Updated on: 3 August, 2021
What is the current situation?
- After the reaching the highest peak of COVID 19 infected cases of in November 2020, since March 2021 the country faced another wave, which continued by the end of May 2021. As of 3 August 2021, the total number of cases since the outbreak is 425,541 and the number of fatalities is 18,222. A little over 2 million doses of vaccines have been administered (1st and 2nd dose). As the emergency epidemic situation has been prolonged the government introduced a set of social and economic measures. The expectations are that in late August – early September the Delta variant will be predominant in Bulgaria and the number of vaccinated will be insufficient for collective immunity. The experts expect the outbreak of the fourth wave during the same period. The extraordinary epidemic situation, which replaced the state of emergency introduced in mid-March 2020, has been extended until August 31, 2021, and so far, is being extended on a roll-over basis every month.
- Since the first wave of the outbreak, the government implemented a range of containment measures, including social distancing and travel restrictions. The current restrictions in Bulgaria are not as many, with mandatory mask wearing, disinfection, maintaining distance of 1.5 meters and utilizing only 50% of the capacity in indoor public spaces. Restrictions of different severity apply for travelers visiting Bulgaria according to three colour zones – red, yellow and green.
- According to the Ministry of Finance, in 2020, Bulgaria’s GDP decreased by 4.2% in real terms. On the demand side, most affected by the crisis caused by COVID-19 were investments and exports of goods and services. Final consumption grew by 1.8% in real terms. Increased government spending led to a 7.5% rise in public consumption. At the same time, private consumption increased by 0.2%. Restrictive measures against COVID-19, reduced employment and higher uncertainty have led to a sharp growth slowdown but not a decline. Consumption was supported by growth in household disposable income driven by increasing compensation in the industrial and General Government sectors, social transfers and pensions.
- The budget forecast of Ministry of Finance foresees GDP of BGN 124.5 billion and real growth of 2.5%, following a decline of 3% in 2020.
- Expected unemployment rate for 2021 is 5.2%, to stabilize in 2022 and 2023 to 4.6%.
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.
- 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.
- By March 2020 the majority of the Bulgarian garment factories had already shipped their production to their west European clients (shops and boutiques) but the later were closed as a result of the pandemic and found it difficult to pay for the ordered and/or already shipped merchandise. So, the subsequent delay or cancellation of some of the orders, and the requests for delay in payments with 150 days by some of the west European clients created a lot of challenges for the Bulgarian garment factories throughout the last year and a half.
- The situation with the garment factories during the pandemic was much better compared to sectors such as tourism, hotel and restaurant businesses, as well as entertainment facilities, i.e., those that were closed mandatorily by the lockdown measures. There has been no official news about bankruptcies or collective dismissals from among the garment factories. However, the number of employed in the sector declined with nearly 9,000 people in 2020 compared to 2019. Since there are many micro and small garment businesses, this may mean that actually there have been both bankruptcies and collective dismissals, although there is no official statistics on that.
- 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.
What are the government policies to support local businesses?
- On 30 March, the government introduced a decree for compensation of wages for the most affected businesses. 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%. The governmental decree was renewed in July 2021 prolonging this particularly successful measure (known as the 60/40 measure) for the time in which there is extraordinary epidemic situation. Businesses can apply to take advantage of the measure through the national Employment Agency. Currently, it is foreseen that the measure will be active until the end of July 2021. 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.
- 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.
- Deadline for annual close down of accounts and tax payment of corporate tax was extended to 30 June 2020. Some other possibilities were to reschedule tax payments (by individuals and legal entities), as well as to ease and renegotiate the terms and conditions for bank loans instalments.
- 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.
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 receive remain undeclared, hence reducing the amount of benefits to which they are entitled.
During the pandemic situation families with children up to 14 years of age are entitled to monthly aid, provided they meet certain requirements:
- One or both parents cannot work remotely or be on paid leave
- Upper earnings limit is 150% (BGN 975) of the minimum wage per member of the family
- The amount of aid monthly aid depends on days when children could not go to school/ kindergarten due to restrictions for the respective month and on the number of children
30 000 pupils from 1st to 9th grade (including 1 accompanying parent) will have a summer vacation in Bulgaria fully financed by the state.
The Council of Ministers has approved an extension to the application deadline under BDB’s interest-free loan guarantee programme for individuals temporarily unemployed due to the Covid-19 pandemic.
The deadline to apply for an interest-free loan under the programme is extended until August 31, 2021 or until the guarantee limits for financing by partner commercial banks are exhausted. BDB is in the process of signing annexes with the banks that still have a free limit for financing under the programme, so that the process of accepting applications can be resumed.
The anti-crisis measure enables the extension of interest-free loans of up to BGN 6,900 to individuals working on an employment contract, self-employed, agricultural producers and seasonal workers who have ceased working due to the Covid-19 pandemic. The maximum repayment period is 5 years, with a grace period of at least 6 but not more than 24 months. The loans are exempt from fees, commissions and penalties.
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 opportunities for financing to more than 1,800 companies.
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.
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.
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.
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 (BATCL) 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 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.
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