Human Development Report Bulgaria 1996

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HUMAN DEVELOPMENT REPORT

BULGARIA 1996

Published for the United Nations Development Programme (UNDP)

Sofia, Bulgaria 1996 Front cover: Krassimir Bonev Human Settlement

Back cover: Vihroni Popnedelev Flora

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ISBN 954-90175-2-4 Copyright © 1996 United Nations Development Programme, Sofia © Editing, composition of the text: National & Global Development, Sofia © Graphic design, layout & print: ARGED, Sofia © Cover design: Bozhidar Ikonomov, Sofia

2 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 FOREWORD

For almost fifty years, Bulgarian society has been the candid and professional analysis of an eminent team guided by principles which hardly changed over time. Then, working under the guidance of Prof. Nikolai Genov. all of the sudden, the introduction of democratic institutions and market economy shattered the foundations of The process of preparing the report is just as impor- socio-economic life of the country. The radical changes tant as the report itself. The preliminary findings have been caused disorientation among large segments of the popu- presented and discussed at several workshops open to the lation which was not prepared for them. public. The team of authors greatly benefited from the open exchange of ideas there. The magnitude of the changes was not anticipated in the international community as well. As a result, the ob- The findings of the report indicate that the main chal- jective of creating an environment which provides equal lenge to Bulgarian society is the development of the hu- opportunities for all is far from being met. New disparities man capacity to cope with a rapidly evolving social trans- appeared, old ones increased. formation. The major task is to formulate and implement policies which will create an enabling environment of sus- Against this background the Human Development Re- tainable human development. port. Bulgaria 1996 is a genuine attempt to contribute to the development of a policy dialogue in the country. The report aims at identifying the most vulnerable groups in Bulgarian Fabrizio Ossella society as well as the areas which need most urgent atten- Resident Representative tion. The views set forth in the report have emerged from UNDP, Sofia

Team of authors:

Nikolai Genov (Editor)

Anna Mantarova, Dimitrina Dimitrova, Gancho Ganchev, Georgi Bogdanov, Georgi Shopov, Goran Bankov, Ivan Nikiforov, Iskra Beleva, Kiril Gatev, Maria Kadinova, Mariana Zaharieva, Minko Minkov, Petko Evrev, Rossen Rozenov, Stefan Ivanov, Stoicho Motev, Tanya Cholakova, Yordan Hristoskov, Zhivko Nedev, Zlatka Glutnikova

Consultants:

Baicho Panev, Kiril Kertikov, Zhana Ilieva

PREFACE 3 PREFACE

After the profound changes of the last tion of analysis. Special attention is devoted few years, Bulgarian society is painfully and to the regional specifics of the conditions slowly entering a period of stabilization. for human development. Positive processes are taking shape in the economy. Political confrontation is getting The authors are well aware that they less acute. Tendencies in culture are be- analyze problems vital for the country and coming clearer. However, the complicated for every citizen; that many of these prob- problems facing the country are more trans- lems evolve rapidly and the risk of analy- parent today as well. sis and recommended solutions is substantial; that, given the countrys present situa- This experience strengthens the view tion, there are no commonly shared views that the national human resources are the of the desirable state of man and national key factor for the success of the current society. transformation. Their development and realization are at the same time condition and Herein lies the genuine scientific and goal of the reforms. That is why the United civic challenge, however. The authors have Nations Development Programmess ini- tried to present as objectively as possible tiative to prepare annual reports on human the major problems facing the country at development in Bulgaria is not just timely. present and in the foreseeable future. Their It manifests the profound understanding efforts were backed by many individuals and that a sustainable development worldwide organizations. Yet the choice of topics, the is possible only if there is a sustainable style of analysis, conclusions and recommen- development of individual countries. dations are the sole responsibility of the Among other things, this means develop- authors and do not commit international or ment of people, development for people national institutions. The publication is and with peoples participation. aimed at promoting a competent and con- structive dialogue on current trends in Bul- Following the broad interest elicited garian society and how to steer them. by the first national Human Development Report Bulgaria 1995, the UNDP has supported a team of independent experts in Professor Nikolai Genov, Dr. sc. preparing a second annual study. The 1996 National Coordinator of the project report is characterized by both continuity Human Development Report. of topics and major changes in the direc- Bulgaria 1996

4 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 ACKNOWLEDGEMENTS

Individual parts of the Report were Valuable ideas on the reports struc- written by the following authors: Prof. ture, analysis approach, and the link be- Nikolai Genov (Chapter 1); Senior Re- tween the Bulgaria 1996 national report and search Fellow Gancho Ganchev and world reports on human development were Rossen Rozenov (Chapter 2); Senior Re- provided by discussions at workshops search Fellow Yordan Hristoskov (Chap- staged by the UNDP Regional Bureau for ter 3, §1,2,3,4,5,6); Research Fellow Anna Europe and the CIS in St. Petersburg Mantarova (Chapter 3, §7); Research Fel- (1995) and Bucharest (1996). low Dimitrina Dimitrova (Chapter 3, §8), Senior Research Fellow Georgi Shopov The authors acknowledge the signifi- and Research Fellow Stefan Ivanov (Chap- cant contribution of the UNDP Regional ter 4); Prof. Ivan Nikiforov, Prof. Petko Bureau for Europe and the CIS and in par- Evrev and Research Fellow Stoicho Motev ticular of its Director Mr. Anton Kruide- (Chapter 5); Senior Research Fellow Iskra rink, Regional Director, RBEC, New York, Beleva (Chapter 6); Prof. Minko Minkov as well as of Juliette El-Hage, Consultant (Chapter 7); Associate Prof. Tanya Chola- at RBEC, and Carlo Geneletti, Technical kova, Associate Prof. Zlatka Glutnikova Advisor, DDSMS, New York. and Prof. Georgi Bogdanov (Chapter 8); Special thanks should be extended to Senior Research Fellow Mariana Zaharie- Mr. Fabrizio Ossella, UNDP Resident va (Chapter 9, § 1,2); Associate Prof. Maria Representative in UNDP, Sofia, and Mrs. Kadinova and Research Fellow Zhivko Dafina Gercheva, Sustainable Develop- Nedev (Chapter 9, §3,4,5,6,7); Senior Re- ment Advisor at UNDP, Sofia, for their search Fellow Goran Bankov (Chapter 10); support. Prof. Kiril Gatev and a team of the Na- tional Institute of Statistics (Appendix The UNDP - Sofia office, jointly with tables). Materials prepared by Senior Re- the Union of Bulgarian Artists organized a search Fellow Nina Yankova and special- competition on the subject of the Habitat ist Elissaveta Ignatova have also been used. II World Conference, for the artistic layout of the report. A competent jury con- During the work on the project UNDP, sidered the numerous paintings, selected Sofia, together with the Union of Scientists and awarded the following artists: Mr. in Bulgaria, organized several workshops. Krassimir Bonev - Human Settlement (front These covered burning issues of Bulgarian cover of the present publication), Mr. society, of human development and realiza- Stefan Yanev - The Door, and Mr. Vihroni tion - the countrys demographic situation, Popnedelev - Flora. measures to reduce poverty, economic restructuring, entrepreneurship and the situa- The report was translated into English tion of women. The authors gratefully ac- by Rumiana Yossifova (Chapters 1, 2, 3, knowledge the ideas and critical notes of the 5, 10) and Nikolina Panova (Chapters 4, 6, numerous participants in these workshops. 7, 8, 9)

PREFACE 5 CONTENTS

FOREWORD ...... 3

PREFACE ...... 4

ACKNOWLEDGEMENTS ...... 5 1. TOWARDS STABILIZING THE CONDITIONS FOR HUMAN

DEVELOPMENT? ...... 11

1.1. Economic recovery ...... 11

1.2. Need of strategic decisions and actions ...... 13

1.3. Contradictions in culture ...... 17

1.4. Sustainable development: problems and tendencies ...... 19 2. ECONOMIC RESTRUCTURING AND PROBLEMS OF THE HUMAN

FACTOR ...... 23

2.1. Strategy of the economic reform ...... 23

2.2. Structural changes in the gross domestic product ...... 24

2.3. Changes in the foreign trade relations ...... 27

2.4. Changes in the sectoral structure of manpower ...... 28

2.5. New requirements and problems facing the human factor ...... 29

2.6. Conclusions ...... 31 3. ENTREPRENEURSHIP IN THE TRANSITION TOWARDS

MARKET ECONOMY ...... 33

3.1. Conditions for developing entrepreneurship ...... 33

3.2. Quantitative characteristics of the small business ...... 34

3.3. Types of entrepreneurs ...... 36

3.4. Normative and legal basis of entrepreneurship ...... 38

3.5. Institutional environment of entrepreneurship ...... 38

3.6. Mechanisms encouraging entrepreneurship ...... 39

3.7. Economic activity and crime ...... 41

3.8. Women and entrepreneurship ...... 44

4. SOCIO-ECONOMIC DIFFERENTIATION OF MUNICIPALITIES ...... 47

4.1. Characteristics of municipalities ...... 47

4.2. The group of the most developed municipalities ...... 48

4.3. Group of municipalities in the middle of the classification ...... 50

4.4. Municipalities in a critical socio-economic state ...... 53

4.5. Conclusions ...... 55 5. SETTLEMENT NETWORK, SETTLEMENTS

AND HOUSING POLICY ...... 59

5.1. Settlement network ...... 59

5.2. Settlement development ...... 60

5.3. Housing and housing policy ...... 64

5.4. Towards a new housing policy ...... 68 6. REGIONAL SPECIFICITIES OF EMPLOYMENT

AND UNEMPLOYMENT ...... 71

6.1. Trends in the regional employment policy ...... 71

6 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 6.2. Regional differences in the employment rate ...... 72

6.3. Characterization of the regional labour markets ...... 74

6.4. Sex, age and ethnic differences of the regional labour markets ...... 78

6.5. Effectiveness of the regional labour market policy ...... 80

6.6. Prospects of employment and unemployment on e regional scale ...... 81

7. THE DEMOGRAPHIC SITUATION: PROBLEMS AND TRENDS ...... 83

7.1. Marriages, birth rate and death rate ...... 83

7.2. Migration and emigration ...... 88

7.3. Sex and age characteristics of the population ...... 90

7.4. Population development policy ...... 92 8. REGIONAL PROBLEMS OF HEALTH AND OF HEALTH

CARE SERVICES ...... 95

8.1. Morbidity rate ...... 95

8.2. Health care services network and health care personnel ...... 97

8.3. Administration of health care services ...... 100 9. NATIONAL AND REGIONAL PROCESSES IN EDUCATION

AND SCIENCE ...... 105

9.1. Vocational training in the secondary schools ...... 105

9.2. Higher education ...... 108

9.3. Institutional and thematic structure of science ...... 110

9.4. Financing and infrastructure of scientific and technological research ...... 112

9.5. The scientific personnel ...... 113

9.6. Regional dimensions of scientific and technological research ...... 115

9.7. Problems of science policy ...... 116

10. MEASURES TO REDUCE POVERTY ...... 121

10.1. Poverty as a component of the social costs of transition ...... 121

10.2. Incomes and degrees of impoverishment of employed ...... 123

10.3. Incomes and degrees of impoverishment of retirees ...... 124

10.4. Incomes and degrees of impoverishment of unemployed ...... 126

10.5. Measures for reducing poverty of the socially weak strata ...... 127

10.6. Conclusion ...... 127

APPENDIX TABLES ...... 129

BIBLIOGRAPHY ...... 135 BOXES

1.1. European foreign-policy orientation ...... 16

2.1. The state was quick to withdraw from the management of the economy ...... 24

2.2. Tendencies in electronic and electrical engineering ...... 26

2.3. Towards economic integration with the European Union ...... 28

3.1. Incomes from property and from entrepreneurship ...... 35

3.2. From state employment towards private business ...... 36

3.3. Restitution of real estate and entrepreneurship ...... 37

3.4. Entrepreneurship means initiative and resolution ...... 37

3.5. Restituted sites and entrepreneurship ...... 38

4.1. Regional problems of the social infrastructure ...... 52 4.2. Demographic parameters of the municipalities with population

having mixed ethnic and religious affiliation ...... 54

5.1. Possibilities for improving the settlement network ...... 60

CONTENTSPREFACE 7 5.2. Industrial zones need reconstruction ...... 61

5.3. Improving the street-district housing environment ...... 62

5.4. Improving the environment in housing complexes ...... 62

5.5. Tourism as a factor for settlement development ...... 64

5.6. The state beats a retreat from the housing sector ...... 66

5.7. Affordability of dwellings ...... 67

6.1. Settlements with a critically high rate of unemployment ...... 76

6.2. How do the unemployed look for employment? ...... 77 6.3. Economic causes underlying the high unemployment

of some ethnic groups ...... 78

7.1. Absolute and relative decrease of marriages ...... 84

7.2. The birth rate has been decreasing rapidly and significantly ...... 85

7.3. Infant mortality is rising ...... 86

7.4. Directions of the emigration flows ...... 90

8.1. Health care services are a national priority ...... 100

9.1. Problems confronting vocational training at the secondary schools ...... 105

9.2. For vocational training at the general education schools ...... 107

9.3. Problems arising from the decentralization of higher education ...... 109

9.4. A trend towards ageing of the scientific personnel ...... 115

9.5. Science and the political conjuncture ...... 117 9.6. Programme for the restructuring of the Academy of

Agricultural Sciences ...... 118

10.1. The policy of curbing the drop of the real working salary ...... 124

10.2. Policy of terminating the drop in the pensions size ...... 125

10.3. Measures to curtail the unemployeds impoverishment ...... 127

10.4. On the reform of the social security system ...... 127

10.5. Combatting poverty requires a strong political will ...... 128 FIGURES

1.1. People employed by economic sectors (1990-1995, in %) ...... 12 1.2. Share of voters in parliamentary elections (December 1994), and of voters in local elections (October 1995)

as per registered voters (in %) ...... 16 1.3. How do you live in June 1995 as compared to years before 1989

(national sample, in %) ...... 17 1.4. Dynamics of major problems in the mass consciousness

1992-1995 (national surveys, position A very grave problem, in %) ...... 18 1.5. Had the society been moving in the right direction in the last

few years? (national surveys, October 1994 and June 1995, in %) ...... 18 1.6. It is natural that peoples incomes differ greatly

(national sample, June 1995, in %) ...... 19

2.1. GDP by economic sectors (relative share - %) ...... 25

3.1. Intentions for economic activity in the next year (June 1995, in %) ...... 34 3.2. Assessment of basic types of economic crime

(very grave problem, national sample, June 1995, in %) ...... 42

3.3. Attitudes to complying with law (national sample, June 1995, in %) ...... 42 4.1. Classification of the municipalities according to

the integral assessment of their socio-economic state (1994) ...... 48

8 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 4.2. Administrative - territorial structure ot the Republic of Bulgaria ...... 58

5.1. Number of completed new housing in Bulgaria (1980-1995) ...... 65

5.2. Level of satisfaction with housing conditions (June 1995, in %) ...... 66

5.3. Who should provide the housing (June 1995, in %) ...... 69 6.1. Changes in the coefficients of economic activity and employment

in the 1993-1994 period by regions ...... 72 6.2. Structure of unemployment by regions - September 1993

(countrywide unemployment = 100) ...... 75 6.3. Structure of unemployment by regions - October 1995

(countrywide unemployment = 100) ...... 75

7.1. Marriage, birth and death rate per 1000 of the population (1950-1995) ...... 83 7.2. Dynamics of the relative weights of the population under,

in and above working/able-bodied age ...... 91 8.1. Death rate due to malignant neoplasms in 1994

per 100 000 of the population by regions ...... 96 8.2. Doctors provided to the population at the treatment and preventive treatment establishments in subordination of

the municipalities by December 31, 1994...... 99 8.3. Dentists provided to the population in the treatment and preventive treatment public health establishments

in subordination of the municipalities by December 31, 1994 ...... 99 8.4. Whose concern should the payment for the

medical services be? (June 1995) ...... 101 9.1. Whose concern should the expenses associated with

getting an education be? (June 1995, in %) ...... 105 10.1. Assessment of the fiscal (monetary) situation

of households (June 1995) ...... 122 TABLES 1.1. Basic economic indicators of countries from Central and

Eastern Europe in 1995 (change as against 1994 in %) ...... 11 1.2. Relative share of the private sector in the output of

branches (1991-1995, in %) ...... 13 1.3. Mandates of the major political forces from the parliamentary elections (December 1994) and the elections

for local governments (October-November 1995) ...... 14 1.4. Degree to which political institutions contribute to solving the

countrys problems (national surveys) ...... 15 1.5. Political affiliation of elected mayors and share of the population in

these municipalities (local elections held in October-November 1995) ...... 17

2.1. Intensity of structural changes ...... 27

2.2. Employment structure by economic sectors ...... 29 2.3. Real working salary dynamics

(changes in per cent over the preceding year) ...... 30 3.1. Registered private firms per 10,000 able-bodied people,

employment and unemployment according to types of regions ...... 34 3.2. People employed according to economic sectors

and the form of economic activity (in %) ...... 35

CONTENTSPREFACE 9 3.3. Total average monthly income per household member from

some sources for the 1992-1994 period ...... 35

3.4. Employers and self-employed (% from all those employed) ...... 44

3.5. Would you like to start your own business? (%) ...... 45

3.6. What should the ideal businessperson be? (%) ...... 45 4.1. Groups of municipalities according to the level of their

socio-economic development ...... 47 4.2. First group of municipalities according to the degree of their

socio-economic development ...... 48 4.3. Second group of municipalities according to the degree of

their socio-economic development ...... 50 4.4. Third group of municipalities according to the degree

of their socio-economic development ...... 53

5.1. Settlement types and their population (1956-1994) ...... 59

5.2. Usable area of new housing 1989-1995 (thousand sq m) ...... 66

5.3. Prices of housing and inflation rate (1990-1994) ...... 67

6.1. State of regional labour markets in October 1995 ...... 71

6.2. Duration of unemployment by October 1995 (%) ...... 76

6.3. Dynamics of unoccupied jobs (%) ...... 77 7.1. Marriages, birth rate, death rate and natural growth

per 1000 of the population in 1994 by regions (in %) ...... 84 7.2. Relative share of deaths due to basic socially

significant diseases (1985-1994, in %) ...... 87

7.3. Migration flows (in %) ...... 88

7.4. Sex ratio of the population ...... 91 8.1. Cases of active tuberculosis registered in 1989 and 1994

per 100 000 of the population by regions ...... 95 8.2. Registered cases of malignant neoplasms for 1989 and 1994

per 100 000 of the population by regions ...... 96

8.3. Health care establishments and stock of beds - 1994 ...... 97 8.4. Stock of beds in the hospitals and outpatient polyclinics

per 10 000 of the population ...... 98 9.1. Number of pupils in the secondary vocational schools

(by academic years) ...... 106 9.2. Number of secondary vocational schools and

students in them by regions (1994/1995 academic year) ...... 108 9.3. Higher education establishments and university students

by university cities (1994/1995 academic year) ...... 109 9.4. Research units and researchers according to

institutional sectors (1994) ...... 111 9.5. Share of the means allocated for scientific and technological

research as percentage of the GDP (1988-1994) ...... 112

9.6. Employment in the sector of science and scientific servicing ...... 113

9.7. Researchers by fields of science ...... 114 10.1. Change in the base minimum income and in

childrens allowances (1991-1995) ...... 121

10.2. Nominal and real working salaries at the end of the year ...... 123

10.3. Nominal and real size of pensions (1991-1995) ...... 125

10 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 TOWARDS STABILIZING THE CONDITIONS 1 FOR HUMAN DEVELOPMENT?

