Dimitar Manolov, Vice President of Podkrepa Labour Confederation: The budget is unnecessarily stagnated and there is no reasonable approach to pensions

- Mr. Manolov, Confederation of Labour 'Podkrepa' seems to be a less active social partner this year. What is your position at this stage of the discussions on the budget?
- This year's budget received a lot of criticism in view of its concept and as a result of the fact that it is oriented mostly to shrinkage of expenditures, while no schemes are envisaged for increasing revenues. In fact, the budget contains too many reserves. Besides, no measures are applied for curbing the current smuggling and the activity of the domestic informal sector, which are inexhaustible sources of funds in Bulgaria.

According to some expectations, the latest amendments to the budget, which have not been announced yet, will stipulate that the funds for the social security system and the additional 20 pensions envisaged in case of retirement in this sector, which had to be reduced to 10, will ultimately remain unchanged. The funds for these additional payments, however, will be deducted from the other sources of the public sector. This policy of state revenue stagnation continues without exerting any real impact on the economy and the social welfare system.

- According to the employers, there is a hidden reserve of BGN 620 mln intended for the state administration, thus actually preventing the implementation of any effective reform to the social security system.
- In fact, so far all drafted budgets have envisaged a reserve for additional payments and I do not see anything wrong in this concept. Actually, additional payments could be transferred as remunerations as long as there is adequately implemented work. I make this stipulation because it is a well-known fact that the largest share of these funds is allocated for politically appointed persons, whose work is the most inessential. This is something which we cannot cope with.

- Can a joint desicion with employers on the spending of the budget funds be reached? In fact, you achieved a consensus on the issue of fiscal reserves. Was this a previously planned gesture to the social partners?
- It seems that the reached compromise was a well-planned move, but this is an old style of politicians. The aim is to make some concessions, thus actually deviating possible adjustments in other budget areas. The budget is unnecessarily stagnated, while again no reasonable approach is observed in terms of the pensions schemes. Breaking the vital link between social security contributions and pension rates is a harmful approach and therefore dangerous. The political idea for increasing the lowest pensions will probably appeal to many people. But this will mount the social tension in the other groups of our population. Afterwards, when people realise that regardless of their different social contributions the retirees will receive similar pensions, they will certainly not approve of this unjust measure.

- This year, Bulgarian employers congratulated themselves on the higher collectibility of income tax in comparison to corporate tax. Was this success for the budget?
- This is not surprising. Unfortunately, only thieves benefit from the low tax rates. These tax rates are to the detriment of the poorest people because as a result of the practical elimination of a non-taxable minimum, all types of incomes are levied as well as the earnings of the lowest social strata.

- Do you think that the increase of income and consumption rates should be implemented only through budget reallocation?
- In fact, budget reallocation is only one of the mechanisms. If there is no solvent demand, we cannot achieve anything. The allocation of funds primarily in the transport sector is not bad, but they should actually provide employment. In fact, the transport projects fail to secure jobs to Bulgarians, which we believe is absurd. We do not advocate the standpoint for strengthening protectionism, but there must be a reasonable balance. The infrastructure projects themselves are pointless if they fail to create jobs in our country because actually they are spending huge resources. We should bear in mind that the EU grants are not envisaged for the construction of our highways.

- Do you think that the financing model proposed by Finance Minister Djankov is feasible? He suggested that one third of the funds for science should be provided by the state, one third should be transferred under the EU operational programmes and the remaining one third should be granted by private financial donors?
- The things are mutually interrelated. The structure of the Bulgarian industry is such that it does not produce anything high-tech. It manufactures semi-finished goods, raw materials or toll products. In fact, the products of science cannot find any market. But on the other hand, it is impossible for some sectors to be liquidated in an irresponsible way.

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