03.06.2021

THE STRATEGY ENVISAGES THAT UNEMPLOYMENT IN BULGARIA WILL SHRINK TO 4% BY 2030.

The new strategic document on employment envisages measures of about BGN 10 billion from various sources

By 2030, unemployment in Bulgaria to shrink to 4%, or 0.4 percentage points lower than in 2019, as well as to achieve employment at levels from 2019 in combination with the implementation of measures to increase the quality of the workforce with a focus on the acquisition of digital skills. This is provided by the new Employment Strategy 2021 - 2030, published for public discussion.

In view of the economic and social challenges caused by the COVID pandemic, in the short term until 2024 at the forefront of the planned actions is the achievement of employment at the levels of 2019, as a result of economic recovery. At the same time, the document outlines long-term actions (until 2030) to meet the country's commitments in the field of employment, arising from the need to implement the Action Plan of the European Pillar of Social Rights.

The measures are aimed at reducing the unemployment rate, increasing the economic activity of the population and increasing the labor potential of the labor force in the country, the document reads.

Unemployment and employment

The set goals include the employment rate (20 - 64 years) to increase by 3 points. n. compared to 2019 and to reach 78% in 2030, and the unemployment rate (15 - 74 years) to decrease by 0.4 points. n. compared to 2019 and in 2030 to be 4%.

According to forecasts, after 2020 the population decline will have a negative impact on employment. In the period 2021-2030, employment is expected to decrease (by 4.7%) and in 2030 the number of employed aged 15-64 will be around 3 million. The long-term challenges related to population decline and an aging workforce , will continue to be relevant. A major change will be seen in the short-term challenges arising from the negative effects of the pandemic, such as declining employment and rising unemployment.

In the educational structure of the employed aged 15-64, the share of the employed with secondary and higher education is expected to increase, and that of the employed with primary and lower education to decrease. It is projected that in 2030 of all employed those with secondary education will reach 58.3%, those with higher education - 33.5%, and those employed with primary and lower education - 8.2%.

The expected restructuring of employment by educational characteristics is due to several factors, among which are: demographic processes related to the reduction and aging of the working age population; the overall change in the educational structure of the population, which has led to higher labor supply with higher education; the change in needs, etc.

The current structure of employment by economic activities in Bulgaria is characterized by lower than the average European shares of employees in government, education, human health and medical and social care with accommodation and social work. Given the process of convergence to the economic development of the EU Member States, the expectation is to strengthen the role of these publicly dominated economic activities and to increase the number of employees in them.

The largest increase in employment in the period 2021-2030 is expected in education by 33.2 thousand. By 18.3 thousand is expected to increase employment in human health and medical and social care with accommodation and social work. Employment in general government is expected to increase by 13.5 thousand.

The labor market

The labor market will be characterized by structural discrepancies between the education/qualification of employees and the educational/qualification requirements for employment, the forecasts also show.

There will be a surplus of employees with higher and primary and lower education, as well as a shortage of workers with secondary education. This means that some people with higher education will be employed in positions that require lower education, and people with primary and lower education will take jobs that require higher education.

In 2021, the number of people with higher education who will work in positions requiring lower education is expected to amount to 40.9 thousand, and in 2030 - to 40.6 thousand. with primary and lower education the number of employees in positions requiring higher education in 2021 is expected to be 136.2 thousand, and in 2030 - 70.1 thousand.

A permanent shortage of people with secondary education, including vocational training, is expected. The deficit of people with secondary education will gradually decrease, in 2021 it will affect 177.1 thousand jobs for which there will be no supply of the necessary human resources, and in 2030, this deficit will amount to 110.7 Thousands of people with lower or higher qualifications than the required ones will be employed in these jobs, according to the forecasts written in the strategy.

Demand and supply imbalances will decrease

Imbalances in labor supply and demand at the regional level in the long run will be gradually overcome mainly due to the general decline in employment in the country and the improvement of the educational structure of the labor force.

In 2021 the structural deficit of the labor force with secondary education in certain regions is expected to reach 63.2 thousand, and in 2030 to decrease to 34.9 thousand. The structural deficit of the labor force with higher education is expected to reach 52.5 thousand in 2021 in certain regions, and in 2030 - 17.4 thousand. These imbalances will appear only in certain areas, regardless of the presence of a structural surplus of people with higher education in the economy as a whole .

To a large extent, these imbalances will be manifested in the regions characterized by relatively lowest wage levels for the country.

The structural surplus of human resources with primary or lower education in 2021 is projected to reach 115.7 thousand in some regions, and in 2030 to decrease to 52.3 thousand. The projected regional imbalances will be accompanied by a large degree of overwork of persons with primary and lower education.

