Updated on: 4 June, 2020
What is the current situation?
- The first 4 cases in Bulgaria were announced on 8 March, and as of 2 June, there have been 2,538 cases of Covid-19, of which 1,123 recovered and 144 are deceased.
- On 13 May 2020, the State of Emergency Measures Act (promulgated on 13 March 2020) was replaced by amendments to the Health Act. These amendments introduced the ‘epidemic situation’, thus putting an end to the state of the emergency. The ‘epidemic situation’ in Bulgaria is enforced until 14 June.
- Prohibitions on mass gathering of people, like in cinemas, theatres, shopping centres, sport events, parks, etc. were gradually lifted, starting on 13 May with walks in the parks, through fitness and shopping centres as of 18 May, kindergartens as of 22 May, and currently, as of 1 June, visits to indoor facilities like restaurants are allowed, but visits to bars and discotheques are still not allowed.
- The ban on travelling from one town to another was abolished as of 6 May. As of 1 June, passengers arriving in Bulgaria from most European countries – but not those with the largest outbreaks of the coronavirus – will no longer be required to go into mandatory quarantine for 14 days. Mandatory quarantine for 14 days remains in force for citizens of Sweden, UK, Belgium, Ireland, Portugal, Spain, Malta, Italy, as well as from all other countries except Serbia and North Macedonia.
- The national economy has been significantly affected. The unemployment rate has increased significantly since the Covid-19 containment measures were put in place, boosted in part by the return of workers from abroad. Job losses are set to be most pronounced in the services sector (which accounts for more than 60% of employment), where the disruption is likely to last the longest. The unemployment rate is expected to jump to 7% in 2020, after having reached historic lows of 4.2% in 2019. In 2021, a partial recovery in employment is projected to take place, and the unemployment rate is expected to decrease to 5.75%. Nominal wage growth, after years of substantial gains, is expected to moderate to 3.5% in 2020 and 2.25% in 2021.
The situation with factory production
- In general, businesses are adapting and are seeking different opportunities for flexible ways of working. However, this is not possible everywhere, declared the Bulgarian Chamber of Commerce and industry (BCCI).
- 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 PPE (masks, gloves, etc.). Schools are closed and students study online.
- So far, there is no news about bankruptcies or collective dismissals from garment factories. Some garment factories shifted their products to produce PPE for hospital staff, masks, etc. Some garment factories stopped working for a week or two at the beginning of the pandemic (13 March) and many sent their workers on paid or unpaid leave.
- Some regions, e.g. Varna region, Blagoevgrad, and Sandanski, especially in the cities where there is a large concentration of garment factories, are also heavily reliant on the tourism sector. Under normal circumstances, if jobs are lost in one of these sectors, workers are redirected to the other sector. Now, this is impossible, and so textile workers have fewer options to find work if their contract is terminated.
What are the government policies to support local businesses?
- The state will provide BGN 4.5 billion to support businesses. Out of this, BGN 1 billion will be used to support businesses in retaining their workers.
- On 30 March, the government introduced a draft decree for the compensation of wages for the most affected businesses. The ones most affected from the lockdown will receive the compensation without any conditions, and all other businesses will be entitled to the compensation, provided they can prove a decline in sales of more than 20%. Garment factories fall in the latter category. Another condition is that companies do not have any unpaid taxes. The government will cover 60% of workers’ wages (income on which social and health insurance contributions are calculated), and the employer should cover the remaining 40%. Those that are self-insured are not included in the wage compensation scheme. (Source: https://www.az.government.bg/pages/izplashtane-na-kompensacii-za-zapazwane-na-zaetostta/)
- Support for micro and small enterprises with staff of up to 50 employees established before 1 July 2019 from all economic sectors (except those within the scope of Rural Regions Development Programme), who have suffered a drop in their turnover of minimum 20% for April 2020, compared to the average monthly turnover in 2019. A condition is that they have a minimum turnover for 2019 of BGN 30,000. They can apply for a grant between BGN 3,000 and 10,000. The amount of the grant may not exceed 10% of the turnover for 2019. Applications shall be submitted online.
