How Does Bulgaria's Labor Market Influence Investment? - HR ConsultanciesAnalysts |Author: Maria Guineva | February 26, 2012, Sunday // 15:02| views
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As part of its "Investors of the Decade" Business Survey, Novinite.com (Sofia News Agency) and Novinite.bg have asked representatives of leading human resource consultancies in Bulgaria how the situation of the Bulgarian labor market influences the country's attractiveness for (foreign) investors.
Question: How does the labor market in Bulgaria influence investments?
Nadia Vassileva, Managing Director, Manpower Bulgaria
As an outsourcing destination, Bulgaria ranks among the top 20 in the world. Our business indicators are extremely favorable: labor cost is still the lowest in Europe, but the demographic structure is such that there is a predominant elderly population and a large percentage of workers with low education and qualifications.
The imbalance between demand and supply suggests that the country would be a target for investors who would seek low-skilled staff or those that could be quickly retrained. On the other hand, Bulgaria's population is looking for better paying jobs abroad, which further drains the market from the necessary personnel.
The opening of Bulgaria's borders for immigrants is also an exceptional condition for investors wishing to implement large-scale projects in Bulgaria. The population is not mobile enough, but the new law on temporary work would definitely become an obstacle for foreign investors because not only it did not create the much needed flexibility, but even deprives workers of their security.
In short, the labor market is unbalanced and creates difficulties for investors.The influence of the labor market on investments would become clearer if there is thorough analysis of its current state.
Precisely – what type of human resources do we have available as skills, qualifications, attitude, mobility, quality, quantity. This could give the Agency for Foreign Investments some directions as to what type of investors it should try to attract. There is also a need of a plan to market Bulgaria in the most suitable way.
Snezhana Raykinska, Manager of Bulwork
The most eloquent answer to this question would be "decisive." When a company has decided to invest in Bulgaria (whether foreign or local), the determining factors for this decision are the constant value costs (office rent, total costs associated with wages, direct and indirect taxes), and the available labor, which will largely determine its development plan.
If we have a developed labor market - i.e. skilled workers, young people in active age with good work habits, respectively, this means respectively more investment in export-oriented and high-tech industries and more companies which are interested to expand their presence in the country.
In the absence of sufficiently skilled workforce, deteriorating demographic situation and low labor productivity, investment and are few and concentrated in areas where there is available workforce. Most interesting is the fact that it is not low taxes that cause a company to invest in Bulgaria, but rather the availability of skilled manpower at competitive prices.
Actually, this factor is a fundamental and decisive for companies which view our country as a potential opportunity to expand their presence. Bulwork works with over 250 clients, 80% of which are foreign - to a large extent, these companies prefer to pay "profit" tax in their country rather than in Bulgaria. This applies to companies from IT and BPO sector where we have over 10 years of experience and observations.
Maria Shishkova, Managing Partner of Aims Human Capital Bulgaria and Dale Carnegie Training Bulgaria
Investments are as vital for the economy as the blood is for the human body. Big or small, each investment counts for the creation and support of a free market-driven economy and a mature society.
Apart from the obvious benefit for the labor market, i.e. creation of jobs, investments are also the reason and the fuel for personal and professional development, for career progression and innovation. They are a key driver for the knowledge economy and influence each and every aspect of our lives.
Investments play a pivotal role in providing a competitive environment allowing constant flow of know-how, commercial and cultural exchange. People in any country enjoying active investment climate are fortunate enough to have long-term stimuli for constantly improving their competencies and change agility.
Prof. Dr. Dragomir Boyadzhiev, Managing Partner, DB Interconsult
The realization of the idea to invest in Bulgaria is based, among other factors, on the analysis of the labor market. The Bulgarian or foreign investor wishes to purchase labor with the needed quality and to optimize expenses for workforce. Can the Bulgarian labor market today satisfy the needs of the entrepreneurs wishing to invest in Bulgaria? What are the trends that would form the market in 5-10 years?
The analysis of the labor market in Bulgaria shows two trends, with opposite influence on investments. The first is related to the relatively low cost of labor and the presence of unemployment, which stimulates investments.
The potential foreign investor in Bulgaria slates in their business plan expenses for labor, lower than in majority of other countries, where they could invest. They count on unemployment to force many people to seek jobs thus to easily find the needed human resources, precisely due to the increased supply of work force on the labor market. This trend stimulates investments.
The second trend is connected with the quality of the available labor. In the last years, different reasons have led to the increase of the number of those job seekers, who have knowledge and skills lower than the level the investors are looking for. The increased number of quality experts, who are trying to find realization abroad, practically leaving the Bulgarian labor market, along with problems in the education system that lead to labor deemed unsatisfactory by investors, also have their influence.
As consequence of the current processes in Europe, many Bulgarians, who have worked abroad, now wish to return to Bulgaria and work here. Usually, these are quality experts, who have acquired the necessary experience. There is a need to apply effort to attract them and retain them here, which would be a good sign for investors.
I believe that the first trend prevails currently, but if things change, in the near future, the investor will face the dilemma of purchasing cheap, but low-quality labor. Are they going to take this risk?