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The usual methodology in the estimation of quality of life is to assess it on a national level, not on a regional one. With the exception of several publications, ranking the cities in various countries, there are no studies, which rank individual regions.

Studies on a national level can be divided into two types – objective and subjective. The latter ones use various public polls in order to calculate an estimate of the quality of life. The objective studies are based on different statistical data, combined into one final value, which measures quality of life. Such studies are for example The Economist Intelligence Unit’s Quality-of-Life Index from 2005, the popular Human Development Index, and the OECD’s Better Life Index.

The assessment “Quality of life in the districts”, drafted by the IME, is an attempt to combine the methodologies the globally recognised indices and apply them on a regional level in Bulgaria. The goal of the assessment is to be, as much as it is possible, yet another factor used when comparing the different districts in Bulgaria. In order to minimize subjectivity, the different indicators are given equal weights in the final result. This assessment is base on the IME’s study “Regional Profiles: Indicators of Development”.

Source: IME’s calculations

As is obvious from the districts ranking, the presence of a large district centre does not always mean a better quality of life. The traditionally cited as large and prosperous districts of Varna and Burgas give way to smaller ones, such as Gabrovo and Pazardzhik. The large difference between Sofia (capital) and the rest of the districts is due to its good performance in one indicator, but in several Sofia lags behind. This is one of the main strengths of the index – first place in one of the sub-factors is not enough to raise the district to a high level. Some other main conclusions, which can be drawn from the study, are:

• Sofia takes first place in five of the indicators and last place in the crime indicator;
• Pernik is in last place in three of the indicators;
• Stara Zagora loses a couple of places, because of its weaker (compared to other districts) performance in the indicator “Emissions of pollutants in the atmosphere”;
• Kardzali takes first place in three of the indicators and shows an overall good performance in the rest;
• Plovdiv has only one first place, while Blagoevgrad takes one second place, but the overall performance of the two district puts them on second and third place in the final ranking respectively;
• Varna and Burgas are in lower positions compared to the leaders, mainly because of their weak performance in the health, crime, and quality of roads indicators;
• Burgas shows a weaker performance compared to the rest of the districts in the average annual income indicator;

Methodology

When assessing the performance of the districts, we’ve used only data from the latest available. Because of the nature of the used data and the method of its collection, this year varies (2009 to 2012). You can see the specific indicators and their relevant years below.

The next step is to normalise the data. This way the data are equated to values close to one another. In our case, the normalisation takes the highest value as 1 and the lowest value as 0. The rest of the data is spread between these two values.

The resulting values are then averaged by the number of indicators (12). This means that they are effectively given equal weights.

The project "Regional Profiles: Indicators of Development" is carried out with the support of the America for Bulgaria Foundation.

The economic crisis continues to deepen the differences between the capital and the rest of the country’s districts. This is true not only for indicators such as unemployment and employment, but also for the levels of average annual income. In this case, we take a look at the total earnings, which include monetary income (salary and other income, pensions, social benefits, income from sales and other transfers), as well as quantified natural income.

For the period from 2001 to 2011, the average annual growth rate of income in the capital is 12.36%, while the national average is 9.05%. In 19 out of the 28 districts, income is rising at a rate, lower than the national average. The only districts, which shows a higher growth rate of the income, compared to the capital, is Stara Zagora – 12.54% per year. Despite this, the average annual income in Stara Zagora remains � less than that in Sofia (capital) in 2011, because of the lower base in the beginning of the period.

Graph 1: Average annual growth rate of the total income per household member in the period 2001 – 2011, %

Source: NSI, IME’s calculations

Note: We have defined the growth rate as “fast” in districts, where the latter is higher by at least 1 percentage point the national average. The “medium” growth rate is lower or higher by less than 1 percentage point. A rate lower by more than 1 �percentage point means that the district falls into the category of those with “slowly” growing total income.

If the average annual growth rate, observed in the period 2001 – 2011, stays the same, it would be impossible to catch up to the capital[1]. Because of this, in order to illustrate the lag in the level of income in years, we assume that the income in the different districts will continue to rise with same average annual rate as in the period 2001 – 2011. Also, we assume that the real rise in income in the capital stops in 2012 and from this point on it rises only with the rate of inflation.[2]

Graph 2: When the rest of the country’s district will catch up to the capital

Source: NSI, IME’s calculations

If the income in the capital stopped rising in 2012 and income in the rest of the districts kept its rate of increase, the first ones to catch up to Sofia would be Stara Zagora and Pernik (in 2014). Several years later, the same would achieve Smolyan, Ruse, Pleven, and Plovdiv. The last ones to do so would be Vidin (in 2033), Silistra (in 2037), and Pazarzhik (2039).

