29.10.2020
The program of the Bulgarian Development Bank in support of liquidity will also cover large enterprises
The Government adopted a Decision amending the Portfolio Guarantee Program in Support of the Liquidity of Micro, Small and Medium Enterprises (SMEs) Affected by the Emergency Situation and the COVID-19 Epidemic, implemented by the Bulgarian Development Bank AD (BDB). In order to meet the needs of the business, changes in the eligibility criteria under the Program have been proposed regarding the status of enterprises. In addition to SMEs, the scope of the Program will also include large enterprises - commercial companies within the meaning of the Commercial Law. This will be another, albeit indirect, measure to protect employment, including by supporting businesses that provide livelihoods in small towns and poorer geographical regions.
Given the extended scope of the Program, it is proposed to change its name accordingly, as follows - "Portfolio Guarantee Program to support the liquidity of companies affected by the emergency situation and the COVID-19 epidemic."
In the course of the implementation of the Program, larger enterprises, which are excluded from the scope of the anti-crisis measure, also stated their need for liquidity. This was also established by the survey conducted among the commercial banks - partners in the Program, which have submitted a proposal for inclusion in the scope of financing and enterprises above the categories for SMEs.
In order to maintain the priority "SME image" of the Program, each bank will have to meet a minimum quota for financing small and medium enterprises, which is not less than 60% of the loan portfolios formed under the Program.
The absolute maximum amount of the loan to one person and related parties is increased from BGN 300,000 to BGN 1,000,000 for SMEs and to BGN 2,000,000 for large enterprises - commercial companies within the meaning of the Commercial Law. The increase corresponds to the growing needs of commercial enterprises for liquidity.
It is proposed to increase the Limit of guarantee payments to 50%. Thus, BDB AD is already committed to make effective guarantee payments to commercial banks in the amount of up to 50% of the Guaranteed loan portfolios under the Program. As a result of a change in the Guarantee Payment Limit, the expected loan portfolio changes and amounts to BGN 1,250,000,000. The expected portfolio of guarantees, which becomes BGN 1,000,000,000, is also changing.
The term for inclusion of loans in the Guaranteed Portfolio is extended until 30.06.2021, as well as the term for application, which will be until 23.06.2021. The change corresponds to the continuing and even deteriorating as working and living conditions economic and social environment in the community, due to which the EC increased the term for support under the Temporary Framework of State Aid applicable to the Program.
How many millions for loans were distributed by the banks in our country under the guarantee programs
Loans for over BGN 178 million have been approved by commercial banks under the two guarantee programs managed by the Bulgarian Development Bank.
This is shown by the data of the financial institution as of October 26.
643 are the approved Bulgarian micro, small and medium enterprises under the guarantee program for business support affected by the COVID-19 pandemic. The total amount of loans confirmed as collateral is BGN 90.7 million.
Companies from the trade, tourism, transport and manufacturing sectors have shown the most serious interest in the program. Among the assisted are also companies in the field of agriculture, construction, services and advertising.
Under the business support program, BDB guarantees loans of up to BGN 300,000 to small and medium-sized enterprises that are suffering the negative consequences of the pandemic. The loans are granted by 8 partner banks, with reduced collateral requirements and the possibility of a grace period of up to 3 years.
The financial institutions granting the loans are Allianz Bank, DSK Bank, Bulgarian-American Credit Bank, Investbank, First Investment Bank, Postbank, Commercial Bank and UniCredit Bulbank.
Partner banks can include both new and existing loans in the program. The condition is that the companies experience difficulties in 2020 and have not been overdue for more than 90 days in the last year.
Under the other anti-crisis program - for interest-free lending to individuals, loans of up to BGN 4,500 are granted - at once or up to three tranches of BGN 1,500 each. Individuals who have been approved to receive interest-free loans up to BGN 4,500 are now over BGN 21,000. Their total value is just over BGN 88 million. Loan applications exceed 32,700, and 710 are currently being considered. of the loans is BGN 4,224.35.
Applicants may be employees who have been on forced unpaid leave or self-employed persons whose activities have been temporarily suspended due to the emergency. The maximum repayment period is 5 years, with a minimum of 6 months and a maximum of 24 months grace period. The loans are exempt from fees, commissions and penalties.
The partners in the program are 12 commercial banks, 10 of which continue to accept applications for interest-free loans. These are Allianz Bank Bulgaria, DSK Bank, Investbank, First Investment Bank, Commercial Bank, UniCredit Bulbank, United Bulgarian Bank, Eurobank Bulgaria, Raiffeisenbank and Central Cooperative Bank.
