site.btaBill Sets Cap on Retirement Compensations, Reasoning Exposes Unusually Generous Compensations in State-owned Companies

MPs of Continue the Change - Democratic Bulgaria (CC-DB) have moved a bill of amendments to the Public Enterprises Act which sets a cap on compensations for retirement in the public sector in order to rectify "some distortions caused by the almost total lack of restrictions" now. The explanatory report to the bill mentions as an example of such "distortions" the Air Traffic Control Authority which in 2021 alone paid a total of BGN 1 million to four staffers as they were sent into retirement. 

That made a per-person compensation of BGN 250,000.

The average wage in Bulgaria in September 2023, the last month for which official statistics is available, was just over BGN 2,000.

The explanatory report to the bill says that the Air Traffic Control Authority distributed a total of BGN 20 million for retirement compensations in the past five years, with some people claiming as much as BGN 370,000 each. These compensations were paid under a collective agreement which calculated them by multiplying the gross wage for the last month before retirement - which is over BGN 10,000 for quite a few staff members - by the number of years the person has been with the company, the report reads. 

Now CC-DB propose that the retirement compensation be limited to the equivalent of 12 wages. 

They also found huge disproportions between the retirement compensations paid in the public and the private sector. 

The Labour Code sets a minimum for the retirement compensations at the equivalent of two gross wages and six gross wages for people with length of service of over 10 years. There is, however, no cap and the exact compensation is set in an act of the government, the employment contract or the collective agreement.