09.10.2023

10% INCREASE IN SALARIES IN BULGARIA IN 2023. AS A RESULT OF INFLATION

The salary increase in 2023 is about 10 percent as a result of inflation, according to a study by "Mercer Marsh Benefits" of remuneration and benefits for 2023. The company annually conducts the study in Bulgaria, tracking trends among employers and their employees, the company said.

The results of the survey were presented by Stella Yulzari, senior consultant at Mercer. This year, the survey covers 493 companies (7 percent growth compared to 2022) and 127,562 employees from 14 different economic sectors. The largest number of participants in the company's research are with "Manufacturing" and "High Technologies" profiles.

The study focuses not just on employee pay, but on the full remuneration package, which includes: gross salary; the guaranteed cash reward; the total monetary remuneration (reflecting various bonuses); total direct remuneration (with long-term incentives such as shares and options) and total annual remuneration (including various benefits such as a company car, pension provision, health insurance and life insurance). The Mercer Marsh Benefits study considered the factors nature of work and employee hierarchy, part of the Mercer Code Library that facilitates employee classification.

The results regarding personnel turnover in our country indicate that there is a slight decrease in the increase in the number of personnel on the part of employers - 46 percent, compared to 54 percent for 2022. At the same time, voluntary turnover is regaining its pace from before the pandemic and there is a greater tendency to make a decision to change the workplace compared to last year, commented the authors of the study.

According to the data on salary increases in Bulgaria, the three main factors for salary increases are performance, place in the range and inflation.

"In 2023, employers will catch up with inflation, which testifies to more effective budget planning and reflection of economic reality," said Stella Yulzari.

"The wage increase in 2023 is around 10 percent for the various sectors, which is largely due to employers catching up with the inflation that started last year," she added.

The increase in wages on the basis of career groups is most noticeable for employees holding positions at the operational level - 12.1 percent, which is due to the low pay in the relevant group and the need for financial incentives for the same in order to cope with inflation. This is followed by the group of specialists (11 percent), management (10.7 percent) and top management (9.6 percent).

Trends in gross wages by sector indicate that remuneration has grown fastest and most consistently in the High Technology, Outsourced Services and Pharmaceuticals sectors.

Sofia is the only region in Bulgaria with higher wages than the national average - 6 percent, while in North-West Bulgaria the wages are the lowest, as much as 35 percent below the national average. The reasons are rooted in the fast-growing and high-tech sectors, which are mainly located in the capital, at the expense of the manufacturing, commercial and financial sectors, whose employees are mainly in the countryside.

Data from the survey also indicate that 87 percent of companies have a variable remuneration scheme, which is expressed in bonuses and bonuses for employees. 9 out of 10 of the latter are entitled to such benefits, and 8 out of 10 managers receive their bonus on an annual basis.

Special benefits are most often health insurance (84 percent), mobile phone (80 percent) and food vouchers (74 percent). The latter occupy third place (compared to sixth in the past year 2022), which is due to the legislative changes concerning tax credits in the amount for food vouchers.

In presenting the study, emphasis was also placed on the Directive of the European Parliament to strengthen the implementation of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms.

Tatyana Dobreva, a consultant in the Mercer team in Bulgaria, presented more information about the upcoming changes as a result of the Directive. According to current statistics, in most countries at the global level, including Bulgaria, there are no regulatory requirements for reporting gender pay differences. The latest figures for Europe from 2021 show that the most noticeable gender pay gap is in Estonia (20.5 per cent), Austria (18.8 per cent) and Switzerland (17.7 per cent), while the most equal are the employees in Luxembourg, Romania and Slovenia, respectively with – 0.2 per cent, 3.6 per cent and 3.8 per cent deviations.

Bulgaria ranks in the middle of the ranking with a 12.2 percent pay gap. The introduction of the European directive will lead to the need for its implementation in the Bulgarian legislation, the authors of the study indicate. This innovation, in turn, would impose specific requirements on employers in Bulgaria in order to implement tools to track remuneration trends, such as the function of the Mercer Marsh Benefits detector to calculate equality in pay.

During the event, the local context in the field of benefits was also presented with a discussion panel on the topic "Well-being and sustainability of employees", moderated by Jacqueline Nikolova, head of "Mercer Marsh Benefits Bulgaria". Representatives of companies from several key sectors in Bulgaria took part in it. Among them were Boyka Doceva - head of human resources at IBM Bulgaria, Veneta Stoilova - head of human resources at EVN Bulgaria, Miglena Uzunova - senior director of "Human Resources" at A1 and Radoslava Krosneva - director of "Human Resources" at DSK.

They outlined that in Bulgaria it can no longer be about accidental initiatives, but about a standard for employers who strive for sustainability and social commitment for their employees.

"Well-being and initiatives are no longer done for their own sake, but are part of the companies' culture", summarized Jacqueline Nikolova.

Dan Dobre, Mercer Marsh Benefits regional leader for growth and solutions for Germany, presented the global trends that Mercer examines annually in a survey of CEOs, HR managers and employees in more than 140 countries around the world.

"When we ask CFOs and COOs of companies what their main concerns are, for 87 percent of them it is the crises, 52 percent are worried about inflation, and a quarter of them expect it to be higher in 2023 compared to 2022." Dan Dobre said.

"Our survey shows that 49 percent of respondents are more worried about inflation than recession. However, most of them are prepared to face an economic crisis of some kind and do not expect it to have consequences like the financial crisis of 2008, when we've seen a lot of layoffs. They say that even if there's a recession, they're prepared because they have higher standards as employers. That means we as organizations have to be more prepared and be more resilient, something that "Mercer Marsh Benefits" has practiced as a policy for years. In practice, this means focusing on company culture, adopting new, flexible work models, creating scalable organizations, diversity, equity and continuity, adaptability," added Dan Dobre.