The Labor Market Remains Fragmented
The first quarter of 2015 unquestionably brought good news for the labour market in Bulgaria. According to the NSI, the number of people employed increased by 55.7 thousand compared to the same period of last year. In the first quarter of 2015 47.7% of all people above the age of 15 were employed compared to 46.5% for the same period last year.
At first sight, the recovery of the labour market seems more or less uniform across the country. In Northern Bulgaria the number of employed people is 26.7 thousand higher than that for the same period last year, and in Southern Bulgaria it is 29.1 thousand higher. On an annual basis, the biggest increase in the number of people employed is observed in Varna (28.7 thousand) while the biggest decrease is in Kyustendil (-4.4 thousand).
However, a more in-depth look at the data tells us that, overall, the condition of the labour market in Northern Bulgaria are still disappointing, especially considering the somewhat positive end of last year. If we exclude Varna from the calculations, Northern Bulgaria is actually losing jobs in Q1 2015.
Figure 1: Annual change in the number of people employed (thousands)
The condition of the labour market in the Northwestern region of the country continues to be extremely severe. The only district in this region in which the number of people employed increased in the first quarter of 2015 is Lovech. At the same time it remains one of the districts with the lowest employment rate in Bulgaria – only 37.7% of the population over 15 years of age is employed. Both the number of people employed and the employment rate have declined in Vidin, Vratsa, and Montana. A loss in jobs was also registered in Pleven, but the simultaneous decrease in population and thus the labor force resulted in a slight annual employment rate increase – from 43.2% to 43.4%.
The tendency of a continuous decline in population is one of the reasons why it is preferable when analysing the recovery of the labour market to include not only the employment rate in the different districts of the country, but also the nominal number of people employed. A lasting positive tendency of growing number of people employed (coupled with a declining population and thus available labour in most districts) can be considered a clear sign for labor market improvement.
Figure 2 should be read as follows:
- Every consecutive quarter with an annual increase in the number of people employed in the different districts is highlighted in green ;
- Every consecutive quarter of annual decline in the number of people employed is highlighted in red;
- A shift in the predominant tendency is shown in white – i.e. if the previous quarter registered a decline, the white field means an increase and vice versa – if the previous quarter registered an increase – the white field means a decrease. A series of white fields means series of increasing and decreasing levels of employment on a yearly basis during consequent quarters without a continuous positive or negative tendency.
Figure 2: Consecutive quarters of growth in the number of people employed
Some good news
1) Varna is recovering fast
By all indications it seems that 2015 will be the first year since 2009 during which the average annual number of employed people in Varna will remain above 200 000. These stats are significant for two reasons:
- The district needs a high number of jobs in order to reach the pre-crisis levels of employment. Varna is one of the few districts in the country whose population has been stable and even growing in some of the past years (2014 for example). In regions with a declining population even merely stable employment numbers (or a slower decline than in population numbers) leads to an increase in the employment rate. In districts like Varna and Sofia (capital) employment numbers have to be higher than those before the crisis if those districts are to ever reach the pre-crisis employment levels.
- The district of Varna is the only one in Northern Bulgaria which attracts significant everyday migration of workers. This means that a lot of people from neighbouring districts leave the area in which they live in order to work on the territory of Varna. The improvement in the situation of the labour market in district Varna has an impact on neighbouring districts as well , for example the Shumen district, where the number of people employed is rising on an annual basis for the sixth consecutive quarter.
2) There are other provinces in Northern Bulgaria which are improving
Positive tendencies are observed in Veliko Tarnovo, where the number of people employed held steadily over 100 000 people and registered a sixth consequent increase on an annual basis. Already in 2011 Veliko Tarnovo displaced Ruse as the district with the highest employment numbers in the Northern central region of the country – a tendency which is likely to persevere in the years to come. After a long period of decline in the number of jobs a positive turn can be observed in the province of Targovisthe as well.
3) In the southern part of the country the most significant improvement is in Stara Zagora where the number of people employed increased by 11.1 thousand. The district of Burgas also experienced its best first quarter for a number of years.
Some bad news
1) The positive data for Southwestern Bulgaria are due only to Sofia (c)
If we exclude Sofia (c) from our calculations the labour market in Southwestern Bulgaria remains in crisis. In the districts closest to the capital – Sofia (district) and Pernik, there are some positive labor market signs, but Kyustendil and Blagoevgrad continue registering record lows in employment numbers. The labour market recovery in these districts is yet to begin.
2) Plovdiv is losing employment for the second consequent quarter
After a long period of rising number of people employed, Plovdiv registered a second consequent quarter of decline. Considering the big number of jobs in the area (280 000 in the last several quarters) the loss of a few hundred employed will hardly exert a serious influence on the average annual employment rate in the area, and it is likely that this decline will be offset in the second quarter of the year.
Even though the employment data is positive for the economy overall, we can clearly see than on a local level the labour market remains depressed in large parts of the country (notably in the Northwest and the Southwest with the exception of the capital). There are still areas (like Blagoevgrad and Kyustendil), which register record lows with regard to the number of people employed. We can also see that the positive tendencies in some districts have come to an end (for example in Plovdiv). For the moment however, the news are predominantly good and a strong second and third quarters for the economy have the potential to “restart” the labour market in some of the underperforming districts of the country.