News

For the fourth consecutive year the Institute for Market Economics (IME) presented the only one of its scale and depth study of the social and economic state of districts in Bulgaria. The press-conference took place on November 9th 2015 in BTA. The English version of the study will also be available by the end of the year.

Regional Profiles: Indicators of Development 2015 (BG only)

presentation (BG only) | handout (BG only)

The research is published at a time when newly selected mayors are expected to propose the most effective policies for regional development. We believe that the publication would be helpful in resolving these issues because it outlines both the advantages of every district, as well as the challenges they face.

This year’s edition of “Regional Profiles” also includes analysis of the work of local justice systems, due to the undeniable importance of justice for the social environment and the conditions for doing business on local level.

Some of the questions that the study tries to give an answer to are:

• In which districts incomes and salaries are the highest?
• What does the poverty map of the country look like?
• Which territories attract the most investment after the crisis?
• Is there a connection between the level of economic development and crime levels?
• In which districts are local administrative services most developed?
• Where are the demographic tendencies most adverse?
• How does the justice system work on local level?
• Does the quality of education depend on the economy?
• Do the rates of local taxes and fees have an impact on decisions for investments?

9^th November 2015 | 11:00 - 12:00

Pressclub BTA

For the fourth consecutive year the Institute for Market Economics (IME) will present the only one of its scale and depth study of the social and economic state of districts in Bulgaria. The research is published at a time when newly selected mayors are expected to propose the most effective policies for regional development. We believe that the publication would be helpful in resolving these issues because it outlines both the advantages of every district, as well as the challenges they face.

The preconference will be in Bulgarian.

This year’s edition of “Regional Profiles” also includes analysis of the work of local justice systems, due to the undeniable importance of justice for the social environment and the conditions for doing business on local level.  

Some of the questions that the study tries to give an answer to are:

• In which districts incomes and salaries are the highest?
• What does the poverty map of the country look like?
• Which territories attract the most investment after the crisis?
• Is there a connection between the level of economic development and crime levels?
• In which districts are local administrative services most developed?
• Where are the demographic tendencies most adverse?
• How does the justice system work on local level?
• Does the quality of education depend on the economy?
• Do the rates of local taxes and fees have an impact on decisions for investments?

The results from the study will be presented by:

Desislava Nikolova, Ph.D, chief economist, IME

Petar Ganev, senior economist, IME

Yavor Aleksiev, economist, IME

Aleksander Tsvetkov, Ph.D, Director, Regiostat

All analyses, data and other materials related to the study will be uploaded on the specialized website of the project at: http://www.regionalprofiles.bg

For more information: Vesela Dobrinova (02/952 62 66, vessela@ime.bg)

Yavor Aleksiev

The Institute for Market Economics and Infograf are joining the analysis of open data provided by the Open data portal for the Republic of Bulgaria. The results of our work will also be published on the official website of the project "Regional Profiles: indicators of development".

The opening of the Employment Agency (EA) data for job vacancies announced in its territorial divisions allows the implementation of a new approach to the analysis of the labor market processes.

As of September 3^rd 2015 the review of the EA data for the vacancies shows that:

• There are 14 771 vacant jobs advertised in 6 068 adverts;
• Among the active adverts 54% are for permanent contracts, 44.8% for temporary contracts and only 1.2% of the adverts are for civil contracts;
• 82.6% of adverts are for full-time jobs (8-hour working day), the second highest proportion (5.8%) is for working part-time (4 hours);

Announced payment:

