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