Economic Policy Review ISSN 1313 - 0544

Jobs in 2015: A Regional Review

30.03.2016
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The labor market in Bulgaria continued creating jobs in 2015. The number  of the employed in the last quarter of 2015 is 72 thousands higher than during the same period of 2014, while the average unemployment rate dropped below 10% for first time since 2009.

Employment prospects in early 2016 are also positive and in line with a faster than expected GDP growth in 2015 and the increase in the number of workers on a labor contract.

It is notable that unlike previous years there is a much smoother job-creation in the north and the south of the country. To some extent this can be explained by the stronger 2013 and 2014 for large parts of Southern Bulgaria. In other words, while labor market recovery in some southern areas has completed or is about to do so, in parts of northern Bulgaria the recovery is yet to begin, or has just begun.

Northern Bulgaria

Positive development

Veliko Tarnovo and Varna are the districts with the best performance of the labor market in Northern Bulgaria in the past two years. Both recorded respectively 9 and 12 consecutive quarters of growth in the number of people employed - the longest period of growth after the capital (13 quarters).

After a long period of job losses the labor market in Ruse has finally bottomed out and in the last quarter of 2015 the number of people employed is 5,600 higher than the same period of 2014.

In Pleven the number of employees remained above 100,000 people for the second consecutive quarter and is at the highest level since the end of 2012.

Negative development

The number of people employed in Vratsa continues to decrease - in the last quarter of 2015 there are 54.5 thousand employed people compared with 60.6 a year earlier. The labor market in Montana and Silistra also remains depressed. Dobrich recorded four consecutive quarters of decline in the number of people employed, but decreases have been relatively moderate and part of it can be explained by a declining population.

Shumen failed to repeat the good results of 2014, but the last quarter was relatively favorable for the labor market and the decline in employment from April-September 2015 may prove short termed.

Southern Bulgaria

Positive development

The Southeastern region is the only one in which the number of employees during the last quarter of 2015, was higher in all districts than the same period of last year. It seems that in 2015 Burgas has already surpassed pre-crisis levels of employment and the labor market in the Stara Zagora district is gradually shaking off the hardships of 2013 and 2014.

The number of people employed in 2015 in the capital is now higher than in 2008. However, it will need additional time to reach the employment levels before the crisis, as the population of the district for the period increased by about 80 thousand.

Employment data for Plovdiv also remains positive, but only as far as the last quarter of the year is concerned, when the local labor market was able to compensate for job losses that occurred in the first half of the year.

Negative development

There is a somewhat surprising inverse relationship between the improvement of the situation on the labor market in the capital and deterioration in the neighboring districts of Pernik and Sofia. The number of people employed in Pernik bottomed at 49 thousand in the third quarter, while those in the Sofia district fell to 85 thousand in the second quarter of 2015. The labor market in both areas remains highly volatile.

Conclusion

The main threats to the continued recovery of the labor market are the rapidly slowing growth of economic activity, the lack of progress in regard to employment among young people and the stubbornly high number of discouraged people. On the one hand, because of the serious labor shortages that Bulgarian companies are experiencing, we can expect a slower recovery of the labor market in 2016. On the other - if the rate of increase in employment continues, in 2016 we can start talking not only about recovery, but about an expansion of the labor market - i.e. overtaking the pre-crisis employment levels.

The data for the first quarter of 2016 is extremely important, as it will show whether and to what extent the sharp increase in the minimum wage and minimum insurance thresholds has affected jobs in poorer areas of the country. This is an important point, because even in the midst of increasing employment on the national level, the exclusion of the poorer areas from this process poses challenges not only for the labor market, but also to the overall socio-economic development of these areas.

 

For more information and analyses - Regional Profiles: Indicators of Development