The deadline for applying for both BDB guarantee programs is until the end of 2020.
28.10.2020
The acceptance of documents for the third stage of the measure 60/40 has started
Employers who want state support to maintain the employment of their employees can now submit documents to the employment offices for the third stage of measure 60/40. The compensation funds will be paid for the period from October 1 to December 31, 2020 and will amount to 60% of the insurance income for August 2020.
The new design of 60/40 introduces relief for the so-called "Random transport", as the companies will not have an obligation to keep the employment of the seasonal workers after the end of the winter tourist season. This has so far existed for the hotel and restaurant sector and it will be maintained in the new version of the measure 60/40.
With the changes, companies that have already received funds under the measure in previous months will have some administrative relief when applying. For example, they will have an abbreviated application form and will only present a list of their employees. In addition to the labor offices, documents will be able to be submitted electronically through the System for Secure Electronic Service, as well as through a licensed postal operator. Full information about the application can be found on the website of the Employment Agency.
Under the first version of 60/40, 9,000 employers were supported and 180,000 jobs were saved. The funds paid are BGN 186 million. The largest amount was paid to the employees of the enterprises in the processing industry - nearly BGN 71.6 million, for the preservation of over 80,400 jobs. BGN 29.5 million for 26,700 employees are directed to the employers from the trade. The Hotel and Restaurant Sector is supported by a little over BGN 22.6 million. Most companies are from the districts of Sofia-city (3,127), Plovdiv (724) and Varna (609).
Under the second version of 60/40, by the end of October, 4,800 employers had been approved to retain nearly 140,000 jobs. The funds paid as of October 27 are nearly BGN 270 million. The most - for those working in the enterprises of the processing industry - nearly BGN 116.3 million, for preserving the incomes of over 56,200 workers and employees. The enterprises from the mining industry have received BGN 21.2 million for 5,900 reserved jobs. BGN 18.9 million for 9,745 jobs are directed to employers from trade. The Hotel and Restaurant Sector received just over BGN 23.7 million to retain nearly 26,000 jobs, and the Transport, Warehousing and Post Office Sector received BGN 16.0 million for about 13,000. There are many companies registered in the districts of Sofia-city (1 485), Burgas (337), Varna (335) and Plovdiv (321).
28.10.2020
New Bulgarian University is looking for women with ideas for their own business
NBU has been chosen to host the American Business Academy for Women Entrepreneurs in Bulgaria. The AWE (Academy for Women Entrepreneurs) initiative at the US Department of State is led by the White House and is implemented in partnership with the US Embassy in Bulgaria.
Its goal is to unlock, support and develop the economic potential of women from around the world by developing their own business of value to society. The initiator of the establishment of the Academy for Women Entrepreneurs is the adviser to the President of the United States Ivanka Trump. Through this program, women will have the opportunity to participate in free training for startups - how to successfully create their business plans, how to raise capital and price their products and services, how to create needs for what they offer and communicate with the market, how to connect to networks of successful business owners, etc.
The participants in the Academy will study online in the months of November 2020 - March 2021.
Leading lecturers and mentors from New Bulgarian University and proven professionals in the field of business will work with the future business ladies. Two of the ladies who have studied at the Academy will receive start-up capital for the realization of their business idea.
The deadline for applying to the "Academy for Women Entrepreneurs at NBU" is November 10, 2020.
More information about the regulation and the criteria for participation can be found here.
AWE was developed by the White House Office of Education and Culture's Women's Global Development and Prosperity Program, led by the White House, which aims to enable women around the world to fulfill their economic potential by creating the conditions for increased stability, security and prosperity. The initiative is to reach 50 million women by 2025 by promoting an enabling environment for women's participation in the economy and business.
26.10.2020
WHAT CHILD BENEFITS WILL BE GRANTED IN 2021?
Families with one child will receive BGN 40 per month, or a total of BGN 480 per year of support from 2021. In 2021, childcare allowances until the completion of their secondary education will be given regardless of the parents' income.
However, the measure will be temporary and will be implemented only next year, it is clear from the draft budget for 2021, which has been released for public discussion.
Families with two children will receive BGN 90 per month, with three children - BGN 135, with four - BGN 145, and for each subsequent one the aid increases by BGN 20.
However, in order to receive the money, the parents must submit an application-declaration to the social assistance services. If the document is not submitted, the aid will not be paid. This also applies to the aid for first and eighth graders, which is increased to BGN 300 and will be paid twice - for the first and second term.
