RIVALRY FOR WORKERS IS YET TO FINISH
A double-digit unemployment rate, a wave of cut-offs and even a wage decrease...These is just part of the gloomy forecasts that the Bulgarian business is preparing to welcome New Year 2009 with. If there is labour force which does not feel the global financial crisis today the next year every 10th will suffer with it as a result of losing job, Bulgarian Industry Association (BIA) heralds with no mercy. On the other hand, the Social Ministry draws a far more rosy picture by promising a minimal unemployment growth and not just one but two jumps in the budget sector remunerations in 2009. The truth, as usual, is somewhere in between, but the employee as a rule is being acquainted with it at the end.
No day has passed during the last weeks without bad news regarding the country's labour market. The latest one came at the beginning of the week from the sewing and textile industry whose business is suddenly shrinking as a result of decreased orders. According to information provided by companies of the branch, textile output flagged by 5.1% year-on-year, that of sewn products fell by 12.5% and knitted fabrics output plummeted by 10.5% over the second half of 2008. The companies are afraid that this trend will inevitably lead to cut-offs and forecast that half of the companies will likely release part of their employees. It is rumoured that approximately 50 000 or nearly one-third of the sector's employed will lose their job.
Two times larger cut-offs threaten those who work in the construction sector although it seems stable for the time being. The situation regarding the agricultural sector is not rosy, too, but currently the ferrous and non-ferrous metallurgy and the fertilizer industry are most intensively releasing their workers. The Kardzhali lead-zinc works is about to cut 700 jobs while Stomana Pernik has already terminated the contracts of 130 of its employees. The order decrease will make another 130 leave Sigma, Stomana Industry's subsidiary. More than 200 workers will be cut in Gorubso and another 200 of Rudmetal's workers in Rudozem will take unlimited holidays. The managers at part of the sector's companies consider the situation critical and are even afraid of bankruptcy. The reason lies in the lead and zinc prices which plummeted on the London Metal Exchange and still do not manage to go back to their previous positions.
Navigation Maritime Bulgare is also fighting the crisis through plans to release 480 employees, mainly from its administrative department. The obstacles at Kremikovtsi may lead to the release of 10% of the Bulgarian State Railways' staff. Job cuts will be carried out also at all ports that cooperate with Kremikovtsi. Tension can be felt also in the postal services sector and even among the mobile phone operators. Bulgarian Telecommunication Company already announced that it plans to terminate the contracts of 220 employees across the country. Moreover, new specialists are not in demand because of the competitiveness in the sector. No jolts are for the time being expected in the tourism and real estate sectors but the companies are significantly narrowing their ad budgets. On the top of it, the National Employment Agency reported last week the first unemployment rate growth over the last year. The rate increased by 0.05 points to 5.85% in October 2008 and it stemmed from the usual autumn-winter season release of temporarily employed in the tourism, agricultural and forest sector, construction sector, processing industry and so on. The poor business environment is also blamed for the situation. Its October 2008 index fell by 4.6 points to the two-year lowest level on a monthly basis.
The situation is not rosy indeed but is not so desperate as BIA experts consider it. The facts are facts but it is also true that the labour market develops quite dynamic and unforeseeable so forecasts for an impending apocalypse can not be made for sure. It is also known that the economy has the capacity to restore its growth after every downturn because it gets rid of the obstacles that used to impede it so far. In the same vein, the bankruptcy of several troubled companies and an unemployment rate jump to 6-7% could prove healthy for Bulgaria. The employers who now cut their personnel are confident that the laid off specialists will relatively quickly find new job because there is a number of companies which lack qualified personnel. And labourers, especially those of the construction, machinery and metallurgical sectors, will be welcomed to companies which are engaged with large-scale infrastructure projects in Bulgaria. The Government itself, which according to Finance Minister Plamen Oresharski has already worked out anti-crisis measures, would lend a helping hand to the business. It would be well enough several large-scale public orders to be announced and financing on one or two European Union programs to be received and thus new jobs will be created. It would be a useful step if more funds be allocated for the construction of Sofia's circular and the metro system's first segment, as well as of Trakia, Struma and Maritsa highways, Danube Bridge-2 and all remaining projects under the pre-accession programes that EU Commission ceased to finance.
