When Bulgaria joined the European Union in 2007, the country had the lowest standard of living of any of the 27 countries that belonged to the Union at that time. On average, Bulgarians had the equivalent of just 4,300 euros at their disposal each year. The average amount within the EU was more than six times as high. Nonetheless, many Bulgarians were optimistic about the future because there had been significant improvements in previous years. Since the turn of the millennium, GDP had grown by around 50 percent. The number of those working in the formal economy had increased by almost half a million and unemployment had fallen from almost 20 percent (2001) to around seven percent. The promise of prosperity offered by the political transformation of the 1990s seemed to have been fulfilled, and accession to the European Union signalled recognition of that success.
However, with the outbreak of the global economic crisis, Bulgaria suffered a major setback. From 2008 to 2009, GDP plummeted by almost four percent. Thousands of jobs were lost, above all in sectors that had previously enjoyed success – construction, trade, textiles and tourism. The number of those employed in Bulgaria today is 330,000 fewer than in 2008 and some 40 percent of the population is threatened with poverty and social exclusion. Bulgaria remains the poorest EU country.
Demographic change spoils chances of prosperity
The country’s demographic development makes it both more difficult and more urgent to close the wealth gap with the rest of the EU. This is because Bulgaria is currently undergoing an unusually rapid demographic transformation. Not only are women in Bulgaria – like almost everywhere else in the EU – having only a small number of children; the health system is so dilapidated that Bulgaria has the second-lowest life expectancy in Europe – only Lithuania scores worse on this indicator. On average, Bulgarians live just 74.7 years.6 During the first ten years of its EU membership, Bulgaria has lost 4.4 percent of its population through death surpluses – more than any other EU-28 country.
In addition, thousands of people emigrate each year in search of a better life abroad – above all, from the poor northern part of the country. Because many of those emigrating are young people, both the shrinking of the population and the aging of society are accelerating. With a current median age of 43.6, Bulgaria is already the fifth-oldest nation in the EU. It is projected that as a result of all these developments, just 5.6 million people will be living in the country in 2050 – more than 1.5 million fewer than today — in which case, there will be only 1.5 people of working age for each person over 64; the current ratio is still three to one. These figures suggest that the aging will be even more pronounced in Bulgaria than in Germany, which at present has the highest median age in the EU. What is more, Bulgaria is likely to be harder hit by this development than Germany because the latter’s population can expect much more financial security in old age. The situation is different in Bulgaria. Today, the country already has the highest risk of poverty in old age among all EU countries – 46 percent.
In view of these developments, it is all the more important to quickly close the wealth gap with other European states. Here the key is productivity – that is, the average output of each employed person. It is estimated that productivity will have to increase annually by four percent until 2040 for Bulgaria to achieve the EU average for GDP. However, between 2010 and 2015, it grew annually by just 2.5 percent. To boost the growth of productivity in the future, the Bulgarian economy must be modernised. Currently, the country produces mainly simple goods at the lower end of the value chain. In almost no other EU state is the share of high-technology exports as low as in Bulgaria. In order to kick-start structural transformation, Bulgaria needs foreign investors. But owing to poor infrastructure, the red tape associated with founding companies and widespread corruption, Bulgaria has little pulling power among international investors.
Education as a major issue
In order to raise productivity to the desired level, Bulgaria will have to take measures to ensure that the population is better able to meet the needs of the job market. Companies that aim to design and manufacture complex products require qualified skilled workers, such as managers, engineers and computer scientists. Bulgaria has too few such workers. This is because of an education system that struggles to equip schoolchildren with even the most rudimentary skills and knowledge. In the 2015 PISA international educational assessment, 40 percent of 15 year olds tested were unable to read simple texts, do easy arithmetic or understand basic scientific concepts.
One of the reasons for these weaknesses is the peculiar structure of the Bulgarian school system. For around one-fifth of pupils, general education ends after six or seven years – that is, long before they reach the minimum school-leaving age of 16. At that point, they switch to a vocational school. The curricula of these vocational schools are scarcely oriented towards the needs of the job market. To this day, there is virtually no cooperation between employers, policymakers and educational institutions when it comes to drawing up educational programmes that would adequately prepare school-leavers for the tasks to be performed at the workplace. Moreover, there is insufficient practice orientation and a lack of clearly defined standards on training content. Despite a large number of initiatives and reform programmes in recent years, this situation has barely changed.
Similarly, higher education has to date contributed far too little to modernising the country’s economy. Not only is the quality of research and teaching worse than in other European states; many students choose subjects that are seldom required – for example, the humanities. For this reason, an unusually large number of graduates later work in professions that are below their level of qualification. In its National Strategy for the Development of Higher Education, Bulgaria is pursuing the goal of encouraging more students to opt for future-oriented subjects – for example, engineering, biotechnology and computer science – and promoting the development of these areas in particular.
Because it will inevitably be several years before such efforts yield positive results, the skills of today’s workforce should be developed through further training. Just how great the need is can be seen from an EU survey according to which more than two-thirds of Bulgarians aged 25-64 do not know how to properly use a computer or the Internet. Each month, just 2 percent of the working-age population are registered as taking part in further training courses. The EU average is just under 11 percent.
Another potential resource for overcoming the consequences of the demographic transformation is to be found in those who currently neither work nor are looking for a job. Almost one quarter of the population aged 25-64 belongs to this so-called silent reserve. Many women do not work. As is the case all over the world, family commitments are among the main reasons for this. But in Bulgaria there is a special reason: the country offers the longest statutory maternity leave in the world – 410 days. During this period, women receive 90 percent of their original wage. Thereafter, mothers or fathers can take paid parental leave of 320 days. For this reason, young women sometimes leave the job market for years. At the same time, those who belong to the current grandmother generation frequently give up working before retirement age in order to help bring up the children or to take care of older family members.
Disadvantaged in every respect
Poverty is a big problem in Bulgaria. However, it does not affect all segments of the population to the same extent. Roma, who make up five to ten percent of the population, are particularly threatened. In 2011, three-quarters of them were living in accommodation without such basic facilities as a toilet, kitchen, shower and electricity. Only half have health insurance and their average life expectancy is around ten years below that of the rest of the population. And because they often have received hardly any education, Roma are frequently unemployed or, at best, work in low-skilled jobs. Only ten percent finish secondary school and, at just one percent, their share of graduates is insignificant. Just under two-thirds of Roma aged 16-24 are neither undergoing training nor working.
A large number of state-sponsored and civil society initiatives are intended to help improve the situation of the Roma. Here, education plays an important role. Alongside informal projects such as summer schools and advisory programmes for parents, reforms of the educational system are aimed at helping to keep children at school for as long as possible. To this end, the government introduced a two-year mandatory pre-school education as well as all-day schools. Moreover, needy families receive certain social benefits only if their children regularly attend school. To a much greater extent than was previously the case, the private sector is taking part in organising mentoring, training and internship programmes to make Roma fit for the job market. Such efforts are not without an ulterior motive. Roma account for up to 19 percent of newcomers to the job market. Just how well or poorly the minority is integrated into society will therefore be crucial in determining the future of the country./IBNA