Stagnation and structural problems - what the labour market in Bulgaria looks like

The labour market in Bulgaria is at a certain standstill, even defined as "stagnation" by specialists. This conclusion is based on statistical data which show that in the last 3 years unemployment has been steadily in the range of 4 - 5.5%, and is currently rather at the upper end of this number.

The demand for labour is also not changing much. The annual surveys on the need for more employees carried out by the Employment Agency show that in recent years the percentage of employers who do not intend to hire new employees has remained around 80%.

The most common factors that change and influence the job market are turbulence in particular sectors and seasonality, according to JobTiger, a job search and supply platform.

So far, we almost regularly see a few months of growth, then leveling off through a decline and back up again," says Christian Petkov, operations manager at the platform.

As usual, the second quarter of the year sees increased demand for staff in the hospitality and catering and retail and sales sectors. Then, in the summer season, there is a drop in both demand and supply. With the start of the school year, there is again an increased supply and again a decline around the winter holidays, according to JobTiger observations.

Structural problems

And while things seem seemingly calm, structural issues in the job market are worrying professionals.

Structural unemployment is deepening, and it is very difficult and slow to overcome. This is a comprehensive policy that starts from education and as early as 8th grade," says Zornitsa Slavova, senior economist at the Institute for Market Economics (IME).

This conclusion is supported by data from the Association of Industrial Capital in Bulgaria (AICB), which show that 40% of graduates are employed in jobs that require secondary education or even less.

As well as the survey of the Employment Agency, which reveals an acute need for staff with vocational education. The labour market needs 14 775 machine operators, 8 653 tailors, 8 602 cooks, 8 297 construction workers. In just one year, the demand for professionals with vocational education has grown by 41%.

Vocational education

According to Slavova, the reason for the lack of personnel in the industry sector is the loss of attractiveness of vocational education.

In the last decade, vocational education, which provides just such personnel, has lost a lot of its image," she says.

64% of employers have difficulties finding specialists in vocational fields, the AZ data show. 16% of them believe that this is precisely due to the lack of willing candidates for the job.

37% attribute this to a lack of qualifications. One of the reasons for the lack of qualified staff, according to Slavova, is the problem with the introduction of dual training.

Dual education is the way to develop practical skills in students so that they are prepared for the labour market," she says.

It would help young people to experience a real working environment and train on modern techniques. The physical facilities entail large investments that cannot be allocated and secured in government schools.

Another option to attract more students in vocational fields is to expand training, according to Slavova. Currently there are more than 600 fields and if you study to be a turner, you can only develop as one.

If you give room for broader training, it would enable flexibility and greater competitiveness in the labour market," she believes.

And despite the great needs of the industrial sector, most people are looking to develop in call centres, customer service, IT, sales and marketing, according to nPloy, an online job search and placement platform.

The job market by region

The territorial picture of job demand and supply also points to structural problems in the labour market. Large regional and industrial centres clearly stand out, while smaller towns and underdeveloped districts have high unemployment rates and shrinking labour demand.

30% of in-demand workers are in the districts of Burgas, Varna and Sofia-city. At the other pole - Vidin, Montana and Yambol - are the districts with the most modest needs for workers. The difference between the former and the latter is at least 3 times, according to the AZ survey.

According to Zornitsa Slavova, it is important to pay attention to small settlements. The IME proposes fiscal decentralisation of municipalities to help them attract investors.

What would fiscal decentralisation mean? If introduced, each municipality would receive 1/5 of the income tax back in the municipality itself, which would provide it with additional resources.

At the moment, according to Slavova, municipalities are at a disadvantage when attracting investors, as they have to provide a road to the plant, as well as connect it to the electricity and water grid.

What to expect?

We cannot look at the labour market as something separate, as it is influenced by many factors on the international scene, such as COVID-19, the war in Ukraine and the Middle East, global economic instability, technological developments, etc.

Maria Petrova, Head of Business Development and Sales at nPloy, remains optimistic about the future.

Despite the challenges we face, there are expected to be job opportunities in more and more sectors," she says.

As she sees it, the most important thing for job seekers is to adapt to changes in the job market.

It is important for people to be flexible and adapt to changes in the working environment in order to always stay relevant and be successful in the labour market," Petrova adds.

Zornitsa Slavova from IME does not expect unemployment to rise in the next year. Her concerns are focused on structural unemployment. However, she believes that vocational schools are making key steps towards change.

We see a lot of positive signals in recent years - in the attempts of vocational schools to respond to the needs of the labour market and their attempts to increase their attractiveness," she says.