KRIB has a plan on restoring growth

The Bulgarian economy is competitive, and most companies are already reaching pre-crisis levels

Evgeniy Ivanov:

KRIB has a plan on restoring growth

Снимка: Александър Нишков за Списание Икономика

284 ~ 10 мин. четене
Татяна Явашева Автор: Татяна Явашева

Evgeniy Ivanov has been the Executive Director and Member of the Management Board of KRIB since 2006. He was Bulgaria's Ambassador to the European Union in Brussels in the period 1993-1997; Third Secretary at the Permanent Mission of Bulgaria to the United Nations in New York; Coordinator of all assistance programmes for Bulgaria and the G-24. He holds a master's degree in International Relations from MGIMO and a PhD from the Diplomatic Academy in Vienna. He also completed a course in public administration at the Ecole Nationale d'Administration, Paris. He was the Executive Director of the Bulgarian Business Leaders Forum, a subsidiary of the Prince of Wales Business Leaders Forum (1998-2000); Secretary General and Member of the Board of the Employers Association of Bulgaria (2000-2006) and Vice President of the Bulgarian National Committee of the International Chamber of Commerce - ICC (2007-2011).

Mr. Ivanov, let's start this interview with something positive. What should that be?

The most positive thing is that the KRIB member companies survived the second wave of the pandemic. We have no losses in our ranks, and we are moving forward. In the general excitement, we forgot to mention that according to the latest verification of the representativeness of the employers’ associations and trade unions KRIB is once again the largest and most representative employers' organization, and we are convincingly leading in all legal criteria. Perhaps at the next KRIB Ball, where we present the awards to the best companies, we will also report on this success.

Are the State and the private sector thinking in unison in this difficult year?

The state and the business sphere were in agreement when there was a stable government. We used to maintain contacts daily, even hourly, and despite some delicate moments - for emotions are part of human nature - things were going well. Now during the whirl of election campaigns, pre-election behaviour seems to prevail, as we are rather witnessing more emotions than managerial decisions. But as the saying goes – even the worst of times won’t last forever, so we will wait.

How will companies solve the equation of "elections times three, plus a pandemic"?

KRIB member companies have already played through such a situation - I am referring to the time of the Oresharski Government. We have a Plan B and a Plan C, so we hope to solve the equation in our favour this time as well - and the sooner we do it, the better. Any wait and see approach is painful and leads to potentially large losses.

Some sectors are growing and achieving enviable results. But others are under tremendous pressure from the effect that the pandemic has on them. In this year of political instability, to paraphrase a popular saying, will those ‘drowning’ be left to their own device?

Yes, it is a fact that some businesses, even during the pandemic, grew and achieved enviable results, while others are under enormous pressure - I am referring to the tourism and catering sectors, which despite the assistance provided by us and the state, are still under water. We do not want the case of the ‘drowning’ to be in their hands alone, and that is why we continue to press for design measures to support the tourism and catering sectors to continue their work, albeit in a modified way. We can also look for new ways, using competitors’ experience on the main markets where our travel companies operate.

In your observations, how effective are the support measures to those affected by the coronavirus crisis? Where are the biggest problems? In what ways did the design of the measures completely lose focus?

In our opinion, the best measure, developed and proposed by KRIB, is the 60/40 measure. Until recently, it worked very well, and even in its new modified version it will continue to work at least until the end of August. Its strength was that it was aimed at those employers who wanted to retain their workers during the difficult times of the pandemic. Only an employer who is willing to add own resources to the ones provided by the state can quickly resume operations after the end of the pandemic. That is because his employees, having kept their jobs, will not have to start from scratch, and can enjoy a flying start. The measures that lost focus were those that, due to technical misconceptions - and here I mean the guarantees for BDB loans to commercial banks, simply did not work. The reason is that it was wrongly envisaged that the guarantees would be covered only after the full process of claiming the loan from the recipient was completed. You understand that then it may take years before the bank receives the money from the guarantees on the non-performing loans.

These days, whose cries for help are reaching you as an employers’ organization?

We mostly receive calls for help from the tourism sector, and the textile and clothing industry. The other sectors are already reaching their pre-crisis activity levels.

What are the "hot potatoes" that the next government and parliament must pull from the "fire"?

The updating of the budget is a key issue so that the planned measures can continue to work. This goes for the introduction of new ones, as well as the submission of the National Recovery Plan to the EU.

Does the National Recovery and Sustainability Plan give you the hope that it is relatively well focused? What possible risks do you see in its implementation?

It seems that there is a prevailing opinion that the existing version of the National Plan, perhaps with slight adjustments, should have simply been submitted already. We worked on it in a number of meetings with the ex-Deputy Prime Minister and his team, and we managed to impose our views together with the unions in many of the areas of action included in the plan - so to some extent, we consider ourselves its co-authors. We frankly do not accept the current nihilistic approach that everything must be changed, even more so without our knowledge and without consulting us as the original plan "designers". In addition, there is a clear signal from the European Commission that it will not accept a plan submitted by a caretaker government, and in the spirit of good tradition will wait for a government nominated by a regular parliament. This means that Bulgaria will lose somewhere between six months and a year because of some people’s attempts to push their own ideas, which are often a stranger to the business sector, the trade unions, and to society as a whole. Moreover, in the process of dismembering the existing project, some ‘interesting characters’ reappeared from the past who only reiterated the same old mantras and rosegarden phraseology.

What is your recipe for the recovery and stimulation of the Bulgarian economic growth going forward?