After the period of sharp changes and As a result of these actions, despite Much efforts are general insecurity in Bulgaria prerequisites the haphazard and sometimes even abor- are being created for stabilizing the condi- tive economic reforms during the previous needed to normalize the tions for human development. The most years and the losses from the trade em- conditions for human persistent destructive tendencies in eco- bargo over Yugoslavia, the general tendency development nomy, politics and culture are being over- of 1995 was one of economic recovery. An come slowly and with a lot of difficulties. illustration of this tendency is the relative It seems that the threshold of the transi- decrease of unemployment. The average tion towards restoring production, strength- number of registered unemployed dropped ening state institutions and curbing extremi- from 537,000 in 1994 to 435,000 in 1995. ties in cultural life has been crossed. How- This should be considered against the back- ever, there is a long and complicated road ground of serving the foreign debt by US to be traversed in the efforts to normalize Dollars 964 millions, and a practical lack society, and affirm favourable conditions of foreign financing. for development and fulfillment of the nations human potential. Table 1.1.

Basic economic indicators of countries from Central and 1.1. Economic recovery Eastern Europe in 1995 (change as against 1994, in %)

The stabilization policy pursued by Country GDP Industrial Inflation Unemployment several successive governments has been production yielding its first results. 1995 saw a slight increase of the gross domestic product Albania 13.4 -7.2 - 13.0 (GDP), reaching the top 2.6 per cent of Belarus -10.0 -11.5 243.8 2.7 expectations. From 121.9 per cent in late 1994, the annual inflation rate was reduced BULGARIA 2.5 4.6 33.0 11.1 to 32.9 per cent at the end of 1995, that Croatia -1.5 0.3 3.7 17.6 made economy relatively manageable. Czech Republic 5.2 9.2 8.0 2.9 Throughout the year the exchange rate of Estonia 2.5 1.4 28.9 4.7 the Lev remained stable. Production ca- Hungary 2.0 5.0 28.5 10.4 pacities in ferrous and non-ferrous metallurgy, chemical industry and oil refining Latvia -2.7 -6.5 23.3 6.5 were used to the full, thus ensuring indus- Lithuania 2.0-2.5 6.2 35.5 7.3 trial growth rate. These sectors also ac- Macedonia -3.0 -10.7 9.1 37.2 counted for the positive foreign trade bal- Poland 7.0 10.4 22.0 14.9 ance of US Dollars 431.8 million at the end of 1995. The budget deficit was within the Romania 6.9 9.4 27.7 8.9 limits set by the international financial in- Russian Federation -4.0 -3.0 131.4 8.2 stitutions. The establishment of an Audit Slovakia 6.5 8.4 7.4 13.1 Office with vast powers in budget control Slovenia 4.8 2.0 8.5 14.5 is a major achievement in the efforts to Ukraine -12.0 -11.5 181.7 0.6 strengthen fiscal discipline in 1995. The same holds true of the adoption of the Law Yugoslavia 6.0 3.8 105.0 24.7 on state financial control in early 1996.

TOWARDS STABILIZING THE CONDITIONS FOR HUMAN DEVELOPMENT? 11 According to the UN Economic Com- growth rate in 1995, but it was due to the mission for Europe these tendencies rank usage of obsolete production capacities. Bulgaria as equal to the other countries in New power-generating capacities are transition with a view to basic economic sparsely introduced. This leads to a con- indicators for 1995 (See Table 1.1.). tinuous threat of setbacks in power supply, and hence along the entire chain of pro- However, the GDP growth in Bulgaria duction and consumption. The GDP growth rate is in 1995 is due mainly to the positive trade not a sign of a balance. The latter is the result of the de- The total indebtedness of state com- sustainable economic valuation of the Lev in 1994 and of the US panies is still too high, amounting to nearly Dollar as compared to the basic European 60 per cent of the value of their material and environmental currencies. Consumption and investment assets. The banking system is unstable. The development are still plummeting. The growth of indus- customs and tax systems need further trial output is owed to productions in sec- strengthening. The transformation of own- tors characterized by high material and ership as part of the economic restructur- power consumption, and a low level of ing is delayed both in its cash form, and in product processing. These sectors are bud- the adopted scheme of mass privatization get-subsidized and indebted to banks. They that began early in 1996. are also major environment pollutants. That is why the growth of industrial output Yet it would be inaccurate to main- and of the GDP is not due to sustainable tain that privatization has failed or is doubt- social, economic and environmental devel- ful. Since the beginning of denationaliza- opment, and does not constitute a solid tion, 1,524 privatization deals have been premise for such development. Nor is this made, and in 1995 alone they numbered growth rate so far associated with any last- 1,042. That same year 1,468 proceedings ing prospects for creating new working for privatization of state and municipal places. property were started. In the international comparisons of privatization in Central and Figure 1.1. Eastern European countries, Bulgaria usually ranks in the middle. The rapidly grow- People employed by economic sectors (1990-1995, in %) ing importance of the private sector is evidenced by the change in the correlation between those employed in it and in the state sector (See Fig. 1.1.).

The expansion of the private sector is uneven in individual sectors and subsectors. It is particularly impetuous in the field of construction and trade (See Table 1.2.).

However, the strategic problem in privatization does not lie in the number of privatized enterprises or the share of employed manpower, but in the economic effectiveness of the privatized enterprises. In 1995 the situation in this respect was not simple. Both the state and the private companies are heavily indebted to the banks. In these circumstances the bank, and the The technological renovation of pro- financial system as a whole cannot be duction is practically blocked because of stable. lack of investments. For instance, the gross power generation scored a 5.2 per cent

12 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 The existence of lasting unsound ten- These conditions obviously require dencies in the economy generates inflation decisive actions for boosting economic ef- pressure and possibilities for destabilizing fectiveness, including a close-down of los- both the financial and credit institutions, ing enterprises. A strong political will is and the real economic sector. The economy needed to undertake socially unpopular can also be directly destabilized by uncer- measures, some of which have been post- tainties concerning the exchange rate of the poned for years on end. Lev. Given these conditions, it is difficult Table 1.2. to forecast the level of the GDP, industrial production, inflation and unemployment. Relative share of the private sector in the output of branches The expected 3-4 per cent GDP growth rate (1991-1995, in %) in 1996 depends on the payments of the foreign debt, that at the end of 1995 was Branches 1991 1992 1993 1994 1995 8.4 billion US Dollars, and on the expected agreements with the international financial Industry 1.6 2.6 6.4 8.0 13.8 institutions. Construction 13.5 23.7 39.3 50.5 62.4 This hard-to-predict situation jeopar- Agriculture 27.6 49.9 63.7 76.1 76.3 dizes investment activeness, and particu- Transport 4.8 13.3 17.0 22.9 34.9 larly that of foreign investors. By 15 De- Trade 24.0 42.4 54.2 61.7 70.3 cember 1995 the total volume of their direct investments was US Dollars 530 million. This is a far cry from investments in Hungary, the Czech Republic and Poland. 1.2. Need of strategic decisions and The investment structure is likewise actions unfavourable. Out of a total of 4,806 direct foreign investments, 3,543 are below The deep and complex transformation US Dollars 1,000, i.e. they are practically initiated in the early nineties has been main- irrelevant to the national economy. The taining high political tension. It is due to largest investor is Germany (38.5 per cent the clash of different and opposing views of all investments), followed by Switzer- of the countrys future, as well as to the land, Belgium and Greece. intermingling of diverse individual and group interests. The sharp political confron- In these complex internal and exter- tation from the first half of the decade ex- nal economic conditions, the feasible task pressed the general insecurity about the solved in 1995 in the income policy was to goals and means of national development, curb the quick and sizeable drop of the real and the ways of making interests meet. incomes of large population groups. For the minimum working salary this policy has Against this background the simple led to checking the drop of its real pur- evaluation of the past period of political chasing power to 3.2 per cent, as against changes is impossible. There can be no ig- 31.7 per cent in 1994. The drop of working noring or underrating the fact that the po- salary in the budget sphere was reduced to litical confrontation has not turned into The stabilization of 6.6 per cent, as against 29.1 per cent in violence. The legal and organizational incomes has strong 1994. The median salary in industrial pro- foundations of future sustainability of the deterrents duction grew by 5.7 per cent, and median national politics have been laid in many pension - by 8.8 per cent. This growth of walks of social life. Yet the high political real incomes cannot, however, compensate tension did not allow for carefully drafting the plunge in the incomes from the first and quickly implementing any strategic so- half of the nineties that came as a result of lutions for economic restructuring and re- the decreased GDP and the growing informs in other fields of social life. Certain come differentiation. decisions and actions, such as those con-

TOWARDS STABILIZING THE CONDITIONS FOR HUMAN DEVELOPMENT? 13 cerning the reform in farming, were obvi- The relative stability of political pref- ously inadequate. Their consequences erences has led to strengthening the state would be suffered for decades to come. institutions at a time when decisive measures are needed both nationally and in- As a result, in the mid-nineties Bul- ternationally. Major efforts were made to garia once again has to mobilize its re- restore the states capacities for regulating sources so as to solve the fundamental Strategic solutions are the economic life under emerging market problems that have piled up. The search conditions. Components of strategic man- sought in a shortage of for strategic solutions is once again made agement have been re-introduced. Among time and resources in the conditions of an acute shortage of these, noteworthy are the strategies, devel- time. Unlike at the beginning of changes, oped and implemented in 1995, concern- however, there is a stronger conviction that ing key social and economic issues: decisive actions can no longer be postponed. There is also a greater readiness to - restructuring the industry; take the responsibility for actions, whose positive results might come in a more dis- - development of power generation; tant future, while at present they create ad- - development of agriculture; ditional economic and social difficulties. - national security; This development becomes possible in the conditions of a relative lull of political - Bulgarias territorial development; confrontation. The reasons for this are the - environmental protection; fatigue from the prolonged political stress and the disappointments with the quality - health care; of political life. Another major reason is the awareness that continuous political ten- - development of education and sci- sions are counter-productive. Political pref- ence; erences have also been stabilized. The re- - social security and social welfare. sults of elections held in late 1994 and the fall of 1995 outlined the prospects of a rela- Individual strategic projects developed tively stable government: further into laws, e.g. the Programme for privatization through investment vouchers, Table 1.3. the Law on defense and the armed forces, the Law on higher education. Others were Mandates of the major political forces from the parliamen- rendered concrete in programmes: for in- tary elections (December 1994) and the elections for local dustrial control between 1995-1998, for in- governments (October-November 1995) vestments between 1996-1998, for measures to combat crime between 1995-1998. December 1994 October-November 1995 There is an indubitable drive to sub- MPs Municipal councillors stantiate priorities and coordinate reforms Number % Number % in individual areas in a long-term perspective. The recovery of production and the BSP and coalition 125 52.1 3291 46.8 market is accompanied by a gradual mod- UDF and coalition 69 28.6 1365 19.4 eration of the restrictive economic policy Popular Alliance - BAU, DP 18 7.5 671 9.5 and boosting economic growth. The continuing economic reform and the legisla- Movement for Rights tive and organizational changes imple- and Freedoms 15 6.3 669 9.5 mented in defense and the armed forces, Bulgarian Business Bloc13 5.4 229 3.3 education, health care, science and culture directly or indirectly aim at stabilizing the conditions of human development. The bill

14 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 of peoples health, submitted to the Na- international market, which has brought tional Assembly, for instance, should regu- about disturbances in the grain balance. late relationships between the state and private medical care - a problem that is pain- The high rate of crime - from mass ful to both doctors and the widest strata of street crime to pyramidal financial struc- society. tures - faces the nation and the countrys government with most serious problems. Special attention is devoted to reform- Irrespective of the adopted amendments Reforms in social policy ing the social policy that has become kind and supplements to the Criminal and lag behind economic of a brake to economic reforms. A major Criminal Procedures Codes, and of the reforms stage in this process is the separation of programmes to combat specific types of the Social Security fund from the state bud- crime, the latter is still among the key fac- get and the establishment of a National tors for social insecurity. Registered crimes Security Institute. 1995 saw the adoption did decrease by 6.9 per cent in 1995 as of a Law on amending and supplementing against 1994. Yet the crime rate is still high the Law of Pensions, which helped do away Table 1.4. with deformities in determining the size of pensions. Special measures were taken for Degree to which political institutions contribute to solving the increasing the remuneration of certain cat- countrys problems (national surveys) egories of specialists (teachers and doctors) that are most directly committed to the re- National Assembly Presidency Government production of the nations human poten- Oct. 94 June 95 Oct. 94 June 95 Oct. 94 June 95 tial. The Law on amending and supplementing the Labour Code answers the ob- - To a very jectives of the social policy - the protection low degree 1 58.6 25.6 34.9 17.4 52.4 16.9 of citizens labour rights and against the opposition of interests of participants in the 2 14.9 19.8 17.7 17.4 15.3 16.0 labour process. Similar is the orientation 3 8.2 24.3 19.8 28.2 12.5 23.9 of the adopted New Guidelines of the state 4 3.1 10.8 8.8 15.9 3.5 18.5 policy for ensuring safe and hygienic con- - To a very ditions of labour, that will have a long-term high degree 5 1.7 4.3 3.4 6.0 1.4 9.3 impact on labour relations and improving peoples health. - Not sure 6 13.2 15.3 15.3 15.2 14.7 15.0

This vigorous legislative work is taking place against the background of cer- in view of countrys traditions, although it tain stabilization of the rating of major is lower than that of the most advanced political institutions. It has hit the bottom countries. A new Law on the work of the line prior to elections of December 1994. Ministry of Interior is needed so as to pro- In the middle of 1995 the picture is differ- vide a better coordination among institu- ent (See Table 1.4.). tions that combat crime. Urgent measures The steps towards stabilizing the na- are demanded to control street crime, and Crime poses the most tional policy, however, do not lead to uni- extinguish the economic roots of organized form results. Unquestionable are the weak- crime in smuggling, gambling, and corrup- complex problems to nesses in providing reliable and timely infor- tion. National interests in the field of government mation on the course, state and problems of privatization, in combatting corruption at major production and distribution processes all levels demand effective protection. and their coordination. Typical in this re- Community should join the combat against spect are the problems that arose in con- crime. nection with the purchase of farm output In the foreign policy, gradual resump- and its marketing in Bulgaria and on the tion of traditional relationships with Rus-

TOWARDS STABILIZING THE CONDITIONS FOR HUMAN DEVELOPMENT? 15 sia, the CIS countries, Central and East- The political processes in Bulgaria face ern European states has been a stabilizing a wide range of problems. These include the difficult coordination of work of dif- Box 1.1. ferent institutions, the rapidly changing do- European foreign-policy orientation mestic and foreign political situation, the impact of powerful geo-political factors. Practical consensus has been tary and cultural structures. In Weariness from political tension in recent reached as to the European pri- 1995 Bulgaria officially became years and some tendencies in regional de- ority of the foreign policy. This an associated partner of the velopment should also be considered. De- strategic orientation was con- Western European Alliance. spite the different nature of parliamentary firmed by the Memorandum of The country actively partici- and local elections, the sizeable drop in the the government of the Repub- pates in implementing the Part- number of those who took part in local elec- lic of Bulgaria submitted late in nership for Peace initiative. tions as compared to that in parliamentary 1995 in connection with the Against this background all ma- elections is indicative of the political fa- countrys application for mem- jor social groups and political tigue (See Fig. 1.2.). bership in the European Union. forces regard the restrictive mea- This tendency of a tangible decline of The implementation of this sures for travel into Western Eu- interest in political processes poses prob- strategy is controlled by the gov- ropean countries as being inad- lems to the democratic policy. It demands ernmental Committee on Euro- equate to the processes in the civil commitment, involvement of experts, pean Integration that renders country and to the sought-after as well as of the broad public in legislative concrete the efforts for Bulga- conditions for comprehensive work and in the control of law abidance. rias integration into the Euro- human development and fulfill- pean economic, political, mili- ment. Both parliamentary and local elections have revealed the major regional differences in political preferences existing in the factor for economic and political processes country. They are clearly outlined when in Bulgaria. The lifting of the trade em- comparing the results of local elections in Regional differences bargo against Federal Republic of Yugo- biggest municipalities and in the remain- slavia was also a key event in 1995. This ing part of the country (See Table 5.1.) are a key factor in embargo has incurred to Bulgaria damages political life amounting to US Dollars six billion that The political left wing won local elec- cannot be compensated in practice. tions mostly in smaller settlements. One of the major reasons for this result was the Figure 1.2. fact that the crisis economic processes had a more painful effect for the older, less edu- Share of voters in parliamentary elections (December 1994), cated and having less job opportunities and of voters in local elections (October 1995) as per population of smaller towns and villages, registered voters (in %) than for people in the capital and in bigger cities, where the opportunities for a job change or private business are greater. These differences reflect on the mass consciousness. The general assessment of life in the mid-nineties and in the late eighties is not in favour of the present situation. Yet, the critical view is especially strong in villages and smaller towns (See Fig. 1.3.).

