The government proposes increasing the minimum monthly wage to BGN 933 as of January 1, 2024 from the current BGN 780. The proposal is contained in the draft of a Council of Ministers decree which has been put up for public coordination until October 2.
After the latest adjustment of the minimum wage on January 1, 2023, the socio-economic and statistical environment deviated considerably from its natural progression due to an overall unpredictability of the international situation and inflation processes, the government says in its assessment of the likely impact of the future decree. “This has caused growing insecurity as to the prospects of economic activity and inflation in Bulgaria and has made it harder to forecast them. The rapid increase of inflation over the period has had an adverse impact on the ability of low-income workers to meet their own basic needs and the needs of their families,” the document says.
According to National Statistical Institute data, annual inflation in Bulgaria in July 2023, based on the consumer price index, was 8.5%, and monthly inflation stood at 0.9%. In July 2023 against December 2022, inflation was 3.3%. Average annual inflation in August 2022 to July 2023 against August 2021 to July 2022 was 14.3%, says the report supporting the government’s proposal.
The Council of Ministers argues that the minimum wage needs adjusting to reflect the changes that have occurred, to help boost employment and competitiveness and to minimize the risks of growing inequality, poverty among working people and contraction of domestic consumption. Another major risk which calls for a minimum-wage adjustment is related to limited labour resources, which can constrain the capacity of the economy over the medium and long term.
Trade unions have proposed a minimum monthly wage of BGN 950. “Our goal is to bring the minimum wage to 50% of the average wage,” Plamen Dimitrov, President of the Confederation of Independent Trade Unions in Bulgaria (CITUB), said on August 23. This, he said, would be in line with a Labour Code amendment effective January 1, 2024. CITUB estimates that, in a best-case scenario, the minimum wage could become as high as BGN 1,003 per month next year.
Under the Labour Code amendment, the minimum wage will be 50% of the average wage of the last 12 months. The formula will be based on early estimates of the average wage in the last two quarters of the previous year and the first two quarters of the current year. Thus, the minimum wage will be adjusted by September 1 of each year.
Employer organizations have complained to the European Commission about the new Bulgarian formula, which was adopted by the 48th National Assembly towards the close of its tenure. They hold that the formula violates the EU directive on adequate minimum wages, and worry that some businesses will be unable to afford the implied wage rise.
Employers also believe that the adopted amendment is contrary to the rule of direct applicability of EU law.