What exactly will be the order remains to be seen. Currently, the assistance is received if the parents submit a declaration to the social assistance agency at the current address.
Parents who live permanently and raise their children in Bulgaria receive monthly allowances for raising children until the completion of secondary education, but not more than 20 years of age. The children attend the classes regularly and have all the obligatory immunizations and prophylactic examinations.
No matter what the income of the parents, in 2021 they will give BGN 300 each for the children who start first or eighth grade. This assistance will not be temporary, but is expected to be valid in the coming years. The budget for 2021 will increase the monthly allowance for raising a child up to one year from BGN 100 to BGN 200, but it will be given only to families with incomes per person below BGN 500 for the last 12 months.
For the fact that all parents will be able to receive benefits for raising their children, for the benefits for children from the first and eighth grade, as well as for the higher amounts for children up to one year, the budget for 2021 provides an additional 390 million BGN.
23.10.2020
WHAT ARE THE DIFFERENT TYPES OF INVESTMENTS FOR START-UP COMPANIES?
If you have an idea for a business or have already started one, it is good to be aware of the financing options that are in front of you. These are the different types of investments that a company can receive:
Business Angels
This can be a group of people or more often a person (angel) who invests directly in new businesses at an early stage (startups). The amount of investment can vary from 20 thousand euros to 500 thousand euros, depending on the needs of the company. The funds they invest are personal. The business angel participates in the strategic management and active development of the start-up company. Guides and guides the entrepreneur.
Seed Startup Accelerator
Accelerators are start-up programs, most commonly in the technology, web and mobile sectors. They provide the teams with initial money to start with, help from mentors and partners and some of them - a job in an incubator. The initial cash investment they make varies from 20,000 euros to 50,000 euros. Some accelerators allow for the next round of investment up to 200 thousand euros (for example, the two Bulgarian accelerators LAUNCHub and Eleven). Usually the programs of most accelerators last 3 months.
Startup accelerators in Bulgaria: LAUNCHub and Eleven
Private Equity and Venture Capital Funds
These funds invest in companies with the potential to achieve rapid growth and sustainable competitive advantage. Venture and private equity funds participate in the company for a medium period of time (usually 5 years) and work with management to improve the competitive market position.
Venture Capital Funds and Private Equity Funds are often confused. Let's clarify the similarities and differences between them so that everyone is well informed.
(In the following lines we will call the Venture Capital Fund VC and the Private Equity Fund PE)
There is a difference between a Private Equity Fund and a Venture Capital Fund and it is:
Fund of Funds
The Fund of Funds manages the funds of BGN 1.2 billion under four operational programs: OP “Human Resources Development”, OP “Innovation and Competitiveness”, OP “Environment” and OP “Growing Regions”. The main activity of the Fund of Funds is the structuring and management of financial instruments co-financed by the European Structural and Investment Funds during the programming period 2014-2020. Financial instruments are an alternative way of financing grants, which is becoming increasingly important in the European Union budget. Targeted at projects that could potentially become self-sustaining, they provide investment support through loans, guarantees or equity participation. In this way, business and public institutions are supported for economic development. Financial instruments allow for the return (recycling) of funds that can be reused.
A fund of funds selects financial intermediaries - banks, funds, credit and other financial institutions. In turn, the selected financial managers mobilize additional private capital and significantly increase the public resource, which through them reaches the final recipients.
All funds provided under the above-mentioned operational programs for financial instruments are combined into a common Fund of Funds, as the Fund Manager of Financial Instruments in Bulgaria EAD is the company that manages it.
The Acceleration and Initial Funding Fund of the Fund of Funds is implemented in accordance with the objectives of the Operational Program "Innovation and Competitiveness" 2014-2020, co-financed by the European Structural and Investment Funds. It aims to increase survival prospects for start-ups and support sustainable and knowledge-based business models.
The Acceleration and Initial Financing Fund is an instrument for equity and quasi-equity investment, which will support the creation and development of sustainable business models, as well as develop and improve the entrepreneurial ecosystem in Bulgaria. The funds from the Operational Program "Innovation and Competitiveness" for the financial instrument are EUR 51.3 million (BGN 100.3 million), which are divided into three funds:
Fund managers will be required to supplement the resource of the three funds of the Acceleration and Initial Financing Fund with private capital, respectively up to 10% for the Initial Acceleration and Financing Funds and up to 30% for the Initial Financing Fund. The funds will be closed-ended and private funds will be provided at fund level and / or through co-investment at the final recipient level. The forms of investment could be equity instruments, namely shares, units, other transferable securities or equivalent rights or instruments that give a right to participate in the capital of a company. Funding in the company ranges from 25 thousand euros to 1 million euros.
