site.btaEmployers Again Argue against Government's Plans to Impose Minimum Contributory Incomes

Sofia, August 24 (BTA) - Reacting to plans of the Labour and Social Affairs Ministry to impose minimum contributory incomes (MCIs) for 2018 by administrative order, employers again set forth their objections in a letter to Minister Bisser Petkov. The Ministry's intentions were prompted by the refusal of the Association of Organizations of Bulgarian Employers (ABEA) to negotiate within the National Council for Tripartite Cooperation for the second year in a row, the Bulgarian Industrial Capital Association said.

The business representatives argue that imposing MCIs differentiated by position and economic activity is obsolete and inadequate. Such mechanisms are not applied in any EU Member State. The employers state that in 2017 the administrative increase in MCIs was 2.5 per cent in real terms. However, in the first half of 2017 the average contributory income increased by more than 6 per cent, and the revenues from social and health insurance contributions rose by over 10 per cent. This is compelling proof that MCIs are unnecessary, and the business community has repeatedly explained why they are damaging.

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.

Employers have argued repeatedly that since the global economic crisis of 2008, the MCIs imposed by administrative order diverge dramatically from the state of the separate sectors and enterprises, the fluctuation of employment, total and sectoral labour productivity, and price rises.

The ABEA recalled that earlier this year the business community pushed for the ratification of the Minimum Wage Fixing Convention 1970 (No. 131) of the International Labour Organization, and for the adoption of a mechanism for minimum wage fixing and of legislative amendments scrapping MCIs. A review of the country-specific recommendations of recent years shows that the European Commission does not support the setting of MCIs by position and economic activity.

The employers claim that the ABEA cannot be expected to change its position on the negotiations on MCIs in 2018, given that there are no plans to change the mechanism. They believe that the Labour and Social Policy Ministry should encourage general collective bargaining at corporate and sectoral level, which is favoured by the employer organizations, instead of announcing plans to impose new MCIs for 2018 by administrative order.

The mounting tensions in industrial relations may force many sectoral organizations and companies to reconsider their positions on social dialogue, the employers said.

The government's and trade unions' rationale for raising MCIs is that this narrows the gap between the cost of labour in Bulgaria and the EU, which could bring highly qualified workers and experts back to this country.

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Speaking to reporters in the southeastern town of Yambol, Economy Minister Emil Karanikolov said experts have until the end of September to come up with measures addressing the main problems of businesses in Bulgaria: a shortage of skilled labour, foreign nationals getting working visas, administrative burdens, and numerous sick days. He said that about 3,000 foreign nationals had been employed in Bulgaria this summer, mainly in tourism, but issuing of working visas remains problematic.