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760 thousand employed more – possible, but only with labor market reforms
submited on 31.08.2008 in category Political stability | Fiscal affairs | Monetary policy | Regulated markets | Privatisation | Macroeconomic developments
submited on 31.08.2008 in category Political stability | Fiscal affairs | Monetary policy | Regulated markets | Privatisation | Macroeconomic developments
The National statistical institute announced the latest data on the labor market in Bulgaria last week.
The statistics can be subject to mixed opinions. “Good news” is to a large extent obvious to the observers of the Bulgarian labor market in the recent years:
- only in four years (from mid-2004 on) the economy has generated employment for almost 400 thousand people
- employment among 55-64 year-old people is growing at more rapid pace
- the unemployment rate fell to 5.8%, as the number of long unemployed people hase decreased at 23% relative to the mid-2007.
Seemingly, Bulgaria is now getting closer to the aim, set in the Lisbon strategy for 70% employment. But the issue remains – why only 70% - yet at least 10 countries in Europe have higher coefficient.
The fact that in Bulgaria almost 1.9 million people in the age range 15-64 years are unemployed is both unpleasant and giving reasons to hope. The explanation of the “excluding” of such a large group from the labor market probably includes at least the following:
- the relatively poor employment among people in the pre-pension wage, somewhat explainable with the plentiful opportunities for younger retirement
- the existence of stimuli for retirement due to illness
- still significant regulations, impeding the market flexibility- barely 2.4% of the employed work part-time, and 5.1% are those with temporary jobs.
Changes in the normative system could stimulate participation on the labor market. Among the least active groups are young pensioners, disabled people, and mothers with young children, the uneducated, and the minorities. There is no reason to think that reform, including lower labor taxation, more freedom in the negotiations between employee and employer and opportunity for part-time employment for many employers would not activate large part of the unemployed.
The macroeconomic effect of higher activity is increasing the potential for economic growth. Although in the long term the change in the labor productivity is the main factor for prosperity and rising disposable income, we must not neglect the necessity of fully exploring the ? available resources. And this means, in simple words, more people to work (if they can – more and better).
The quantitative dimension of this potential is considerable – although it might be too optimistic and even impossible to expect 100% employment. But even if Bulgaria only reaches the average employment rate of the 5 leading economies on Europe, the number of the employed could rise by 23%, or some 760 thousand. Hence, it is still early to state that the available labor force in Bulgaria is exhausted.
The statistics can be subject to mixed opinions. “Good news” is to a large extent obvious to the observers of the Bulgarian labor market in the recent years:
- only in four years (from mid-2004 on) the economy has generated employment for almost 400 thousand people
- employment among 55-64 year-old people is growing at more rapid pace
- the unemployment rate fell to 5.8%, as the number of long unemployed people hase decreased at 23% relative to the mid-2007.
Seemingly, Bulgaria is now getting closer to the aim, set in the Lisbon strategy for 70% employment. But the issue remains – why only 70% - yet at least 10 countries in Europe have higher coefficient.
The fact that in Bulgaria almost 1.9 million people in the age range 15-64 years are unemployed is both unpleasant and giving reasons to hope. The explanation of the “excluding” of such a large group from the labor market probably includes at least the following:
- the relatively poor employment among people in the pre-pension wage, somewhat explainable with the plentiful opportunities for younger retirement
- the existence of stimuli for retirement due to illness
- still significant regulations, impeding the market flexibility- barely 2.4% of the employed work part-time, and 5.1% are those with temporary jobs.
Changes in the normative system could stimulate participation on the labor market. Among the least active groups are young pensioners, disabled people, and mothers with young children, the uneducated, and the minorities. There is no reason to think that reform, including lower labor taxation, more freedom in the negotiations between employee and employer and opportunity for part-time employment for many employers would not activate large part of the unemployed.
The macroeconomic effect of higher activity is increasing the potential for economic growth. Although in the long term the change in the labor productivity is the main factor for prosperity and rising disposable income, we must not neglect the necessity of fully exploring the ? available resources. And this means, in simple words, more people to work (if they can – more and better).
The quantitative dimension of this potential is considerable – although it might be too optimistic and even impossible to expect 100% employment. But even if Bulgaria only reaches the average employment rate of the 5 leading economies on Europe, the number of the employed could rise by 23%, or some 760 thousand. Hence, it is still early to state that the available labor force in Bulgaria is exhausted.
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