The investment period is five years, and the duration of all three funds should be ten years, with the option to extend for two more one-year periods.
The Venture Capital Fund provides public funds for management in the amount of BGN 47.1 million from the Operational Program "Innovation and Competitiveness" 2014-2020, co-financed by the European Structural and Investment Funds. Applicants will also need to provide private co-financing amounting to a minimum of 30% of the total investment in final recipients. A fund of funds provides intermediaries with the opportunity to provide the necessary co-financing, both at the level of the fund and at the level of the final recipient, which gives flexibility to the fund manager in obtaining private resources. At the same time, a minimum amount of additional financing and support to companies is provided in order to fulfill their development and growth forecasts.
The funds are intended for equity and quasi-equity investments in high-tech, innovative small and medium-sized enterprises (SMEs) at an early stage of development. The amount of investments in each company will be in the range of 1.5 to 7 million levs. The purpose of the financial instrument is to support SMEs in the first five years after their establishment, as in this risky period a significant part of start-ups face difficulties to continue their activities due to lack of financial resources and effective management structure.
Specific for this investment fund are the additional strategic support and mentoring provided by the fund manager to the companies in which he invests.
Additional information: https://www.fmfib.bg/bg/buyer/procedure/25
The Municipal Guarantee Fund for Small and Medium Enterprises is a unique financial instrument, launched and developed by Sofia Municipality in support of business and innovation in one of the fastest growing capitals in Europe. Its mission is to increase the competitiveness and access to finance of SMEs in Sofia.
The fund aims to provide loan guarantees to SMEs that have a cost-effective project but cannot provide sufficient bank collateral. As of mid-2018, the Municipal Guarantee Fund has supported over 635 companies, assisting in granting loans of over BGN 117 million and a guarantee commitment of over BGN 31 million.
In 2018, the Fund launched the Innovative and Start-up Financing Program (FISP Program), which is a new guarantee scheme in addition to the successful Basic Guarantee Scheme implemented over the last ten years. The program for financing innovative and start-ups is a specialized guarantee scheme and was developed in implementation of the Innovation Strategy for Smart Specialization of Sofia (ISIS of Sofia). It is aimed at facilitating the access of start-ups and/or innovative enterprises to financial resources in connection with the implementation and development of their business projects.
In implementation of the Program, the Municipal Guarantee Fund will issue guarantees on loans granted by partner banks of the Fund for financing innovative business projects with emphasis on the main thematic priorities of the Innovation Strategy for Smart Specialization of Sofia, including:
Informatics and Information and Communication Technologies as one of the strategic focuses of ISIS of Sofia is to create the necessary prerequisites and conditions for Sofia to become a national and regional center for education, modern research, innovation and entrepreneurship based on ICT. The emphasis is on the following priorities: living in an intelligent urban environment and mobility; cyber-physical systems; future cloud technologies; future network solutions; healthcare and healthy lifestyle; protection of personal data, security and trust; intelligent energy systems and intelligent spaces.
New technologies in the creative and recreational industries will also be supported. Emphasis in this priority is to support the development of the creative economy in Sofia, which is becoming a major factor in the development of tourism. This includes the arts, cultural and creative industries, where the main factors in the creation process are individual creativity, skills, talent, as well as the ability to reproduce and protect copyright on the unique cultural element.
Parameters of the specialized guarantee scheme of the Municipal Guarantee Fund for small and medium enterprises
The main requirements for entrepreneurs are to meet the basic criteria for a start-up innovative enterprise:
Additional benefits will be given to:
Permissible innovations
Warranty coverage
The Municipal Guarantee Fund for Small and Medium Enterprises shares with the creditor bank part of the credit risk, securing up to 50% of the loan principal and up to a maximum amount of BGN 30,000, regardless of the principal amount of the loan. The guarantee is a supplementary collateral to the main collateral for the loan accepted by the Bank. The maximum amount within which the Municipal Guarantee Fund for small and medium enterprises will issue guarantees under this financial instrument is BGN 600 thousand.
Eligible collateral (individually or in combination)
All eligible collaterals according to the Bulgarian legislation are accepted as collateral for the loans. In addition to them, the Program for financing of innovative and start-up enterprises requires the owners of the loan applicants - legal entities and the owners of the collaterals to be engaged as co-debtors of the loan.
