Bulgaria's Labor Minister Highlights Wage Increases and Fight Against Shadow Economy

Bulgaria has seen a 12% rise in average salaries, Labor and Social Policy Minister Borislav Gutsanov announced during a broadcast on BNT. He added that the government is proposing an increase in the minimum wage to 1,213 leva (620 euros) next year, up from the current 1,077 leva, and this proposal is presently open for public consultation.

Gutsanov emphasized that while some may argue that the rise should have been closer to 25%, the increase is nonetheless significant, particularly in regions outside Sofia. In Targovishte, for example, salaries grew by 18.3%, while Blagoevgrad recorded a 20.3% increase. Sofia remains at the higher end of the spectrum, with average salaries around 3,500 leva.

Regarding the calculation of the poverty line, which was recently increased by 126 leva, Gutsanov highlighted that it follows a methodology widely accepted in Europe. He noted that among six national partners involved in the process, five agreed with the current approach, while the Confederation of Bulgarian Trade Unions preferred the methodology used until 2021. Using the older method would have produced a slightly higher increase, around 20% instead of the current 19.7%. Gutsanov insisted that the current methodology is fairer, more comprehensive, and responsive to broader economic indicators, ensuring the poverty line rises consistently regardless of fluctuations.

The proposed minimum wage increase to 1,213 leva is based on a formula averaging six months of the previous year and six months of the current year. Gutsanov stressed that the process is aligned with established rules, though he acknowledged that debates with employer organizations are likely. If approved, the hike will represent an additional 12.6% increase, or 136 leva. Formal approval will require consultation at the National Council for Tripartite Cooperation and a decree from the Council of Ministers.

Beyond wage growth, Gutsanov highlighted efforts to tackle the shadow economy, which he described as a persistent problem in Bulgaria. With estimates ranging from 23% to over 30% of economic activity occurring in the informal sector, the ministry has been taking proactive steps over the last several months. He noted that differences in pay across various job roles, such as accountants, hygienists, and managers, used to be much larger, feeding into the gray economy, but recent measures have reduced these discrepancies. The ministry aims to ensure fair wages are paid formally to curb under-the-table payments and strengthen the legal labor market.

Gutsanov concluded that the government is committed to both fair wage growth and stricter enforcement against informal employment practices, underscoring the importance of fairness and transparency in Bulgaria’s labor market.