Salaries in Bulgaria are Increasing by 8-10% Per Year

The salaries in Bulgaria are growing very fast, between 8-10% increase per year. However, they remain low compared to other EU countries. This is the comment of UniCredit Bank's chief economist, Lubomir Mitov, who presented the analysis of the bank Bulgaria, Europe and the World - Macroeconomic Review on Thursday. NSI data also show that labor costs in our country are growing - in the first and second quarters of 2017 the increases are by 10% compared to the previous year, reports Sega. 

Although most Bulgarians are very skeptical on the issue of raising income, the facts show that the remuneration in Bulgaria is not "distorted" but proportional to the scale of the economy. The share of net wages (after deduction of taxes and social security contributions) from gross domestic product is even above the EU average, according to Unicredit's analysis. We are similar to Sweden and Finland and we are ahead of Britain and France, Lyubomir Mitov said. The explanation is that in the Western countries income taxes are high and "eat" a large part of the wages, and here operates the low flat tax.

Eurostat statistics also show that Bulgarians' incomes are the lowest in the EU, but that wages in our country are rising most rapidly in the last 20 years. Lately, however, the problem is that wages grow at a higher rate than productivity.

The construction sector can once again become a locomotive for development - it has experienced the greatest collapse from the Economic crisis in 2009 but at the same time it has great potential, the economist explained. Thanks to EU funds, the sector is already growing, which is expected to continue next year. This means that construction companies will open new jobs, and competition for staff will lead to wage increases.

In the past year, exports are a major engine for our economy, "but as a percentage of GDP is not as strong as other Eastern European countries," Mitov said. For Bulgaria in 2016, exports per capita of Bulgaria amounted to EUR 4209, while in Hungary it was EUR 10,577 and in the Czech Republic it exceeded EUR 13,300.

"The reason is that our exports are still largely made up of goods with low added value," the expert explained.

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