Social inequalities and inflation are two of the leading problems in Bulgaria’s income policy. While inflation is a pan-European issue, provoked by external factors, such as the war in Ukraine, the price of energy carriers, etc., the wide gap between rich and poor in Bulgaria has existed for years.

"In Bulgaria, 35% of our compatriots are working poor who receive minimum wage. However, there is no tax-free minimum and out of 363 euros, people receive just 281 euros a month. Against this backdrop, the growth of inflation on an annual basis is 17.3%, while the growth of income is just 7.7%, according to the NSI. This means the rise of incomes lags significantly behind that of inflation," economist Mika Zaikova has told the BNR.

• Inflation has outpaced wage growth
  

"We need to be careful when raising the poverty line. We shouldn't bring it close to wages because that will have a negative effect on people who receive the minimum wage. They will lose the incentive to look for a better-paid job and to improve their skills," chair of the Board of Directors of the Bulgarian Chamber of Commerce and Industry, Tsvetan Simeonov, said.

• Lack of personnel and high share of people outside the work force - problems of the Bulgarian labor market
  

A survey by the chamber, conducted in the period July 19-29 this year, shows that some employers manage to retain their staff, despite inflation and rising costs.

"A large number of employers have tried to find ways for compensation. Their efforts to keep their workers, however, makes them provide additional financial stimulus close to inflation levels."

Here are the most serious concerns of employers in the current situation:

"First comes the impossibility of planning the long-term production process, because of the constantly changing prices of energy sources and raw materials,” Simeonov points out. "The issue of finding qualified labor force also remains unsolved."

What are the possible measures that can limit the growth of inequalities between people in terms of their incomes?

This question is among the leading ones within the framework of a project entitled "Reducing poverty and inequality of opportunity through reforms in social transfers and services" implemented by the Institute for Market Economy (IME). It will end in September but some conclusions have already been drawn from the conducted studies:

"When we talk about social services, we should know that the resource allocated by the state for them is about half a billion EUR. There are more than ten types of social services, but they are provided in a fragmented way, receiving funding in four different ways - through the state budget, as delegated activity, through the municipal budget or through European projects," economist Petar Ganev says.

According to economist Mika Zaikova, incorrect fiscal policy and incorrect policy regarding measures and aid were also fueling the inflation. According to her, handing out money to everyone is counterproductive to anti-inflationary measures. The IME say that social assistance should be targeted more effectively at those in need. A change in the organization and financing of social services is also necessary, Petar Ganev pointed out:

"A way must be found to bring all these social services together. It is necessary to create a common unit between the municipalities and the directorates for social assistance, with the purpose to direct those in need of such a service to the best one for them. It is necessary to put an end to the four different types of funding for the same services.”

Compiled by: Yoan Kolev

English: Al. Markov

Photos: BGNES, Pixabay