25.11.2022

ECONOMISTS: THE MELTING POPULATION LIMITS THE GROWTH OPPORTUNITIES OF THE REGIONS

The regional profiles clearly show that while the footprint of the pandemic and subsequent economic recovery is visible on the regional map, previously large disparities between districts persist. Due to continued political instability and economic challenges at the end of 2022, the development and unlocking of the regions' potential will be of great importance. This is stated in the analysis of the Institute for Market Economy, which has been preparing profiles of the regions in Bulgaria since 2012.

The new edition of "Regional Profiles: Development Indicators" for another year reveals the economic potential and deep social differences between regions in Bulgaria. The publication covers a period in which the economy recovered from the severe impact of the pandemic, but quickly encountered new challenges, topped with a severe political crisis, the authors of the report wrote.

The population census highlighted more clearly than ever the severe demographic problems facing the country, which also limit the potential for growth in places.

It is indicated that local authorities should be extremely active and work towards the transformation of their economy through more productivity and competitiveness - attracting investments and developing industrial areas, working with educational institutions and supporting investments in human capital, openness to regional partnerships and thinking beyond the usual administrative boundaries. In these efforts, however, the municipalities need support and, above all, real steps for financial decentralization and more own resources, the analysis states.

Economists report that almost every region is distinguished by successful performance in a certain area - it is good, for example, education in Smolyan, health care in Pleven, investment activity in Sofia region, and in a number of regions there is potential for improving the overall development. Its deployment in a tangible and permanent improvement of people's lives and the business environment depends both on the processes in the large economic centers and their periphery, and on the development of the secondary economic centers, which are still lagging behind, the economists add.

In the latest edition, the regions of Stara Zagora, Veliko Tarnovo and Ruse are joined by the regions of Sofia (the capital), Plovdiv, Varna, Burgas and Gabrovo, which are performing well overall, and have passed relatively well through the difficulties of the pandemic, experts report.

The biggest challenge for all is the demographic picture. The latest census last year highlighted the dire demographic problems facing the whole country, with figures on the working age population showing that 20 out of 28 districts had lost at least a fifth of their workforce.

"And while the collapse of natural growth reflects long-term processes and slowing it down requires vision and time, mechanical growth can be affected by short-term policies," the report states.

The lack of adaptation to the declining population, although this has been evident for years, continues to have a direct impact on the provision of public services (education, health, public order, culture, etc.) and the ability of the private sector to hire labor.

Economists warn that the problems facing local authorities arising from demographic trends will further deepen, requiring higher costs, the need for optimization and accounting for new realities. In order for such adjustment to be possible, more own resources and freedom in conducting regional and municipal policy are needed, according to economists.

The regions in the country have a different economic profile, which predetermines their different development trajectories. Among the areas with good indicators are mostly those with developed industry and strong penetration of digital services.

Despite the economic recovery in 2021, employment has failed to return to pre-pandemic levels, economists report. The employment rate of the population aged 15 to 64 on average for the country remains slightly above 68%, varying from 52.5% in Montana to about 75% in the Sofia region and Sofia (the capital).

The very strong performance of the Sofia region is noted, which is again ahead of Sofia (the capital). Varna region is in third place with an employment rate of 73.8%, which is also a historical record for the local economy.

In 2021, eight regions report an employment rate above 70%, 15-20 percentage points ahead of those at the bottom of the ranking. All six regions with an employment rate of the working-age population below 60% are located in Northern Bulgaria: Montana, Razgrad, Targovishte, Silistra, Vidin, Vratsa.

In recent years, wages have continued to rise in the country. As of the middle of 2022, the average gross monthly salary in the capital exceeds BGN 2,300. The Sofia region is in second place with an average salary of over BGN 1,600, and within the range of BGN 1,400 - 1,500 are the remunerations in the regions of Varna, Plovdiv, Stara Zagora, Vratsa and Gabrovo.

The lowest salaries in 2022 are reported in Blagoevgrad and Kyustendil - about BGN 1,100 per month, as well as in Vidin, Haskovo and Smolyan. Expectedly, at the level of municipalities, the highest remunerations are in and around the three leading centers - Sofia, Varna and Plovdiv, as well as in the Srednogorieta and several municipalities with large energy companies.

Human capital and the profile of the workforce are key in the transformation process of the economy, economists report. In 2021, nearly 30% of the population aged 25 to 64 has a higher education, and in recent years this share has been rising.

The categorical leader is Sofia (the capital), where 57.7% of the workforce has a higher education. In next place are the regions of Ruse (30.9%), Varna (30.2%) and Veliko Tarnovo (28.6%), which traditionally perform strongly in this indicator.

In at least 12 regions of the country, people with primary and lower education outnumber those with university degrees in the workforce. The share of people with primary and lower education remains extremely high in the districts of Sliven, Razgrad and Targovishte, the data show.

Regional differences in health care are particularly visible in the population's access to doctors, the report states, as the pandemic has also shown this.

While in some regions - Pleven, Sofia (the capital), Plovdiv and Varna - one doctor takes care of an average of less than 200 people from the population, half of the regions in the country have more than 300 people per doctor.

Regional centers with strong medical universities perform significantly better in health access indicators, especially in terms of access to specialist doctors. The number of hospital beds also varies from about 11 beds per 1,000 people in the Pleven district to under 3 beds per 1,000 people in the Pernik, Dobrich and Shumen districts.

In recent years, there has been a steady decline in registered crimes against the person and property in the country, the analysis also states. In 2021, an average of 9.8 crimes against the person and property per 1000 people of the population were registered, while 10 years ago this indicator was at least 1.5 times higher.

Smolyan and Kardzhali remain the safest districts with less than 5 registered crimes against the person and property of 1000 people. The most crimes per 1000 people of the population are reported in the North-West - Montana and Vratsa, as well as in Varna and Burgas, although in the maritime areas the trend is for a serious decline in recent years.

The detection rate is the highest in the Gabrovo region, with nearly 75% of the registered crimes against the person and property during the year being detected. Once again, the detection rate is lowest in Sofia (the capital) and Varna, where consistently less than half of the registered crimes against the person and property are detected within the year.