- Political stability
- Fiscal affairs
- Monetary policy
- Regulated markets
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- Macroeconomic developments
Official wages grow in real terms
submited on 15.08.2008 in category Political stability | Fiscal affairs | Monetary policy | Regulated markets | Privatisation | Macroeconomic developments
submited on 15.08.2008 in category Political stability | Fiscal affairs | Monetary policy | Regulated markets | Privatisation | Macroeconomic developments
Latest data reported by the official statisitcs of wages in Bulgria showed that the considerable nominal growth of labor income is being kept – 25% on the basis of the first half-year. In the same time, inflation of consumer prices was 14% for the 12 months until June – higher than the expected and than the historic levels after the introduction of the currency board, but in the same time lower than wage growth.
„The avegare wage” has relatively limited business application, since employers appoint workers on particular positions at most often individually set payment. Wage growth is not the same for different industries and different positions within them. We use data for payment by industry as basis point in the growth forecast for the most common labor market positions. Traditionally we focus primarily on the most common labor market segments – basic and medium – which represent some 2/3 of the current employment in Bulgaria. Wages of specialists could be surveyed, but for sure thay cannot be coverer all. We assume that managers’ wages are not the main portion of the labor costs.
Wages of most common positions grow at rates within the range of 20-30% nominally in the most recent 2 years. Official wage growth began catching up with these digits for two reasons. First, we note certain shadow economy reduction after the reduction of the direct tax and indurance contributions’ rates. Second, inflation of the euro (and therefore leva) accellerated consierably after 2006, which reflected on on nominal wages as well. It is important to say that wage growth acceleration began two years ago, i.e. yet before the inflation acceleration took place. Wages caught much more precisely the devaluation of the currency rather than CPI did, with which real wages lost their high growth pace. Meanwhile, it is likely for wage growth moderation to come before the deceleration of consumer price dynamics.
In the private sector higher growth is notable with wages in the secors, where hidign labor income is least frequent – in financial intermediation (growth of 34% for the first half) and the production and distribution of electricity, gas and water (29%) – over two times faster than official inflation. In cobstruction however – growth is neither lower than the country average, not too diifferent from our independent surveys of labor market dynamics.
In other important part of the supposed “grey” economy – hotels and restaurants – wages grow at 17.5%. This is slower than the average for the economy, but it is still more than inflation of consumer prices, i.e. even here there is is real income growth, although this is sector, from which we cannot expect fast productivity growth.
In order for more substantial reduction of the shadow economy to be achieved, more notable decrease in the tax-insurance burden will be necessary. In the most labor-intensive sectors there is still considerable underestimation of wages by the official statistics.
„The avegare wage” has relatively limited business application, since employers appoint workers on particular positions at most often individually set payment. Wage growth is not the same for different industries and different positions within them. We use data for payment by industry as basis point in the growth forecast for the most common labor market positions. Traditionally we focus primarily on the most common labor market segments – basic and medium – which represent some 2/3 of the current employment in Bulgaria. Wages of specialists could be surveyed, but for sure thay cannot be coverer all. We assume that managers’ wages are not the main portion of the labor costs.
Wages of most common positions grow at rates within the range of 20-30% nominally in the most recent 2 years. Official wage growth began catching up with these digits for two reasons. First, we note certain shadow economy reduction after the reduction of the direct tax and indurance contributions’ rates. Second, inflation of the euro (and therefore leva) accellerated consierably after 2006, which reflected on on nominal wages as well. It is important to say that wage growth acceleration began two years ago, i.e. yet before the inflation acceleration took place. Wages caught much more precisely the devaluation of the currency rather than CPI did, with which real wages lost their high growth pace. Meanwhile, it is likely for wage growth moderation to come before the deceleration of consumer price dynamics.
In the private sector higher growth is notable with wages in the secors, where hidign labor income is least frequent – in financial intermediation (growth of 34% for the first half) and the production and distribution of electricity, gas and water (29%) – over two times faster than official inflation. In cobstruction however – growth is neither lower than the country average, not too diifferent from our independent surveys of labor market dynamics.
In other important part of the supposed “grey” economy – hotels and restaurants – wages grow at 17.5%. This is slower than the average for the economy, but it is still more than inflation of consumer prices, i.e. even here there is is real income growth, although this is sector, from which we cannot expect fast productivity growth.
In order for more substantial reduction of the shadow economy to be achieved, more notable decrease in the tax-insurance burden will be necessary. In the most labor-intensive sectors there is still considerable underestimation of wages by the official statistics.
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