15.06.2022
REPORT: LABOR MARKET CONDITIONS IN BULGARIA HAVE DETERIORATED
According to the World Competitiveness Yearbook 2022 of the Institute for Governance Development (IMD, Switzerland), the Bulgarian economy, pulled by the EU, has been slowly recovering over the past 15 years, but has not reached its full potential, the Center for the Study of Democracy said.
In 2022, Bulgaria ranks 53rd out of 64 countries, which shows a lack of progress since 2021. The country marked a deterioration of five positions compared to 2020 and fifteen positions compared to 2009. Thus, the Bulgarian economy remains among the most uncompetitive in Europe. Of great concern is the fact that long-term competitiveness factors remain stagnant. The likelihood of positive reforms or progress in the foreseeable future remains low, and this can only be changed through appropriate corrective action in policy-making, governance and business leadership.
Main challenges and opportunities for improving the competitiveness of Bulgaria in 2022
- Geopolitical shocks and rising inflation caused by energy costs.
- Inconsistent energy and climate policies.
- Confrontation between the executive and the judiciary.
- Lack of reliable anti-corruption law enforcement.
- Limited R&D investment and innovation.
By 2022, the Bulgarian economy has almost completely recovered from the economic consequences of the pandemic, although now both businesses and households are experiencing the negative effects of rising energy prices. After the invasion of Ukraine, the energy-intensive economy was negatively affected by its energy dependence on Russia. Rising energy prices and continuing disruptions in the global supply chain have led to the highest inflation rates in a decade. Thus, the vulnerability of society, exacerbated by the ongoing crisis, poses a potential threat to the poverty index and living standards.
Although Bulgaria is ranked in the same place as last year, the Yearbook also notes slight improvements in the country in most of its economic indicators (14 out of 20). However, the yearbook significantly lowers Bulgaria's ranking in terms of the labor market (from 23rd to 46th place) and in terms of public finances (from 21st to 38th place).
Over the last year, labor market conditions in Bulgaria have deteriorated. Unemployment is stabilizing as a result of the pandemic, but the country continues to experience unfavorable demographic processes associated with high levels of inactivity among people of working age, as well as an aging and rapidly declining population. As a positive development, it should be noted that Bulgaria continues to rank in the top 10 countries in terms of remuneration of managers, specialists in the field of services and long-term growth of the workforce. Lower corporate tax rates in the country attract foreign investors and global outsourcing.
The yearbook emphasizes that Bulgaria continues to improve its competitiveness in the field of international trade, ranking 19th out of 63. Although its main export partner remains the EU, Bulgaria has achieved a significant increase in its exports to the rest of the world. In terms of international investment, however, the country has dropped to 60th place. In this regard, it is extremely important for Bulgaria to make more efforts to attract foreign direct investment by improving its regulatory framework and providing appropriate financial incentives to interested companies.
Bulgaria continues to face many opportunities to improve infrastructure, especially in the technology sector and in vital areas of science and education. In all these areas, the Yearbook slightly improves Bulgaria's ranking, but it still remains closer to the group of lagging countries.
