Covid-19 impact and responses: Bulgaria

Updated on: 8 November, 2021

What is the current situation?

General information

Bulgaria was hit by a new and powerful wave of COVID-19 – in large part a consequence of the very low vaccination rate. COVID-19 cases have increased rapidly autumn 2021, with daily cases reaching 6,007 as of 1^st November. This is the highest number of daily cases since the start of the pandemic.
According to official data, Bulgaria has had the highest COVID-19 mortality rate in the 27-nation European Union in the past two weeks and 94% of those deaths were unvaccinated people[1]. Bulgaria currently leads the global rankings for COVID-related deaths per capita, two weeks before holding snap elections for the third time this year, poised to be held on November 14. Bulgaria goes to the polls in November for the third time in 2021, after two failed attempts in parliament to form a government
The interim government imposed a health pass entry COVID-19 “Green Certificate” to most indoor public venues (as a mandatory requirement for access to restaurants, theatres, cinemas, concert halls, gyms, clubs and shopping malls) in a bid to slow the spread of the more contagious Delta variant and spur vaccinations in the country, where only one in four adults has had at least one shot[2].
Many Bulgarians remain skeptical about the shots amid entrenched mistrust in state institutions, misinformation and contradictory messages by politicians and experts ahead of a third parliamentary election this year on November 14. The vaccination rate is hardly up to 22%.
Thousands of restaurant owners, chefs, waiters and bartenders protested on Thursday, 28 October 2021, in cities across Bulgaria to protest the government’s decision to impose a mandatory COVID-19 health pass on all people seeking to enter indoor entertainment venues. Restaurant and hospitality associations organized the protest, calling the health certificates “inadequate” and “discriminatory.” Restaurant associations claimed that in the first two days of the new requirement, restaurant attendance dropped 80% nationwide. Critics say the government introduced the requirement too quickly for people to prepare for it.
The short-term outlook has improved slightly, and GDP is expected to grow by 3.5% in 2021 as a whole, compared to 3.8% decline in 2020. Growth is expected to remain moderate in the coming years
Expected unemployment rate for 2021 is 5.2%, to stabilize in 2022 and 2023 to 4.6%.

[1] https://apnews.com/article/coronavirus-pandemic-business-europe-health-bulgaria-3c2c9b86d9ce94c4ec4e03b143f4b508

[2] https://www.reuters.com/world/bulgaria-hits-record-high-daily-coronavirus-cases-hospitals-stretched-2021-10-27/

The situation with factory production

According to the Bulgarian association for textile, apparel and leather (BATOK)[1] the textile industry is one of the most affected by the Covid pandemic, although it has not been closed by a state act. The sector is extremely export-oriented, and in the countries for which Bulgarian companies work, serious restrictions have been imposed, which has hampered supply chains. According to the president of BATOK there has been some movement in the last few months, but the textile companies are still very far from the levels we held before the crisis. There are orders, but they are limited, and their price is seriously reduced. Some companies are trying to introduce new products to compensate for the losses, but this is not enough. The only measure for the textile industry is to reduce staff. According to Jordan Belovodski, employment in the textile industry has dropped by 20,000 as a result of the pandemic. There are also companies that have permanently stopped their activities. The main thing holding some of the companies at the moment is the 60/40 measure.
The official men’s fashion was hit the hardest. There is the biggest drop in orders. The main orders for the last year are pyjamas and underwear, because when people are closed, they will not buy pants and shirts[2].
Bulgarian manufacturers in the sector have expressed deep concern over the unprecedented increase in electricity prices earlier this month. This is a record in the entire history of the Bulgarian energy exchange. According to BATOK price increase noted in July electricity bills are 68% higher than in July last year. The industry works with preliminary agreements for at least three or four months. The contracts hold by the textile manufactures cannot change the price. For manufactures the increase is a very serious problem, because on the one hand they cannot change the price, and on the other – they cannot fulfill our contracts. Manufactures are concerned how they will be able to pay our bills and salaries.
Production companies have not been prohibited from work but are obliged to meet extended health and safety measures, especially related to cleaning and disinfection requirements, including wearing masks. Some employers also decided to organise vaccination for their workers.
Covid was responsible for ½ billion decline (12%) of exports of garment industry in 2020. Some brands have been demanding great discounts (up to 30%) from their suppliers. Main clients are from Germany and France, and they declared that they will be ordering some 30% of their previous volumes in 2021. Some factories are facing difficulties in paying wages due to decline of orders.

[1] https://batok.org/en/news/the-textile-industry-is-one-of-the-conditions-most-affected-by-covid-19

[2] www.batok.org

What are the government policies to support local businesses?