• For nearly 70% of the vacancies there is no predetermined payment. This can potentially be seen as one of the factors that hinder labor mediation.
• With respect to the various types of contracts the salary is mentioned in 31% of the adverts for long-term contracts, 29% of the adverts for fixed-term ones and only 6% of the adverts for civil contracts[1];
• Weighted according to the number of vacancies in various adverts (as one advert can apply to more than one vacancy), the average gross salary for job vacancies in the country (based on 8-hour working day) is 536 BGN This is significantly lower than the average wage in the country, according to NSI (868 BGN gross wage by latest data from June 2015). A possible explanation is that the majority of vacancies are for positions involving lower skills and thus lower payments. Another part of the explanation can be found in the characteristics of the employers and the jobseekers, which use employment agencies as a means of securing or providing - public bodies, small- and medium-sized enterprises, which cannot entice prospective workers by offering attractive positions in terms of pay and working conditions. Employers usually resort to the more expensive services of private recruitment agenciesfor positions that require higher levels of expertise and liability where the pay is higher, but finding good staff - even more difficult.
• 421 (24%) of the 1 770 adverts with specified wages and working time and 1 346 (31.5%) of the total of 4 270 jobs with specified wages and working time (some adverts apply to more than one vacancy) were for a payment less than 420 BGN for an 8-hour working day (the level of the minimum wage from January 1, 2016). This relatively high proportion signals for one of the potential negative effects of raising the minimum wage in the beginning of 2016 to 420 BGN The rise in the minimum wage to that level will affect nearly a third of the 4 270 vacant jobs at the moment, for which there is accurate data on wage levels. Raising the minimum wage will not only affect existing jobs, but also the decision of employers to open new ones both at present and in future periods.
• Half of the job adverts with wage over 1 000 BGN (11 out of 22 adverts and 87 out of 122 jobs) are in the capital, while the majority of this type of adverts are for drivers, engineers and erectors.

Chart 1: Average monthly salary calculated on the basis of eight-hour working day, for the active job adverts as of September 3, 2015, that contain information on the duration of working time and the offered payment (number of adverts)

Source: EA, IME calculations

Regional Review

• At the regional level, the average salary (computed for an 8-hour working day) in active adverts and vacancies for which there is data on the level of pay and working time varies from 747 BGN in Sofia (capital) to 428 BGN in Veliko Tarnovo.
• Except for the capital, high level of offered payment can also be found in the districts of Gabrovo - 619 BGN and Pernik - 585 BGN. The salaries offered in Blagoevgrad, Plovdiv and Varna are also above the national average.
• Besides Veliko Tarnovo relatively low levels of pay are also registered in the districts of Sliven (449 BGN) and Pazardzhik (452 BGN).

Chart 2: Average salary for vacancies in the active job adverts, as of September 3, 2015 (BGN)

Source: EA, IME calculations

Number of unemployed competing for one available job

According to the latest official data of the EA on the number of registered unemployed persons (as of July, 2015), they amount to 309 781 people. The comparison of their number by districts and the number of vacant jobs as of September 3^rd, 2015 shows that:

• The biggest number of unemployed people competing for one workplace is in Razgrad - 67 people, while the lowest is in Ruse (9 people). On average 21 people compete for each available job opening.
• 25 unemployed people in Northern Bulgaria and 19 unemployed people in Southern Bulgaria are competing for a single job. The combination of low employment rates and high unemployment rates in the Northern part of the country makes finding a job a serious challenge.

It should be noted that only some of the unemployed are an actual match for the advertised jobs; in some cases there are no unemployed whose qualifications, background and experience fulfill the employer’s demands. I.e. theoretically it is possible to have 67 candidates competing for one vacancy, while all of them are unsuitable for the job.

Chart 3: Number of unemployed who are competing for one vacancy

Source: EA, IME calculations

The quality of life in a society to a large extent depends on the ability of the local administration to effectively enforce the rules and laws in the particular country. Even good policies have no effect if they cannot be efficiently enforced.

One of the ways to measure the effectiveness of local administrations in their task of enforcing the law and regulations, is to evaluate the results (how many) and effectiveness (at what cost) of the collection of penalties and property fines enforced by municipal administrations.

