Controversial Minimum Wage Proposal in Bulgaria Sparks Union Criticism

A proposed bill by the Ministry of Labor and Social Politics has sparked controversy by suggesting that the minimum wage in Bulgaria should only increase in line with inflation. Although the bill has not yet been made available for public discussion, its contents were revealed through a strong statement from the Confederation of Labor "Podkrepa" on their website. If passed, the changes would essentially freeze the minimum wage, which has recently been impacted by low inflation rates. For instance, in September, inflation was only 1.2%, and there has even been deflation during certain months.

The proposal comes after a significant 38% increase in the minimum wage over the past two years, due to a formula that ties the minimum wage to the average wage. As the minimum wage is a component in calculating the average wage, any increase in the minimum wage leads to a higher average wage, creating a ripple effect. This disproportionately affects sectors where wages are primarily determined by the minimum wage, leaving little room for other employees to see pay increases.

Both the formula and the new proposal were introduced with reference to the EU's Adequate Minimum Wage Directive, which must soon be incorporated into national laws. However, the union argues that both the current formula and the proposed changes contradict the directive's aims. The directive stipulates that member states should consider various criteria in setting minimum wages, such as purchasing power, the general level of wages, and productivity growth, all aimed at ensuring a decent standard of living and reducing working poverty.

This proposal has caused a rift between employers and unions. While employers have expressed frustration with the current wage formula, unions are equally upset about the new changes. "Podkrepa" accused the Ministry of proposing a text that would consign a quarter of workers to poverty by linking unemployment benefits only to inflation. They also pointed out that pensions are updated based on average insurance income growth and inflation. The union criticized the proposal as an attempt by the Ministry to report activity without addressing underlying issues such as low wages in sectors like healthcare and education.

The Confederation of Labor warned that if the proposal is adopted in its current form, they will take all legally permitted actions to defend workers' rights. They argue that the text undermines social dialogue and protection, with some parts of the proposal being unrealistic and unlikely to benefit workers. In addition, the Association of Industrial Capital in Bulgaria has already filed a legal challenge against the current formula, claiming that the European directive encourages collective bargaining over the determination of the minimum wage.