This dynamic is, of course, conditional, but it gives a good idea of the time lag between the levels of total income in the capital and the rest of the country.

We should also note the different way, in which the crisis has affected the growth rate of income in the individual districts. For example, in recent years, in districts such as Stara Zagora and Sofia (district) the average annual growth rate of total income is higher than the one in the capital. Despite the development of this trend, significant changes in the overall dynamics in the long term seem unlikely.

Working meeting in the Chamber of Commerce and Industry – Stara Zagora (June 18, 2013). The meeting was attended by the economists Kaloyan Staykov and Yavor Alexiev from IME, the chairman of the Chamber Oleg Stoilov, the CEO of the Regional Economic Development Agency Rumiana Grozeva, and representatives of industry and business organizations.

Starting from mid July 2013, IME began a tour of the 28 Bulgarian districts for a second year in a row, as part of the preparation of the forthcoming publication “Regional profiles: Indicators of Development 2013”. Through meetings with representatives of NGOs, the business and the administration, IME aims to gain insights of the socio-economic situation of the various Bulgarian districts and to identify the common problems and issues, which they have.

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The project “Regional Profiles: Indicators of Development” is carried out with the financial support of the America for Bulgaria Foundation.

Yavor Alexiev

Starting from mid July 2013, IME began a tour of the 28 Bulgarian districts for a second year in a row, as part of the preparation of the forthcoming publication “Regional profiles: Indicators of Development 2013”. Through meetings with representatives of NGOs, the business and the administration, IME aims to gain insights of the socio-economic situation of the various Bulgarian districts and to identify the common problems and issues, which they have.

During the first part of the tour IME visited Pazardjik, Plovdiv, Stara Zagora, Sliven, Yambol, Haskovo, Kurdzhali, and Smolyan. IME’s observations will be used in the preparation of the individual district profiles in the forthcoming second edition. Some of the main trends, observed in the districts in the south-central and southeast regions are:

Operation of the administration: in most of the visited regions, there are still not enough traditions and examples of successful cooperation between the administration and non-government sector. The quality of the administrative services is gradually improving, but e-government and transparency continue to be a major problem. In a lot of districts personal acquaintances and contacts are seen as a necessary condition for quick and easy interaction with the local administration. At the same time, cooperation with the local administration is of crucial importance to the overall state of the business environment in smaller regions.

Business environment: micro and small enterprises in the smaller regions experience serious difficulties in their attempts to adjust their business to constantly changing laws. The lower turnover does not allow them to comply with the legal requirements quickly enough. Because of this, they are often targets of financial sanctions. The frequent changes in the regulations mean that investments are being made under certain conditions, while economic activities are being carried out under others. This interferes with the implementation of the business’ development plans and hinders loan demand.

Tax policy: A large part of the representatives of the business and non-government sector agree with the proposal to set the minimal wage and the social security thresholds on a regional level. Raising the level of the social security threshold has a negative effect on employment in the smaller and poorer districts. In many cases this leads to firms entering the grey economy.

Raising the tax assessment on properties led to an increase in costs covering the waste tax. In recent years property prices are falling, but tax assessments remains the same, despite the fact that properties are unsellable at these prices. The method of determining the tax assessment is improper, because it has nothing to do with generated waste and has a negative effect on investment activity.

European projects: Infrastructure in the region is gradually improving. A large part of the projects are in the area of urban development and are financed via European programmes. Programmes for improving the qualification of workers are seen as far more effective than those aimed at training the long-term unemployed. The business sees the latter as a clear manifestation of social welfare aid.

Education: There is a severe lack of professionals in many areas. The reasons for this lie not only in the falling interest in professional high schools (the ex technical schools), but also in the insufficient training of young people entering the market, who have actually graduated from such school. Businesses are often forced to re-train their employees, which takes time and resources and hinders development.

Public procurement: There are widespread infringements in the area of public procurement procedures. Reasons for these are not only the lack of necessary capacity of some districts to establish the parameters of these procurements, but also the purposeful misappropriation with the intent to benefit certain firms.

Working meetings of IME with representatives of the local business, non-government organizations, administration and media

IME participated several working meetings – in Stara Zagora, Plovdiv, Haskovo, and Kurdzhali.