These differences, coupled with some ethnic problems underline the major importance of regional policy. 1995 saw the implementation of major legislative efforts in this respect: the adoption of a Law on

16 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 amending and supplementing local self- Cultural disorientation, disappoint- government and local administration, and ment with and distrust in major social in- The winning political a Law on the administrative and territorial stitutions reached their lowest level in 1994. strategy is that of structure of the Republic of Bulgaria. Their The public opinion polls held at this time aim is to better balance the interests of the established highly negative attitudes to- national interests state, regions and municipalities, and to wards the main processes and institutions enhance local self-government. Special attention should be devoted to the existing Table 1.5. disproportions in the development of individual regions, border and mountain re- Political affiliation of elected mayors and share of the gions, as well as the large number of mu- population in these municipalities (local elections held in October-November 1995) nicipalities that are in dire need. Irrespec- tive of all these efforts the regional policy still needs a clear-cut balancing of priori- Mayors % Population % ties and specific programmes for regional development. BSP and coalition 196 76.7 62.9 UDF and coalition 12 4.7 27.4 The analysis of political changes in Movement for Rights and Freedoms 26 10.2 6.2 recent years clearly shows that the demo- Popular Alliance - BAU, DP 3 1.2 0.4 cratic political institutions are being gradually strengthened, and the principles of Bulgarian Business Bloc2 0.8 0.3 democratic political life are being affirmed. Dupnitsa Democratic Coalition 1 0.4 0.7 It also shows that the major winning strat- BCP 1 0.4 0.1 egy of political life in the country is that Independent 14 5.49 2.1 which relies on unification around the national interests. in the country. A period of relative cultural Mass consciousness is 1.3. Contradictions in culture stabilization followed. This can best be witnessed by the distribution of assessments dominated by anxiety The lengthy crisis processes in the whether the country is moving in the right and insecurity economy and politics are accompanied and direction. Within a couple of months only intensified by cultural disorientations and tensions. According to the sociological sur- Figure 1.3. veys held every year after the changed began, a stable number of one-third of adult How do you live in June 1995 as compared to years before Bulgarians (26.6% in June 1995) maintain 1989 (national sample, in %) that the inability to distinguish between good and evil is a very grave problem for Bulgaria. Yet most lastingly and intensively people determine crime as a very grave problem. Against the background of pauperization of large groups of people and of influential traditional egalitarian attitudes, the growing sensitivity to the quick rich-poor stratification of society is too natural. In the changing economic, political and cultural situation the assessments of the importance of other problems, such as political confrontation and ethnic tensions become less intensive as dominants of the cultural situation (See Fig. 1.4.).

TOWARDS STABILIZING THE CONDITIONS FOR HUMAN DEVELOPMENT? 17 this distribution sizeably changed and criti- In the conditions of continuing social cal assessments became less sharp. The and economic changes the dynamics of explanation is that a prospect for social cultural orientations is high. It depends on development more acceptable for wide- numerous internal and external factors. The Figure 1.4. potential disturbances of the fragile economic and political stability can easily grow Dynamics of major problems in the mass consciousness 1992- again into a widespread cultural pessimism. 1995 (national surveys, position A very grave problem, in %) The lasting impoverishment of large groups and mass insecurity in every-day life, per- taining to the high crime rate, are persistent factors for negative cultural orientations.

Cultural insecurity is also maintained by contradicting processes in the very structure of fundamental values and norms of Bulgarian society. In the first half of the nineties, parallel with private entrepreneurship and political democratization, the principles of individualist ethics became quickly established in it. Some extremities of the market individualism and destruction of institutions that embody and protect the commom good, have nurtured traditional anti-individualist attitudes. The affirmation spread cultural orientations has taken of universal values collided with blatant in- Traditional and shape. The complex nature of the histori- stances of pursuing individual and group modern values clash in cal problem situation can be evidenced by interests in economy and politics. The result was a sharp clash between traditional- culture the fact that nearly every third adult Bul- garian finds it difficult to make assessments: ist and modernist, between individualist and collectivist cultural orientations. Figure 1.5. Only conditionally can this contradic- Had the society been moving in the right direction in the last tion be reduced to a clash between tradi- few years? (national surveys, October 1994 tional rural collectivist culture and mod- and June 1995, in %) ern urban individualist culture. Yet there is an indisputable fact: the cultural assessments of major processes in Bulgarian society widespread in villages and small towns essentially differ from assessments of the same processes current in the capital and big cities. This becomes evident from the distribution of assessments about the rapid income stratification of Bulgarian society (See Fig. 1.6).

These substantial differences in major cultural orientations and assessments can be explained by age and educational differences, specific ways of life and pecu- liarities of the local economic and political environment. Whatever the reasons, these

18 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 differences are to be carefully considered Economic restructuring is the deepest in the course of the formulation and imple- and most lengthy process in the social trans- mentation of reforms. One of the reasons formation now underway. Profound for the failure of the monetary shock changes in technologies, sectoral structure, therapy is namely the fact that it put a stake Figure 1.6. on the urbanist liberal culture. Despite the relatively high degree of the countrys ur- It is natural that peoples incomes differ banization, the economic liberalism has ob- greatly (national sample, June 1995, in %) viously clashed with influential cultural orientations that are difficult to agree with its individualist principles. On a political scale this contradiction became obvious in the results of parliamentary and local elections. That is why future reform strategies in the field of economy, health care, education and social policy should more fully take into account these cultural facts and their broad and lasting influence.

1.4. Sustainable development: problems and tendencies

The main aim of the Bulgaria 1995. Human Development Report was to support the nationally-responsible dialogue on major problems facing sustainable human forms of ownership, organization of eco- development in Bulgarian society. Possible nomic relations in the country and in for- and desirable ways for their solution have eign-trade orientations, are still forthcom- also been outlined. The need of consolidat- ing. These changes have and will have a ing state institutions, and unequivocally as- sizeable and lasting impact on the condi- suming the political responsibility for deci- tions of development and fulfillment of sions vital to the nation has been pushed basic groups in Bulgarian society and on to the forefront. This problem continues the individual. The most visible part of to be painfully urgent, since the basic stages these problems is the still high rate of un- of economic restructuring and reforming employment that will most probably grow other spheres of social life are yet to come. further with the forthcoming close-down The rapid change of internal and external of unprofitable enterprises in 1996. Eco- conditions makes these problems even nomic reforms pose essentially new de- more acute, especially in view of the need mands to educational and qualification to make the long-term development pros- level, organizational skills and labour atti- pect more concrete. tudes. Many questions remain open as to Old sources of conflict, harmonizing economic restructuring with At the same time experience from last in addition to new ones, the sought optimization of the conditions years shows that parallel with some first for human development and fulfillment. are re-activated instances of stabilization of Bulgarian society, certain old sources of social tensions One of the main characteristics of the and conflicts become re-activated in addi- implemented transformation of society is tion to new ones. They function in all ma- the establishment of a stratum of private jor spheres and directions of transforming entrepreneurs. It has come into being in the Bulgarian society. conditions of quick economic and political changes, of ambiguous legal norms, un-

TOWARDS STABILIZING THE CONDITIONS FOR HUMAN DEVELOPMENT? 19 stable state institutions and insecure cul- an indispensable premise for outlining ver- tural orientations. These conditions have sions of the future development of regional left a lasting imprint on the stimuli and labour markets. barriers to entrepreneurship, and on the new organizational structure and culture Nearly all demographic processes in that is being formed through its activities. Bulgaria have negative tendencies. Since The key problem in this context are the the early nineties a lasting and sizeable possibilities to coordinate the interests of depopulation has been witnessed, stem- private entrepreneurship and the national ming from the mass emigration and the interests, the needs of development and high death rate that is increasingly outstrip- fulfillment of the other population groups. ping the birth rate. Particularly alarming are the demographic processes in most of Municipalities are the basic adminis- the mountainous and semi-mountainous trative and organizational center of the regions, and in the majority of villages. The economic, political and cultural processes open questions in this context concern the in the country. Their situation most directly feasible and required demographic policy determines the way of life and fulfillment in the present social and economic condi- of the individual. The main problem of tions. The choice of priorities in heavily municipalities is their uneven development. depopulated municipalities and some popu- Many of them are in a critical situation. lation groups awaits political solutions. The This demands a lot of purposeful efforts in main question concerns the choice of a regional policy aimed at overcoming and most effective demographic policy in cur- averting crises in municipal, hence in hu- rent conditions and the way of its imple- man, development. mentation.

Due to natural, historical, economic, The main activities of health-care demographic and administrative reasons, policy take place in regions and municipali- the countrys settlement system and settle- ties. The solution of health-care problems ments have been developing unevenly. This demands an accurate analysis of the health unevenness is further intensified by the status of the population in different regions, present conditions of transition. The result as well as a regionalized policy for imple- is specific conditions for human develop- menting the adopted strategy of health-care ment and fulfillment, some of which are development, entitled Health for Bul- rather unfavourable. The normative system garia (1995). Many are the pending ques- and organizational structure should be im- tions of the regional distribution of health- proved so as to successfully solve the com- care establishments and their functions, of plex problems in the territorial develop- the number and training of medical staff, ment of production, in the building of settle- and their financial support. ment infrastructure and the housing problem. Substantial changes have set in in the regional characteristics of the educational Regions in the country differ greatly system. Reforms have greatly affected sec- in their socioeconomic characteristics. This ondary and higher education, though in dif- also determines big differences in regional ferent ways. The present state of the labour markets. The goals of the national economy, and especially the prospects of and regional economic policy require a its development, require that special atten- close monitoring of their dynamics and the tion be devoted to vocational training in main factors that determine it - technologi- secondary schools. Many problems have cal and sectoral restructuring, development been raised by the sharp quantitative of the private sector, investments, as well growth of higher education that more of- as the age, ethnic, educational and other ten than not is not linked with the neces- population characteristics. This analysis is sary qualitative changes. The national and

20 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 regional development of science is also so as to strengthen the nations integrating complicated. Problems concern vital as- institutions and social solidarity. pects of its existence: the nature and prospects of scientific institutions, their relation- In more concrete terms this means ship with higher education and participa- focusing organizational efforts in several tion in international scientific cooperation. main directions: The key problem concerns the needed sci- - Creating a favourable environment Towards strengthening entific and technical policy of the country for domestic and foreign investments; that can rank Bulgaria among the prosper- social integration ous countries in the world. - Drafting and implementing a long- term strategy for sectoral and technologi- Large groups of Bulgarian population cal restructuring aimed at productions with live below the poverty threshold - no mat- low material and power consumption and ter how it is determined. The urgent mea- high surplus value of their output; sures to curtail the gravest instances of absolute poverty present a complex and re- - Clear normative and institutional sponsible task. Even more responsible is regulation of relations between the state the task of combining short-term measures and private sectors in production, trade and with a long-term policies for poverty alle- services; viation. Competent decisions must ensure the maintenance of institutions and orga- - Selective and effective social policy; nizations that are most effective in the ef- - Consistent policy for population de- forts to reduce and eliminate poverty. velopment;

In a more general perspective, the key - National identity in education, sci- task facing the countrys government is to ence and culture. limit and overcome the tendencies of weakening or disruption of essential factors of Nobody can harbour any illusions that social integration. This means to maintain this wide range of problems can be com- and establish regional and inter-regional prehensibly analyzed and solved by a wave technological ties, to promote economic of the magic wand. A major lesson from exchange among and within regions, to the first half of the nineties is that the solu- strengthen organizational interaction tion of complex and dynamic problems re- among municipalities, regions and the cen- quires a long period of time. Yet decisive tral power. Social integration also demands steps can no longer be postponed. The time curbing the action of tendencies towards of hesitation and postponement has ended. Time of postponement marginalization and exclusion of individu- What is needed now are actions, so as to has elapsed, what is als and groups and towards their opposi- strengthen the fragile offsprings of stabil- tion. The practical problem consists mainly ity, and gradually, though strenuously and needed now are actions in stabilizing interaction between local and painstakingly, affirm a rational and humane central bodies of power, organizations in sustainable development of man and soci- the field of business, politics and culture, ety.

TOWARDS STABILIZING THE CONDITIONS FOR HUMAN DEVELOPMENT? 21 ECONOMIC RESTRUCTURING AND 2 PROBLEMS OF THE HUMAN FACTOR

2.1. Strategy of the economic state property privatization, land reform Reasons for the reform and reorganization of state administration. A programme for the restructuring of in- strategy of shock dustry was drafted and discussed at sev- therapy The radical economic transformation eral stages, but no official state document began in the early 1991 with liberalization was issued, neither had a programme for of prices, foreign trade and the banking infrastructure modernization been mapped system. The reform initiators expected that out. the quick change of the rules of the game in economy would soon establish new cri- Moreover, the strategy for economic teria of effectiveness (maximizing profits) reform was also based on the premise that and a new type of budget restrictions. They the economic and social costs of reforms also supposed that this would usher in a would be relatively low, and the period of change in the structure of the gross domes- economic stagnation - short. The abolition tic product, export and import, production, of a large part of subsidies to the industry employment and foreign economic rela- was believed to have no sizeable effect on tions. the peoples living standards.

This strategy of economic restructur- The real course of economic processes ing was based on the idea of a shock proved to be a far cry from expectations. therapy. The almost complete internal and As a result of the high inflation rate and external liberalization, and the diminished the predominantly negative real interest role of the state as a tool for re-distribut- rates on bank deposits, savings show a lasting national income through the budget ing tendency to diminish: from 15-17 per were regarded as a condition for a quality cent of the GDP in 1991 to 7-8 per cent in change in the behaviour of economic 1995. Given the major payments on the agents. The lack of stable market institu- foreign debt, the lack of sizeable external tions, the tradition of centralized organi- loans and minor direct foreign investments, zational structures, the lack of trained man- this tendency determined the shrinking of agers, the high transaction expenses, inad- fixed capital investments. From about 22 equate infrastructure and technological lag per cent of the GDP in 1991 they dropped were all considered difficulties that could to some 7 per cent in 1995. be overcome relatively quickly. Little attention was paid to the fact that in the tran- The low investment activeness has led sition from a command-style to a market to an overall shrinkage of domestic de- economy the mechanisms of direct distri- mand. The problem was further aggravated bution of resources should be replaced by by the curtailment of state consumption be- The course of economic a monetary-credit system that transforms cause of the major payments on the na- savings into economy-effective investments. tional and foreign debt. This called for a reform has tangibly substantial positive primary balance in the deviated from forecasts The expectations of the course and state budget. Both the shrunk real volume results of the reform were also based on of savings and the increased burden of the suggestions that farming and tourism would national state debt reflect the ineffective- develop with priority. The very term struc- ness of the financial and credit system in tural reform was mainly associated with the initial stage of the transition. the restructuring of the banking system,

ECONOMIC RESTRUCTURING AND PROBLEMS OF THE HUMAN FACTOR 23 Box 2.1. access to bank loans. Initially they will be budget-financed, and gradually subsidies The state was quick to withdraw from the management of will diminish. The mass privatization is the economy expected to tangibly change the management of the real sector. Special attention is The entire period between 1990 state expenses in the GDP is devoted to the attraction of foreign invest- and 1994 was marked by the some 40 per cent. Provided that ments in major enterprises. A package of states withdrawal from the the share of servicing the na- tax reliefs for local and foreign investors is economy. While in 1990 state in- tional debt within the overall under consideration now. come and expenses accounted volume of Bulgarias state ex- for 53 and 66 per cent of the penses is remarkably big ac- GDP, respectively, in 1994 the cording to international stan- 2.2. Structural changes in the figures were 25.9 and 32.5 per dards, the states withdrawal gross domestic product cent. They were retained in from its objectively needed 1995. In advanced market functions becomes even more The structural changes have developed economy countries the share of substantial. in a decentralized way under the impact of market factors, but in the conditions of in- Because of the delayed privatization, complete information and imperfect com- the states withdrawal from processes of re- petition. In 1993 the level of industrial pro- distribution was not accompanied by a par- duction dropped to 58.3 per cent of that in allel withdrawal from its functions as an 1990. Export and import went down by the owner. The private sector quickly devel- same proportion. The drop in GDP and oped and became dominant in the field of real incomes was somewhat less. The situ- trade and partially of the financial and ation was characterized by high inflation, credit system. The symbiosis between a quick monetary turnover, reduced amount state sector in industry and a private sec- of real money, devaluation of national cur- tor in the field of distribution and re-distri- rency, increasing national debt, and grow- bution (trade and finances) took place un- ing bad debts in the banking system. der weakened re-distributive functions of Contrary to forecasts, the structural the state administration. This brought forth changes in the GDP in the transition from deformations in the functioning of market a command-style to market economy fol- mechanisms that had negative social and low the trends typical of countries with a economic effects. The stepping-up of relatively high level of economic develop- privatization, and more particularly of the ment. The major difference is that in Bul- mass privatization programme provides garia they take place not against the back- conditions for a gradual overcoming of this ground of economic growth, but in the con- structural asymmetry of the transformation ditions of an economic crisis comparable process in Bulgarias economy. only to that of 1929-1933. This means that The strengthening of fiscal discipline the economic structure of former socialist The changes are in the banking system and real economy is countries does not differ fundamentally from their relative advantages on an inter- following trends a condition for the successful implementation of the reforms now underway. A national scale. The adaptation to market typical of advanced programme for healing up the banking sec- demands has taken place mainly as improv- countries tor has been adopted. It envisages recapi- ing the economic systems by freeing them talization, consolidation and privatization from individual ineffective production of state banks. Part of the state enterprises units. The claims that command structures that are in dire financial straits will be are completely inadequate to the demands closed down. The number of their employ- of the world market have proven wrong. ees is relatively small, so the social price of The structural changes in Bulgarian this measure would be bearable. Compa- economy are manifest above all in the di- nies working at a loss will have a limited

24 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 minished relative share of industry. In 1991 sidizing and granting loans to farm produc- it generated 46.8 per cent of the GDP and ers, as well as the regulation of foreign trade in 1994 - one third of it. In 1995, however, with farm produce are characterized by a this share grew again as a result of the eco- complex and changing nature. It is often nomic enlivening that has taken shape. The inherently inconsistent, does not guaran- GDP growth rate of 2.5-3 per cent is mainly tee transparency of procedures and full due to the increased heavy industry output information to regulating authorities. The and export. adoption of the Law on the protection of farm producers in June 1995 created pre- The share of farming and forestry requisites for establishing an overall sys- also tends to diminish. The crisis in farm- tem for support to producers and for a ing, mainly due to the radical land reform gradual stabilization of agricultural produc- and the overall restructuring of the agri- tion. cultural sector, was manifest in the reduced Figure 2.1. relative share of farming - from 15.3 to 11.0 per cent of the GDP. This result can be GDP by economic sectors (relative share - %) further explained by the major foreign competition brought forth by the easy access to the Bulgarian market of subsidized farm imports from the European Union member-states, that came as a result of the agreement for Bulgarias joining the Union. Another factor is the retained gap between the prices of fertilizers, chemical products and farm products used, and the purchase prices of farm staples. Also retained are the negative differences between domestic and international prices that assist the stagnation in Bulgarian farming.

