Study: Regional employemnt and unemployment
This year's focus analysis accompanying the release of Regional Profiles: Development Indicators focuses on the latest developments in regional labour markets and seeks to outline the key challenges facing their growth in the near future. Despite there being employment records in most districts and a significant drop in unemployment, several districts remain away from the overall positive development, and structural problems pose difficult challenges for the future.
By the third quarter of 2019, the employment is concentrated mainly in the leading economic centres - Sofia has already exceeded 700 thousand employees, Plovdiv has 324 thousand, Varna - 229 thousand. On the contrary, in districts with continuing labour market problems the number of employees remains below 30,000. Employment growth is also uneven, with the most rapidly developing districts being those where investment in manufacturing has been accumulated.
Even with records in many districts, however, not all of them have reached the same peak in the labour market as the one before the economic crisis. Five districts did not manage to overtake their previous best achievement - Montana, Yambol, Smolyan, Kyustendil and Vidin, but only in one of them the downturn is particularly noticeable. The employment of Montana's active-age population has dropped as much as 15 points since the previous decade, and at this stage there is no indication that it will recover in the near future.
One interesting case is Veliko Tarnovo, which in the last year has set absolute records in employment for Bulgaria - employment over 80% of the active population is a rare occurrence in the economic history in general - but for now it is difficult to predict to what extent the district will be able to maintain these levels. Leading economic centres, on the other hand, have surpassed 70% employment in the last 6 to 8 quarters. Even with the increasing demand for labour, this ratio does not appear to start to decline, except in the event of a major economic crisis, for which at least there are currently no indications. It is also interesting to note that in some districts - most notably in Sliven, Gabrovo and Kardzhali, the employment dynamics are different for men and women, with the number of men employed increasing and women decreasing.
By the end of 2019 the country's registered unemployed are just under 195,000. Their distribution by districts is much more even than that of the employed, but nevertheless the leading economic centres also have the highest number of unemployed persons, mainly because of the significantly larger size of their workforce. It is noteworthy that despite the relatively smaller size of the economy in Blagoevgrad district, there is currently the highest number of unemployed. This is a consequence of the downsizing in recent years of two industries that until recently have been leading the local economy - the clothing and tobacco industries.
Even at the end of 2019, there remain seven districts where unemployment has not yet fallen below 10% of the active age population. In the capital alone, its level has fallen below the "sanitary" 2%, indicating the onset of stagnation in the labour market and impeded labour mobility. In most districts, the unemployment rate is between 5 and 10%, which points to future employment growth potential in the next year or two. This would be more difficult in the districts that have had the most aggressive expansion in the last few years - Varna, Stara Zagora, Gabrovo, where unemployment is gradually decreasing.
Undoubtedly, the most important factors that determine the dynamics of the labour market in Bulgarian districts are the educational structure and characteristics of the skills of the working-age population. The educational structure (Chart 3) certainly reflects on the ability of the districts to create new employment. As for the total share of university graduates in the workforce, the capital is ahead of all the other districts, and at the same time has the smallest share of the low-educated population. There are six districts with a share of university graduates of less than 20%, and none of them has been particularly successful in the labour market in recent years except Sofia district.
The negative demographic processes and the aging of the population are undoubtedly also the most significant problems facing districtal economies in the near future. So far, the restructuring of the economy and the growth of high value-added activities have largely mitigated the impact of the shrinking workforce, but in the medium term, it may present more hard to overcome obstacles.