Working meeting in the Chamber of Commerce and Industry – Stara Zagora (June 18, 2013). The meeting was attended by the economists Kaloyan Staykov and Yavor Alexiev from IME, the chairman of the Chamber Oleg Stoilov, the CEO of the Regional Economic Development Agency Rumiana Grozeva, and representatives of industry and business organizations. You can find more information about the meeting here: chambersz.com

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Working meeting in the Haskovo Chamber of Commerce and Industry (June 20, 2013). The meeting was attended by the economists Kaloyan Staykov and Yavor Alexiev from IME, Nikolay Nanev, temporary regional governor of Haskovo, Yancho Yanev, chairman of the Haskovo Chamber of Commerce and Industry, and representatives of the business, trade unions, banking sector and media. You can find more information on the meeting here:haskovo.net | infobusiness.bcci.bg | novinarug.com

IME would like to thank the Chamber of Commerce and Industry of Stara Zagora, Plovdiv, Haskovo, and Kurdzhali districts for their cooperation in organizing and conducting the working meetings.

The project “Regional Profiles: Indicators of Development” is carried out with the financial support of the America for Bulgaria Foundation.

Yavor Alexiev

A little over a month ago, IME traced the dynamic of the increase in income and unemployment levels in the different districts of Bulgaria.[i] The goal was to determine how the labor market in the various regions reacts to the combination of rising wages and continuously high unemployment. In that analysis, we divided the regions in four groups:

• Group 1: Districts with slowly increasing wages and falling unemployment in 2012: Burgas, Vidin, Gabrovo, Dobrich, Kyustendil, Pleven, Smolyan and Haskovo. In these districts unemployment in 2012 was falling, while at the same time the annual average level of wages increased at a slower rate than the national average.
• Group 2: Districts with slowly increasing wages and rising unemployment in 2012: Blagoevgrad, Varna, Veliko Tarnovo, Vratsa, Lovech, Pernik, Ruse, Sliven, and Yambol. The combination of low rate of increase in wages and the continuous rise of unemployment is evidence of the lack of flexibility on the labor market in these regions.
• Group 3: Districts with rapidly increasing wages and rising unemployment in 2012. In these regions the wages in 2012 have increased at a rate higher than the national average, which is accompanied by the rising unemployment. These are Montana, Pazardzhik, Plovdiv, Razgrad, Silistra, Sofia (capital), Stara Zagora and Targovishte.
• Group 4: Districts with rapidly increasing wages and falling unemployment in 2012 – there are only two districts, in which the rate of wage increases is higher than the national average, without negatively affecting the labor market. These are Shumen and Sofia (district).

Keeping these four groups, in the current analysis we will take a look at what happened with the annual average employment rate of the population above 15 years old.

In times of continuously high unemployment, monitoring the employment level is of crucial importance to the interpretation of the labor market processes, because it shows what part of the population in working age actually has a job. By itself, the fall in unemployment in some regions (if not accompanied by increase in employment) doesn’t show real recovery of the labor market.

Graph 1: Change in the employment rate in the districts with slowly increasing wages and falling unemployment in 2012 (Group 1), percentage points

Source: NSI, IME’s calculations

In seven of the eight districts, in which in 2012 wages increased at a rate that is lower than the national average we see a rise in employment. Burgas is the region with the largest number of created jobs – almost four thousand. In Dobrich and Smolyan, the number of employed has increased by 3.3 and 2.9 thousand respectively. Only in Kyustendil employment is shrinking and in 2012 the employed decreased by 1.7 thousand people.

This is also the group with the most favorable labor market development in 2012, manifesting itself in decrease in unemployment and increase in employment. The slower rise in income in these regions helps people keep their jobs and in the same time leads to creating new ones.

Graph 2: Change in the employment rate in the districts with slowly increasing wages and rising unemployment in 2012 (Group 2), percentage points

Source: NSI, IME’s calculations

In five out of the nine regions, in which in 2012 we see a simultaneous increase in unemployment and a slow rise in income, employment is also decreasing. This is evidence of a serious lack of flexibility in the labor markets in these regions.

Most worrisome is the situation in Sliven. The minimal increase in income in combination with falling employment and rising unemployment, can be seen as a sign that the labor market does not seem to be able to cope with the administrative increase of wages. This increase in wages affects most of all the districts with lower salaries, such as Sliven.

