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Wages in state-owned enterprises and macroeconomic stability
submited on 20.04.2007 in category Political stability | Fiscal affairs | Regulated markets | Privatisation | Macroeconomic developments
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The average monthly wages in state-owned enterprises in 2006 grew considerably faster than average wages in the country and are up to 30 % higher. However, the pressure for increasing wages of public sector employees has been recently accelerated. The lack of a common procedure for wage regulation would lead to unrelated to market reality increase. On a macro scale the result from such a policy would be a fall in investment, a rise in prices (natural monopolies) and an increase in government subsidy. Slowing down real growth rate of average productivity of labor, combined with a faster increase in wages, would ultimately eliminate Bulgaria’s comparative advantages in the long run.

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