Cause and Effect in European Politics and Law

An increase of salaries in spite of the crisis?

euinside, February 22, 2010

The National Statistic Institute of Bulgaria reports 13.3% increase of the nominal cost of salaries in 2009, compared to 2008, in spite of the contraction of labour demand and the increase of unemployment. The average salary, before payment of taxes and social securities, was 585 levs (300 euro) in 2009, according to the national statistics. In the private sector the increase was 13.7 %.

According to Industry Watch, the reason for these data, if they are correct, is that last year employers got rid of jobs with lower than the average salary. Thus even if the jobs that remained were with no increase of the salaries, the statistics reports an increase.

Industry Watch point out though, that the increase of salaries in the public sector by 11.6% is more worrying, especially because it is extremely hard to measure productivity in this sector. Furthermore, given the slight reduction of public jobs by 1.8% last year, it is obvious that the increase of salaries is not bound to any improvement of results.

In the same time the analysts from Industry Watch say that inflation for the 12 months until January 2010, measured through the index of consumers prices, was 2.3%. In 2009 the real salaries, calculated after clearing inflation of consumers prices, changed as follows: public sector - plus 8.5%, private sector - plus 10.6%.