In addition to Sliven, the rate of increase of the average annual wages is lowest in Blagoevgrad, Veliko Tarnovo, Pernik, Ruse, and Yambol. These are also the districts that show the biggest improvement in terms of employment – in four of them employment increases.

Graph 3: Change in the employment rate in the districts with rapidly increasing wages and rising unemployment in 2012 (Group 3), percentage points

Source: NSI, IME’s calculations

In four of the eight regions, in which in 2012 income levels increased faster than the average national rate and unemployment also rose, we see a fall in the level of employment as well. Only Plovdiv shows a significant increase in the number of employed, but even this district is below the level of 1 percentage point. We also have to note here that in this group the districts that showed an increase in employment in 2012 (Plovdiv, Silistra, and Montana), are also the ones with the lowest deviation from the average national rate of wage increase. In the other five regions wages have a much faster rate of increase, which has a negative effect on employment.

Graph 4: Change in the employment rate in the districts with rapidly increasing wages and falling unemployment in 2012 (Group 4), percentage points

Source: NSI, IME’s calculations

In 2012 there are no significant changes in the rate of employment in the two districts with decreasing unemployment and rapidly increasing wages. Despite the increase in income and employment in Shumen, the district remains one of those with the highest unemployment.

Graph 5: Distribution of the four groups of districts according to the change in the rate of employment of the population above 15 years old in 2012, percentage points.

Source: NSI, IME’s calculations

As is evident, employment in 2012 increased by more than one percentage point only in districts with lower than the national average rate of monthly wage increase.

There is an increase in the employment level in 11 out of the 17 districts, in which wages in 2012 increased at a rate lower than the national average. The slow increase in income in some of the poorest districts in 2012 continues to aid the increase in employment in the same districts since the start of 2013. But in other districts, even the slow rise in wages cannot positively influence employment. In the same in five out of the ten districts, in which the increase in wages is higher than the national average, the average annual level of employment in 2012 waslower than the one in 2011.

Groups 1 and 2 (districts with slower rise of wages) include four of the six regions, in which in the first quarter of 2013 there was an increase in the number of employed in comparison to the end of the fourth quarter of 2012. These are Vidin, Gabrovo, Kyustendil, and Pernik. With the exceptions of Montana and Shumen, employment in the first quarter of 2013 fell in all of the districts of Bulgaria.

Yavor Alexiev

The recently held parliamentary elections in Bulgaria have once again been a reflection of the effect diverging socio-economic conditions exert upon electoral moods. The election results of the three leading parties – GERB (Citizens for European Development of Bulgaria), BSP (Bulgarian Socialist Party) and DPS (Movement for Rights and Freedoms), exhibit a more or less robust relationship with three main socio-economic indicators – ethnicity, age and employment rate.[1]

DPS takes advantage of the “ethnicity” factor

As expected, the distribution of votes according to administrative regions has been significantly affected by the ethnic origin of the local population. In regions where over 30% of those who declared to consider themselves as Turks during the last national census in 2011, DPS won between 28.3% (Silistra) and 59.8% (Kardzhali), while nationwide, the party managed to win as much as 11.3% of electoral votes nationwide. Another observation exemplifying the role of the ethnicity factor in shaping DPS’s electoral support is that in some regions in Western Bulgaria, which have common socio-economic characteristics with the above-mentioned regions, DPS managed to secure only modest electoral support, amounting to as little as 1.1% (Vidin) and 0.7% (Kiustendil).

Sources: CIC (Central Electoral Commission), NSI (National Statistical Institute), IME calculations

BSP takes advantage of the “AGE” factor

In order to illustrate the relationship between BSP’s election results and the age factor, we use data of the Bulgarian National Statistical Institute (NSI) concerning two indicators - the number of citizens aged above 65 years per region [2] and the ratio of citizens above 65 over citizens in the 15-64 age group (i.e. the coefficient of age dependency).

Out of the nine regions, where the latter ratio exceeds 33.3%, i.e. there is more than one person aged 15-64 years per three people over 65 years of age, the results show that BSP took the upper hand in eight of them. The only exception is Gabrovo, where GERB took 37.2% of the votes, which also happens to be the highest regional result of the former ruling party.

