Bulgaria: Poor not just by EU standards

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After three years of EU membership, Bulgaria is still one of the poorest countries not only in the EU but in the Balkans as a whole. Dnevnik, EURACTIV's partner in Bulgaria, reports.

In 2009, the average salary in the country was €302 per month, according to data from the Vienna Institute for International Studies. On this indicator, Bulgaria only fares better than Albania and trails far behind Romania, the other country that acceded to the EU with Bulgaria in 2007.

The negativity is aggravated by data from the Confederation of Independent Syndicates in Bulgaria (KNSB), according to which every fifth family lives below the lower limit of poverty: meaning €95 a month per person.

This was also confirmed by the Bulgarian Ministry of Social Policy, which stated that in 2008, a fifth of the population in Bulgaria was living on the poverty line. Statistics show that the share for the whole EU is around 17%.

In the meantime, economic experts at the KNSB, a trade union, calculated that in March 2010, a four-member family of two adults and two children needed €980 to cover all their living expenses, which is 2.1% more than in the same period last year. According to the trade union, only 11% of Bulgarian households bring in this amount or exceed it.

Bulgarians are growing poorer and are reducing their consumption, according to data provided by the Bulgarian National Statistics Institute. In December 2009, each household earned just €415 per month, which is €60 less than the previous year.

Although in previous years Bulgarians spent most on food, official statistics show that this year the amount they are spending has decreased. People are buying fewer products or cheaper items of lower quality, according to experts. Spending on clothes, shoes, household renovation, maintenance and transport is also falling. At the same time, the amount spent on cigarettes, alcohol and dealing with health problems has increased slightly.

Employment creates 'working poor'

There is also another alarming tendency: around 636,000 people – or a third of the employed citizens in Bulgaria – belong to the category of 'working poor', as the average salary in their sector is significantly lower than the national average. This is particularly the case in the clothing, timber, restaurant, construction, maintenance and planting industries. At the end of 2009, wages in the education and health sectors stood at around €350, while the highest average salaries are found in the financial services and energy sectors.

The main reasons for the increased impoverishment of Bulgarians over the last year are delays, freezing and even decreases in salaries in many organisations in both the public and private sectors, as well as a sharp increase in unemployment. The last 18 months have seen the unemployment rate among the active population in Bulgaria surpass 10%.

A reduced budget for subsidised employment programmes will be counteracted by new schemes under the operational 'development of human resources' programme, as promised by Social Affairs Minister Totio Mladenov. The last scheme under this programme began in March. With the scheme's help, 65,000 unemployed people will start courses and 52,000 of them are expected to find a job after gaining new qualifications by completing them.

As a result of the financial problems of recent months, the government postponed one of the support measures for retired people, who are the most vulnerable group in society as their incomes are lowest. As of 1 July, people over 75 years old who earn up to €150 per month were set to be eligible for additional pension allowances. However, the government recently decided not to proceed with the plan and will use the money for other social support measures instead.

"I think that this is the most suitable moment to ensure a financially stable pension system, as the crisis brings attention to structural defects and unfinished reforms in Bulgaria and in Europe," Florian Fichtl, a World Bank representative for Bulgaria, told Dnevnik.

In 2025, almost a fifth of Bulgarians will be older than 65 years old, which will be the highest share among the new EU member states, said Fichtl.

Today, 17-20% of retired people live below the poverty line, declared Jordan Hristoskov, deputy rector of the High School for Insurance and Finances and ex-manager of the Bulgarian National Insurance Institute, while on a panel discussing pension reform.

According to Hristoskov, the lowest pension in Bulgaria should not be under the poverty line, because if this were the case, then the state would be officially producing poverty.

Background

The fight against poverty is one of the five priorities of a draft ten-year economic plan unveiled by the European Commission in March, called 'Europe 2020' (EURACTIV 03/03/10).

The strategy defines five headline targets at EU level, which member states will be asked to translate into national goals reflecting their differing starting points:

  • Raising the employment rate of the population aged 20-64 from the current 69% to 75%.
  • Raising the investment in R&D to 3% of the EU's GDP.
  • Meeting the EU's '20/20/20' objectives on greenhouse gas emission reduction and renewable energies.
  • Reducing the share of early school leavers from the current 15% to under 10% and making sure that at least 40% of youngsters have a degree or diploma.
  • Reducing the number of Europeans living below the poverty line by 25%, lifting 20 million out of poverty from the current 80 million.

In a series of articles, the EURACTIV network will present the state of play in individual EU countries on each of the targets. The first series of articles focuses on poverty reduction, a target seen as controversial in several circles (EURACTIV 01/03/10EURACTIV 25/03/10).

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