The conducted analysis of the funds collected by municipal administrations in this manner shows that:

• In 2014 five municipal administrations have registered an income from penalties and property fines ten times higher than the value of those actually enforced. This extra income probably came from fines already enforced in a prior period and maybe also due to a reorganization of their operations. These municipalities are Zavet, Plovdiv – central region, Vidin, Simeonovgrad and Nova Zagora.
• Another 19 municipal administrations have also collected fines which were enforced in a prior period, but in a smaller size than the previous group, but even so they reach a collection rate of over 100%. These are mainly small municipalities like for example Zlatograd, Aksakovo, Tutrakan and etc., but there are also some bigger ones like Ruse and Varna.
• A much bigger group of municipalities (a total of 60) reach a collection rate of enforced fines between 80% and 100% - in this group areKardzhali, Panagyurishte, Plovdiv – Northern and Western region, Razlog, Dulgopol, Velingrad and others.
• The biggest number of municipalities (72) have a collection rate between 50% and 80% - some of the biggest municipalities are in this group – Blagoevgrad, Pleven, Veliko Tarnovo, Dobrich, Pazardjik, Shumen, Yambol and others.
• The group of municipalities with a low collection rate (between 10% and 50%) is formed by 64 administrations, including Sofia, Burgas, Targovishte, Asenovgrad, Svilengrad and the capital regions of Izgrev, Oborishte, Poduene, Mladost and Triaditsa.
• 23 municipalities have an even worse collection rate of between 1% and 10% , this group includes Stara Zagora, Sozopol, Silistra, the capital regions of Studentski, KrasnoSelo, Ilinden, Serdika and Iskar, Kustendil and Botevgrad.
• 17 municipalities have registered no income from collected fines, the biggest ones being Lulin, Novi Iskar, OvchaKupel, Vrabnitsa, Hisaria and others.

The data shows that the big municipalities, where most of the population is concentrated, have a very bad record in terms of their regulatory functions, which has an effect on the incentive to abide by regulations and consequently – on the quality of life of local inhabitants. According to various data, about 25% of total enforced sanctions are either appealed in court or simply retracted, but despite this, the size of enforced fines which are not collected remains quite significant, which shows that a large number of offenders remain unpunished for breaking the rules.

The lack of effective control for enforcing local regulations means that even if there is an inflow of investment and a quality infrastructure and even transfers from the central budged towards particular local projects, the big municipalities fail at providing living and business conditions which are good enough.

Source: IME, based on the state and local administration’s official reports for 2014

The top 5 municipalities with the biggest absolute sums effectively collected from fines and penalties in 2014 are Plovdiv, Sofia, Varna, Burgas and Aksakovo. These, however, are also municipalities with a low collection rate (except for Varna), i.e. they have collected only 50% of the total size of the sanctions they have enforced.

The most efficient municipalities (sum collected per employee) are Samokov, GotseDelchev, Tutrakan, Simeonovgrad and Shabla. 

Source: IME, based on the state and local administration’s official reports for 2014

Georgi Vuldzhev*

Bulgaria has been in a state of demographic decline since the 1990’s. Population across the whole country has been progressively shrinking – in the year 2000 it was 8.1 million people, but by 2014 it has declined to 7.2 million.

Of course, the severity of the demographic decline varies across different regions of the country – due to internal migration from scarcely populated areas to more densely populated ones and from underdeveloped to developed ones, the negative effects are being exacerbated in some areas and diminished in others. Considering these differing processes in various parts of the country it is interesting to analyze the dynamic of the size of municipal administrations throughout the years.

For the purpose of this analysis we shall use municipal administrative personnel per 1000 inhabitants as an indicator. By measuring the variations in that number throughout the years we can see how much influence demographic shifts have on the size of municipal administrations.

In this short comparative study we focus on two years – 2010 and 2014. According to the data compiled by NSI and the official reports of the different municipal administrations in the country, during this period total population has declined by 4%, while the total number of municipal personnel stayed almost the same – declining only by 0.1%. This leads to a rise in the number of administrative personnel per 1000 inhabitants from an average of 2.90 in 2010 to 3.02 in 2014.