Many problems of farming stem from the one-sided approach to this sector. It was believed that the restored ownership of arable land would automatically lead to The tertiary sector (transport, commu- better motivation and possibilities for un- nications, trade, finance, etc.) is character- leashing private initiative. The fact that the ized by an instability of its relative share in real shift of ownership leads to vagueness the GDP which, according to estimates of and a temporary increase of transaction some international institutions, is about 60 expenses, has not been considered. Both per cent. This growth pertains mainly to these circumstances make market mecha- the stepped-up development (including nisms less effective. At the same time farm- through the re-distribution of surplus value ing is a sector characterized by specific from the secondary to the tertiary sector) price-formation, seasonable and cyclic of trade, the finance and banking sector. price dynamics. Given these circumstances, What is needed is state farmers have to rely either on a clear-cut Irrespective of the crisis phenomena, state mechanism of regulating prices and the processing industry continues to form support to farming stock of basic farm produce, or on well- the core of Bulgarian economy. The most developed future markets. At the current dramatic structural processes in industry stage of market reform development in Bul- are the reduced relative share of the out- garia only the first version is feasible. put of metal-working industry within the total industrial output (from 16.6 per cent Immediately upon the start of eco- in 1991 to 9.8 per cent in 1994), and that of nomic transformation, the regime of sub-

ECONOMIC RESTRUCTURING AND PROBLEMS OF THE HUMAN FACTOR 25 the food industry (from 27.1 to 21.1 per lute growth. But its share in the total vol- cent). The reasons for these similar ten- ume of industrial output is insignificant. dencies, however, are somewhat different. The drop in machine-building is mainly due The dynamics of ferrous and non-fer- to the loss of markets in the former Coun- rous metallurgy has certain specific fea- cil for Mutual Economic Assistance tures. Ferrous metallurgy, ore-mining in- (CMEA). The drop in food production is cluded, had an initial decline in 1992, fol- the result of two additional factors - the lowed by a revival in 1993 and 1994, thus collapse of raw material supply stemming retaining its relative share as a whole. Non- from the land reform, and stronger foreign ferrous metallurgy, however, has doubled competition. its share in the total output of the secondary sector, thus becoming the most success- Box 2.2. ful subsector of industry.

Tendencies in electronic and electrical engineering Similar processes are taking place in most countries of Central and Eastern The main reason for the grave times. While in 1991 the import Europe (CEE) and the Commonwealth of crisis in electronics and electri- of this type of products was 5.4 Independent States (CIS). The whole re- cal engineering is the unfa- times less than export, in 1994 gion develops at priority rates the produc- vourable development of for- the import was 1.8 times more tion of intermediate, mainly material-, eign trade turnover and espe- than export. This development power- and labour-consuming output ex- cially the loss of CMEA mar- was furthered by the unfa- ported to the industrial center of the world kets. Over the 1991-1994 pe- vourable customs taxation, dis- economy. This makes the group of CEE riod the value amount of elec- loyal external competition, the and CIS heavily dependent on the dynam- tronic and electrical-engineer- lack of sizeable foreign invest- ics of cyclic economic processes in West- ing exports shrank by half, ments and the technological lag ern Europe and the developed market while imports went up over four of production. economy countries.

The intensity of structural changes in the processing industry, measured by the There are sectors whose importance standard deviation of changes in the rela- in the structure of industry is growing. tive shares of individual sectors which re- Above all this is the chemical and oil-reflect the degree of impact of changes on fining industry whose relative share has industry as a whole (low values of standard grown from 12.8 to 23.0 per cent of the deviation) or on individual sectors (high overall volume of industrial output between values), shows an interesting dependence 1991 and 1994. Also growing is the impor- on the dynamics of the overall economic tance of electrical and heating power gen- situation. eration - from 5.4 to 10.0 per cent of the total output. The power consumption of in- Most substantial structural changes dustrial production has grown, which is par- have been recorded in the period of reach- tially due to the relatively low cost of elec- ing the bottom of economic crisis in 1992- tric power. The material consumption of 1993. The greater intensity of changes in industrial production has slightly improved. the structure of production and foreign The processing industry trade of that time were due to the strong The industrial sectors traditional for is the core of economy dependence of Bulgarian economy on ex- Bulgaria, such as textile, tailoring, glass- ternal demand. This period saw the for- making and ceramics, tanning, paper and mation of a comparatively stable export cellulose-making either retain their relative structure. To a great extent it also deter- share or mark a drop in it. The only excep- mines the structure of imports, since the tion is the printing and publishing industry bulk of raw materials is imported. In this that has registered both relative and abso- way the changes in the production structure depend on the adaptation of Bulgar-

26 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 ian economy to the demands of interna- Table 2.1. tional markets. Intensity of structural changes Worth noting is another fact: sectors whose end products need less process- A. Standard deviation of relative shares of industrial sectors ing, but which are more power- and material-consuming (heavy chemistry, metal- 1992/1991 1993/1992 1994/1993 lurgy) adapt more quickly to the situation. Industry 2.7 1.2 1.0 This is possible because of the persisting crisis situation of mechanical engineering, B. Standard deviation of relative shares of commodity sectors in imports and electronics and electrical engineering that exports consume the products of first-echelon in- 1993/1992 1994/1993 1995/1994 dustries as a result of the latters bigger export quota. The quicker adaptation of in- Import 2.0 0.7 0.7 dustries that are relatively simpler in tech- Export 2.3 0.6 0.8 nological terms is natural and allows for a temporary stabilization of the economy. But introduced new features to the balance of it delays the solution of fundamental struc- trade flows. According to data of the UN tural problems of the processing industry Economic Commission for Europe, the and of the national economy as a whole: shock liberalization of prices and rate of the reduction of power and material con- exchange is linked with the shift from a sumption through technological restructur- passive trade balance in 1990 (-352 mil- ing and priority development of sectors with lion US Dollars), towards a surplus of US a high level of surplus value. Dollars 734 million in 1991. Later, however, the liberalization of exchange, the dis- 2.3. Changes in the foreign trade integration of the multi-sided system of relations payment in transferrable rubles within the CMEA, and the measures for stabilizing the Lev rate within the agreements with the The dynamics of the export and im- International Monetary Fund, have led to port structure generally mirrors the course poor foreign-trade results. Trade deficit in of changes in the structure of the process- 1992 and 1993 amounted to US Dollars ing industry. The share of products of the 546 million and 1,337 million, respectively. chemical, plastics and oil-refining industry The latter is a record figure since 1980. As marks an annual growth of 2 to nearly 30 a result of the devaluation of the Lev, in per cent for individual commodity groups. 1994 the deficit tended to decrease. 1995 The export of ferrous and non-ferrous saw sizeable trade balance assets of about metals follows the same trend. The import US Dollars 400 million. of these groups of products is either curtailed or increases much more slowly. The intensive structural changes and the state of trade balance are linked with Mechanical engineering, electronics the ousting of Bulgarian producers out of and electrical engineering follow a trend The restructuring of the domestic market and the forcible ad- of curtailing both imports and exports. This aptation of the production structure to the high-technology sectors unfavorable development mirrors the loss demands of international market. The pri- of markets by Bulgarian manufacturers of is delayed ority growth of exports is related to the high-tech products, as well as the absence reproduction of existing structures while of technological renovation of the countrys production capacities are not used to the economy. full, the investment climate is dull, and the The transition from a command-type structural changes slow. to a market-oriented economic system has

ECONOMIC RESTRUCTURING AND PROBLEMS OF THE HUMAN FACTOR 27 Foreign investment has failed to be- transport routes between Bulgaria and come a major factor for making the struc- West Europe. tural adaptation more dynamic. According to the Agency of Foreign Investment, by The exports reduction by about US mid-December 1995 foreign investment to- Dollars 200 million in 1993 and the record- talled US Dollars 530 million. This is a com- breaking trade balance deficit of the same year reflect the big delay in the regional Foreign investment so paratively small amount that ranks Bulgaria among the last CEE countries. The sectoral re-channeling of foreign economic ties. It far is not a major structure of capital investment mirrors on will demand an overall restructuring of the factor for restructuring the whole the GDP structure. Industry ac- transport and telecommunication infra- counts for 37 per cent of investments, trans- structure which requires sizeable domestic port for 21 per cent, trade for 19.5 per cent, and foreign investments. construction for 5.5 per cent, and other sec- The process of regional re-orientation tors for 17 per cent. Germany is the leading also implies the countrys joining another foreign investor with nearly 39 per cent of system of contract-integration relationships. all foreign investments. The limited role of Like other CEE countries, in 1994 Bulgaria foreign investment is explained by the high signed an agreement for association with risk associated with Bulgaria, and by the lack the European Union, and in 1995 applied of a clear-cut state strategy. for full membership. The course towards Box 2.3. an integration with the EU poses major structural demands to Bulgarian economy. Towards economic integration with the European Union 2.4. Changes in the sectoral The agreement on Bulgarias as- aptation of Bulgarian economy, structure of manpower sociation with the European focused on power-generation, en- Union has designated the basic vironmental protection, promo- goal of the countrys development tion of the private sector, educa- Structural changes in economy take in the context of European inte- tion and training. Bulgarias par- place against the background of a relatively gration - sustainable economic ticipation in research and techno- high level of unemployment. In 1990 the growth. Besides measures for lib- logical projects of the Union will registered unemployed numbered about eralizing trade, movement of become more important in the fu- 30,000, reaching 400,000 in late 1991, and capital and labour, the associa- ture. The European integration scoring the summit of over 600,000 in early tion agreement also envisages the processes will gradually become 1994. The number of unemployed has be- employment of sizeable resources a key structure-determining fac- gun to go down since the second quarter for stepping up the structural ad- tor of economic development. of 1994. By mid-1995 the unemployed to- talled 400,000 (i.e., the level of 1991) and tended to decrease further. The state has gradually given up its role of a major em- There is a close interdependence be- ployer, replaced by the private sector, es- tween structural changes in industry, trade pecially in the field of services. and the geographic orientation of foreign trade. The economic transformation in Bul- Changes in the structure of employ- garia, like that in the remaining CEE coun- ment more or less follow the changes in tries, is a regional re-orientation of trade the structure of GDP and the processing flows towards a new growth center - to- industry. The main tendency is reduction wards Western Europe. Following the start of the number of those employed in indus- of reforms, the share of the European try - from 35 per cent in 1991 to 30 per Union in Bulgarias trade turnover has cent in 1994. The relative share of trans- more than trebled. However, the process port and construction workers is plunging, was seriously hampered by the UN trade as is that of workers in the field of science sanctions against the Federal Republic of - from 1.9 in 1991 to 1 per cent in 1994. Yugoslavia. They severed the most direct

28 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 The number of employed in the fields of period, the index of the real working sal- education, culture and arts is growing. ary was the highest in ferrous metallurgy, power generation, coal-mining, non-ferrous The number of new working places is metallurgy and the chemical industry. The growing in the field of trade (from 9.6 per plunge was biggest in the light industry. cent in 1991 to 11.7 per cent in 1994), finance, credit and insurance (from 1.4 to The share of working salary in 2.1 per cent) and management (from 1.4 the total structure of incomes is relatively to 2.1 per cent). Situation in farming is stable, varying between 56 and 58 per cent. somewhat peculiar. Irrespective of its re- Table 2.2. duced relative share in the GDP, the number of farm workers went up from 19.1 per Employment structure by economic sectors (in %) cent in 1991 to 21.7 per cent in 1994. This process is a reflection of the decreased la- 1991 1992 1993 1994 bor productivity in this sector, the process Industry 35.0 33.0 30.0 30.0 of reverse migration as a result of the land Construction 7.1 6.2 6.5 5.9 reform, and the bigger decrease of employment in other sectors. Farming 19.1 20.7 21.7 21.7 Forestry 0.5 0.5 0.4 0.4 The changes in employment structure Transport 6.2 5.9 6.1 5.9 in the processing industry are similar to the Communications 1.2 1.3 1.4 1.4 changes in production. The biggest reduction is observed in the number of workers Trade 9.6 10.0 10.3 11.7 in the field of mechanical and electrical en- Other sectors of material production 0.8 0.8 1.0 0.9 gineering, and electronics. Those employed Housing construction and in metallurgy, chemistry and power gen- communal services 2.2 2.1 2.0 2.1 eration are growing in number. Like in Science 1.9 1.6 1.1 1.0 farming, the food industry has also increased its share in the overall number of Education 7.5 8.0 8.2 8.2 those employed, while its share in produc- Arts and culture 1.1 1.0 1.3 1.3 tion has come down. Health care, sports, tourism 5.8 6.2 6.2 6.3 The unfavourable tendencies in the Finance, credit and insurance 0.8 1.1 1.1 1.3 overall size and structure of employment are Management 1.4 1.6 2.1 2.1 accompanied by negative tendencies in the Other non-production sectors 0.3 0.2 0.2 0.2 level of income. The populations real incomes tend to fall down. In 1993 they TOTAL 100.0 100.0 100.0 100.0 dropped by 4 per cent, in 1994 - by over 28 per cent, and for the first quarter of 1995 - by about 20 per cent on an annual basis. The share of pensions ranges between 24 Based on the dollar, salaries are relatively and 28 per cent. Incomes from entrepre- stable, varying between US Dollars 70 and neurship vary between 3 and 5 per cent. 120 per month. Best paid are those working The remaining incomes come from per- The number of those in the sphere of finance, trade, the process- sonal farms and other types of economic ing industry and management. Yet 1994 wit- activity. employed in industry is nessed a turnabout: there was a comprehen- diminishing sive drop of real incomes in the field of fi- 2.5. New requirements and nance and credit (-23%), trade (-22%), problems facing the human management (-20%) and industry (-19.5%). factor Within the framework of the processing industry no sector has marked a stable Besides employment and training, growth of real incomes. For the 1990-1994 other major criteria of the quality of the

ECONOMIC RESTRUCTURING AND PROBLEMS OF THE HUMAN FACTOR 29 human factor include the value system of rate and reduced business activity in high- economic agents, the attitude towards eco- tech sectors, and in science show that be- nomic processes, the consistent or incon- sides new possibilities problems born by sistent behaviour of manpower groups. The the transition crises have also arisen. radical changes in the rules of the game in the economy also imply a change in the The degree of commitment to ones company increases if two conditions are Table 2.3. met: the company must be a real economic agent and must operate in the conditions Real working salary dynamics of firm budget restrictions, demanding (changes in per cent over the preceding year) everyones efforts so that it can survive and prosper. The big amount of bad debts, 1992/1991 1993/1992 1994/1993 problems with the fiscal discipline in some state and private enterprises, however, Industry 20.9 -0.6 -19.5 clearly indicate circumstances that objec- Construction 14.3 -4.3 -25.9 tively hamper the establishment of a cli- Farming -11.8 -5.8 -20.0 mate of loyalty and commitment to com- Forestry 7.0 -0.1 -31.5 panies and to the existing legal order. Taxes Transport 24.0 5.0 -18.2 paid amount to 88-90 per cent, including VAT - 77-88 per cent, profit tax - 66-70 Communications 14.8 3.5 -18.6 per cent, and bank loan interests - 43-59 Trade 20.9 0.7 -22.8 per cent. Other sectors of material production 27.4 -7.0 -22.4 The radical change of ownership has Housing construction and also created conditions for a temporary communal services 17.2 -1.0 -21.6 decline in the loyalty of those employed. Science 9.9 0.9 -20.5 The revival in the processing industry be- Education 1.9 1.0 -23.4 tween 1994 and 1995 has provided possi- Arts and culture 1.6 0.9 -22.1 bilities for positive changes. The first nine months of 1995 witnessed a ten per cent Health care, sports, tourism 5.7 2.5 -23.8 increase of labour productivity in industry Finance, credit and insurance 28.3 24.0 -23.0 based on surplus value, as compared with Management 11.6 9.6 -20.6 the same period of 1994. Other non-production sectors 25.7 17.2 -21.8 The consistent behaviour of economic agents poses a special problem. Sociologi- value system of economic agents. The col- cal surveys show that the market economy lectivist orientation of the official value sys- principles meet with approval. On the other tem in the conditions of command-style hand, phenomena like tax evasion, work- economy is being replaced by a value sys- ers opposition to closing down losing en- tem aimed at individual success and in- terprises, bad debts and poor financial dis- A climate of crease of personal profit. The expansion cipline, growth of economic crimes, osten- organizational, of crime in the transition period reflects, sibly high income in subsidized industrial financial and legal among other things, the deep-going sectors and in banks with a negative net changes and problems of the value system capital, etc., point to two lines of inconsis- loyalty is needed of part of the Bulgarian society. tency. First, only the positive sides of the market are accepted (the pursuit of per- Problems also exist in terms of the at- sonal interest), while its price is rejected titude towards economic processes. Mar- (taxes, firm budget restrictions, risks). Sec- ket relations and free initiative provide ond, groups are taking shape, that benefit possibilities for peoples orientation to- on non-complying with the rules of the wards jobs that best suit their preferences game followed by all the rest. This is par- and requirements. The high unemployment

30 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 ticularly true of the social strata linked with Fifth, from the point of view of value the black and gray economy. system, motivation and loyalty to organizations changes are contradictory. The 2.6. Conclusions behavior of economic agents tends to be inconsistent.