Mechanism for approval of the issuance of a guarantee by the Municipal Guarantee Fund for small and medium enterprises
The Municipal Guarantee Fund for Small and Medium Enterprises considers individually each individual project applying for guarantee support, and may accept or refuse to issue a guarantee, depending on whether the project meets the eligibility criteria under the Program for Financing Innovative and Start-up Enterprises and the Internal Rules of the Fund. More information: https://ogf-sofia.com/
Innovation Capital
This is a venture capital fund amounting to EUR 15.6 million with a mandate to provide access to capital and quasi-capital financing to Bulgarian start-ups. The fund aims to increase the survival prospects of start-ups with significant growth potential.
For contact: https://www.innovationcapital.bg/
Vitosha Venture Partners
Vitosha Venture Partners invests between 15,000 and 1,000,000 euros in early and growth companies that are based in or related to Bulgaria. The application form is available online at the following address: https://www.vitosha.vc/#5
Morningside Hill Venture Capital Fund
In November 2019, Morningside Hill launched its latest venture capital fund MORNINGSIDE HILL VENTURE CAPITAL FUND, which is focused on providing capital for growth of Bulgarian start-up companies. The fund has 28.6m euros under management. Apply electronically here: http://www.morningsidehill.com/
New Vision 3. (NV3)
New Vision 3 (NV3) is a fund for risky investments in technology companies at an early stage of development.
NV3 operates from Sofia and invests in fast-growing technology companies that seek to achieve leading positions in global and/or local markets. The main investor in NV3 is a Fund of Funds with funds amounting to EUR 19.1 million, provided by the Operational Program "Innovation and Competitiveness 2014-2020", co-financed by the European Structural and Investment Funds. You can contact New Vision 3 here: https://www.newvision3.com/copy-of-team
A.L.E.C.O (Achieve Leadership in Entrepreneurship and Cooperation Opportunities)
With a budget of up to 1m euros, up to 200 candidates from Bulgaria and across Europe will be supported. To benefit, they must have a viable business plan, have recently set up their own company or have participated in the Erasmus for Young Entrepreneurs program. More information: https://andreynovakov.eu/aleco/
Eleven
The Eleven Venture Investment Fund was established in 2012 with a start-up capital of EUR 12 million, provided by the European Investment Fund under the JEREMIE program. In addition to funding, Eleven offers workspace and preparation for startups from its portfolio. Additional information and contacts: https://www.11.me/
LAUNCHub Ventures
LAUNCHub Ventures is a leading early stage venture capital fund investing in technology start-ups in the Seed and Series A funding phases. The fund's website allows you to apply for funding entirely online at this address: https://launchub.typeform.com/to/O5vGva
20.10.2020
PROBLEMS IN DISMISSAL OF EMPLOYEES AT THE INITIATIVE OF THE EMPLOYER FOR COMPENSATION
Separation from an employee, for whatever reason, is often a challenge for employers. The legal framework of labor relations in Bulgaria is conservative, outdated, relevant to other social systems and ultimately insufficiently flexible to adequately protect the interests of both parties in the employment relationship.
One of the most preferred grounds for termination of employment is downsizing and reducing the volume of work.
Employers often do not realize that the termination of employment on any of these grounds is a procedure that requires consistent and precise preparation of the accompanying internal documentation, including methodology for selection, appointment of a selection committee and others. The lack of any of the necessary elements of the procedure makes it easy to attack by the employee with the resulting negative consequences. Of course, the Labor Code provides a number of other grounds for termination of employment, but they cannot be covered by this brief.
In 2001, the legislator introduced a new possibility for termination of employment at the initiative of the employer - for compensation. Although associated with a financial cost to the employer, this option has become one of the preferred grounds for termination, as it provides a quick, efficient and stable, from the point of view of possible litigation, way to finally settle the relationship with the employee.
In general, the law allows the employer, on its own initiative, to offer the employee termination of the employment contract against compensation provided for in Article 331 of the Labor Code. The proposal must be accepted in writing by the employee within 7 days. Otherwise, it is considered rejected. Although there is no explicit requirement in the law, we believe that the proposal to the employee should also be in writing, and its service on the person should be duly certified, in order to avoid future disputes over compliance with the statutory 7-day period. The compensation must be paid to the employee within one month from the date of termination of the employment contract. If the employer does not comply with this deadline, the grounds for termination shall be deemed to have lapsed. The minimum amount of compensation is four times the amount of the last received monthly gross remuneration. Of course, the parties can agree on a higher amount, but not a lower one.