Source: Official annual reports of the municipalities, NSI, IME’s calculations

As we can see in the table, the districts in which the size of the municipal administration relative to the population is the highest, i.e. we can assume a waste of municipal resources (and consequently – of state resources through state transfers to municipalities) are the same for 2010 and 2014. These provinces are Vidin, Dobrich (without the city itself) Kardzhali, Smolyan and Yambol. The provinces with the lowest number of administrative personnel per 1000 inhabitants in 2010 keep their spot in 2014 as well: Sliven, Ruse, Varna, Stara Zagora, and Pernik. When we take a look at the third column, where we can find the change in the value of the indicator in 2014 as compared to 2010, we notice that the relative size of municipal administrations has declined only in four provinces. These are Yambol (-0.37; -7%), Pleven (-0.19; -6%), Varna (-0.13; -5%), and Sliven (-0.06; - 2%). In all other provinces, the number of administrative personnel per 1000 inhabitants has grown. The provinces where it has grown the most are Lovech (+0.96; +24%); Smolyan (+0.53; +10%), and Blagoevgrad (+0.52; +16%).

It is interesting to also note the size of which particular municipalities underwent the greatest change during the period. On the next two tables you can see exactly this data compared to the shifts in population and the size of the municipal administration in 2014 as compared to 2010.

Source: Official annual reports of the municipalities, NSI, IME’s calculations

It is immediately obvious that the municipalities with the biggest growth in the proportion of local administration size and population size are located in the Burgas province – Sozopol, Sredets, Sungurlare, and Tzarevo. The other two municipalities – Belitsa and Kovachevtsi are located in the provinces Blagoevgrad and Pernik respectively. In five municipalities from the first table the rise in the value of the administrative personnel/1000 inhabitants indicator is caused both by population decline in the municipality and the rising number of employees in the municipal administration. Only in Kovachevtsi is the rise due entirely to the decline in the number of inhabitants and in Belitsa despite the fact that population growth has been positive, the size of the municipal administration has ballooned by 133%!

On the second table we see a very different picture. In all municipalities the number of personnel per 1000 people is lower, with 20% to 40%, despite the poor demographic situation.

Optimally, the rest of the country should be moving in the same direction as the municipalities listed in the last table. The gradual decline in population numbers, combined with the introduction of e-services provided by municipal administrations, suggests that less and less local personnel should be required. The administration has to take steps towards cutting down the numbers of administrative employees, especially in those areas and municipalities where the demographic decline is most serious, and consequently the need for administrative personnel is the lowest.

* Georgi Vuldzhev is an intern at the IME.

Yavor Aleksiev, Victor Trichkov* and Georgi Vuldzhev*

The limited own resources of the Bulgarian municipalities have transformed the successful utilization of European resources in a vital prerequisite for the implementation of a number of regional projects. The widely discussed “addiction” to European money is completely understandable in view of the modest resources of the municipalities themselves to ensure their capital expenditures.

As of January 31, 2015 Bulgarian municipalities have received nearly 4.1 billion lv. as beneficiaries of the structural and cohesion funds of the EU. This is only the value of the amounts that have already been paid. The average utilization rate per capita [1] for the country is 564.9 BGN/capita. This is 49% higher than last year’s 379.8 BGN/capita. In other words, the amount that municipalities have received in only one year is equivalent tohalf of the total amount paid in the period between the country's accession in the EU and January 31, 2014. This trend of faster utilization reflects both the accelerated payment at the end of the previous program period and the increasing project capacity and experience of the municipalities themselves.

Last year the IME made a similar comparison of the amount of funds utilized by the structural and cohesion funds of the EU and the population of the Bulgarian district and municipalities. The main conclusions of our analysis are confirmed by this year’s data:

• The utilization rate of the European funds by the municipalities as beneficiaries of EU structural funds is very uneven throughout the country. When compared to the population it varies from 4 829 BGN/capita in the municipality Konstinbrod to 0 BGN/capita person in Gramada.
• No territorial dividing lines can be observed in the utilization of EU funds, at least with regard to Northern and Southern Bulgaria. The same applies to the size of municipalities. There are a number of smaller municipalities who successfully implement European projects, as well as a number of large municipalities that are far less successful.

District level

Once more Gabrovo is the champion in utilization of European funds - 1360 BGN/capita as of 31/01/2015, the second, as well as last year, ranks Burgas (BGN/capita). Followed by Lovech (BGN/capita), managing to overthrow the Sofia district, which last year was the third. The lowest utilization rate is in the districts of Sliven (349 BGN/capita), Ruse (309 BGN/capita), and Kyustendil (286 BGN/capita).