The recipe for restoring and stimulating the growth of the economy is best known to companies from both the base industries and the most innovative sectors. Only they can say what they want and what the state administration must do to keep the economy going. The fresh example of a leading car manufacturer in Bulgaria comes to my mind. I am referring to Sin Cars Industry, a member of KRIB, which was forced to move to Germany (Bavaria) their production of conventional and fully electric cars. There, it received a certificate as Class A investor. "We have the full cooperation of the German administrative system, so as not to be disturbed in our work," - the company owner told us. Our new government should go and ask him what tormented him in Bulgaria and why he chose another country for his successful production. We used to be so proud when every major KRIB event featured a display of these car models - models that Germany will now be proudly displaying. In short, to make the recipe successful, KRIB works directly with its base industry members, as well as with the innovative companies gathered in BRAIT - the Bulgarian Employers' Association Innovative Technologies, a very important partner of ours.

In the world competitiveness ranking of the Institute for Management Development, out of a total of 64 countries, Bulgaria fell to 53rd position in 2021, which represents a 15-places descent since 2009. Is this a failure, or is the Bulgarian economy still competitive, regardless of the rankings?

I am especially careful when I read the rankings of the plethora of luminaries in the analytics field. I remember the great economic crisis (2008-2009) - none of them predicted that this could happen, and when it did, none of them gave a recipe for overcoming the crisis. And now, as the turbulent years have subsided, they have once again begun to analyse which businesses are more efficient and which are more competitive. I can most responsibly say that in some sectors Bulgaria is no less competitive than the leading countries of the so-called Old Europe, even if this is not highly publicized. We should talk about Bulgaria with dignity since it is certainly not at the bottom of the "authoritative" European rankings, where many ill-wishers would want to see it. I will only give as an example the projects we are working on with the Automotive Cluster Bulgaria. These will certainly prove the validity of our assessment.

How can we attract investment, given that HR professionals see a strong shortage of people in all industries?

Yes, there is a shortage of people, but I will return to the measures - those who set aside their own resources and added their 40% to what the state gave, now have all their employees and there are no such problems for them. And now think of those who schemed or openly lied trying to convince the authorities that the state should cover all of their expenses.

In Bulgaria we like waiting for the ‘storm to pass’. But in the case of the Green Deal, can we postpone any longer?

Yes, historically this is relevant, perhaps folk psychology has imposed this thinking, but in the case of KRIB this is definitely not true. As early as January this year, KRIB co-organized a conference called "Green Deal and Digital Transformation - Opportunities for the Competitiveness of the Bulgarian Economy". This was done together with Ms. Iskra Mihaylova, Deputy Chair of the Renew Europe Political Group at The European Parliament. It also included the personal participation of our President Mr. Kiril Domuschiev, and our members, represented by Mr. Stoyan Stavrev, Executive Director and owner of the Bulgarian Consulting Organization. We prepared an initial action plan, which, however, if not adopted by the state, would be very difficult to lead to any results.

The Green Deal definitely pushes us to act. Where do are our biggest issues lie? How can we find the right solutions?

Our biggest problems are linked to the coal power plants. I am referring to the Maritsa basin, coal mining and the production of electricity from the lowest quality coal. Here we have serious problems with the trade unions, which are trying to maintain both the production and the huge subsidies that these operations receive - at times on the edge of legality. All neighbouring countries will close these proceedings by 2025, while we seem to be trying to push beyond the 2030 horizon. Obviously, measures must be taken now, and not wait until December 31, 2030.

Among EU countries, the Bulgarian economy has the highest carbon intensity. What are the roles of the state, of employers' organizations, and of the business sector itself in setting the road to decarbonisation?

The first steps should be to replace carbon-based fuel with natural gas and at the same time look for a breakthrough in hydrogen management. Only top-level innovation will ensure that hydrogen can become the engine of our economy as well. There is already a movement in this direction in our circles, but the topic is delicate and highly competitive, which means that confidentiality is needed. So, we will first wait for the companies that work in this direction to announce their good results themselves.

For years we have been talking about circular economy, yet at the national level we still do not have well-organized waste sorting. What are we waiting for? Who will organize a working circular economy?

KRIB has been working for years to ensure a sustainable circular economy. The organizations of the so-called collective schemes are members of KRIB and together we are looking to implement what has already become a working solution in Europe. But let's not forget that we started relatively late and from a lower base, and so we have a lot to catch up. Still, to tell you the truth, I have visited neighbouring European countries where they have not even heard of separate waste collection.

What are KRIB’s current priorities as an employers’ organization?

Our main priority is to finally leave the pandemic crisis behind us, prevent a third wave and impose a sustainable dialogue with the government, whichever its political stance, - so we can use all the opportunities provided by EU membership for competitive economic management, and not lag behind the leading countries.

Is there a philosophy that helps you deal with difficulties?

Size matters, and when you are the biggest actor, you need to demonstrate on a daily basis how others can handle difficulties. This is a huge challenge for us, because we have to prove ourselves again and again every single day.

Any inspiring messages that we can share with our readers?

Let's stop hating and constantly imagine that things are not going well in our country. Instead, much like Petko Karavelov once declared after suffering an assault, let us proudly say: "Such things do not happen in my Fatherland!" And this must be clearly understood by the authorities, whichever they are. Otherwise, those who have not read it will have to read it, and those who have read it and have not understood it will have to read it yet again. And with that I am referring to the title of Steinbeck’s classic novel "The Winter of Our Discontent".

Organization’s profile

KRIB is the "Voice of Bulgarian Business" that unites over 12,500 companies, collective and individual members, among which are the largest companies in Bulgaria, together employing over 900,000 people. The organization participates in the National Council for Tripartite Cooperation and its commissions.
KRIB covers 71 economic activities, and it has strong regional and branch structures: 255 regional offices throughout the country and 141 branch organizations. KRIB also has 12 intersectoral committees that coordinate the work on protecting the members’ interests.