14.06.2023

28 MUNICIPALITIES WITH 50% PERMANENTLY UNEMPLOYED

Almost all indicators indicate that the labor market in Bulgaria is in very good shape, despite the gradual slowdown in economic growth - unemployment is very low, employment has exceeded records since 2019, and expanding businesses in various industries are competing for staff.

However, this does not mean that the labor market does not lack free resources, or that it does not have visible imperfections. While a certain level of unemployment is expected, and even healthy for well-functioning labor markets, keeping people out of work long-term is a sign of structural problems. An analysis by the Institute for Market Economy examines the territorial distribution of the permanently unemployed and some of their characteristics.

The presented data are calculations of the Institute for Market Economy based on the monthly data provided by the Employment Agency. Since the Employment Agency does not publish average annual data on the permanently unemployed, the analysis uses the average number of unemployed persons with registration for more than one year at the labor offices for the 12 months of 2022, presented as a share of the total population in a working age age, as well as from all unemployed. It is important to note that this number does not include those looking for work independently (say, through online platforms), so the indicators included here most likely underestimate long-term unemployment.

In 2022, the average annual number of permanently unemployed throughout the country was 35.5 thousand people. However, their distribution is highly uneven - two relatively small municipalities, Kotel and Kaolinovo, each have 1,100 permanently unemployed, their number is also large in Velingrad and Pleven, with almost 900 people each.

And vice versa, there are entire groups of municipalities where this phenomenon practically does not exist - in the Srednogorieta, almost all the Black Sea municipalities, near Gabrovo and Veliko Tarnovo.

It is also noteworthy that, despite the large size of the labor markets of the leading municipal economies, the number of permanently unemployed in them is very small - in Varna it is only 28 people on average per year, in Plovdiv - 105, in the capital - 242. Several regions are being formed, which concentrate the majority of the permanently unemployed - practically the entire Northwest around Vidin, Montana, Pleven and Lovech, significant parts of the Northeast around Razgrad, Shumen, Silistra and Targovishte, as well as smaller clusters in Blagoevgrad and Smolyan.

The distribution of the permanent unemployment rate, which describes the share of the unemployed with registration for more than a year among the able-bodied population (between the ages of 15 and 64) of the municipalities, is similar. In three small municipalities - Kaolinovo, Dimovo and Ruzhintsi - the coefficient is over 20%, and in another 27 municipalities it is over 10%.

As expected, there are also visible clusters in the Northwest and Northeast, but some border areas also stand out - to the west along the border with Serbia and to the southeast with Turkey. In most municipalities, the rate of permanent unemployment is low - in 110 of them it is below 1%, in 150 - below 2%, in Sofia - only 0.04% of the working population. This, in turn, means that in almost the entire country, the share of people who want to have a job, but cannot find one, remains relatively small.

The most interesting indicator is the share of the permanently unemployed among all unemployed. It is indicative of the state of local labor markets and, above all, of the ability of potential workers to adapt to local labor demand.

In as many as 28 municipalities - and here mostly in the North-West, North-East and border regions - the share of permanently unemployed persons is over 50% of all job seekers. Conversely, this share is lowest in the municipalities with the most dynamic and adaptable labor markets – those of the largest regional centers, coastal tourist municipalities and leading industrial areas.

The strong regional concentration of permanent unemployment once again underlines the need to apply a regional approach to labor market policies. It is, of course, only one aspect of a multidimensional problem – large groups of individuals remain permanently outside the labor market and, despite their desire to find work, are largely currently unemployable due to low education and inadequate skills.

This is a visible obstacle to the economic development of some of the poorest Bulgarian regions, where the direction of investments has the potential to bring rapid change, but the lack of a trained workforce is among the most serious obstacles to such investment decisions being made from the perspective of individual companies. As businesses face increasing barriers to finding suitable staff, however, the long-term unemployed, along with the inactive, are becoming an increasingly important resource for expanding employment, making it all the more crucial to upskill them to match demand to potential future employers.