Labor Market Data Remain Positive
Labor market data show positive developments in the second quarter of 2014. Although the economic activity of the population is increasing, compared to the period from April to June 2013, there is a decline in the unemployment rate (from 12.9% to 11.4%) and a rise in the employment rate (from 47.0 percent to 47.9 %) of the population over 15 years of age. These data were largely expected, given the positive signs of increasing economic activity and the gradual decrease in the number of discouraged workers in the last few quarters. The decline in the ratio of long-term unemployment is undoubtedly positive news – it fell from 7.2 to 6.6 percent on an annual basis. This suggests that some of the people, who gradually returned to the labor market over the past year and a half in search of a job, were able to find one.
The rise in the number of people employed in Q2 2014 (39.6 thousand) is practically the same with the one observed in Q1 2014 (39.1 thousand). These data are undoubtedly positive and imply a continuing trend of job creation. Even so, the pace of the recovery is still relatively slow, with regard to the number of jobs lost during the crisis. In May 2014 we estimated that if this pace of job creation continues, the economy will need 8 years to recover the number of jobs lost since Q1 2008. This could happen somewhere in the end of 2021 and the beginning of 2022. Bearing in mind the slowing down of the European economy and the deterioration of the macroeconomic perspectives of the business environment in Bulgaria in the short term, the persistence of this trend looks unlikely. In order to keep up the current quarterly job creation, the economy will have to generate a total of 73 thousand jobs in Q3 2014. At the same time, the low economic activity of young people and the problems that they share with people with technical education trying to enter the labor market, continue to be a cause for concern. Both are the result of the structural problems of the Bulgarian labor market that render these two groups, together with the low-skilled workers, the most vulnerable to potential shocks in the recovery that is taking place.
In Q2 2014 the number of people employed rises in 14 of the 28 districts in the country. A significant part of the annual rise is due to positive developments in Sofia (capitol). In Q2 2014 the number of people employed there has increased by 19.8 thousand. Notable annual increases are also registered in Plovdiv (11.4 thousand), Haskovo (7.8 thousand), Burgas (6.7 thousand) and Veliko Tarnovo (6.5 thousand). A positive recovery trend is also evident in Varna, although its pace remains moderate and below expectations.
Four out of the five districts in the South Central region of the country register at least 6th consecutive quarter of an annual increase in the number of people employed. These are Plovdiv, Haskovo, Kurdzhali and Pazardzhik. The only exception is Smolyan, where the number of people employed drops slightly in comparison to the same period of last year.
Since the start of the year the number of people employed is yet to register annual increases in ten of the country’s districts – in some of them these negative trends are long-term. For example Q2 marks the 7th consecutive quarter of decrease in Silistra and Stara Zagora and 5th and 6th in Blagoevgrad and Ruse – respectively.
It is evident that the Southern Central region of the country continues to be at the forefront of the labor market recovery in the country. Separate districts from the South East and the South West regions of the country (like Sofia and Burgas) have also contributed. Labor markets in the North West region remain in deep crisis, while the North Central region shows some signs of improvement. A more significant increase in the number of people employed is evident in North East Bulgaria, with Varna and Shumen showing the largest improvement and Targovishte finally breaking a negative trend of nine consecutive quarters of falling number of people employed on an annual basis in the period October 2011 – December 2014.
 Due of the continuing decline of population and consequently – the number of people in the labor force, if the current trend of job-creation continues pre-crisis employment levels will be reached earlier – in 2017 or 2018. The reason is that a smaller number of jobs will be required in order to reach the same employment rate.
 Youth economic activity remains at record lows. Only 27.3 of young people aged 15-24 are economically active in Q2 2014, which is one of the lowest levels in a decade.
 IME continues to hold reservations regarding the representativeness of NSI’s data on the state of the labor market in Kurdzhali.