The analysis of structural changes in Sixth, the overcoming of negative ten- Bulgarian economy points to a number of dencies will depend on the transition to- The motive force of social-technologicaly relevant inferences: wards a stable economic growth. This im- restructuring is the plies stepping up the investment process, adaptation to new First, the motive force of changes is ensuring foreign markets and intensifying the need of adaptation to the international domestic demand. markets rather than market demands, and not the technological reconstruction. Seventh, the increase of investment technological would be impossible unless the internal restructuring Second, changes are unfavourable as norm of savings is increased and external a whole because the high-tech sectors and financial resources are attracted. It will not well-trained manpower are losing their po- be effective unless the investment process sitions in the structure of the national is accompanied by technological restruc- economy to sectors with a low surplus value turing. This demands clear-cut structural and relatively lower requirements to man- policy and encouraging the transfer of tech- power skills. nologies.

Third, these unfavourable tendencies Eighth, structural changes are taking are linked with an overall decrease of real place in the conditions of a large-scale re- incomes, especially in high-tech sectors. striction of state functions in redistributing Fourth, only a shift towards resource- the national income well below the social saving and technological reconstruction of optimum. Bulgarian economy can ensure a stable Ninth, the dynamics and trends of growth of incomes. The difference in in- structural changes, as well as the forms and comes of advanced and developing coun- intensity of the structural policy pursued tries is a function of the intensity by which by the state will even more greatly depend countries with lower incomes reproduce on the process of Bulgarias integration into innovation processes in the industrial cen- the European Union. ter.

ECONOMIC RESTRUCTURING AND PROBLEMS OF THE HUMAN FACTOR 31 ENTREPRENEURSHIP IN THE TRANSITION 3 TOWARDS MARKET ECONOMY

3.1. Conditions for developing considered because of the specific eco- The appearance of a entrepreneurship nomic structures in farming, and the stage of the land reform. For similar reasons the stratum of financial and insurance sectors are not in- entrepreneurs is the Under the centralized planned eco- cluded either. nomy the private economic activity in Bul- core of the current garia was gradually liquidated. The state, The encouragement of small business transformation municipal and cooperative economic struc- aims at solving fundamental economic tures had an established monopoly. They tasks, since the filling out of the economic employed nearly all the able-bodied popu- space with small and middle-sized enter- lation. According to law, free-lancers were prises, sole proprietors and businessmen is confined to the field of culture, arts and a key component of the structural reform. crafts, and the legal profession. The small business quickly adapts itself to the changing economic conditions. It can The dominating idea was that the state utilize local resources, thus enlivening the ownership was the supreme form of man- economy of regions and settlements. The agement. The hiring of workers by other small business fills out market niches and economic subjects was regarded as exploi- meets mass consumer interests. It thus acts tation which was banned by the then exist- as a generator of economic growth for a ing Constitution. In the second half of the sustainable development of towns and vil- eighties, influenced by the results of liber- lages. alization of economic life in Hungary, Po- land and China, a tendency of permitting The small business solves social tasks, private entrepreneurship evolved. How- being practically the sole alternative to the ever, the registration procedures were rife vast number of blue- and white-collar work- with restrictions. ers discharged from state and cooperative enterprises. The small company consoli- So in the dawn of profound economic dates families and whole clans and enables changes, the private ownership had a sym- the even distribution of the burden of tran- bolic presence in economic life. Its devel- sition among family members. It is not ac- opment is a primary condition for the tran- cidental that the small business is called a sition to market economy. That is why the machine for new working places. appearance of the stratum of entrepreneurs is an essential characteristic of societys The assertion of small business also transformation. This stratum has been es- solves political tasks, as it is the ground- tablished in the conditions of intensive work of the democratic society, with the changes in the structure of society and in middle class being its backbone. The eco- legal norms. The market economy institu- nomically independent proprietors can Complicated tasks tions are not fully built yet. The former oppose the attempts at restoring authori- value orientations and changes in them tarian structures. This is particularly valid facing small business have their imprint on the personality fea- for the small settlements where political tures and the social status of entrepreneurs, changes are not tangibly felt. and on the societys attitude towards them. In order to have these tasks solved, Further analysis is focused mainly on the economic reforms are directed towards the development of small business and self- providing the legal and institutional pre- employment. Farm entrepreneurship is not

ENTREPRENEURSHIP IN THE TRANSITION TOWARDS MARKET ECONOMY 33 mises for the development of a private eco- - What are the quantitative character- nomic sector, including by the transforma- istics of private entrepreneurship? tion of state and municipal property into private one. Given these complicated and - Which are the main groups of entre- contradicting circumstances, many ques- preneurs? tions arise: - What legal and institutional mecha- Table 3.1. nisms can be used to combine the interests of entrepreneurship and those of other Registered private firms per 10,000 able-bodied people, em- groups in society? ployment and unemployment according to types of regions 3.2. Quantitative characteristics of the small business Regions Industrial Agricultural Diversified Indices Developed Underdev. Developed Underdev. Developed Underdev. The transition from hired labour to private entrepreneurship became possible Entrepreneurship 805 694 777 542 1095 756 after the radical political changes, when a Employment consensus was reached in society on the coefficient (%) 85.7 79.6 78.7 75.1 83.1 75.3 directions of the economic reform. Dy- namic processes took place within a short Unemployment period of time. By the end of 1995, more coefficient (%) 14.3 20.4 21.3 24.9 16.9 24.7 than 400,000 registered firms belonged to the small business. The leap in its quantitative development coincided with the onset of changes. At the end of 1990 the sole proprietorship and partnership companies Figure 3.1. numbered 82,909. By the end of 1991 a Intentions for economic activity in the next year total of 190,695 private firms were regis- (June 1995, in %) tered. Less than half the registered firms operate in practice, however.

In territorial terms the number of registered private firms varies widely according to the economic structure of regions (former districts) (See Table 3.1.).

The entrepreneurial attitudes of the population also give an idea of the private business potential. An indicator of this are the intentions for action aimed at improving material status of respondents in a nati- nal survey carried out by a team of the Bul- garian Academy of Sciences (See Fig. 3.1.).

Young and better educated people dominate those who wish to start a business of their own. Usually these are inhabitants of larger settlements. People in villages and smaller towns are less inter- ested in entrepreneurship. Most people regard entrepreneurship as a means of survival in a crisis situation. That is why the

34 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 readiness to start up a business of ones Table 3.2. own is especially high among the unemployed. People employed according to economic sectors and the form of economic activity (in %) The share of those employed in the private sector and mostly the number of Employed in sectors 1990 1991 1992 1993 1994 1995 private employers and self-employed people indicate a growth in entrepreneurship in the last years. According to ob- Employed in the state servations of manpower, the number of and cooperative sector 94.1 89.9 82.3 71.7 64.0 59.3 private employers and the self-employed Employed in the grew from 292.9 thousand in October private sector 5.9 10.1 17.7 28.3 36.0 40.7 1993 to 314.6 thousand in June 1995. Of these: About 40,000 unpaid family members also take part in entrepreneurial activi- - hired laborers n.a. n.a. n.a. 11.2 16.1 17.3 ties. As a whole, the two groups comprise - employers and about 11 per cent of the countrys em- self-employed n.a. n.a. n.a. 9.8 8.6 10.4 ployed, and some 9.5 per cent of the able- - unpaid family workers n.a. n.a. n.a. 1.4 0.9 1.2 bodied population. In practice the number of entrepreneurs is bigger because TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 some of those registered as hired labo- urers in the private sector take part in the companys management as partners Table 3.3. or family members. Total average monthly income per household member from The share of the privately employed some sources for the 1992-1994 period is expected to skyrocket following the privatization of large state enterprises. The Sources 1992 1993 1994 mass privatization and the buying-out of Leva % Leva % Leva % enterprises by workers and managers will boost entrepreneurship. Total income, 1336 100.0 1986 100.0 3297 100.0 The amount of the populations incl. from: money income obtained from entrepre- - entrepreneurship 29 2.2 48 2.4 103 3.1 neurial activities is another quantity indicator of the development of entrepre- - personal farms 283 21.2 400 20.2 855 25.9 neurship. The official statistic records of Box 3.1. observations of household budgets show incomes from entrepreneurship to be Incomes from property and from entrepreneurship low. The high share of incomes from personal farms, however, also comprises re- The prevailing unlandlordlike of people. The income from sults from unregistered entrepreneur- attitude towards real estate, in- property sales has dropped for ship. Part of the able-bodied population cluding restituted property, is the same period. The share of work under a labour contract or are reg- evidenced by the very low share households that rely on addi- istered as unemployed, but they also re- of the median monthly per tional income from entrepre- ceive incomes from entrepreneurship. capita income from real estate. neurship as sole proprietors or According to statistical data incomes In 1992 it accounted for 0.2 per partners, farming excluded, is from real estate management and sale cent of the total income, and 17.2 per cent, from paid ser- are symbolic. in 1993 and 1994 for 0.6 per vices - 20.8 per cent, and from cent. This income is received sale of farm produce - 22.8 per by a comparatively small group cent.

ENTREPRENEURSHIP IN THE TRANSITION TOWARDS MARKET ECONOMY 35 The share of the private sector in the that engaged in entrepreneurship in the gross domestic product is an indirect indi- field they had been working in prior to the cator of the development of entrepreneur- onset of reforms. Already while employed ship. The estimates of the level of this in- in the state sector many of them worked dicator vary from 40 to 45 per cent of the on their own either in the state company private sectors share in the 1995 gross do- or outside it. This moonlighting was pos- mestic product. Private business has the sible mostly in the field of trade, services, highest share in trade, restaurant and ho- tourism and transport. The accumulated tel-keeping, car transport, construction and income, managerial and production expe- services. These spheres are preferred as rience provided a good starting point for they are less costly to organize and allow entrepreneurship. The success of this group for a quick turnover of capital. The share of entrepreneurs was partly due to the fact of the private sector in the formation of that they have attracted customers of their budget and social funds revenues is smaller former state enterprise by offering them than its share in the GDP generated. lower prices in the start of their private business. Because of the economic uncer- 3.3. Types of entrepreneurs tainty some entrepreneurs kept working at the state firms. They were thus able to use the installations, equipment and quite of- The qualitative characteristics of en- ten, materials for their private business. trepreneurial stratum are a key component of the assessments of the present state of Bulgarian nationals who had left the small business in Bulgaria and the pros- country years ago can be conditionally pects of its development. In motives and ranked among these entrepreneurs. Upon ways of starting entrepreneurial activities, their return to Bulgaria some of them in- in the origin of the start-up capital, in their vested their savings in businesses where economic and social status, the entrepre- they had accumulated expertise during their neurs can be divided into four major emigration. The same group also comprises groups: Bulgarian nationals who work on contracts abroad - athletes, musicians, actors, etc., Box 3.2. but who invest part of their incomes in entrepreneurship in Bulgaria. From state employment towards private business The second group of entrepreneurs has A.H. has worked for 30 years ers. Yet they are well aware of sprang up as a result of the implementa- as a driver of a taxi truck in a the unfavourable environment. tion of restitution laws. These laws restored large city. His two sons were The interest rate of credits is the right to ownership of land, built real also drivers. In the early nine- too high. The number of insol- estate and industrial enterprises. Because ties the three of them registered vent customers is growing. of the lengthy period between nationaliza- a transport services firm. Their There are clients who black- tion and restitution, the management of work expanded, so they re- mail them to pay lower fees, or restituted objects was mostly undertaken placed their old truck by two not pay at all. They have to by the heirs of former owners. The numer- heavy-duty trucks. They have share their income with clerks ous heirs with various interests and atti- their regular clients and are and customs officers so as to tudes, as well as the different place of resi- continuously on the road in Eu- overcome bureaucratic ob- dence of owners and the location of the rope and Asia. They want to stacles. All this prevents A.H. restituted property restrict the growth of expand their business by buy- and his sons to invest in their this group of entrepreneurs. Yet there are ing more trucks and hire work- own company. instances of continuity in restoring the former activity in restituted objects, as well The first group comprises workers, as a revival of trade marks. administrators, engineers and technicians from the state and municipal enterprises

36 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 This group of entrepreneurs also in- Box 3.3. cludes owners of larger housing or farm units. The liberalized economic life allowed Restitution of real estate and entrepreneurship them to open shops, hotels, ateliers and the like, without making large investments. G.B. graduated in technology of sanitary officers threaten to close Real estate owners from the big cities, those the food industry and worked as the bakery down without any living in resort settlements or at major workshop master in his home- grounds whatsoever. The tax au- transport crossroads enjoyed differential town. The workshop was closed thorities often go through the advantages in the economic utilization of down, and he was discharged. firms documentation hoping to buildings and free terrains. His wife also remained jobless. find any lapses and have their They got an old bakery restitu- wheels oiled. Most of all G.B. is The third group of entrepreneurs ted and decided to engage in worried by the advice to com- sprang out from the midst of former party- breadmaking. The bakery and ply with the prices of the former state and economic notables and the spe- their house were mortgaged. cooperative bakery that had cial services. Well-informed and powerful, With the loan they repaired the been sold out to another com- this groups representatives engaged in building and purchased equip- pany. The advice came from ro- large-scale mediator or financial transac- ment. The bakery and the adjoin- bust young men that are strang- tions. They made a fortune in a short time. ing small shop were quick to at- ers to the town. This had made The start-up capital of this group amounted tract customers. Sometimes they G.B. give up his idea of opening to privatization mostly of non-material as- had to work round-the-clock. a bakery in his wifes village. He sets of the state sector (market positions, The income covered expenses decided to wait for better times know-how), as well as of material assets and the profit was good. But to come. and means from extra-budget funds and accounts of political organizations. Often the representatives of this group are dubbed are the most viable among entrepreneurs. credit millionaires, after the large loans Their potential to be promoted to the they get from state and private banks. middle class is big. They are the most will- These loans are granted under different schemes and in practice are bad debts. Box 3.4.

This group carries out its activities Entrepreneurship means initiative and resolution through complicated economic configura- tions, registered both in Bulgaria and P.G. had lost his job due to the a private firm. P.G.s firm is at abroad, and it gradually drifts away from diminished orders to the mili- a standstill. P.G. learned about the typical entrepreneur stratum. Some- tary equipment plant where he a PHARE project for financing times they call themselves representatives worked. When registering as an production and production ser- of the big business. unemployed he learned that he vices, and remembered that to- can get his unemployment ben- gether with an engineer from his The fourth group is formed by citizens efits as a lump sum, if he pre- former work he had worked on who engaged in small businesses out of sented a small business project. a tool device. The engineer had unemployment or wishing to be economi- He decided to open up a repair- also been discharged from the cally independent. They start their business shop for household appliances. plant, and they both applied for mainly on the basis of personal and family He signed a contract with the a loan under PHARE project savings, professional expertise and ingenu- labour office and registered his against a low interest rate and a ity. Many of them take loans, and carry company. He then turned his gratis repayment period. The out their business activities either in rented garage into a repair-shop and loan was used to buy a small premises or in their own homes. This bought various tools. But most furnace where they cast the groups starting positions are the most of his fellow-citizens repair their main body of the device, as well unfavourable, and they most often suffer appliances themselves. Some of as precise tools. The production bankruptcies or dying away of business his former co-workers do the proved successful and the sales activities. Yet economic coercion makes same, without having registered went up. these businessmen quite zealous and they

ENTREPRENEURSHIP IN THE TRANSITION TOWARDS MARKET ECONOMY 37 ing to learn entrepreneurial skills and in vidual groups would make the limited bud- case of failure, to start up another business get resources more effective, and the assis- of their own. With their original ideas and tance more efficacious. professional training, this groups representatives can expand the scope of entrepre- 3.4. Normative and legal basis of Box 3.5 entrepreneurship

Restituted sites and entrepreneurship The state monopoly in economy was A survey of the National Insti- mostly in the large settlements. abolished by different normative acts in tute of Statistics shows that The bulk of sites that are sub- 1990. Legal conditions were created for the from the adoption of restitution ject to restitution are empty lots citizens to rent or buy state enterprises in laws in late 1992 till Septem- and courtyards (38.3%), and the field of tourism, trade and services. The ber 30, 1995, 81,429 applica- houses (24.7%). The rest are 1991 Constitution ensured rights and pro- tions for restitution of various shops, restaurants, hotels, phar- tection of the private property. The Trade sites were submitted. The num- macies, warehouses, garages, Law regulated the structure and procedure ber of actually restituted sites industrial enterprises, adminis- of firm registration. Contract relations and is 50,838 at a total amount of trative buildings, etc., that can bankruptcies were settled by law. Account- 18,739 million leva. Some 86 provide a start-up for entrepre- ing was brought in line with that in the mar- per cent of restituted sites are neurship. Assessed as a physi- ket-economy countries. The Law on the in towns, against a mere 14 per cal capital and value, the resti- Protection of Competition provided small cent in the villages. The five tuted property lacks the charge companies and consumers with guarantees largest cities in Bulgaria ac- of an essential factor for ex- against monopoly and disloyal competition. count for 55 per cent of restitu- panding entrepreneurship. But The restitution laws restored ownership of ted sites. Given such territorial from a psychological point of arable land, shops, warehouses, city build- distribution of restored rights view restitution has played a ings and industrial projects that had been on real estate, the restitution major role in the re-birth of cooperated or nationalized in past years. can boost entrepreneurship private property. Irrespective of these changes in legislation, small business still lacks the necessary legal environment. Many relationships neurship into non-traditional niches - are settled by outdated laws or statutory consultancy and experts reports, training, acts. The frequent change of the rules of impresario and social work. They can intro- the game does not contribute to lasting duce new technology and equipment into ties within the country or with foreign part- traditional occupations, thus making them ners. International relations are also ham- competitive. pered by the visa regime and restrictions The above typologization of entrepre- for Bulgarian entrepreneurs. The lack of a neurs in Bulgaria is conditional. In the cour- law on state orders likewise discriminates se of time the individual groups will increas- entrepreneurship. ingly interact, and their relationships will The main shortcoming of legislation probably be institutionalized. The bigger the There is no law that is the lack of a law that settles the status, share of the first and fourth group both as a institutions, policy of incentives and other settles the status of number and participation in the GDP gen- issues of entrepreneurship. entrepreneurship eration, the better the prospects for small business development would be. The greater share of the third group and the higher con- 3.5 Institutional environment of centration of national capital in their hands entrepreneurship is a sign of a distorted economic and social structure of society. Entrepreneurship needs The institutional environment of en- state support as a whole, but a differenti- trepreneurship has developed parallel to its ated approach to the specific needs of indi-

38 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 establishment. Its non-government organi- aware of the problems of entrepreneurs. zations have been built, the most influen- Some municipalities have formed associa- tial among them being the Union for Eco- tions for solving common problems, entre- nomic Initiative of Citizens. These NGOs preneurship included, and this is a positive engage in training businessmen through development. Many municipalities take courses and seminars, providing informa- part in regional development agencies tion and consultations, as well as links with founded with the help of the PHARE What is needed are partners from Bulgaria and abroad. The programme, while others have initiated the Euro-Info Correspondence Center informs establishment of similar agencies. How- codes of small and middle-size firms about Euro- ever, the municipalities lack the necessary entrepreneurship pean markets. The Bulgarian Chamber of funds to implement their plans to promote Commerce and Industry and the Economic entrepreneurship. At the same time, unused Chamber have a network of regional orga- industrial buildings and sites, owned by nizations. They provide business informa- state enterprises, remain deserted on their tion, consultations, training in entrepre- territories. neurship and management, access to fairs and exhibitions in Bulgaria and abroad. There is an urgent need of a specialized institution functioning as a coordinator of It would be useful for the entrepreneur- the policy of encouraging entrepreneurship. ship NGOs to expand their activity by draft- This can be an agency, incorporating coun- ing codes of behaviour norms of entrepre- cils of professional entrepreneurship orga- neurs from different professions. Abidance nizations. It would be best if this bodys by these norms would change the attitude powers are stipulated by a law. towards private entrepreneurship. By adopt- ing such documents and complying with 3.6. Mechanisms encouraging their regulations the state could shift some entrepreneurship of its functions onto the professional organizations, e.g. licensing, some control functions, etc. The establishment of the Asso- The first step for setting up financial ciation of Employers Organizations in formulas for encouraging and assisting en- 1995 provided the basis for a coordinated trepreneurship was made in 1991 through policy in the field of entrepreneurship. the establishment of the Small Enterprises specialized fund. It has been used for: So far no state institution has been directly committed to the development of - granting loans at mitigated condi- entrepreneurship. The Ministry of Indus- tions; try is involved in this economic sector - reimbursing 50 per cent of the inter- through the Small and Middle-size Enter- ests paid for used investment loans; prises fund. The activity of the special department on small business has been con- - lump-sum financial aid to the tune fined to providing technical services to the of 50 per cent of the capital stated at the fund and cooperation with the PHARE time of registering newly established small programme. The Ministry of Labour and enterprises; Social Care plays certain coordinating role, although this is not among its major func- - reimbursing 50 per cent of the ex- tions. Its role is limited to orienting the un- penses for becoming part of the electric employed towards independent business power, water supply, communication and and training them in entrepreneurial skills. road infrastructure;

The municipalities are the institutions - technical and technological develop- that have the largest stake in the development and improvement of the quality and ment of entrepreneurship and are best design of goods and services.