The measure “60/40” is the most popular measure in Bulgaria in support of employment during the COVID-19 pandemic. It is aimed at helping to preserve jobs in Bulgarian enterprises affected by the pandemic and the introduced state of emergency in the country in March 2020. It is considered as an active measure and a tool for subsidized employment, as it is introduced to support the level of existing employment of employees. Measure “60/40” has been implemented in several stages so far[1].
The ones most affected from the lockdown receive compensation without any conditions and all the other businesses are entitled to support provided they can prove a decline in sales of more than 20%, 30% or 40% for different target economic sectors. A condition is also that companies do not have unpaid taxes. The government covers 60% of the wages (income on which social and health insurance contributions are calculated) of workers and the employer should cover the remaining 40%.
Bulgaria’s Ministry of Labor announced that employers may apply to receive financial support for their employees during the period of August to December 2021. In order for a business to be eligible for funds, the business must have had sales revenues decrease by at least 30% during the month for which the support is provided compared to the same month in 2019. Businesses can apply to take advantage of the measure through the national Employment Agency. According to the NSI (national statistical institute), as of beginning of July the measure brought to some 13 thousand businesses nearly BGN 1,5 billion, saving around 304 thousand jobs[2].
The state provided 4.5 billion BGN to support the business. Out of these 1 billion will be used to support the business in order for them to retain their workers. There are multiple measures in support of businesses grouped according to the type of economic operator that is targeted (SMEs, big enterprises, the self-employed, and farmers). Currently, there are some special measures for the tourism and transport sectors as the ones that suffer the most in economic terms. Some of the measures are grants for wages or working capital; others are loans with favourable conditions. Such loans guaranteed by the state have been negotiated between the Bulgarian Development Bank (BDB) (state-owned) and several commercial banks. The Portfolio Guarantee Programme in support of the liquidity of the companies affected by the pandemic was also extended. The deadline for including the loans in the guaranteed portfolio has been extended until December 31, 2021. Companies can apply for financing until December 20, 2021. The programme is open to all sectors of the economy and is implemented by the partner commercial banks throughout the country. BDB provides guarantee coverage of 80% of the principal of each loan under the measure. At the initiative of the Ministry of Economy, work is underway to add the Business Finance Programme to the new Recovery Programme announced in support of businesses through guarantees from the Fund of Funds and BDB.
Since the outbreak of the pandemic, based on recommendations sent to employer associations in March 2020, employers were obliged to update their risk assessments for workplaces with the support of Occupational Health Service Companies (all companies in Bulgaria are obliged to have a mandatory subscription service from such company). The updated risk assessments are supposed to describe the Covid-19 related risks, as well as the necessary protective measures to mitigate the infection at the workplace.
During the debates of these measures there were some comments that requirements to companies are very restrictive (e.g. sectors, revenues, no tax and social security liabilities). There were also some opinions that the administration of applications is cumbersome and even that those accepting applications tend to change some of the conditions.

[1] “NEW PROGRAMS IN SUPPORT OF SMEs IN BULGARIA IN RESPONSE TO THE CORONAVIRUS CRISIS”, University of National and World Economy (UNWE), Faculty of Finance and Accounting, Sofia 1700, Studentski Grad “Hr. Botev”, Blvd. “8 December”, Bulgaria

[2] https://www.monitor.bg/bg/a/view/mjarkata-60-40-zapazila-nad-304-hiljadi-rabotnite-mesta-272843

What are the government policies and regulations to protect employees – the workers?

Financial measures for workers can be divided into three categories: such aimed at workers on unpaid leave, workers who continue working and their salaries are covered by the 60/40 measure, measures aimed at workers who have lost their job. In this sense, funding options cover a wide range of scenarios, in which a garment worker can find herself. There are no indications that garment workers (or a particular segment thereof) can fall outside the scope of the available funds, with the exception of case of receiving unemployment funds (see below).

Workers whose contracts have been terminated can receive unemployment benefits, provided that:

They have contributed to the “Unemployment” Social Security Fund for at least 12 out of the last 18 months before their social security contributions stop
They are registered as unemployed in the Employment Agency
They have not acquired the right to receive a pension or do not receive a pension based on their employment history
They are not in employment, hence they are not obliged to pay social security contributions under Bulgarian or another country’s legislation, with the exception of workers who have short-term contracts in agriculture

The daily amount of unemployment benefit depends on the reason for termination of the employment contract and on the average daily wage the worker has received in the past 24 months, while the duration of this benefit depends on their length of service. The 2020 thresholds are set as follows:

Minimum benefit amount per day is 12.00 BGN (6.14 EUR)
Maximum benefit amount per day is 74.29 BGN (37.98 EUR)
For length of service of up to 3 years, the benefit can be received for 4 months. In the bracket between 3 years and 1 day and 7 years length of service, the period is 6 months, in the bracket 7 years and 1 day to 11 years – 8 months, in the bracket 11 years and 1 day to 15 years – 10 months. The maximum period to receive the benefit is 12 months (for workers with length of service of more than 15 years).
If the employer has terminated the worker’s contract one-sidedly, the worker will be able to receive the unemployment benefit as described above. However, if the worker has terminated the contract on her own initiative or has agreed with the employer on the termination, then the worker is eligible only for a benefit of 12.00 BGN per day for a period of 4 months.

