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| THE LABOUR MARKET POLICY IN BULGARIA (1990 - 1993)
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PART THREE: FINANCING THE LMP
1. Status of the Training and Unemployment Fund
The predecessor of the fund currently in operation was created in
1986 to finance training and retraining. Starting from 1989 the
fund covers all LMP expenses.
Revenues
The fund is created through employers' contributions and the state
budget. Contributions are obligatory to all employers except for
those whose organisations are budget-dependent. They are calculated
on the basis of wages. The amount of the contributions has changed
three times for a period of four years: 2.75 to 5.0 to 7 percent as
of January 1992. The amount is fixed through the state budget law
each year, which is a reason for considerable delays (The budget is
not approved earlier than March of each year). Contributions are
made on behalf of employees on labour contract but not those on
civil contract. 10 This is a constant burden on the budget which
reduces its revenue sheet as the common form of labour agreement in
private companies is the civil contract.
The reduction of the revenue sheet is also a consequence of the
Finance Ministry's refusal to make the contributions set forth by
regulations, such as unemployment benefits to unemployed in the
budget-subsidised organisations, family allowances and youth
unemployment subsidies. As a result, the state has in fact
contributed no resources to the Unemployment fund for 1992 and most
of 1991.
A new legal framework is needed to regulate coverage of
the private sector in an unemployment security network. Otherwise
mere revenues will not be a guarantee for the attainment of the
objectives the fund was created for.
The draft law for Unemployment envisages to introduce contributions
made by those administering the fund. Along with all else, it will
be an additional incentive for trade unions to take part in its
management.
Expenditures
There is hardly any other country in Central and Eastern Europe
where fund revenues exceed expenditures by some 40 per cent. The
1991 balance sheet showed a residue of 50 million leva, that is 32
per cent, and this year's residue was 1 500 000 000 leva. The
annual contributions to the fund are estimated on the basis of the
estimate unemployment figures. The actual number of unemployed for
the last two years is way below the estimate. The delay of the
reform (close-downs, restructuring measures and privatisation),
which is actually the major source of lay-offs is one reason.
Another reason for the fund residue is that the planned
expenditures are never made in full. The LMP started to operate as
late as 1990 and the two-year period was not sufficient time to set
the entire mechanism in motion, for the entire sum to be utilised
in the implementation of the various measures. For instance, labour
offices staff for 1992 was supposed to be 4 000, that is almost
double the initial number. This was not accomplished, not only
because of the delay in the adoption of the structure of the
National Employment Service, but also because there are not enough
labour market experts, as well as premises to place them.
As the discussion of the budget is now under way, options are
considered to reduce the amount of contributions, although the
opinion in favour of identifying measures to, utilise the fund
residue, rather that reduce the revenues. No restrictions on the
LMP are therefore expected imposed because of limited resources.
There are enough resources available. The issue is their reasonable
and effective use.
2. Dealing with long-term unemployment.
A major disadvantage of the LMP is the lack of an adequate
information support system covering labour markets. Data on
long-term unemployment are not summarized and, therefore, the exact
number of unemployed is unknown. This is clearly a misleading
factor. The assumption is that the number of these unemployed is
not very large, and it is based on the fact that the system for
registration has been in existence for only three years. On the
other hand, the unemployed of this group usually drop registration
with the labour offices and, consequently, their real number
exceeds the number of those registered considerably.
The only measure aiming to promote employment among members of this
group is the temporary work programme (public work programme).
Long-term unemployment surveys conducted in three labour offices
(Sofia, Lovetch and Rousse) in October of 1992 indicated that the
share of ethnic minority members and unskilled unemployed is very
high. A considerable share of those do not wish to work, but take
advantage of their registration with the labour office as a vehicle
for receiving social payments within the social care system. The
temporary work programme targets these individuals and refusal to
participate (whenever the job offered is adequate to their
education and qualifications) is sufficient grounds for termination
of social payments.
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