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Spectre of unemployment looms over Bulgaria

Date: 26.11.2008

Notwithstanding Government reassurances about Bulgaria's financial stability and that it will not sustain severe shocks from the global financial crisis, a number of voices are warning that unemployment will worsen, while firms in some sectors have already laid off employees.

In a November 24 2008 interview with Bulgarian National Radio (BNR), Bulgarian Industrial Association president Bozhidar Danev forecast double-digit unemployment in 2009.

According to Government statistics, unemployment in the first nine months of 2008 dropped to 6.42 per cent on a monthly average. Unemployment in Bulgaria is below the European Union average, the Government said in a statement on November 10.

Danev told BNR that there should be belt-tightening. There should not be Christmas extra payments and 13th monthly salaries, he said. "No Christmas extra payments; we are entering a crisis. There should not be Christmas extra payments and a 13th monthly salary because we will start shaking Bulgaria's economy, which could result in additional and very serious difficulties," Danev said, as reported by Bulgarian news agency Focus.

In a report released on November 24, the Bulgarian Industrial Association said that 2007 monthly salaries went up by 10.5 per cent but labour productivity went up by only three per cent.

BNR reported on November 23 that reductions in the number of orders for many companies in various sectors of Bulgaria's economy had caused losses.

"Many employers have had to force workers and personal into unpaid leave or just lay them off and eventually close down production. The prognosis is that unemployment next year will greatly exceed the Government- prognosticated seven per cent," BNR said in a special report.

"At the moment, unemployment stands just below six per cent. Prognostications for the building sector are not bright either - major development projects are being frozen, investments in building coming from abroad have tended to shrink too.

"Building workers are being laid off. Housing prices are beginning to tip down, prospectively dropping to levels, closer to real building prices," BNR reported.

In an interview on November 22 with mass-circulation Bulgarian daily Trud, Danev said that at least 20 per cent of construction workers would be dismissed because of companies' bankruptcies and would have to undergo e-training.

He said that the crisis would most severely affect producers using end products with higher added value. The upcoming crisis in construction would have an adverse effect on a series of related sectors, including producers of cement, metals and chemicals.

November 21, the online English-language version of Bulgarian daily Dnevnik said that
Bulgaria's unemployment rate had increased for the first time this year, according to National Employment Agency figures.

About 2000 people had gone on to unemployment benefits in October 2008 compared to the previous month. The rate grew to 5.85 per cent from 5.8 per cent to 216 644 people.
The same day, it was reported that Monbat, Bulgaria's largest producer of car batteries, had said it would lay off 120 workers, or a fifth of its headcount, to streamline production
operations and cut costs in the face of the global financial and economic downturn.

The staff downsizing will be a preventive measure against the crisis but was not a sign that business is grinding to a halt, the company's board chairman, Atanas Bobokov, told Dnevnik.

Monbat will not revise its 2008 financial forecast, but a slight correction may be possible once the October results have come out, the management said.

In 2008, Monbat missed its sales target by 760 000 leva because the slump in lead prices on international markets.

The worsening situation prompted Deputy Labour Minister Lazar Lazarov to tell Trud in an interview published on November 20 that he expected that business would now go easy with salary increases.

Lazarov said that he expected that the pace of wage growth in 2009 would be slower than at present and also lower than previously expected.

The same day, Trud reported that owners of scores of dairy plants and meat packing businesses in Bulgaria were ready to sell them because of a shortage of inputs, "Draconian" lending restrictions and shrinking consumption.

The news coincided with reports that state railways BDZ was to lay off about 3000 employees while a question mark loomed over the future of employees at Bulgaria's steel behemoth Kremikovtzi.

Labour and Social Policy Minister Emilia Maslarova said on November 17 that the Government would try to keep unemployment at less than seven per cent in 2009.

However, the tally was mounting, even though some individual cases of dismissal of employees were relatively small-scale.

The Stomana Industry steel maker in Pernik, Western Bulgaria, announced on November 17 that most of its employees were to go on forced paid leave because the plant had no new orders.

Stomana Industry executive director Emil Zhivkov said that the lack of new order was because of the global economic  crisis and falling metal prices. Of its 1100 employees,
300 workers had been laid off, but no more redundancies were expected, Zhivkov said.

At the same time, it emerged that 200 miners from the Roudmetal company in Roudozem, southern Bulgaria, had been sent on indefinite unpaid leave on November 10. The pits stopped working and only 15 employees were left in the company in charge of equipment maintenance.

Dnevnik reported on November 14 that Bulgaria's exporting heavy industry companies had been first to feel the pressure of slowing foreign demand because of the global financial crisis.

Fertiliser makers Agropolychim and Neochim, steel maker Stomana Industry and cast iron foundry Tchugunoleene had all unveiled measures aimed to address the shrinking market.

"Conditions in Europe have changed so rapidly inside a single month that we areto cut jobs," said Anton Petrov, regional manager of Greece's Viohalco, which owns Bulgarian steel maker Stomana Industry though its unit Sidanor.

The market was so unpredictable that no one could tell what would happen in the future, Petrov said.

Stomana Industry was to slash output by about 30 per cent, and Sidenor was to lay off about 300 workers from its subsidiaries.

Tchugunoleene, which ships about 85 per cent of its production abroad, was trimming its workforce by 25 per cent because Italian, French and German customers were cutting down on orders, Dnevnik reported.

Devnya-based Agropolychim, owned by US company Acid & Fertilizers LLC, was to shut down its ammonia fertilisers production, said Hristo Petrov, one of the company's executive directors.

Stockpiles were mounting at all major producers because no real deals were being struck although prices had almost halved, Petrov said.

The deteriorating market conditions had caused Neochim to postpone resuming operations currently halted for renovation, the company said in a filing to, the information service of the Bulgarian Stock Exchange.

According to the Government's November 10 statement on unemployment in Bulgaria in the first nine months of 2008, 116 300 job vacancies for unsubsidised employment were posted.

With the assistance of employment intermediaries, nearly 89 000 job seekers started work, and 76.54 per cent occupancy of job vacancies was achieved, the Government media statement said.

In the first nine months of 2008, job centres organised 19 exchanges: six general ones and 13 specialised ones. The exchanges were attended by 4610 job-seekers and 379 employers who posted 5185 job vacancies. A total of 4270 people started work, including 1983 people who had been registered at job centres as unemployed.


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