- Support for medium-sized enterprises established before 1 January 2019 with a net sales revenue for 2019 of at least BGN 3 million. The amount is a grant to be used for working capital from BGN 30,000 to 100,000 (not to exceed 1% of the net sales revenue above). The support will be provided on a project basis using the usual procedure for project applications. The deadline for application is 20 days from the announcement of the procedure. More details on this site.
- The 60/40 measure covers payment of 60% of wages and social and health insurance contributions. The measure is provided for enterprises that had to stop working for certain time or had to ask all or some of the workers to work part time. In order to apply for this measure, employers must prove at least 20% decrease in revenue compared to the same month in 2019. For certain sectors that were closed during the lockdown, there is no requirement to prove decreased revenue, but the garment sector is not among them. The measure will be effective until 30 June 2020. More information can be found at this webpage.
- Deadline for annual close down of accounts and tax payment of corporate tax has been extended to 30 June 2020. Some other possibilities are to reschedule tax payments (by individuals and legal entities) as well as to ease and renegotiate the terms and conditions for bank loan instalments.
- As of 11 May 2020, the total number of companies that have applied for the 60/40 measure was 9,035, for a total of 171,548 employees. Out of these, the largest share is of hotels and restaurants – 36.6%, followed by trade and motor vehicle repairs – 19%. The employers from manufacturing make up around 11.5%, and culture, sports and recreation – 5%. Based on NSSI data as of 12 May, the compensation paid amounted to BGN 16 million. The deadlines for the other measures are still running, so there is no data yet on the uptake.
- During the debates of these measures there were some comments that the company requirements 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.
What are the government policies and regulations to protect employees – the workers?
Financial measures for workers can be divided into three categories: those aimed at workers on unpaid leave, workers who continue working with their salaries covered by the 60/40 measure and 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 him/herself.
On the other hand, the measures providing financial support can be divided into existing and newly introduced ones. The newly proposed measures were considered insufficient by the Confederation of Independent Trade Unions in Bulgaria, both in terms of scope and monetary value as of the end of March 2020. 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 cases of receiving unemployment funds (see below).
Parents of children up to 12 years of age who have used at least 20 days of unpaid leave (because it has been impossible for them to work from home during the state of emergency) are able to receive a one-time sum of BGN 375 (192 EUR). To receive this support, they will need to fulfil all of the following criteria:
- The income per person in the family must not exceed the national gross minimum wage (BGN 610 or 312 EUR)
- The parents must not receive income from other sources
- They must not receive financial support of any sort under the Social Assistance Act
- The parents should not be part of a company receiving support under the 60/40 measure
- Their children must have attended school or daycare before 13 March 2020
- All social security contributions must be duly paid for the 6 months prior to requesting the one-time assistance.
- In the cases in which only one parent is on unpaid leave, s/he will be eligible for this statutory support if the other parent is not receiving maternity leave benefits, unemployment benefits, or temporary inability to work benefit
Workers who are on unpaid leave because of the state of emergency can sign a second employment contract with another company whose operations have not been damaged by the Covid-19 crisis. According to the General Labour Inspectorate, workers who sign a ‘one-day contract’ in agriculture (specific type of contract for short-term employment) do not lose their right to receiving social support and benefits.
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 BGN 9 (4.60 EUR)
- Maximum benefit amount per day is BGN 74.29 (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 between 7 years and 1 day to 11 years – 8 months. In the bracket of 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 without mutual agreement, the worker will be able to receive the unemployment benefit as described above. However, if the worker has terminated the contract of their own initiative, or has agreed on termination with the employer, then the worker is eligible only for a benefit of BGN 9 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 negatively affected by the fact that part of the wages workers receive remain undeclared, hence reducing the amount of benefit to which they are entitled.
