European Trade Union Institute, ETUI.

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Bulgaria

11 January 2018

Bulgaria: tripartite talks on pensions and minimum wage

The financial situation of Bulgarian pensioners is problematic. Observers note that the country’s pension system is in a state of crisis, as inflation has outpaced the nominal increase of the pension payments. As a consequence, the purchasing power of pensioners has plummeted. The National Council for Tripartite Cooperation is discussing the improvement of pensions, but it is felt it will be difficult to find a good solution.

Late in 2017, the Bulgaria’s government proposed an increase in the monthly minimum wage to 510 leva (260 euro). The increase was announced as an 11% rise that will stimulate labour market activity and improve both the incomes of low-paid and the purchasing power. In the same week in November 2017, the government said that pensioners whose pensions are no more than 321 leva (the poverty line) would receive a 40 leva Christmas bonus. Statistical data show that around 1,243,000 pensioners can derive this Christmas allowances. From 1 October 2017, the minimum pension is 200 leva.

From the first of July 2018, all pensions will be increased by 3.8%, with a ceiling at 910 leva. The percentage is set by the rule, which accounts for half of the rise in insurance income and inflation. From 1 July on, the average pension, currently 350 leva (180 euro), will increase by 13 to14 leva. The responsible ministry has calculated that this decision will affect 824,000 pensioners or 40% of all.

In recent years, there have been discussions about creating a sustainable pension system. During last year’s election campaign (26 March 2017), the solution of the main political parties was sought in an increase of the statutory retirement age and a more restricted access by raising the number of years workers have to put in before being able to draw a state pension. Some political parties were proposing a rise in pensions that could even call into question the pension system as such. The Confederation of Independent Trade Unions in Bulgaria (CITUB) said that the pension system should be based on the idea of fairness, noting that ‘the social benefit system must be reformed if we want it to be efficient’. CITUB stated directly after the elections that the system of social assistance must be reformed without a reduction of the financing. The trade union confederation called on the new government to reinstall the talks of the National Council for Tripartite Cooperation in order to have a dialogue on the necessary measures.

The Council has started in December 2017 the discussions on an improvement of the pension system, but so far no details are available. Critics say the country’s pension system is in a serious state of crisis. The pension pay is simply too low to make ends meet and the small improvements of the past could not keep pace with inflation. Thus, the purchase power of pensioners has decreased. In the coming years, the share of people of working age in the population will further decrease while the number of people who receive pensions and need social protection will grow. Moreover, the number of people who have reached pension age without covering the required length of service is increasing.

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