At first glance, the regulation is clear, unambiguous and does not imply the emergence of controversial points.
In fact, considerable attention should be paid to the concept of gross remuneration, which is the basis for calculating the compensation due. This is a particularly important issue in sectors in which the element "bonus" or "reward" participates in the formation of the monthly remuneration of employees. More and more industries include a fixed and flexible part in the negotiation of remuneration, as the most common "flexible part" includes the bonus element in the formation of wages, and it is most often associated with achieving certain results. In most cases, this additional remuneration is many times higher than the basic one and plays a decisive role in the final amount that the employee receives.
However, is the bonus included in gross remuneration, which is the basis for calculating the compensation due, discussed above?
The Ordinance on the structure and organization of the salary stipulates that the gross remuneration includes the basic remuneration and the additional remunerations of a permanent nature, determined by the individual employment contract, unless otherwise provided in the Labor Code. Therefore, in gross remuneration as a basis for the compensation under Art. 331 of the Labor Code includes the basic remuneration and additional remunerations of a permanent nature, those that are predictable and secure, defined in a collective employment contract and/or in the individual employment contract.
The regulation stipulates that additional remunerations of a permanent nature are those that are paid for a scientific and educational degree, for acquired work experience and professional experience, as well as those that are paid permanently and together with the remuneration due for the respective period and are in dependence only on the time worked.
In order not to be considered as additional wages of a permanent nature, i.e. for an element of gross remuneration, the amounts for bonuses (rewards) should be determined by the employer (by decision of the management), should depend on the achievement of a certain work result, should not be predictable, should not be secure, should not be permanent and should not be are bound only by the time worked.
Therefore, it is important that the rules for the formation of bonuses and rewards in the company be prepared in a way that does not allow them to be interpreted as part of gross remuneration, which would lead to a multiple increase in the minimum benefit for termination of employment at the initiative of employer.
For completeness, we should note that the insurance income of the person is also irrelevant. I.e. regardless of the fact that the employee is insured for the full amount of the received remuneration (including a bonus), this circumstance does not make the bonus part of gross remuneration. This is so because the basis on which the amount of compensation under Art. 331, para 2 of the Labor Code is not the insurance income, but the last received gross remuneration, in which (as indicated) should be included only the basic salary and the additional labor remunerations of permanent character.
16.10.2020
Nearly a third of Bulgarians live at risk of poverty and social exclusion
32.5% of Bulgarians were at risk of poverty or social exclusion in 2019, according to data from the European statistical office Eurostat.
Their share has increased compared to 28% in 2018, and according to this indicator our country ranks first in the EU. After Bulgaria, the highest risk of poverty were the citizens of Romania (31.2%), Greece (30%), Italy and Latvia (27.3%, data for Italy are from 2018), Lithuania (26, 3%) and Spain (25.3%).
On the other hand, the share of people at risk of poverty and social exclusion is lowest in the Czech Republic (12.5%), Slovenia (14.4%), Finland (15.6%), Denmark (16.3%), Slovakia (16.4%), the Netherlands (16.5%) and Austria (16.9%).
A total of 21.1% of the EU population, or 92.4 million people, were at risk of poverty or social exclusion in 2019 compared to 21.6% a year earlier, writes investor.bg.
At the same time, 22.6% of Bulgarians were at risk of income poverty, which puts our country in third place in the EU. According to this indicator, the residents of Romania (23.8%) and Latvia (22.9%) are at the highest risk. Over one-fifth of the population also lives at risk of income poverty in Estonia (21.7%), Spain (20.7%), Lithuania (20.6%) and Italy (20.3% according to 2018 data). At the opposite pole are the Czech Republic (10.1%), Finland (11.6%), Slovakia (11.9%) and Slovenia (12%).
In 2019, 16.5% of the EU population was at risk of poverty after social transfers (income poverty) compared to 16.8% in 2018. The income poverty parameter determines the share of people in a household whose disposable income are below the national at-risk-of-poverty threshold.
Bulgaria ranks first in the EU in terms of the share of people living in great material deprivation, ie. their living conditions are severely affected by the lack of resources such as the ability to pay their bills, heat their homes adequately or go on a one-week holiday away from home.
Last year, 19.9% of Bulgarians lived in severe material deprivation, followed by 16.2% of Greeks and 14.5% of Romanians. At the opposite pole is Luxembourg, where this applies to only 1.3% of the population, followed by Sweden with 1.8%, Finland with 2.4% and the Netherlands with 2.5%.