ENTREPRENEURSHIP IN THE TRANSITION TOWARDS MARKET ECONOMY 39 Similar funds have also been set up as a whole for fear of losing the mortgaged with the Bulgarian Chamber of Commerce property. and Industry, the Bulgarian Economic Chamber, and others. Investment funds in The infrastructure reliefs are of major Bulgaria also have their drafts of stimulat- importance for the development of entre- ing and assisting private entrepreneurship. preneurship. Supporting services include legal, accounting, marketing, technical and Guarantee funds would The American Investment Fund, two pilot projects of the PHARE programme and other consulting assistance. Entrepreneur- limit the entrepreneurs other initiatives complement the existing ship is also encouraged by giving premises risk financial mechanisms for assisting entre- or construction sites to let. preneurship. Business incubators are a suitable form The big gap between labour demand that combines non-material and physical in- and supply has led to introducing an infrastructure reliefs. This form is yet to de- centive for starting up a small business. The velop in Bulgaria. It is suitable for the large unemployed, who submit a small business and middle-size towns where terrain is project to the labour office, get all their scarce, and the rents and cost of infrastruc- unemployment benefits as a lump sum pay- ture services are relatively higher. ment. A benefit to the amount of four mini- The infrastructure of small business mal working salaries is also paid, provided and entrepreneurship includes also the the business project envisages employment units engaged in teaching entrepreneurial for a second unemployed family member. skills. The major organizer is the National The high rate of youth unemployment Employment Service. Non-governmental prompted the establishment of a Fund for organizations also train entrepreneurs. Encouraging Youth Entrepreneurship. The Training includes courses, both full-time fund is aimed at granting low-interest loans and correspondence, information materi- with a gratis period to finance business als, lectures in the mass media, etc. These projects of young people. forms are especially suitable for entrepre- The bulk of loans for promoting small neurs from small localities that are far from business and entrepreneurship are granted big centers. Besides adults, training in en- by commercial banks under normal mar- trepreneurship might also cover children, ket conditions and against guarantees for if it is made part of curricula. loan repayment. Reliefs for small business The measures for boosting the effect of companies that have proven their solvency entrepreneurial training also include the in- are provided through the possibilities to use troduction of state standards for training or- revolving loan, opening of a credit line and ganizations, and training programmes. The overdraft. Nonetheless, commercial banks qualification requirements for entrepre- are not very willing to grant loans to small neurship are a necessary component of business. Risks in investment projects with these measures. Bulgaria should implement Towards state a longer period of capital maturing are big. them as part of its preparation for mem- That is why private entrepreneurs prefer standards in bership into the European Union as re- activities that have a quick capital turnover quired by the rules for services provided entrepreneurship (trade and services) and refrain from in- by nationals of the Union member-coun- vestment in industry and farming. The fi- training tries. Based on solid foundations, the sys- nancial schemes for supporting entrepreneur- tem of entrepreneurial training can pro- ship should develop with priority guarantee mote entrepreneurial culture and manage- funds for granting loans used for the financ- rial skills of the private entrepreneurs, and ing of specific projects. This would boost increase their potential for self-develop- high-tech and risky ventures, would help ment. overcome the mental barrier to using loans

40 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 Two questions remain open in connec- new forms of economic activity, the social tion with social insurance. The first con- security system in Bulgaria needs deep-go- cerns the behaviour of entrepreneurs as ing transformations. In view of boosting the employers that have to insure their employ- development of entrepreneurship and its ees. The second pertains to the self-insur- participation in the insurance system, these ing behaviour of entrepreneurs. transformations should be as follows:

Having once overcome the psychologi- - closer link between the size of The profound reform cal barrier of hiring their own workers, instalments and the size of indemnities for in the social insurance petty owners quite often do not sign labour short- and long-term insurance; system is unavoidable contracts with them. They sign personal services contracts or work on the basis of oral - participation of those insured by agreements. In this way the employer saves making them pay part of the insurance himself the security payments, or at least instalments differentiated according to the unemployment and vocational training types of insurance; instalments. The workers agree to this be- - stricter criteria for availability of dif- cause of the unfavourable labour market ferent payments from the social security situation, and because of inadequate insur- system; ance culture. Often entrepreneurs shun social insurance for their own selves and - a transition from an expense-cover- relatives. Irrespective of the size of remu- ing to a capital-forming social security sys- neration or income, the common practice tem. is insurance based on the minimum working salary. The further development of entrepreneurship and small business as a machine Indicative of the scope of this beha- for new working places also requires alle- viour of private entrepreneurs is the fact viating regimes for insurance and self-in- that the hired labour, employers and self- surance in this sector. The payment of all employed total more than one-third of all or part the security instalments by another those employed, while this sectors contri- source at the initial stage of entrepreneur- bution to revenues of the State Social Se- ship reduces labour expenses other than curity Fund accounts for a mere 5-6 per salaries and promotes the development of cent. One of the reasons for this phenom- this sector. Such stimulating schemes lead enon is rooted in the nature of Bulgarias to employment increase and help legalize social security system inherited from the the activity of many small companies and former regime. It was adjusted to an self-employed people who now form the economy characterized by a monopoly of shadow economy. the state ownership and full employment. That is why private entrepreneurs, the self- 3.7. Economic activity and crime employed and farmers avoid any contacts with the social security system and bear the social risk themselves. Some join the state The transition towards market eco- social security system only in order to gain nomy and private entrepreneurship has some benefits through sham labour con- some criminogenic components that assist tracts for their relatives that face certain the growth of general, and especially eco- social risk. The lack of an adequate health nomic, crime. The economic crimes de- insurance system poses many questions as tected in 1995 number 9,956, or by 5.4 per to the health care for entrepreneurs and cent more than those in 1994. The damage petty owners. they incurred are to the tune of 18,508 million levs, or by 54 per cent more as com- In order to adapt itself to the changed pared with 1994. The growth rate of dam- employment structure and to the emerging ages outstrips that of inflation. Yet detected

ENTREPRENEURSHIP IN THE TRANSITION TOWARDS MARKET ECONOMY 41 and registered crimes are only the tip of has been increasing. Also growing is the the iceberg. Public opinion indicates the gap between the educational status of economic and traditional law offenders. In Figure 3.2. 1995 documentary crimes, typical of white- Assessment of basic types of economic crime (very grave collar workers, accounted for the greatest problem, national sample, June 1995, in %) share of economic crimes (25% of all established violations).

Among other offences, the public opinion ranks corruption of state employees as the gravest problem - 29.3 per cent of the population think so. Bribes are common occurrence in contacts between citizens and officials. Yet they are hard to detect and prove, and in practice remain unsanctioned. The 71 proven bribery cases in 1995 indicate the impotence of specialized bodies to combat them. The bribery cases sanctioned by court are ten times less than those detected.

In the course of hidden privatization, funds from the state sector are shifted into the private sector. State capital is leaking out through mixed companies. Managers of state enterprises or their kin develop a similar business of their own, using the most Violations against the importance of this problem and shows a profitable technological solutions and busi- stable high sensitivity towards it. ness contacts of the state enterprises, their state property are The white-collar crime is growing - material and financial resources. State com- frequent the number of well educated and high-rank- panies are stalked at their entrance and exit ing people that commit economic crimes by private companies which do not take production risks and do not invest in pro- Figure 3.3. duction, but collect the production profits. The losses are covered by society. Attitudes to complying with law (national sample, June 1995, in %) Crimes accompany the development of private business. The latter was undertaken not only by enterprising and capable people, but also by such whose dirty money has come from profiteering, traf- ficking, and other criminal offences. Oth- ers have engaged in small business with the idea that this is a possibility for becoming rich quickly by semi-legal and illegal means.

Part of the private business became both an object and a subject of criminal action. Citizens, state enterprises, private companies have suffered various frauds perpetrated by other private companies. The financial pyramids that have emitted unbacked securities and embezzled billions

42 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 became notorious. Documents are being is a substantiated national programme for forged - when registering a company, de- crime prevention that should focus on de- claring incomes, requesting a loan, import- termining factors and on the system of sub- ing and exporting goods. Profiteering is in jects that are to implement it. the core of falsified goods, foodstuffs included, and by cheating on consumers un- Legislation lags behind the social conditions and requirements. Even if its possi- lawful incomes are made. The detected in- State counteraction to stances of fraud are but a tad of the real bilities are fully utilized, it does not pro- number, but their five-fold increase in the vide for adequate sanctions against law of- crime is ineffective last year (from 21 in 1994 to 108 in 1995) fenders. A step forward in this respect are might prove to be the beginning of a prom- the changes in the Penal Code, the Penal ising tendency of boosted activity of con- Procedure Code, tax legislation and other trol authorities. laws. Changes in the Penal Procedure Code have had a favourable effect on penal Unlawful profits are also made by traf- policy, but those convicted still account for ficking, illegal import of fuel, alcohol, ciga- less than 5 per cent of perpetrators of eco- rettes and other goods. The reduced nomic crimes. Many offences typical of amount of damages incurred by this type market economy - abuse of the monopoly of crimes in 1995, while the detected of- status, tax evasion, feigned bankruptcies - fences have increased from 145 to 177, still lack their legal regulations. shows that minor offences only are detected. Large quantities of goods are sto- The analysis of the crime-generating len. They are re-sold to companies that do action of present-day social situation points not care whether their origin is legal or not. to some basic measures that would help There are companies dealing in the pur- curb economic crime. Now it is particularly chase and export of non-ferrous metals, important to precisely regulate the inter- car-sale houses, traders in auto spare parts, action of state organizations and private that encourage or initiate thefts. firms, of economic subjects and state bodies, to draft and implement rules and Honest businessmen become victims mechanisms for the management of state of fraud perpetrated by their colleagues. property that would guarantee its preser- The stabilization and expansion of private vation and the protection of state interests. entrepreneurship are jeopardized by the The bank, trade, customs, tax, environmen- increasing violations of the property of pri- tal and sanitary legislation should be up- vate firms - robberies, thefts, arsons. Black- dated. mail, kidnapping and life threats are growing in number. The low effectiveness of The work of the legal system needs legislative institutions and the mistrust in sizeable improvement. Sluggishness, that their capabilities more often than not make has been current of late, should be done people take the law in their hands when away with, and the number of detected and settling debt matters and disloyalty. sanctioned economic offenders must increase sharply. Moreover, the sanctions Economic crime is strongly influenced should be such as to act as real deterrents. by the overall climate of randomness and destruction. An integral, purposeful and The social-demographic groups ex- Legislation should be scientifically substantiated state policy of posed to the risk of a criminal behavior updated combating crime and coordination among should be given special attention. The pos- individual specialized units is still missing. sibilities to receive lawful incomes would 1995 saw the adoption of a Programme to limit the basis for recruiting rank-and-file combat economic crime. Yet it has not members of organized crime. Higher labour been persistently pursued and the results remuneration of specialists and state em- are far from satisfactory. What is needed ployees coupled with a strict control against abuse of official power would also have a

ENTREPRENEURSHIP IN THE TRANSITION TOWARDS MARKET ECONOMY 43 positive effect. Though belatedly, barriers of employed women is still high - about 48 should be put to using dirty money in per cent of the entire manpower. The share privatization and business in general. of unemployed women is not much bigger than that of unemployed men. Yet in the 3.8. Women and entrepreneurship future women might become more seriously affected by the dynamics of labour Emancipation in market. Social allowances for maternity The specific features of entrepreneur- leave, envisaged by law, would probably labour is coupled with ship among women are determined above lead to a discrimination in hiring women. labour segregation all by this groups labour market situation. In addition to problems of promotion and In the last decades employment among the difficult combining of job and family, women sometimes reached the demo- these are major factors that make women graphic maximum. Much more often than seek alternative forms of employment, such in Western Europe, the Bulgarian women as self-employment and entrepreneurship. enter traditionally mens jobs and professions. In the mid-eighties the women ac- Womens ability to adapt to the new counted for half those employed in indus- economic conditions and their advance into try and for 36 per cent of engineers and the sphere of entrepreneurship are deter- technicians. As a result, Bulgaria that ranks mined by the nature of professional knowl- 65 in the world by the Human Development edge, the level of skills and motivation, and Index, according to the UNDP ranking, is by the nature of the structural changes that 20th by the comprehensive Gender Empow- have taken place in economy. As a whole erment Measure focusing on the degree of the entrepreneurial activeness of women womens participation in the management is lower than that of men. (See Table 3.4.). of economic, political and cultural life. The link between previous employ- Table 3.4. ment and entrepreneurial activeness among former trade workers and clerks has proven Employers and self-employed (% from all those employed) to be the strongest. The concentration of women in the field of services, trade and Total % of men % of women finance has coincided with these sectors expansion over the last few years, which is June 1994 9.9 12.1 7.3 due to the low capital consumption and June 1995 10.4 12.9 7.5 quick capital turnover, typical of this kind of economic activities.

Despite the educational and profes- The low level of education is a salient feature of entrepreneurship as a profession sional advancement of women, patterns of labour segregation are reproduced in soci- at this early stage of reforms. A mere 4.3 per cent of women and 10 per cent of men ety. This is manifest in the feminization of the labour force in the fields of services, with higher education have engaged in en- trade, finances, education, health care, and trepreneurship. Yet 10 per cent of women and 14.2 per cent of men with primary and in the lower hierarchical positions typically occupied by women. Womens salaries ac- less than primary education have become entrepreneurs. count for 74 per cent of those of men. Against the background of full-time em- Women-entrepreneurs face specific ployment, the double workload of women restrictions in their work, stemming from in office and at home, is also a major prob- the stage of their life cycle, family status lem. and number of children. According to a survey of women in entrepreneurship, car- Although in the last five years employment dropped as a whole, the relative share ried out by the Institute of Demography, the link between family and business cre-

44 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 ates problems for 80 per cent of women. skills, because of their family and work They believe that work in both spheres is overload, in getting loans because of the hard to combine, partially or totally incom- higher expectations of failure. Women to patible. Asked if the two types of work can a lesser degree can rely on social networks be combined, 35.7 per cent of women aged to support their entrepreneurial activity. below 25 answer yes, fully so. Yet this That is why, besides general measures to view is shared by a mere 8.7 per cent of Table 3.5. women aged between 31 and 35, characterized by a high reproducing activeness. Would you like to start your own business? (%) This is among the major reasons for womens abstaining from entrepreneurship Yes It depends No (See Table 3.5.).

