Trends in the Bulgarian industry – expansion of high value-added manufacturing
The text was first published in the annual report of the Professional Association of Robotics, Automation, and Innovation for 2023.
The previous year was characterized by relatively low growth in the Bulgarian economy, with real GDP growth in 2023 at 1,8%, well above the EU average of 0,7%. Forecasts suggest that growth will accelerate over the next two years, reaching 3% annually, amid rapidly diminishing inflation. Industrial production remains a key driver of the Bulgarian economy, despite some slowdown in 2023, mainly due to the record highs set in 2022. Based on the dynamics of various components of the manufacturing index, there is a transformation of industry toward a broader shift to high value-added production.
This is particularly visible in the production of computer equipment, electronics, and optics, where in some months, the index with a base year of 2015 exceeded 270%. A similar positive trend is seen in the production of vehicles excluding cars, where the records exceed 300% compared to the base year. A more modest but still noticeable upward dynamic is also observed in metal products, pharmaceuticals, and electrical equipment. However, this does not mean that all parts of the industry are developing well – the production index for tobacco products is only 25-30% of its value from 2015, leather and leather goods processing is about 50%, and clothing production is around 70%. A visible contraction is also seen in textiles, timber, furniture, paper, and cardboard. The direction of development is more than clear – growth is present in sectors with more serious mechanization and automation, but also those better integrated into international, especially European, value chains.
The connection between the dynamics of individual subsectors of Bulgarian industry and labour productivity is more than obvious. The segments of industrial production that have advanced in recent years are among those with high added value per employee – according to the latest data from Eurostat, in computer and communication equipment, labour productivity is 39 thousand euros per employee annually, and in the production of basic metals – 42 thousand euros. Other technologically advanced sectors, such as the chemical industry, also show high productivity, with added value per employee reaching 48 thousand euros. In contrast, declining industries have much lower productivity, such as in clothing and leather goods manufacturing, which is just 9 thousand euros per person, and in furniture and textiles – 13 thousand euros per person.
Expectedly, these are the sectors that attract employment. Despite the overall decline in the number of workers in manufacturing, the production of computer, electronic, and optical products, as well as vehicles, showed an 8% year-on-year increase, and electrical equipment production – 6%. There are also significant differences in wages. When viewed through the lens of the employer’s total cost, those in clothing manufacturing are nearly three times lower than those in computer equipment. The conclusion is clear – the rise of the industry is driven by those segments that heavily invest in mechanization and high-tech production but also focus on high skills and knowledge of employees and demand maximum performance from each one.