5.6 percent of the EU population lived in severe material deprivation in 2019, down from 6.1% a year earlier, according to Eurostat data.
Last year, 9.3% of Bulgarians under the age of 60 lived in households where adults made less than 20% of their total work potential. According to this indicator, Greece is in first place with 13.8%, followed by Ireland with 13% according to data for 2018, Belgium with 12.4% and Italy with 11.3%. At the opposite pole are the Czech Republic with 4.2%, Poland with 4.7% and Malta with 4.9%.
In the EU as a whole, 8.5% of the population under the age of 60 lived in low-labor-intensive households, down from 8.8% in 2018.
16.10.2020
EFFECTIVENESS OF MEASURES TO COMBAT POVERTY IN BULGARIA
The main factors at risk of poverty are education, economic activity and the populated place, according to a study by the Institute for Market Economics.
Moreover, the data show that deep poverty is concentrated in the working population (and not among pensioners, children or people with disabilities), which again refers to the problems of education and the labor market, write the economists of the Institute for Market Economics in their analysis.
The focus of public policies should inevitably be on poverty factors and not on fiscal measures to cover "missing" income. The data clearly show that the discussion of the topic of poverty cannot be limited to a discussion on the administrative increase of incomes, benefits and allowances. The more important conversation should be about education and new jobs.
The leading goal of policies must be to cross the path from low education to unemployment and ultimately poverty. The fiscal burden of poverty, based on people's own assessment of the lack of income in the household to "make ends meet", shows that spending policies cannot solve the problem of poverty. Education and labor market reforms, as well as adequate regional policy, have no alternative to raising incomes.
What does the administration do?
This week, the Bulgarian National Audit Office published an audit report on the implementation of "Effectiveness of anti-poverty measures" for the period 2015-2018 and the conclusions are, to put it mildly, worrying. The report focuses on the national poverty reduction target set in the Europe 2020 Strategy and set out in the National Reform Program and the National Development Program, and examines the actions of the Ministry of Labor and Social Policy and the Ministry of Education and Science, which have four ministers each for the period.
The implementation period is coming to an end and it is expected that there will be significant progress in achieving the national goal and its sub-goals. However, it turns out that this is not the case at all.
Purpose
The set goal envisages a reduction in the number of people living at risk of poverty or social exclusion by 260 thousand people (up to 1 372.1 thousand people) in 2020 compared to the base year 2008. The focus is on poverty reduction in four vulnerable groups - children under 17 (by 78 thousand), adults over 65 (by 52 thousand), unemployed (by 78 thousand) and working poor (by 52 thousand), and The measures are in a number of different sectors - employment, education, healthcare, social payments, policies for children and families, transport, housing, etc.
Execution
As we usually observe, the strength of the administration is in the quantitative writing of plans and strategies, but not in their quality and implementation. It is difficult to list all the gaps and criticisms identified in the audit report on the implementation of anti-poverty measures, but here are the main ones:
There is no system of indicators to monitor progress. In some of the measures there are no target values or what resources are needed for their implementation;
There is no clear focus on the target groups, there is no analysis of the results in the regional aspect, nor on the impact of demographic and migration processes;
There are no clear functions of the responsible ministers and organization for monitoring, management, control and reporting, which does not allow adequate monitoring of the progress of the measures;
Huge delays and lack of interest - the initial implementation plans were adopted with a delay of 8 months and with serious weaknesses in the process of organizing the planning, limited guidelines for work, lack of analysis of activities. Subsequent plans for the implementation and reporting of previous periods were also adopted with delays and with very low attendance at the working group meetings (on average 31% of the members). Some of the documents for the work of the working group are missing;
There is no analysis and assessment of the degree of achievement of the performance indicators, as well as an analysis of the impact of the implemented measures in the adopted reports. No forecasts have been made for the implementation of the objectives. Curious is the case with the survey conducted among the members of the working group set up to develop the action plan for the period 2019-2020 and the report on the implementation of the plan for the previous period. The main weaknesses in the work of the group are: lack of targeted measures towards poverty, instead relying on general measures; lack of analytical work and seeking the impact of specific poverty reduction measures; delays; sending alternates to meetings who are not aware of the topic. One respondent shared that “All activities are taken from other strategies and development plans for which funding is provided. There is no single program to track the specific impact of poverty reduction.”