The group of women-entrepreneurs is Men 31.9 26.6 41.4 not homogeneous from the viewpoint of Women 18.8 27.1 54.1 motives for starting up a private business and as regards strategies for its development. The first group of women-entrepre- stabilize small business and self-employ- neurs can be labeled traditionalists. In ment, measures sensitive to womens spe- self-employment and entrepreneurship they cific problems are also required. seek a means of adding up to their family Women-entrepreneurs - incomes and a flexible combination of work The establishment of a special Fund and family. The second group comprises for encouraging entrepreneurship among traditionalists and innovators. This type of female entrepre- women is a feasible task. It would finance innovators neurship is not just a response to economic projects by granting low-interest loans and coercion, but is motivated by a desire to a gratis period of repayment. Special at- achieve an economic success. It is not just tention can be paid to womens qualifica- an escape from constraints in formal orga- tion and development of managerial skills. nizations, but a striving for creativity. Most Table 3.6. often these are highly qualified women motivated to create something new, to man- What should the ideal businessperson be? (in %) age their own life and to utilize their knowledge and skills to the full. Man Woman Doesnt matter The risk of private business failure is not neutral in respect to gender. Every sec- Man 52 1 47 ond male respondent visualizes the ideal Woman 22 10 69 entrepreneur as being a man. Only 10 per cent of women see the ideal entrepreneur as a woman (See Table 3.6.) These ideas Also important are the consultations for mirror traditional stereotypes, according to business start-up, as well as book-keeping, which women are performers rather than marketing and technical assistance. Non- innovators; submissive rather than aggres- governmental organizations are a major sive; emotional rather than rational. These tool for establishing support social net- characteristics result in the formation of works, avoiding isolation and for an inten- cultural barriers to the success of women sive exchange of business information. entrepreneurs. Pressed by the deep recession and These circumstances increase the risk strongly committed to paid labour, women of failure for women-entrepreneurs. They have been making efforts to adapt them- lead to difficulties in improving womens selves to the new realities through self- qualifications and acquiring managerial employment and private entrepreneurship,

ENTREPRENEURSHIP IN THE TRANSITION TOWARDS MARKET ECONOMY 45 What is needed is a to balance between business and family. contribute to the expansion of their capa- The establishment of favourable legal foun- bilities for generating economic growth and Fund for encouraging dations and institutionalized support would personal self-fulfilment. female entrepreneurship

46 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 SOCIO-ECONOMIC DIFFERENTIATION OF 4 MUNICIPALITIES

The municiplities are the basic admin- economic development. On this basis the Towards a regional istrative centres of the economic and so- municipalities have been classified from 1 cial processes taking place in the country. to 255 and have been differentiated into policy of sustainable Differences in their state and development three groups: development standards are something normal. However, these differences become serious social and - first group from ¹ 1 to ¹ 42, whose personal problems, when they go on and level of development is generally above the are reproduced over a long period of time. average for the country; The situation becomes even more compli- - second group from ¹ 43 to ¹ 164, cated when the differences intensify in con- whose level of development is between ditions of a critical state of the national what is average for the country and what is economy. In such conditions municipali- the treshold of crisis in the development of ties form and keep up territorial poles of municipalities; development which are unequal. As seen from the poit of view of the individual, these - third group from ¹ 165 to ¹ 255, differences imply unequal living conditions. whose development level is generally below the crisis treshold. In Bulgaria the problems of human development are connected to a high ex- According to the criteria used, the tent to the critical state of a number of mu- overwhelming part of the municipalities are nicipalities. Thus, the analysis of the socio- classified under the mean standard for the economic differentiation of municipalities country. and of the factors determining it is the ba- Table 4.1. sis for the working out of a national regional policy which is oriented to the indi- Groups of municipalities according to the level vidual and to the sustainable development of their socio-economic development (1994) of the settlements. Groups of Municipalities Population Territory 4.1. Characteristics of Municipalities number % % % municipalities First group 42 16.5 44.7 15.9 The socio-economic status of the 255 Second group 122 47.8 41.9 56.5 municipalities in Bulgaria will be further Third group 91 35.7 13.4 27.6 analyzed by means of a methodology based Total 255 100.0 100.0 100.0 on taxonomic principles. It takes into account the age characteristics of the population in the municipality, the arable land and the material assets per capita, the level The state and the dynamics of devel- of unemployment and the revenues deriv- opment of the average socio-economic con- ing from economic activities. Indicators ditions for the country are also far away covering the development of the social in- from the top parameters, characterizing the frastructure have also been used. The re- model municipality. This has been due to sults have been compared to a standard, the grave state of most municipalities and whereby the municipalities can be classi- settlements. fied according to the degree of their socio-

SOCIO-ECONOMIC DIFFERENTIATION OF MUNICIPALITIES 47 The socio-economic stratification of The conclusion drawn is that the socio- the municipalities has two clear-cut poles. economic state of the municipalities in Bul- The first consists of the top five munici- garia is quite similar. Eight out of each 10 palities, which have very high values of their municipalities have the development stan- integral evaluations. The second pole in- dard below what is the average for the coun-

Figure 4.1. try, which in turn has quite unfavourable characteristics. This makes it extremely dif- Classification of the municipalities according to the integral ficult to determine which municipalities are assessment of their socio-economic state (1994) at a really critical state.

4.2. The group of the most developed municipalities

The first group is the smallest in number. This is an illustration of the regional aspect of the overall critical socio-economic situation in the country. However, some 44.7 per cent of the whole population live in the municipalities of this group.

There are considerable differences between the top and the bottom municipali- cludes the three bottom municipalities ties in this group. For instance, Devnya whose integral evaluations are far below focusses a high economic potential, which from the standard. The difference between is put to comparatively good use. The mu- the evaluations of the top and the bottom nicipality of Montana is evenly removed municipality in the overall classification is from the standard by most of the features Table 4.2. studied. Included in the group are municipalities having major industrial agglomera- First group of municipalities according to the degree tions of national importance as Devnya, of their socio-economic development Pirdop, Radnevo, Bourgas, Kozlodoui. As a rule, they are characterized by a good ¹ in the Municipality ¹ in the Municipality economic potential, whose utilization de- classification classification fines the positive parameters in the state of most of the territorial units of this group. The economic potential of some of them 1 Devnya 36 Zlatitsa has been the result of the concentration of 2 Mirkovo 37 Gorna Oryahovitsa great capacities in municipalities of fewer 3 Pirdop 38 Razgrad inhabitants, attracting manpower from 4 Radnevo 39 Lyaskovets neighbouring regions. They can thereby be used as pillars of regional development. 5 Chelopech 40 Kazanluk 6 Bourgas 41 Dobrich The place occupied by other munici- 42 Montana palities in this group (Breznik) is mostly ..... determined by the dynamics of their socio- economic development during the last few years. In the rest of municipalities, the 3.4:1. When these two extreme values are changes in the socio-economic parameters eliminated, the differentiation is reduced monitored do not manifest any consider- significantly. able dynamism. The top group includes all municipalities (with the exception of

48 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 Haskovo) with cities which are centres of the manner in which the economic and regions. Nearly one-third of the municipali- social reforms have been tied up. ties includes towns, which had formerly been district centres. By virtue of a policy The social infrastructure back-up of the pursued until not very long ago, they fo- population in terms of quantity in most cussed a considerable portion of the municipalities is around the average for the country. Due to the restrictive budgetary countrys economic potential. This comes The big municipalities to show that the potential of a big part of policy, the maintenance of the available fa- the largest municipalities and cities has not cilities is insufficient, however. The social manage to adapt to the been exhausted by the economic crisis. services offered are rather limited in vol- new conditions They have capacities to adapt to the new ume and unsatisfactory in quality. The low conditions. investment activity in the social sphere limits its reproduction. In the bigger cities it is The good economic state of the mu- incapable of coping with the growing de- nicipalities classifed in the first group demand for services resulting from the con- termines a comparatively high degree of tinuing urbanization. These conditions do their financial independence. In these terri- not favour the preservation and increase torial units the share of their own revenues of the human capital, and most of all the in the local budgets is above the average development of the younger generations. for the country as a rule. Some of them (Devnya, Radnevo, Mirkovo, Bourgas, The most developed municipalities are Gulubovo, Kozlodoui) almost do not rely evenly located in the northern and south- on subsidies provided by the budget. ern half of the country (See Fig. 4.2.). Six territorial concentrations of this type of The demographic characteristics of municipalities take shape. most municipalities in this group are above the average for the country. The share of The first one is located in the north- the population under and in working age eastern part of the country along the coast goes as high as 85 per cent. (Varna, Devnya, Dobrich, Aksakovo, Balchik, Beloslav). The structure of this This implies a smaller demographic region, which includes branches of the load, a low degree of economic dependence chemical industry, the machine-building in- of the generations under or above the work- dustry, the light and food processing in- ing age and a potential of human capital. dustries, and tourism, may be defined as complex. Its relations and role have re- In most of the leading municipalities gional, national and international charac- the unemployment is around or under the ter. One of the fundamental problems of average figure for the country. The indi- this and other developed regions is the en- vidual cases, where it is higher, can be ex- vironmental one. The boundary of endur- plained by the close-down of production able loading of the regional eco-systems lines (Madan), or by the employment of has been crossed, which is contrary to the labour from the neighbouring municipali- paradigm of sustainable development. The most developed ties (Devnya) in the local economy. The municipalities are higher than average incomes per capita in The second concentration is in the cen- most municipalities of this group (the dif- tral eastern part of the country - Bourgas, located in six territorial ference in some cases is over 4 times the Nessebar and Kameno. The economic concentrations average for the country) have been the re- structure in terms of sectors of this region sult of their economic state. This fact illus- is diverse, too. It includes oil refineries, met- trates the indubitable link between the eco- allurgy, machine-building industry, light nomic and social development. It proves and food processing industries, agriculture that the solution of the local and the na- and tourism. The largest Bulgarian oil re- tional social problems crucially depends on finery, one of the metallurgical centres of the country, a ship-building enterprise, a

SOCIO-ECONOMIC DIFFERENTIATION OF MUNICIPALITIES 49 big port, a sugar plant and seaside resorts being primarily specialized in mining and are located in these municipalities. The non-ferrous metallurgy. This makes it economic state of this large potential is strongly dependent on the economic cri- fairly good, which determines the front sis. The structural changes in economies places of these municipalities in the over- of this type are expected to be accompa- all classification. nied by greater shocks in employment and incomes. This makes them one of the seri- The third regional concentration is lo- ous sources of problems for the national cated along the axis of Kazanluk, Stara and local policy in the course of the re- Zagora, Radnevo, Gulubovo. As seen from forms. the point of view of the structure of the local economy this group is mixed in char- The sixth territorial agglomeration is acter. Power production is the major struc- along the Pleven-Lovech-Troyan axis. It is tural sector of the last two municipalities, made up of a regional centre (Lovech) and while Stara Zagora, a former district cen- what used to be a district centre (Pleven), tre, is characterized by a comprehensive characterized by a well developed struc- structure of municipal economy. ture of the local economy with economic units and production lines of national im- The group of municipalities in the portance. On a smaller scale, the economy western central part of the country - Sofia, of Troyan, including some industries of na- Pernik, Bozhourishte, Breznik, Dragoman, tional importance (pharmaceuticals), is also has a similar character. The presence of in a relatively good state. This reflects on the last three municipalities in the first the positive parameters of the populations group is indicative for the beginning of an incomes and the employment rate. encouraging process, namely the expansion of the geography of the relative economic prosperity beyond the traditional centres 4.3. Group of municipalities in the like Sofia and Pernik. middle of the classification

Table 4.3. This second group incorporates the Second group of municipalities according to the largest number of municipalities. Living in degree of their socio-economic development them are 41.0 per cent of the countrys population. In terms of the nature of the major settlements, the features of the group ¹ in the Municipality ¹ in the Municipality are the following: classification classification - the centres of major municipalities used to be district towns, which is 10 per 43 Sredets 159 Smyadovo cent of all municipalities in this group; 44 Kavarna 160 Letnitsa 45 Peshtera 161 Rakovski - the predominant part (65 per cent) of the municipalities have centres which are 46 Dobrich rural 162 Strelcha medium-sized towns; 47 Doupnitsa 163 Berkovitsa 164 Dospat - the rest of municipalities of this group ..... are mostly agricultural and their centres are small towns or villages.

The fifth developed region is repre- What is most characteristic of the sented by the municipalities of Mirkovo, municipalities of this second group is their Pirdop, Chelopech, Zlatitsa, Panagyurishte poor socio-economic state. Only 4 of them from the region south of the Balkan Range. have indices above the average for the It is characterized rather by a single branch, country. Nevertheless, the number of mu-

50 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 nicipalities whose dynamics is above the av- tions social problems in crucial spheres as erage for the country is considerably higher. public health, education, culture, social aid The economic potential of the municipali- and others is greatly restricted and will con- ties of this group, with the exception of tinue to be restricted further. The problem Radomir and other 6 municipalities, is be- of investments is particularly grave, as they low the average for the country. presently boil down solely to the imminent repairs carried out in some infrastructural A quarter of the For 60 per cent of the municipalities of objects. this group, the level of durable material as- municipalities of the sets per capita is more than two times lower The problems related to the social in- second group may get than the average for the country. The dif- frastructure are determined by the finan- ferentiation is the greatest in the dynamics cial state of the municipalities and by a wide into a critical state of the economic revenues. This is due to range of other factors. The demographic the large differences in the economic base factor has a special relevance among them. of the municipalities and to the specific con- The trend towards stabillization and slight ditions for economic development. Only 12 increase of the population in municipali- municipalities of the group have registered ties whose centres are relatively big cities real positive dynamics. What has been ob- continues, along with the slight decrease served in the majority of municipatieis is a of the population in the small, primarily deterioration of the economic state, which agricultural municipalities. Of certain im- can be described as an economic break- portance has been the demographic struc- down for General Toshevo, Karlovo and ture of the population that has become es- Alfatar. tablished in the two types of municipalities. In the first type, it is characterized by The economic conditions in the second a relatively high proportion of the popula- group of municipalities are quite different tion of active age and under the active age, and this determines their further stratifica- whereas in the second, the share of the tion. Just about 10 per cent of them have population at retirement age is significant. real foreseeable chances of outgrowing economic stagnation. The negative processes The demographic situation in the sec- taking shape in the economic development ond group of municipalities divides them of the other municipalities are a prerequi- almost in two equal parts depending on the site for a deterioration of the living condi- level of development of the social infra- tions in them. If that trend continues, about structure. The first type, in which the de- one-quarter of the municipalities of this mographic situation is relatively stable, is group may slip into a critical state. characterized by a number of hospital beds above the average for the country and class This economic situation of the second rooms per 100 classes below the average group of municipalities predetermines the for the country. This has been due to the capacity of the local authorities to tackle available organization of public health ser- the problems and the prospects for eco- vices and of the territorial localization of nomic independence. It is only in 13 mu- the countrys network of hospitals, as well nicipalities that their own revenues exceed as to the relative loading of the schools in half of all required revenues of the local these municipalities. budgets. At the same time, 28 municipalities rely on transfers from the state, whose In the second type of municipalities rate exceeds 70 per cent of the necessary whose centres are small towns and villages, funds for their budgets. In view of the over- the public health indices are, as a rule, be- all financial situation of the country, in such low the average for the country. The local conditions no effective local self-adminis- population is serviced by hospitals located tration can be implemented. The role of in neighbouring bigger municipalities. The the municipalities in tackling the popula- mechanical ebb of young people leads to

SOCIO-ECONOMIC DIFFERENTIATION OF MUNICIPALITIES 51 the non-traditional use of the available in- the same time one-quarter of the munici- frastructure of education. What is paradoxi- palities have twice lower per capita incomes cal is that in these municipalities the indi- than the average. ces of class rooms per 100 classes are considerably above the average for the coun- The rate of income may be assumed try. to be in reverse proportion to the unemployment rate. This is the case in most of Box 4.1. the municipalities in the second group. At the same time there are also exceptions in Regional problems of the social infrastructure two ways.

The decreasing number of The infrastructure and the First, high unemployment rate and settlements and the depopula- housing stock in the settle- high incomes. Such a combination is typi- tion of the small villages engen- ments to which the flows of mi- cal for municipalities where industry or der and maintain social prob- gration are directed, are not in mining predominate. These municipalities lems. The social infrastructure a position to take on further attract manpower from neighbouring mu- available and the housing stock loading. The restrictive fiscal nicipalities which are usually underdevel- are not effectively used. Social policy pursued results in low oped. This, coupled with the significantly welfare facilities like kinder- investment activity and re- higher remuneration of labour, contributes gardens, schools and public stricts the possibilities of keep- to raising the rate of per capita income re- health facilities have been ing up the social infrastructure. ceived. At the same time, the distorted eco- closed down. The provision of Restitution has proved to be an nomic structure fails to provide enough jobs accessible social services, suffi- additional factor for the close- for women, wherefrom the high unemploy- cient in volume and quality, is down of social welfare institu- ment rate comes. A typical example is becoming more difficult. The tions. The human potential Devnya, the municipality under ¹ 1, as well dwindling of the infrastructure both in town and in village as the municipalities of Radomir, Assenov- actually used, further stimulates clashes with inadequate and grad and Zlatograd. The single-sector young people to migrate to the low-grade conditions for de- structure of the municipal economy and the town or to the bigger villages. velopment and reproduction. restricted alternative employment opportunities explain the similar situation in municipalities like Chepelare, Luki and oth- The unemployment rate in the second ers, specializing in tourism. group of municipalities is below the aver- The second case refers to low unem- age for the country in the relatively bigger ployment rate and low incomes. This com- municipalities where the urban population bination is most often observed in small predominates. It is relatively low also in agricultural municipalities (Sitovo, Glavi- smaller municipalities with a considerable nitsa, Dve Mogili, Ivanovo). The explana- share of industry. In the other two-thirds tion can be found in the fact that people of the municipalities of this group, the un- do not register in the employment offices, employment rate is above the average for because they do not expect to find jobs the country. In 55 of them it is between through them. Another reason is the high 12% and 20%; in 18 - between 20% and rate of incomes in kind in these munici- 30%, and in 3 municipalities it is above palities, where the only employment is in 30%. agriculture. The low unemployment rate The distribution of per capita income and low incomes are also witnessed in in the municipalities of the second group municipalities with a high share of has considerably worse characteristics in shadow economy or higher seasonal em- comparison with the first group of munici- ployment for most of the population. palities. Only 3 municipalities (Luki, Doupnitsa and Roudozem) have incomes higher than the average for the country. At

52 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 4.4. Municipalities in a critical nomic growth has been registered only in socio-economic state six municipalities, but the indicator per capita economic revenues is of insignificant absolute value. The decline is particu- In line with the method adopted in larly noticeable in 13 municipalities, which determining the threshold of relative state is an evidence of a break-down of the lo- of crisis, the municipalities classified from cal economy. 165 to 255 in the total classification according to their integral evaluation, may be Table 4.4. treated as being in a state of crisis. They Third group of municipalities according to the degree encompass 13.4% of the total population. of their socio-economic development There is minimum differentiation in the state of the municipalities in crisis. A ¹ in the Municipality ¹ in the Municipality small group of 9 municipalities at the bottom of the classification makes an excep- classification classification tion, as they are somewhat different from the others. 165 Devin 249 Treklyano 166 Kresna 250 Rouzhintsi The overall unfavourable assessment of the socio-economic development of the 167 Oryahovo 251 Rakitovo third group of municipalities is based on 168 Rila 252 Makresh their low internal potential for development, 169 Chiprovtsi 253 Nevestino their poor economic situation and social in- 170 Avren 254 Nedelino frastructure. Only the municipality of Mizia

