14.09.2022

GTAI: BULGARIA HAS THE LOWEST LABOR COSTS IN THE EU

In its publication "Labor costs and wages - Bulgaria 2022", the German Economic Development Agency (Germany Trade & Invest - GTAI) informs about the labor market, wage costs and labor legislation in Bulgaria, reported the German-Bulgarian Industrial -chamber of commerce in the latest issue of its newsletter Bulgarien Aktuell.

Bulgaria has relatively the lowest labor costs in the European Union. But companies need to work harder to retain qualified employees.

Labor market

Although Bulgaria's labor market has recovered from the coronavirus crisis, some employers are struggling with structural weaknesses, the publication said, citing data from the Employment Agency, which showed demand for staff rose by 13 percent in the first three month of 2022 compared to the same period last year.

The demand for personnel in the service sector is particularly high. Since the beginning of 2022, the trend of the struggle for qualified personnel has intensified, which suppresses the unemployment rate. For 2022, the quota is expected to drop further and be between 4.8 and 4.9 percent, the Employment Agency has calculated.

The greatest need for qualified workers is in wholesale and retail trade, in logistics and transport, in the restaurant industry and in the ICT sector. In manufacturing, most employers plan to retain and slightly increase their staff. The employment agency reports the greatest need for personnel in the textile and leather industries, in machine building and metallurgy.

Low labor costs are an advantage of the location

According to Eurostat, for 2021 the average labor costs were around 7 euros per hour. The employment rate was 68.1 percent at the end of 2021, and according to the National Institute of Statistics, it was 3.9 percentage points higher than in 2021. Due to the high demand for personnel, companies in some cases increased wages. About 65 percent of the employed work in the service sector and about 30 percent in industry. Labor costs rose above average by 9.1 percent year-on-year in 2021, Eurostat reports.

Remuneration and salaries

The services sector recorded the largest increase in labor costs at 14.4 percent in the first three months of 2022 compared to the same period last year. Labor costs rose 11.8 percent year-on-year in manufacturing and 10.7 percent in construction over the same period, the National Statistics Institute reported.