Economists recommend elimination of the minimum wage threshold

The minimum wage thresholds and the minimum insurance income should be set by the market and not in an administrative manner, economists of the Institute for Market Economics (IME) claimed. According to Kaloyan Staykov from IME, collective labour agreements should not be obligatory either.

According to IME’s estimates, the number of jobs in Bulgaria has declined by around 450,000 since the pre-crisis year 2008. The decrease has continued this year and the trend is expected to persist in 2013, albeit at a slower pace. “In order to reverse the negative trend on the labour market and the number of new jobs to exceed that of closed ones, GDP growth in Bulgaria should be more than 2%, while the optimistic scenario for 2013 is for some 1.6% -1.9% increase,” commented IME’s economist Peter Ganev. IME’s observations showed that, in the last four years, the biggest number of jobs (more than 20%) were closed down in the municipalities of Smolyan and Haskovo, and Targovishte is the only area where there are more jobs than several years ago.

At the same time, despite the decline in the number of employed people, total budget revenues from the income tax of working citizens have increased by 26%, compared to 2009, or by 15% taking into account the inflation rate. Practically, this is largely due to the increase in the minimum wage and social security income. IME’s experts failed to explain how the aggregate revenues from income tax would increase if the minimum wage requirement is eliminated and the incomes of the population drop further, in addition to the current high unemployment rate.

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