Because of the Covid-19 crisis, the Bulgarian Development Bank developed a programme granting interest-free loans without collateral. The maximum amount of this loan is BGN 4500 (EUR 2301) and can be received as a lump sum or in three instalments. The period to pay the loan back is maximum 5 years with a maximum grace period of 24 months. In order to receive this loan, workers need to fulfil the following criteria:
- To have their employment to be temporarily suspended
- To be on unpaid leave
- To have had an employment contract for at least 6 months prior to the unpaid leave
- To not be receiving a wage from another source
- To have worked for at least 5 days in the month when their unpaid leave began
The workers who apply for such loans need to have all their social contributions paid and must return to their workplace the end of the unpaid leave.
Another banking instrument for support introduced because of Covid-19 is the option of loan payment deferrals. Those workers who wish to take advantage of the measure need to fulfil the following criteria:
- To not have payments overdue by more than 90 days
- To explicitly request a loan payment deferral
The deferral period is up to 6 months, but cannot be extended beyond the end of 2020.
- As before the Covid-19 crisis, employers are obliged to inform the Employment Agency for collective dismissals at least 45 days prior to the effective dismissal.
- Special information to help employers and workers is published on the website of the General Labour Inspectorate.
- 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 minority groups.
What are local stakeholders doing to lobby their government?
- 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 who can receive compensation for wages at a ratio of 60:40, as discussed above.
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 allowed the employer to send workers on unpaid leave. 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 companies to call meetings with the Health and Safety Committees and discuss measures to prevent Covid-19 contamination.
- There are several one-off and continuous donation initiatives and charities. For example, the volunteer group of Yunona Kiriakidu is collecting food (until 15 June) for families who have become unemployed during the crisis in the Pravets region through the TimeHeroes platform. Such initiatives are regularly updated on the platform.
- There are also charities with initiatives to counter the crisis. The Teddy Bear Operation NGO continuously collects food donations for families which have lost their income due to the crisis. Their activities are active in Sofia, Razgrad, Blagoevgrad, Veliko Tarnovo, Vidin, Vratsa, Gabrovo, Dobrich, Kardzhali, Kyustendil, Lovech, Montana, Pazardzhik, Pernik, Pleven, Ruse, Silistra, Sliven, Smolyan, Stara Zagora, Haskovo, Yambol.
- An NGO specifically created to help families who have lost their jobs because of Covid-19 is WeCare.
- The Bulgarian Food Bank has options to donate food or money that will be invested in providing food for communities in need. A special campaign is also open for this purpose in the Bulgarian Donors Message Service.
- The United Against Covid-19 Fund is an initiative by the Bulgarian Donors’ Forum, America for Bulgaria Foundation, United States Embassy in Bulgaria and American Chamber of Commerce in Bulgaria. They support NGOs who, on their side, provide support to communities in need in Bulgaria. The Fund has an open donors’ account available here.
What have been the responses and requests of business associations to support the industry?
- There has been no particular debate on garment factories, except that so far about 10 factories shifted their production to making protective outfits, masks and other necessary protection for medical staff and the general population.
- Bulgarian Chamber of Commerce and Industry took respective measures and actions for adequately informing business circles. Meetings with the President of the Republic, the Government and respective ministers took place during the week and a set of measures was developed. Still, more measures are to be introduced. Tackling the negative results of Covid-19 in the short term, the Bulgarian CCI suggested:
- Ensuring the movement of goods and raw materials along the trans-European corridors not to hinder imports and exports.
- Checking all delayed payments on a national and municipal level for companies and developing a plan for their execution as soon as possible.
- Opening a hotline for companies to signal cases of delayed payments from the state to the business. Shortening the periods for payments form the state to the businesses.
- BCCI is providing regular information for companies regarding the WHO recommendations, Ministry of Health, Ministry of Labour and Social Affairs and Ministry of Foreign Affairs in Bulgaria in BCCI’s info channels, as well as numerous articles and links provided by partner organisations: Eurochambres, European Commission, ICC, World Trade Center Association, Silk Road Chamber of International Commerce.
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 – compensations
General Labour Inspectorate
Special coronavirus information site