The result
The data for 2018 show that the goal has been met at 31% after ten years of work and only two remaining. Although the delay is known to the administration from both the data and the interim reports over the years, the National Poverty Reduction Strategy has not been updated for its entire 7-year implementation period. The Audit Office' report shows that if the trends continue, the goal of reducing the number of people living in poverty will not be achieved even by half by 2020, although the population is also purely mechanically contributing to its convergence. At the end of 2018, the poor are 1,550.8 thousand people and at this rate of decline will reach 1,526.4 thousand (with a target of 1,372.1 thousand). This means that the decrease compared to 2008 will be 105.7 thousand people, which is about 40% of the target.
The implementation of the specific sub-objectives is also deplorable. By the end of 2018, the planned poverty reduction for children is 4 %, for adults – 29 %, for the unemployed – 78 %, and for the number of working poor there is even an increase and the set goal will not only not be met, but and will move away from the goal twice.
Conclusion
Instead of a conclusion, we quote verbatim one of the report's conclusions: “Implementing such a long-term strategic document without reviewing the implementation of the measures provided for in it to reduce poverty and promote social inclusion and their adequacy in terms of socio-economic change and without assessing the effectiveness of the measures implemented, does not guarantee that the efforts and resources invested in their implementation will lead to the expected results. The level of achievement of the national and specific sub-goals for poverty reduction by the end of 2018 shows a serious lag."
15.10.2020
They launched a new electronic system for LEMC
As of today, the electronic system for issuing Labor-Expert Medical Commissions (LEMC) decisions starts working. People with disabilities will be able to apply electronically, but there is still the possibility to apply on paper. Access to the system will be with an electronic signature.
The system will be of help to the citizens who are about to issue a LEMC decision. Through it, people with disabilities can submit applications for certification, notifications will also be made electronically.
Through its introduction, all issued decisions of the LEMC will be available to the institutions. An appeal against a decision can also be made through the system. In case of electronic submission of documents, the only physical presence of the person can be only if he is assigned an examination on the occasion of certification, said the Deputy Minister of Health Jeni Nacheva: "If an examination is appointed, an examination is made, then, of course disability must be visited by either the GP, the laboratory or the medical establishment to which the tests are to be performed."
As of today, GPs are obliged to issue a referral for LEMC through the new electronic system.
15.10.2020
Over 25% of small and medium-sized companies in our country have difficulty finding staff
More than a quarter (25%) of small and medium enterprises (SMEs) in Bulgaria have difficulties in finding staff and managers. This is shown by data from a joint study of the European Commission and the European Central Bank (ECB) for 2019, quoted by the executive director of the Fund of Funds (FF) Alexander Georgiev.
Next as a problem is finding customers or markets. About 13% of the companies in our country answered that the regulations are also an obstacle to their activity. Only in fourth place is access to finance. The trend is similar for companies in the European Union (EU), where finding a staff is the biggest challenge. However, access to financial resources ranks only sixth, as it is a problem for only 7% of companies. In terms of sources of funding, there is not much difference between us and the EU. Most often money is taken from credit lines, bank loans or leases.
Between 45-50% of companies in the EU have indicated that these are the forms of financing they are looking for. In fourth place are trade credits and grants, followed by other forms of loans, and in last place are capital investments, which are sought by about 11 percent of entrepreneurs in the EU. For comparison, in our country only 4% of SMEs find this type of investment suitable for their activity. According to Georgiev, this type of financing should be more popular among domestic entrepreneurs. At the moment, the Fund of Funds offers 4 funds, which is over 55.4 million euros of resources. "This is money that can be invested in companies," said the fund's executive director. Work is already underway on a fifth fund, through which another 39m euros will be offered on the market.
In order to promote capital investments, the Bulgarian Stock Exchange and the Fund of Funds signed a Memorandum to encourage investment in prosperous Bulgarian companies. The document covers initiatives to promote, train and encourage domestic companies to raise capital to invest in their growth. "Our efforts are in two directions - to develop new forms of financing suitable for startups and innovative Bulgarian companies that would not receive credit from commercial banks, and to increase the financial culture of entrepreneurs," said Georgiev. "We believe in the potential of Bulgarian companies which have a unique capacity for innovation, job creation and ultimately stimulating the economic prosperity of Bulgaria", commented the Executive Director of the BSE Dr. Manyu Moravenov.
The initiative is also supported by the Ministry of Finance, as the principal of both institutions. "We are aware that the situation is not one of the easiest at the moment for the financial markets, although the crisis started in a different area than in 2009, now it has started in the health sector," said Deputy Finance Minister Marinela Petrova. According to her, however, now is the right time for such an endeavor.