Unemployment benefits are a major safety net option for garment workers. However, the unemployment benefits amount will probably be affected negatively by the fact that part of the wage’s workers receives remain undeclared, hence reducing the number of benefits to which they are entitled.

So far, the Bulgarian Development Bank has approved loans for over BGN 559 million under the two state anti-crisis programs, supporting 52,320 individuals and providing opportunity for financing to more than 1,800 companies.

As before the Covid-19 crisis, the employers are obliged to inform the Employment Agency for collective dismissals at least 45 days prior to the effective dismissal. Special information in help of employers and workers is published on the website of the General Labour Inspectorate: http://www.gli.government.bg/page.php?c=231

The requirements for accessing funds are in all cases cumulative and, arguably, cover quite a limited group of workers. Applying for funds is and has always been a highly red-tape process, which can be a barrier for workers, especially because governmental institutions encourage online applications because of social distancing measures. Additionally, there may be a language barrier for workers from minorities.

What are local stakeholders doing to lobby their government?

The social partners (trade unions and employers’ associations) took part in the negotiations related to the new wage compensation decree and most of their opinions were taken into account. Both parties requested changes in the list of businesses which can receive compensations for wages at ratio 60/40, as discussed above.
Bulgarian manufacturers in the sector have expressed deep concern over the unprecedented increase in electricity prices earlier this month. This is a record in the entire history of the Bulgarian energy exchange. On this note, the Bulgarian Association for Textile, Apparel and Leather (BATOK) sent an open letter to the institutions on August 9, stating its support for the position of the Association of the Organizations of Bulgarian Employers (AOBE), which includes the 4 largest businesses organizations in our country – BICA, BIA, BCCI, CEIB and insists on resignations and urgent measures against the situation.

What are local organisations doing to support and protect workers?

Prior to the negotiations for wage compensation there have been several opinions of trade unions to the government on how to tackle the inevitable economic crisis caused by the lockdown. CITUB objected a text in the decree that was allowing the employer to send workers on unpaid leave and in the final version of the decree this text has been abolished. CITUB also proposed the wage compensation subject of the decree, as well as extending the deadline for annual tax payment for 2019. CITUB also proposed to request from companies to call meetings with the Health and Safety Committees and discuss measures to prevent contamination with the Covid-19.
An NGO specifically created to help families with children, who have lost their jobs because of COVID-19 is WeCare.

What have been the responses and requests of business associations to support the industry?

The Bulgarian Association for Textiles, Clothing and Leather (BATOK) [1]called the state to take urgent measures to support it in the situation of limited exports due to the coronavirus. “In a global crisis, urgent support measures are also needed at the state level to enable the industry to meet this challenge. To enable the families of nearly 100,000 people employed in the sector to meet their needs in peace, and for this traditional industry to continue to be an ambassador of a positive image of Bulgaria to the world”, says a statement of the association, distributed to the media. Nearly 11% of the total exports of Bulgaria are of textiles, clothing and leather goods. In the second half of 2020, the production of garments in the country decreased by 10-15% compared to the previous year, and the production of footwear the decrease was up to 25-30%, according to official NSI data. According to BATCL, some of the companies have managed to save their business, as they have switched to the production of protective clothing and masks.
BCCI (Bulgarian Chamber of Commerce and Industry) is providing regular information for (all) companies regarding the recommendations of WHO, Ministry of Health, Ministry of Labour and Social Policy, and Ministry of Foreign Affairs in Bulgaria in BCCI’s info channels, as well as numerous articles and links provided form partnering organizations: Eurochambres, European Commission, ICC, World Trade Center Association, Silk Road Chamber of International Commerce. https://www.infobusiness.bcci.bg/bcci33-8-5-20.html

What are international brands doing to support the suppliers and protect the workers?

There is currently no information about international brands supporting suppliers and protecting workers.

Relevant links for more information

Bulgarian Ministry of Health (Bulgarian only)
Ministry of Labour and Social Policy
Hotline of MLSP regarding social and labour issues
Employment Agency
Employment Agency – compensations
General Labour Inspectorate
Special coronavirus information site