HUMAN DEVELOPMENT REPORT ! BULGARIA 1996
72
6.2. Regional differences in the
employment rate
In Bulgaria the reforms set off with
the radical elimination of the regional dif-
ferences in prices, taxes and subsidies from
the budget. Placed in conditions of a sharp
transition from centralized administration
to economic liberalization, the individual
regions adapted to varied extents to the
local economic conditions. That painful
process negatively affected the regional de-
velopment of the labour resources. Against
the background of the drastic drop of em-
ployment in the country by 37.7 per cent in
the 1989-1994 period, the regional decline
of employment singnificantly varied. Stand-
ing out at the one pole was the region of
Haskovo, where the drop of employment
was the highest. At the other pole was the
city of Sofia, where an increase in employ-
ment was registered.
What has been common to all regions
has been the
drop in the economic activity
of the population. In the region of Haskovo
it was by 7.1 per cent, of Bourgas - by 5.8
per cent and of Lovech by 4.5 per cent,
while the average for the country was 3.3
per cent in the 1993-1995 period.
Regionally, the rate of employment
has been affected by the overall economic
and social environment in which the labour
markets have been developing. The geo-
graphical features and natural resources of
the territorial systems of settlements stand
out predetermining to a high extent the
production structure of the economic ac-
tivity as well as its branch specificities. The
natural conditions determine, for instance,
one or another rate of labour intensity in
agricultural production and the differences
in the demand for labour. The nature of
the tourist services and of farm work pre-
conditions seasonal employment and latent
seasonal unemployment.
The demographic features of the re-
gions and the quantitative and qualitative
characteristics of the labour resources in
terms of sex, age and ethnic background
also determine the specificities in the sup-
ply of labour. There is a high concentra-
tion of able-bodied population in the city
of Sofia, in the Plovdiv and Sofia regions.
In other regions like those of Montana and
Lovech, the predominant share of the
population is above or below the active age.
Substantial problems of the regional
labour markets become clear when other
two indicators are taken into account,
namely the high unemployment rate and the
growing share of people who are not part of
the labour force. There are imbalances in
the region of Plovdiv, where supply of
labour considerably exceeds demand. In
October 1995 the region ranks second in
the relative share of those employed but
has also the highest share of unemployed
people - 14.3 per cent of all unemployed
people in the country. The regions of
Bourgas and Sofia rank next in their high
rate of jobless people - 10.3 and 13.5 per
cent respectively of the jobless in the coun-
try. The relative share of the unemployed
is the smallest in the capital city. But the
decline of the labour force is likewise the
highest in the
capital and in the region of
Plovdiv. The explanation of these regional
states of
employment and unemployment
should be sought in the economic factors
Figure 6.1.
Changes in the coefficients of economic activity and
employment in the 1993-1995 period by regions
73
REGIONAL SPECIFICITIES OF
EMPLOYMENT AND UNEMPLOYMENT
shaping employment and the labour mar-
kets prior to and during the period of tran-
sition.
No doubt, of top importance from
among the economic factors, determining
the regional labour markets, has been the
structural factor. It shapes the production
character of a region and determines the
demands for manpower. The domestic spe-
cialization of Bulgarias economy was
strongly dependent on specialization within
the framework of the Council of Mutual
Economic Assistance. Individual regions
were centres of specialized industries. Me-
chanical engineering dominated in the re-
gions of Lovech, Varna, Plovdiv, Haskovo
and Sofia, the
latter accounting for about
14% of its output. The electrical engineer-
ing and electronic industry was concen-
trated in Sofia (21%), the regions of Lovech
(20%) and Plovdiv (14%). The region of
Bourgas was the centre of the chemical
industry (48.5%). The textile industry
dominated the production structure of the
Haskovo (17.7%) and Lovech (16.4%) re-
gions. The food and beverages industry
centred in Sofia (21%), the regions of
Plovdiv (15.2%), Varna and Lovech and
Haskovo (11% each).
In these structural conditions, employ-
ment changed on a regional scale depend-
ing on the extent to which a certain market
of products had collapsed. Several regional
labour markets have an excess of skilled
manpower, employed formerly in the sec-
tors of electronics and mechanical engi-
neering, in which Bulgaria had specialized
within the CMEA. The unemployment rate
among the highly skilled manpower of these
regions was particularly high in the early
years of the transition to a market economy.
The disintegration of the food and bever-
ages industry and agriculture affected the
livelihood of approximately one-fifth of the
able-bodied population. Economic imbal-
ances and social problems emerged. Large
groups of the ethnic minorities in the coun-
try lost their jobs.
Investment activity for the country as
a whole continues to be low and has been
one of the key factors of economic stagna-
tion. On a regional scale, the capital city
has been the region with the biggest invest-
ments, followed by the regions of Plovdiv
and Varna. The structure of investments
according to forms of ownership of the
enterprises for the country as well as by
regions has shown that the investments in
state enterprises have been the main invest-
ments made in the economy. There has
been a very small share of investments in
private and cooperative enterprises.
Private investments have been of in-
dubitable importance for encouraging em-
ployment and reducing the unemployment
rate. So far, however, the rates of private
sectors growth have not helped it become
a compensating factor with regard to the
drastic drop of employment in the state
sector. In the 1992-1994 period, the num-
ber of private firms in the country had in-
creased almost 2.5 times over. The private
investors prefer to open firms in the big
cities. The city of Sofia has the highest num-
ber of private companies (30 664), followed
by Plovdiv (27 707), and Varna (21 081),
while Montana has the smallest. The grow-
ing share of the profitable private firms
from 61.7% in 1992 to 73.5% in 1994 comes
to show the trends of stabilization and de-
velopment of that sector. This has been a
precondition for certain optimistic expec-
tations as regards
its role in the provision
of new jobs. But private capital began to
develop in the sector of trade, accounting
for 64 per cent of all private companies in
1992, and it continued to be leading in that
sector of the economy (70% of the net
value of revenues from sales). This trend
does not correspond to the anticipated
growth of private capital investments in
industry and the provision of new jobs, so
that a breakthrough
could be achieved in
coping with unemployment.
The problem has not rested solely in
the quantity of investment and the growth
of the private sector. The main problem
concerns the development of a stable and
There are sructural
causes of regional
unemployment
The private sector does
not make up for the
reduced employment in
state-owned enterprises