Economic Policy Review ISSN 1313 - 0544

New Programs of the Social Ministry – from Employment to Qualification

Author: Adriana Mladenova / 27.09.2007
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This week the social minister Mrs Maslarova declared a provisional change in the direction of the policy of the Ministry of Labour and Social Policy of Bulgaria on the labour market. The current programs that pay to employers and companies to hire unemployed will be replaced by new ones that aim to pay for courses of qualification and prequalification of the unemployed. This change is due to the situation we have experienced during the last several months of decreasing unemployment rates under 8%, and at the same time, lack of qualified workers in many spheres of the economy such as constriction, textile and hotel industries.

According to the report describing the two-year anniversary of the government, during the period of August 2005 - July 2007 240 thousand new job positions have been opened in the country. This success, however, is due not to the employment programs of the Social Ministry, but mainly to creating prerequisites in the economy for more business opportunities and development of the private sector.

Minister Maslarova said that 10 thousand new job positions have been opened with state subsidies for the reported period. In 2006 138 thousand people have been included in the employment programs and 47 thousand people have been involved in training organized by the Social Ministry that cost 100 mln. Euro to the taxpayers. For the first six months of 2007 100 thousand people have been included in the employment and training programs which in monetary terms amounts to 34 mln. Euro. Beside these aggregate data, however, we can not find information and analysis how many of the trained have been permanently employed after the training courses and what have been the long-term impacts on people after the end of the social programs.  

At the same time, in 2006 and at the beginning of 2007 there are many other factors that have played a positive role on the labour market. Social security contributions were decreased by 6 percentage points and the harmonization of the labour legislation in the country with that of the EU lead to liberalization and greater flexibility on the labour market. These are the drivers of increased employment rates and less unemployment in the country.

Therefore, the following questions should be answered before a decision is taken for every new proposed program in the Social Ministry:

  • How much will these programs cost - taking into account not only the direct expenses for financing and implementation of the programs, but also, for administrative capacity building and enforcing of the project ideas?
  • What will be the benefits and will they outweigh the costs?
  • What are the opportunity costs of all these expenses? Less expenses for social programs in theory means more disposable income for taxpayers or financing of other public programs. That is what the program budgeting is all about - competition among various projects and realization of those that bring the highest net benefit for the society.
  • Can a right decision be taken by government officials and centralized bodies what skills and abilities need those that seek work?

The answers to all these basic questions should be provided with detailed and strong arguments in their favour. At the heart of each decision of individuals lies private motivation and interest. The state cannot train and qualify somebody if he is not motivated enough or has no incentives for that. Therefore, in order to achieve its aim, the government should seek for market solutions such as introduction of education vouchers; decreasing of social security contributions and taxes, which means more financial resources at disposal of employers for qualification and training of their staff; liberalization of the process of hiring of workers from abroad by Bulgarian companies, which will serve as a stimulus for better qualification and enhancing the labour productivity of the Bulgarians.