On the one hand, people with primary and lower education will mainly occupy positions requiring secondary education, for which there is a shortage of people with secondary education and there are not enough available human resources at the local level.

On the other hand, in the labor market, there is expected to be pressure from people with secondary education to take positions in the workforce with higher education (to which people with lower education could also be engaged). In this way, people with primary and lower education will also be redirected to positions requiring secondary education (which could be held by people with lower education) and which will be vacant by working people with secondary education.

The main challenges

Continued population decline in working age and an aging workforce will continue to be a major risk. These demographic processes have and will continue to have an adverse effect on the labor market. They determine the constantly declining labor supply and the contraction of employment. Thus, demographic processes have a negative impact on the potential GDP and economic growth of Bulgaria in the long run.

Low technological intensity of economic activities also remains a challenge. The last decade has seen a slow enough overcoming of the technological backwardness of the Bulgarian economy compared to the average levels in the EU 28 in terms of employment structure.

Another risk that will hinder the labor market is the structural shortage of qualified staff with secondary education and the surplus of employees with primary and lower and higher education.

Due to the technological backwardness of the economy, the structure of employment by economic activities is such that the majority of employees are engaged in economic activities: manufacturing; trade; repair of automobiles and motorcycles; construction. Demand for skilled labor in these sectors mainly concerns people with secondary education. Demand exceeds labor supply of persons with secondary education.

Therefore, in some of the jobs in some sectors intended for persons with secondary education, persons with higher education are engaged and are expected to be engaged. The largest deficits for people with secondary education are expected in economic activities characterized by relatively low wages: hotels and restaurants; administrative and support service activities; education; manufacturing industry; medical and social care with accommodation and social work without accommodation; Culture, sport and entertainment.

Forecasts point to a continued lag in the development of the education and health sectors compared to other EU Member States. The size of these sectors in Bulgaria is in the last places in the EU.

The strengthening of regional imbalances in the labor market is another remaining risk. The expected contraction in employment will affect all regions, and the observed inequalities in pay will further stimulate internal and external migration of the working population.

All this will lead to deepening of the structural discrepancies of those regional labor markets, which are characterized by relatively lower levels of wages and lag behind in their socio-economic development compared to the leading regions (Sofia-capital, Plovdiv, Varna and Burgas) in Bulgaria.

Threats to the labor market by 2030

Unemployment growth and the slow decline in the number of unemployed in the first years of the decade due to stagnant economic development and economic restructuring as a result of the epidemic is a major risk.

The threat is structural unemployment as a result of the closure or reorientation of production in implementation of anti-epidemic or measures included in the "green deal", slowdown in economic growth as a result of negative changes in domestic demand and restrictions on exports and orders, increasing pressure on wages shortage of highly qualified employment specialists in the new technology sector, delay in the start of operational programs for the use of European Structural Funds during the new programming period or failure to meet all conditions for access to these funds.

In the second half of the decade and until 2030, there may be a threat of limited economic growth due to growing skills shortages as a result of declining labor force, an aging population and an increase in emigration, as well as insufficient measures to education and training that meets the needs of the economy.

Possible threats are: the closure of traditional jobs as a result of globalization and new technologies, the lag in digitalisation, the slow adaptation of industrial relations to the increasingly diverse, globalized and unconventional labor market.

The demand for human resources with higher education and unattractive specialties from employers will increase in the medium term. Restrictions on the free movement of people due to anti-epidemic measures are also a threat to the free movement of workers, especially seasonally employed people.

Increasing labor demand for quality high-productivity jobs is a key priority. The application of new forms of work, incl. teleworking not only in the conditions of a pandemic, but also in the future, will ensure the sustainability of employment as a priority and the regulatory framework for improving flexibility and ensuring healthy and safe working conditions, development of corporate social responsibility, ensuring access to the social rights of workers in the new forms of work, prevention against undeclared work, which in turn requires minimizing unregulated work and increasing social security, the document says.

Financing

The implementation of the priorities set in the strategy requires the expenditure of significant financial resources. The set measures will be financed through various financial instruments and in addition to the funds from the state budget, funds from the Structural Funds, the EU Cohesion Fund and the European Agricultural Fund for Rural Development will be used; international sources; funds of employers, municipalities, local legal entities (donors), NGOs and other sources. This is written in the document.

In the National Development Program of Bulgaria, the funds needed for investments in human capital and promotion of employment until 2030 amount to BGN 7.7 billion.

With regard to the financing from the structural funds, the funds for the employment policy for the period 2021 - 2027 are about BGN 2.26 billion, incl. for: employment and training of unemployed persons, training of employed persons, improvement of working conditions, mobility of employed persons and implementation of joint actions with the social partners.