The Economy - Labor Force
Because of a low birth rate, labor shortages began to appear in Bulgaria in the 1980s. Then in 1989, deportation of 310,000 ethnic Turks created critical shortages in certain economic sectors. The dislocation caused by the large-scale economic reform that began in 1990 introduced high rates of unemployment and social insecurity to a system that nominally had no unemployment under the central planning regime. A period of protracted readjustment of labor to enterprise needs was expected in 1991.
Factors of Availability
The total labor force in Bulgaria was 4.078 million in 1988. Of that total, 35.9 percent were classified as industrial workers, 19 percent as agricultural workers, and 18.9 percent as service workers. In 1985 some 56 percent of the population was of working age (16 to 59 years old for men and 16 to 54 for women); 22.9 percent were under working age, and 21.1 percent were over working age. These figures indicate that the population had aged demographically since 1946, when 30 percent of the population was under the working age and only 12 percent were over. Small growth rates and occasional declines of the Bulgarian labor force increasingly inhibited economic growth in the 1980s. The meager growth in the labor force was due primarily to a birthrate that began declining before World War II.
Declining population growth did not affect Bulgarian economic planning and performance for a number of years. In the 1950s and 1960s, the expanding labor requirements of industrial growth were accommodated by a steady influx of peasant labor from the countryside and by the nationalization of artisan shops in 1951. This migration slowed, however, and complaints of an industrial labor shortage were common by the late 1960s. The situation was exacerbated in 1974 when the government reduced the work week from 48 to 42.5 hours. By the early 1980s, Bulgaria's urban working-age population had begun to decline in absolute terms. Then in May 1989, ethnic strife caused thousands of ethnic Turks to leave Bulgaria for Turkey. In August Turkish authorities finally closed the border, but only after 310,000 ethnic Turks had left the country, taking with them a substantial chunk of the Bulgarian work force. In addition, a significant "brain drain" threatened in 1990 when large numbers of young, highly educated Bulgarians applied to leave the country. In the first four months of 1990, at a time when the country desperately needed its professional class to restructure society and the economy, 550,000 such applications were received.
Labor statistics reflect a distinct change of economic priorities from agriculture to industry under communist regimes. From 1948 to 1988, the shares of labor in industry and agriculture shifted dramatically. Industry's share rose from 7.9 to 38 percent, while agriculture's share fell from 82.1 to 19.3 percent. Among other sectors, in 1988 construction, transportation and communications, and trade respectively accounted for 8.3, 6.7, and 8.7 percent of employment.
Labor and Economic Reform
Under communist rule, unemployment officially was nonexistent. Like many other Soviet-style economies, however, the Bulgarian system included much underemployment and hoarding of surplus workers, particularly in industry. While in power, the BCP set wage and work norms. Average annual earnings rose from 2,185 leva in 1980 to 2,953 leva in 1988. Earnings were highest in the research, state administration, construction, transport, and finance sectors, in that order. Agriculture and forestry were among the lowest paid sectors.
After the overthrow of Zhivkov, reasonable use of industrial capacity was expected to maintain a tight labor market for the foreseeable future because the labor force had ceased to grow. Women already accounted for approximately 50 percent of the labor force in 1988; therefore, little additional growth was expected from that part of the population. Similarly, little growth was expected from among voluntarily employed pensioners and invalids. However, the tight labor supply was not the most pressing concern of the first post-Zhivkov economic planners. The economic transformation from centralized planning to a market economy meant increased influence by market factors on wage and unemployment rates in the future. This transformation also made high unemployment likely as state enterprises closed and generation of goods and services shifted to an expanded private sector. But this intermediate dislocation was thought necessary to achieve correlation between wages and productivity.
Unemployment, which stood at 72,000 at the beginning of 1991, was expected to jump to at least 250,000 by the end of that year because of the planned transition to a market structure. In 1990 the interim government of Petur Mladenov created a national labor exchange to assist in placing unemployed workers. Unemployment assistance remained a state responsibility, but the state had very little money for this purpose in 1991. Plans called for eventual contribution by private employers to a designated unemployment fund.
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