Sources: CIC (Central Electoral Commission), NSI (National Statistical Institute), IME calculations

GERB takes advantage of the “Employment” factor

In the majority of the administrative regions, out of the four parties that made it to Parliament, GERB can be deemed to be the only one the electoral support of which exhibits a positive correlation with district employment rates.[3] GERB is the second political power after BSP in the five regions where unemployment is highest in the country – Vidin, Lovech, Montana, Vratsa and Pleven. Accordingly, in regions where the unemployment rate is lower than or close to the average for the country, GERB wins the highest number of votes, with the notable exceptions of Stara Zagora and Pernik.

Sources: CIC (Central Election Commission), NSI (National Statistical Institute), IME calculations

[1]The featured graphs represent a conditional comparison of various socio-economic indicators and election results in different administrative regions. These are under no circumstances to be considered as proof of the electoral moods of citizens based on their ethnic origin, age or socio-economic status; rather, these depict common tendencies in the shaping of political preferences of groups of people living in a different social, economic, political and cultural context.

[2]The five regions where DPS’s electoral dominance can be primarily attributed to the ethnicity factor have been excluded from the comparison between the age dependency ratio and the results of BSP.

[3]The five regions where DPS’s electoral dominance can be primarily attributed to the ethnicity factor have been excluded from the comparison between the employment rate and GERB’s results.

Yavor Aleksiev

In 2012, the unemployment rate at national level has kept increasing, reaching 12.3%. Despite this, the average monthly salary of employees under labor contracts has increased by 8.6% on annual level. Even accounted for inflation (3% annual average in 2012), actual wage growth is still staggering at 5.4%.

Overall, in 2012 the unemployment rate increased in 18 districts and decreased in 10. But only in two of those the decrease of unemployment rate was accompanied by higher than the average national growth rate of monthly wages.

The main issue here is how the labour market in the various districts of the country has responded to the combination of rising wages and persistently high unemployment. If we take a closer look at the dynamics of unemployment and wages by districts in 2012, we can differentiate four main types of districts:[1]

Slowly increasing wages and falling unemployment rate

Source: NSI, IME calculations

In eight districts: Burgas, Vidin, Gabrovo, Dobrich, Kyustendil, Pleven, Smolyan, and Haskovo, unemployment has fallen, and at the same time the average wage on annual level has increased, although at a lower rate than the national average. The slow rise of wages in some of the country’s poorest districts (Vidin, Smolyan, Haskovo, and Kyustendil) has resulted in a decrease of the unemployment rate.

Slowly increasing wages and rising unemployment rate

Source: NSI, IME calculations

Unemployment increased in nine districts, although wages in them grew at a lower rate than the national average. These were: Blagoevgrad, Varna, Veliko Tarnovo, Vratsa, Lovech, Pernik, Ruse, Sliven, and Yambol. In most of these districts, nominal average monthly wage increase was minimal, being less than 3%in Ruse, Sliven, and Yambol. Especially striking was the case of Varna, where unemployment rose by 6%. The combination of slow wage growth and a continued rise of unemployment rate testified to the lack of flexibility in the labour markets of those districts.

Rapidly increasing wages and rising unemployment rate

Source: NSI, IME calculations

In eight districts, wages increased by a higher-than-the-national-average rate, and in the same time unemployment rose as well. Among those districts appear the ones with the lowest annual average unemployment rate – Sofia (cap.) and Stara Zagora. The significant rise of average wages in Razgrad in combination with increased unemployment possibly indicates the layoff of low-skilled employees.

Rapidly increasing wages and falling unemployment rate

Source: NSI, IME calculations

The only two districts where the wage increase has outpaced the national average, without a negative effect on the labour markets, are Shumen and Sofia (district). The latter continues to close the gap with Sofia (capital), while the only districts with higher wage levels are Stara Zagora and Vratsa. Sofia (district) is the district with the third lowest unemployment rate after the capital and Stara Zagora. Meanwhile, Shumen remains one of the districts with the highest unemployment rate in the country in 2012.

What’s next?

The effects of the recent increase of the minimum wage and social insurance thresholds is yet to be evaluated. The fact that in most districts the wage growth rate, which is higher than the national average, goes hand in hand with an increase in the unemployment rate, indicates that the labour market needs more time before we can speak of a true recovery.

The simultaneous increase in the unemployment rate and wages, observed in many districts, demonstrates the lack of flexibility in local labour markets. Their low adaptability is caused by administrative interference, namely the constant increase of minimum social insurance thresholds and minimum wages, which in turn hinders the downward wage adjustment and fuels the layoff of workers.

The project “Regional Profiles: Indicators of Development” is carried out with the financial support of the America for Bulgaria Foundation.