Within the scope of its advisory duties, KRIB presents the following comment and assessment on the National Employment Action Plan of the Republic of Bulgaria 2014, proposed by the Ministry of Labor and Welfare for adoption by the Council of Ministers:
The plan does not offer a reliable analysis of the development of the labor market and its relationship with trends in the economy and policies for its development. It does not provide guarantees for more employment, as a result of a common approach and concerted actions to increase access to the labor market, or for economic reduction of unemployment.
The measures in the Plan invariably continue to be aimed at the socio-economic integration of the unemployed in a disadvantaged position, increasing their suitability for employment, providing subsidized employment and improving services on the labor market - to unemployment itself, but not to its causes. Active measures remain preferred in the fight against it - creation of jobs by the administration with state or European funds, subsidizing training or direct employment mainly in the state and limited in the private sector. The funds are provided by taxes, debt or other sources, without regard to the effect on private sector activity and the employment it creates, and on the change in the total number of jobs; regardless of the dynamics of the labor market and the inability of the administration to respond quickly to the demand for personnel.
Direct job creation measures reduce periods of unemployment. But the experience, the logic and the comparison of the huge resources spent with the low permanent employment created - after the end of the subsidy, show that the selected programs in recent years have created jobs only while they last, that they have not contributed to the settlement of the participants in the primary labor market, not have permanently affected the employment and low economic activity of the people, have not created a long-term and significant effect for the economy, but that they have been costly. Adding to the systematic rejection of ex post impact assessment after the implementation of active measures to show which of them are effective and at what cost, in order to choose the best plan of action, new policies or funds are alternatively directed to other kinds of programs , or to remain with the taxpayers, we come to the logical conclusion that budget funds should be reduced. Contrary to popular belief, the more funds, the better.
The unrealistic planning of employment measures, the lack of compliance with demand, the increase of costs and the misuse of funds are inadmissible in the conditions of high unemployment and successive years of budget deficit.
Centralized decisions on the type of qualification or retraining of the unemployed are inadequate. Unfounded financial support demotivates and has a negative effect. Therefore, the planning of employment actions must be based on an accurate assessment of: for example the type of programmes; the impact of qualification programs on the employment of the unemployed after their completion; the result of counseling and guidance; the effect of directly subsidizing employment in the private and public sectors; the success rate of the programs according to the age of the participants involved; administration costs and profitability, quality achieved. If not all processes and functions of management, evaluation and planning are within the capabilities of the administration, they should be outsourced /on a commercial basis/, and the administration cuts.
We understand that the government aims to help the people in the most difficult situation, but this cannot be at the expense of actions in the Plan that are not far-sighted or represent social activities without an effect on increasing employment. The plan should focus on meaningful actions to ease business and labor market regulations, on business environment, education and skills, on employment and training programs in the real sector, with clear criteria for success and job sustainability. Unemployment and low economic activity among people are caused by a number of factors, such as heavy hiring and firing procedures, administrative increases in income and labor costs, retirement conditions, the amount and duration of benefits, social benefits or subsidies, tax increases . These factors must be subject to careful assessment. Otherwise, national and European funds will continue to be spent, and employment targets will not be met.
Some measures in the NPDZ 2014. borrow policies to achieve other national goals in the economy that affect employment. Government spending on economic activity, creating growth and national income, and government policies on competitive advantage, sectoral development and investment stimulation do not always provide sufficient returns to necessarily have a long-term positive effect on employment. And more - the risk financing of start-up companies should not come from the state finances, as well as the development of high-tech or innovative productions, with high added value, should be encouraged with non-market incentives. But the state can help with actions to improve the business environment - optimizing the administration; low taxes, quasi-taxes and bureaucracy; rational regulation. However, the plan only contains measures for reforms and better access to public services in the Employment Agency.
We are aware of the economic need for quality VET and higher education and would like to support a common concept of management approach and tools to achieve them, but in practice, in the field of education, departmental reforms are ahead of consensus decisions.
We do not share the income policy of the low paid groups. The constant increase of the minimum wage and the mechanism of the minimum insurance thresholds are a discriminatory tool against the low-skilled. Ideas to regulate internships, minimum wages and insurance thresholds are measures limiting access to the labor market. The most vulnerable groups are the young and the low-skilled.
NPDZ 2014 should focus on improving the business environment because permanent employment is created by the real sector. With good conditions for entrepreneurship, investments will ensure the creation of jobs.
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