On the other hand, employers themselves should not be underestimated. Every owner who runs its business knows that cutting jobs off is not the best measure against the financial crisis. The lower demand inevitably leads to expendables and production curtailment but nobody will deprive himself from its main personnel. If the budget sector remunerations really jump in 2009 as the Government promises the situation will change and the companies (especially those of the production sector) have to be ready to meet higher demand and they will therefore need staff, said Vassil Tsanov of Bulgarian Academy of Science's Economy Institute. The trait in this case is that the big companies terminate the contracts mainly of administrative staff and of employees on the brink of retirement. One of the possible future solutions is the business to have a preference for lower-priced services provided by temporary employment agencies and hire employees on fixed-term contracts. Such a move will secure low unemployment rates but it will also reduce the companies' expenditures on salaries. Expenditures could be reduced also by keeping the private sector's wages at their 2008 levels or by planning minimal increases. During the last two years, the social partners negotiated advisable index for salary growth of between 15% and 17% but the salaries in fact jumped by 20% on the average. The detention of this growth will not burden the employees but will unburden employers in terms of expenses for sure.
The coin no doubt has other side, too, which should not be underestimated. The labour market condition could worsen if the economy does not overcome the crisis fast enough and prevent potential entanglements. It is clear that a real stagnation will occur if the gloomy prognoses about large-scale bankruptcies and wave of unemployment come true. The people will hardly save themselves in neighbouring countries and even in the European markets because many are to lose their job there, too. Slovenia forecasts the number of registered in the labour bureaus to increase by more than 63 000 over 2008 and 2009, while this figure will exceed 100 000 in Romania. Another 100 000 will be kicked out in Serbia while Greece is frightened that the crisis will terminate the contracts of at least 50 000 of its labour force. The most affected appear to be the construction sector, textile industry, ferrous metallurgy, and the mining, food and automobile industries. The problem is that the European companies firstly release their foreign staff which means that the majority of the Bulgarian gastarbeiters will be back to their homeland. The Government forecasts their number will reach 80 000 but also sees the unemployment rate remaining below 7 percent.
But not all hope should be resigned as no crisis lasts forever. And the local labour market is still stable for the time being. This can be proved even by the job announcements available via Internet. The jobs.bg website only offers almost 10 000 vacancies across the country for engineers, construction labourers, spidermen, sales consultants, programmers, accountants and managers in almost all economy's developed sectors. Despite the petty increase in the number of unemployed in October 2008, the National Employment Agency reports on lower-than-average unemployment rate for eight Bulgarian districts. In Sofia, for example, the production and construction sectors are thriving regardless of the crisis and just 1.29% of the capital's residents have no job. The figures are 2.82% for Burgas district, 3.40% for Gabrovo district and 3.79% for Varna district. The remaining champions are Stara Zagora district with 4.78%, Plovdiv district with 4.83% and Pernik and Rousse districts with respectively 4.90% and 5.47 percent. On the other side of the classification with highest jobless rate are Targovishte (12.58%), Smolyan (10.83%), Shoumen (10.65%), Montana (10.35%), Razgrad (9.89%) and Vidin (9.72 percent). For the time being, the higher levels could not give ground for anxiety because they are related to the release of temporarily employed in the tourism and agricultural sectors after the summer season. According to National Employment Agency data, the vacancies available through labour bureaus were 2 399 in October 2008, down by 13.4% month-on-month but the downward trend is typical for this time of the year.
It is important now that rulers should not forget this is a nine days' wonder. Otherwise, it would be easy to make a mountain out of a molehill which will tear down the stability not of the labour market only but of the entire economy as well.