The difference between the district with the most and least utilized resources increased from 787.7 BGN as of 31 January 2014 to 1 074.6 BGN as of January 31, 2015, i.e. differences in the extent of utilization intensified during the last year.

Municipal level

If the data on the utilization on municipal level is to be juxtaposed against thelocal population, most funds per capita were spent by the municipality Konstinbrod – 4 829 BGN per capita (population of 17 265 people). The total amount of funds utilized by the municipality as a beneficiary under the operational programs is 83.4 million BGN as of January 31^st, 2015, the municipality has contracts for about 22 million BGN. In comparison, Karlovo municipality where over 50 thousand people live, managed to utilize only 17.1 million BGN or nearly five times less for three times larger population.

• 44 municipalities have utilized more than 1,000 BGN per capita. Among them are Kostinbrod, Pirdop, Hisar, Byala, Sozopol and Krichim who have utilized more than 3,000 BGN per capita.
• 37 municipalities have utilized under 1000 BGN/capita, but above the average 565 BGN/capita for the country. Blagoevgrad municipality occupies the last position in that group with utilization rate of 568.17 lv/ person.
• 152 municipalities (58% of all in the country) have utilized between 565 and 100 BGN. This group, as always, is the biggest one. Sofia, as well as Plovdiv, Ruse and Pleven are all part of this group.
• In 30 municipalities less than 100 BGN/capita have been utilized. The number of such municipalities in 2014 was 52.

In 2015 once again there is a high number of municipalities (30 total) in which the resources utilized as of the 31^st of January are under 100 BGN/capita. Last year the district centers of Plovdiv and Kyustendil were in this group, but this year round, they have utilized 123.4 BGN/capita and 161.7 BGN/capita, respectively. As of 31.01.2015 the only municipality which hasn’t utilized any resources via the EU structural programs is Gramada.

It is notable, that in a short one-year period (from 31.01.2014 to 31.01.2015) the largest amount of resources in absolute terms has been utilized in the Varna district’s municipality Byala (1600 BGN/capita), and other holiday resort municipalities like Sozopol (BGN/capita), Nesebar (BGN/capita), Pomorie (BGN/capita) and Bansko (BGN/capita) as well as MalkoTarnovo (BGN/capita).

Comparing the 30 municipalities which have utilized less than 100 BGN/capita of the population and the 30 best performing municipalities in the country, we see that there are no clear territorial tendencies in the levels of utilization of EU funds. What we can see however, is a strong concentration of municipalities with a high level of utilization of funds in the district of Plovdiv and a concentration of municipalities with a low level of utilization of EU funds in the district of Vidin. Maybe the most homogenous territorial “clusters” of municipalities from the standpoint of received resources are:

1. Sofia, Pazardjik and Plovdiv – nine of the 30 municipalities with the highest level of utilization and only one of the 30 municipalities with the lowest level of utilization are located in this cluster.
2. Varna and Burgas – contains six of the total 30 municipalities with the highest utilization of EU funds and only one from the 30 with the lowest level of utilization.
3. Stara Zagora, Sliven, Haskovo, and Yambol – in this cluster we find one of the municipalities with the highest levels of utilization and seven of the municipalities with the lowest levels of utilization.
4. Vidin, Montana, and Vratsa – here we find only one municipality with a high level of utilization and six of the municipalities with the lowest levels.

The problems with the utilization of EU funds are due to both the administrative weaknesses of some of the smaller municipalities and the low quality of the strategic development documents. The presence or lack of close relations between the local and central state administration also plays a role in determining which municipalities get more projects and which get less.

In the accompanying database (in Bulgarian) you can find the resources utilized by every single municipality in the country, for which there is available information, as of 31.01.2015. The best and worst performing municipalities in each district are highlighted. We have also included a document with the official data (in Bulgarian) of the Informational System for the Management and Monitoring of the EU Structural Funds in in Bulgaria, since their latest data (for undisclosed reasons) is no longer available on their official website www.eufunds.bg.

| data in .xlsx format |

* Victor Trichkov and Georgi Vuldzhev are IME interns.