site.btaLabour and Social Policy Minister Petkov to Propose 3.9 Per Cent Increase of Minimum Contributory Incomes by Administrative Order

Sofia, September 28 (BTA) - Bulgarian Labour and Social Policy Minister Bisser Petkov said at a meeting of the National Council for Tripartite Cooperation on Thursday that he will propose a 3.9 per cent increase of minimum contributory incomes by administrative order.

Justifying his proposal, Petkov said that the average contributory income of persons who are insured on a minimum contributory income increased by 5.2 per cent by mid-2017 compared to 2016. Half of this growth resulted from the increase of minimum contributory incomes.

Minimum contributory incomes are the minimum amount on which employers are obliged to pay social and health insurance contributions for their employees. In a number of sectors, the actual wages are far above these thresholds, but in some sectors the wages are lower.

Petkov recalled that an increase of minimum contributory incomes was not imposed by administrative order last year, but the average contributory income rose 2.6 per cent as a result of an increase of the minimum wage. The average contributory income for managers and specialists grew at the slowest pace, by 2.3-2.4 per cent on the average (minimum contributory incomes there have not changed since 2016), whereas the increase of the average contributory income for worker occupations was faster, by 6.5-7.6 per cent, under the influence of the higher minimum wage.

The Labour and Social Policy Minister said that this proposal for an increase of minimum contributory incomes by administrative order is based on the current macroeconomic framework for 2018 and the Finance Ministry's guidelines for drafting the 2018 Public Social Insurance Budget Act.

He recalled that for a second year in a row negotiations on new contributory incomes have failed owing to the refusal of the nationally representative employer organizations to take part in the negotiations, and under the circumstances the Minister of Labour and Social Policy has to issue an administrative order. In Petkov's words, this is "the least desirable but only possible solution" at this stage.

Employers have argued repeatedly that since the global economic crisis of 2008, the minimum contributory incomes imposed by administrative order diverge dramatically from the actual state of the separate sectors and enterprises, the fluctuation of employment, total and sectoral labour productivity, and price rises. The government's and trade unions' rationale for raising minimum contributory incomes is that this narrows the gap between labour costs in Bulgaria and the EU, which could bring highly skilled workers and experts back to this country.