..... 255 Boinitsa has potential above the average for the country. The dynamics of the socio-economic processes in municipalities in a state of crisis is considerably better, but it has The differentiation of the municipali- been determined on a low base. ties in a critical state in terms of the per capita arable land defines two groups. The The economic parameters of the mu- first one encompasses 20 municipalities nicipalities in a critical state differentiate (about 22% of the total), which possess between two basic types: arable land around and below the average for the country. These are mainly munici- 1. Depressed municipalities as Novi palities in mountainous and hilly regions. Pazar, Loukovit, Omourtag, Septemvri, The other municipalities have per capita Roman, Byala Slatina, Mizia, Velingrad. arable land significantly above the average These municipalities have a relatively high for the country. They are located in the share of industry, but the industrial com- most fertile regions of the country - the panies located there are inefficient and in Danubian Plain, the Dobroudja, and the an extremely difficult situation. This is evi- Thracian Plain. The combination of back- denced by the considerably lower results Last among equals - wardness while the per capita arable land in the economic revenues and especially depressed and indicator is comparatively good is an evi- by the negative indicators of their econo- dence of the questionable results of the ag- underdeveloped mies. ricultural reforms carried through so far. municipalities 2. Underdeveloped - mountainous, bor- The financial situation of the munici- derline and farming municipalities. They palities under consideration is catastrophic. are characterized by a small share and even The own revenues of only 5 municipalities absence of industrial production. As seen exceed 30% of their budgets. The share of from this point of view, the assessment of state subsidies for more than half of the their dynamics is not unambiguous. Eco- municipalities exceeds 80%. A complete

SOCIO-ECONOMIC DIFFERENTIATION OF MUNICIPALITIES 53 financial dependence on the state budget 12 municipalities the unemployment rate is at hand. is around the average for the country. In most of the municipalities (57%) it has been The demographic structure of the mu- above 20%, while in 17 municipalities it nicipalities in crisis is quite different. Is has has exceeded 30% of it. All muncipalities been the result both of the high birth rate have taxable incomes considerably below in the municipalities with mixed popula- the average for the country. In 90% of them tion in terms of ethnic and religious affilia- this indicator is twice lower than the aver- tion, and of the share of urban population age. in the respective municipalities: The state of the social infrastructure in Box 4.2. the municipalities of the third group is similar to that in the second group. The main Demographic parameters of the municipalities with differences are as follows: population having mixed ethnic and religious affiliation - a considerably greater share of mu- These municipalities are char- municipalities like Djebel, nicipalities, where there are practically no acterized by a better demo- Ardino and others, it has drop- hospital beds; graphic structure, as a rule, due ped almost two times as a result to the high birth rate. The share of the emigration waves of 1989 - there are cases where the absence of of people under and at working and 1993. There is seasonal mi- hospital beds is combined with a low value age exceeds 80%, whereas this gration in the municipalities in- of the indicator of class rooms per 100 percentage is 76% for the coun- habited by Bulgarian Moslems classes (Kresna, Chiprovtsi, Dolni Chiflik, try on the average. The differ- within the country. This migra- Anton, Chavdar and others); ences in the dynamics of the tion has been decreasing in the - the highest indicators concerning the population greatly depend on its years of transition, which is due material infrastructure of education have composition. Where part of the to the crisis that has gripped the the municipalities with ethnically mixed population is Turkish, there is a regions where that population population, owing to the great population significant drop in numbers. In traditionally found work. decrease.

The causes determining the critical - 25 municipalities (27% of the total socio-economic state of the municipalities studied) with ethnically mixed population are the low rate of industrialization, low in- have demographic indicators better than comes of the population and high unemploy- the average for the country; ment rate. Most of them have propitious conditions for the development of agricul- -14 municipalities have demographic ture. A lasting resolution of the current indicators around the average for the coun- problems is probably to be sought along try; these lines. All municipalities rely mainly There are - all other municipalities are charac- on state subsidies. Their social infrastruc- municipalities in a state terized by a deteriorated demographic ture is rather underdeveloped, and wherever there is such, it is inefficiently used. of crisis throughout the structure. The situation is particularly grave in 11 municipalities - Bratya Daskalovi, An analysis of the territorial distribu- whole territory of the Nevestino, Treklyano and in almost all mu- tion of the municipalities in a critical socio- country nicipalities of the countrys northwestern economic state has shown that they are part - Boinitsa, Makresh, Dimovo, Yaki- scattered almost all over the country (See movo and others, whose population at re- Fig. 4.2.). They are more concentrated in tirement age exceeds 50%. Northwestern Bulgaria, where one-third of The unemployment rate and the rate of these municipalities are located. In the taxable incomes of the population are de- Loudogorie and in Dobroudja there are ten rivatives of the economic processes. In only of the municipalities in crisis. Eleven mu-

54 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 nicipalities are in the Upper Thracian Plain The results come to show that approxi- and in the region between the Balkan and mately half of the municipalities in a critical the Sredna Gora Mountain Ranges. With socio-economic state are located in the few exceptions, these municipalities are mountainous parts of the country, while the located in plains and generally have very rest are mostly agrarian. good conditions for the development of agricultural production. They are situated 4.5. Conclusions around highly developed economic centres which have gradually attracted their manpower. Another cause underlying their state 1. The socio-economic differentiation is that during the past few decades invest- of municipalities in Bulgaria stands out in ments have mostly been directed to these conditions of a deep crisis of the national centres and currently the opposition cen- economy. Notwithstanding the signs of re- tre-periphery on a regional scale is acquir- viving, the continuous stagnation, the man- ing clear-cut parameters and acuteness. ner in which the economic reform has been carried out in its sections concerning sta- The mountainous municipalities make bilization and restructuring, as well as the up more specific regions: delay in the reform of the local self-administration have been the key factors deter- - the first one is located on both sides mining the state of the economy of the mu- of the Eastern Part of the Balkan Range nicipalities. They have been the main cause and incorporates ten municipalities. The for the seriousness of the local social prob- gravest problems in them are the high rate lems and for the limited possibilities of the of unemployment, determined by the drop municipalities to tackle them. of the underdeveloped industrial production and the limited resources of arable 2. The socio-economic differentiation land; is characterized by:

- nine municipalities are in the East- (a) great polarization between the de- ern Rhodopes. The region is characterized velopment standards of the municipalities by underdeveloped industry and greatly re- on the top and on the bottom of the clas- stricted resources of arable land; sification;

- ten municipalities are in the West- (b) small differences in the develop- ern Rhodopes and along the Mesta River. ment standards of most of the municipali- With the exception of Velingrad, the in- ties; dustry of the rest is almost on the verge of disappearing. On top of these processes in (c) a small number of municipalities industry comes the continuing crisis in ag- with development standards above the av- riculture of the regions agrarian munici- erage for the country, where almost half of palities, due to the cultivation of a single the population lives; crop (tobacco, potatoes), as well as to the (d) a great territorial scope of the restricted alternative opportunities for de- municipalities at a critical socio-economic velopment; state and a small share of the population - eleven municipalities are located living in them; along the western frontier and along the (e) emergence of new, non-traditional Strouma River. Most of them have an ag- centres of socio-economic prosperity in the ing population structure, high rate of un- smaller municipalities. employment and low income. The major problem here is the looming collapse of the 3. Although characterized by a certain local economies. regional specificity, the conditions of living, development and realization of the human

SOCIO-ECONOMIC DIFFERENTIATION OF MUNICIPALITIES 55 potential in most of the municipalities can- down, there is an improvement of the en- not be defined as satisfactory in terms of vironmental situation. This holds good for quality and quantity. In the period of eco- municipalities in crisis with localization of nomic crisis and social transformation, this depressed productions. Apparently the eco- situation considerably complicates the pos- nomic development of all municipalities sibilities for stabilization of development should proceed within the boundaries of The conditions for on a national and local scale. tolerable loading of the regional eco-systems. This would provide favourable liv- human development 4. An analysis and assessment of the ing conditions to the people who now pre- are unsatisfactory in differentiation of municipalities in the eco- fer to work in highly polluted and more nomic and social sphere brings out several developed settlements. most municipalities important problems. Depending on the level of development in the different municipali- (c) Greater differentiation of the liv- ties, they are manifest in a specific manner ing conditions and exacerbation of the cen- and affect with differing acuteness the de- tre-periphery opposition. On a regional scale velopment of man and his environment. it is manifested in the form of a highly developed big city, surrounded by underde- (a) The problem of the technological veloped territories. It can be seen on the restructuring of the economy on a regional map of the country that the first group scale is most acute in the big industrialized municipalities are more or less thickly sur- and integrally developed municipalities. It rounded by underdeveloped municipalities. can be resolved by intensified innovation This combination is particularly typical in policy, including the attraction of foreign the northwestern part of the country and capital and the establishment of joint ven- around the big cities as Sofia, Plovdiv, tures. The enterprises in the big munici- Varna-Devnya, Pleven and others. palities and settlements may have a defi- nite export orientation. Quite a few of the These contradictions have accumu- settlements have a potential for the devel- lated for decades but they have intensified opment of services. Part of the prospects during the years of transition. This has been for a future revival and development of the facilitated both by the legislative base and municipalities of the second and third by the inadequate policy of regional and group are associated with the transforma- local development. From the point of view tion of the medium-sized settlements into of conditions for the human development, secondary pillars of development. The pro- the centre-periphery opposition is mostly duction of the small underdeveloped mu- manifested in the great differences in so- nicipalities should be mostly based on lo- cial infrastructure and in the quality of the cal resources and should be oriented to social services. These prove to be some of specific regional needs, whereby services the causes underlying the greater migra- and processing related to agriculture should tion and the depopulation of the periphery The upholding of the be developed. Efforts along this line could regions. The demographic and social prob- centre- periphery stop the depopulation of large territories lems of the underdeveloped regions are an of the country and bring about the improve- additional factor for the ebb in the eco- opposition is a sign of ment of employment opportunities in them. nomic activity and for the lesser opportunities for self-development. unsustainable (b) The problem of the contradiction development between economic development and envi- 5. The change of the mechanisms of ronmental balance. The high economic implementing regional policy can no longer standard of the leading municipalities in be put off. The accumulated experience has Bulgaria is most often at the expense of to be summed up and the elaboration of the environment (Devnya, Bourgas, Sred- new principles and legislative base should nogorie, Sofia and elsewhere). In territo- wind up; these should determine the strat- rial units where production lines close egy of regional development and provide

56 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 mechanisms for its implementation. The has been, for instance, the regime of addi- policy of regional development has a po- tional financial aid to municipalities in a criti- tential to become an initiating, leading and cal state since the beginning of financial year synchronizing factor in the implementation 1995; (b) the need of a specific regime for of the structural reform. aiding municipalities, grouped according to similar features (mountainous, agrarian, 6. In the country there are no economic, frontierline, etc.), via programmes, projects, No regional social and political prerequisites for the en- preferences, etc. Those two regimes should dorsement of a purely market approach to operate in parallel and should mutually development is possible the implementation of the regional policy. complement each other. without state regulation These conditions rather point out to the need of state regulation in territorially de- 8. The establishment of a financial fined zones, and in the first place with re- base for the state regulation in critical respect to regions in a critical state. One of gions calls for: (a) the formation of a spe- the main objectives of this policy is to blunt cial National Fund for Regional Develop- the impact of the crisis conditions on the ment; (b) further specification and synchro- local economy and to counteract its com- nisation of the approaches and mechanisms plete destruction. for allocating subsidies for municipalities in a state of crisis. 7. The characterization of a municipality as mountainous, hilly or frontierline 9. The low development standards as is not always tantamount to a critical socio- well as the differences in the socio-eco- economic state. The critical state is above nomic situation of the municipalities jus- all socio-economic, rather than geographi- tify the need of working out programmes cal in nature. This implies at least two things: for international aid, which should be con- (a) the need of a general regime of ren- formed to the maximum to the specific dering aid to the municipalities in crisis, as needs of each territorial unit

SOCIO-ECONOMIC DIFFERENTIATION OF MUNICIPALITIES 57 Figure 4.2. Figure

58 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 SETTLEMENT NETWORK, SETTLEMENTS 5 AND HOUSING POLICY

The settlement network is the material uted is the population in them. As a result Bulgaria gets urban visage of human society. The network is of the intensive urbanization and migra- the result of human activity, as well as a tion, within several decades the majority within the lifetime of a major condition for economys effective- of people flooded the towns. The villages generation ness and quality of life. Most of mans life have been depopulated, and the smallest is implemented in settlements. It is there of them are dying out. that he works, lives, relaxes and maintains social, economic and political contacts. Against the background of the rela- Housing is a key component of settlements. tively even location of small towns and vil- Providing an adequate dwelling for every lages throughout the country, the uneven citizen is a life necessity and a basic hu- distribution of big towns and cities stands man right. out. Large parts of the countrys territory are far away from servicing city centers. In 1994, 43.9 per cent of the countrys popu- 5.1. Settlement network lation lived in 24 cities and towns.

This change has disturbed the disper- The settlement network of the Repub- lic of Bulgaria has been taking shape in sion point structure of the settlement network that has been historically determined. the course of millennia under the impact of geographic, economic, cultural, politi- The big towns tend to increase in territory cal and other factors. Modern Bulgarian and form gravitation fields around themselves. A new type of settlement formations towns and villages bear traces of Thracian and Slav settlements, of ancient Greek and - agglomerations - has taken shape. Many of these formations nuclei are areas where Roman towns, of settlements dating from the time of Ottoman domination, of the in- Table 5.1. dustrialization of recent years. The layers upon layers of cultures determine the di- Settlement types and their population (1956-1994) versity of settlements composition, their unique nature and their affiliation to Eu- 1956 1980 1994 ropean civilization.

The towns and villages have a charac- Bulgarias population 7 613 709 8 876 600 8 427 400 teristic that is essential for countries in a Rural population 5 057 638 3 330 600 2 711 500 transition period. This is their inertia and Urban population 2 556 071 5 546 000 5 715 900 stability that oppose the changing nature Degree of urbanization 33.6% 62.5% 67.8% of social life. That is why the issue of the settlement network, its state, changes and Number of settlements 5 903 5 368 5 336 development prospects is very relevant for Number of towns 112 221 238 Bulgaria, since in the last decades the coun- Number of villages 5 791 5 147 5 098 try has undergone and continues to implement complex and rapid social and economic changes. many people, production funds and activities are focused. They generate environ- Although differing in size, settlements mental problems and coincide with burn- are more or less evenly distributed through- ing environmental points - the regions of out the country. What is unevenly distrib- Varna-Devnya, Burgas-Kameno, Dimit-

SETTLEMENT NETWORK, SETTLEMENTS AND HOUSING POLICY 59 rovgrad, Plovdiv-Assenovgrad, Pleven- policy, the already formed agglomerations Dolna Mitropoliya, and Vidin-Dounavtsi. number 13 and include 651 settlements and 47.5 per cent of the countrys population. Parallel with the formation of urban The agglomerations that are in a process agglomerations and their avalanching prob- of formation comprise 330 settlements and lems, the problems of peripheral areas that 9.4 per cent of the population. Box 5.1. The latest trends in the development of the settlement structure were reflected Possibilities for improving the settlement network in the Law on the administrative and terri- The current state of the settle- essary to more effectively uti- torial structure of the Republic of Bulgaria ment network requires priority lize the international transport (1995). development of small and routes that pass through Bul- middle-size towns for the best garia for the further develop- 5.2. Settlement development possible utilization of the avail- ment of the linear-agglomera- able material and human re- tion settlement network model. The period after World War Two wit- sources, more even develop- A better usage of national, re- nessed sizeable work on settlement plan- ment of the entire countrys ter- gional and local transport ning and construction. Many towns and ritory and enlivening of the re- routes for developing the settle- villages have developed well-structured gions that lag behind. It is nec- ment network is also possible. central areas, have expanded and improved their residential areas, have built industrial are sparsely populated and underdeveloped areas. Nearly all towns boasted downtown have become more acute. These regions and out-of-town gardens and parks. have further deteriorated in the transition The towns territorial growth and years. The already few industrial enter- changes in their structure are mostly due prises in them were closed down, as were to the establishment and growth of their the cooperative and state farms, and a industrial territories, and the establishment lengthy process of restituting the agricul- of industrial areas. Given the lack of a land tural land began. market and real land price because of its Another specific feature of Bulgarias nationalization, large areas of arable land settlement network is its development along around the towns had been allotted for the three main urbanization axes: needs of the nascent industry. In towns with a population above 100,000, the industrial - Major settlements of national rel- area usually exceeds the residential one. evance, that are of a key importance for The correlation ranges from 1:1 (Shoumen) the countrys territory. They are located to 1:1.67 in favor of the industrial areas alongside the national and international (Bourgas). In smaller towns with a popu- transport corridors; lation of 30,000 to 100,000 the correlation ranges from 1:0.6 to 1:1.3. But for some - Settlements of regional relevance, towns it has higher values - 1:1.5 (Gabrovo) located alongside regional transport routes; and 1:1.65 (Kyustendil). In small towns with - Settlements situated alongside trans- a population of less than 30,000 industrial port routes of local importance. zones cover smaller areas and the correlation is within the 1:1 range. Depending on the level of their development the agglomerations are divided into The terrains allocated for industrial already formed, such in a process of for- and warehouse areas proved ineffective mation, and yet-to-be-developed ones. because of technologically outdated pro- According to a survey of the National Cen- ductions that consumed much energy and ter of territorial development and housing resources. They also consumed land, power and water, while at the same time gener-

60 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 ated environmental problems. Yet they down. Industrial areas proved more diffi- provided employment to the growing ur- cult to restitute owing to the major changes ban population, as well as economic well- in them that had occurred in post-war years. being and satisfactory living standards. Privatization had been delayed. These factors have prevented the improvement of The differentiation of town industrial the physical state of industrial territories. zones and their distance from residential Their deterioration affects adversely the en- The establishment of areas was largely justified by the environ- vironment and the cities sustainable de- mental pollution they cause. But besides velopment. industrial zones has its advantages, this functional zoning has its advantages and negative effects. Like in other countries, In the wake of World War Two the the strict separation of industrial and resi- middle-size and big cities witnessed the shortcomings dential areas has made links between them formation of two major types of housing difficult. Deprived of their able-bodied environment - street-district and housing- population during the day, the residential complex. The first type comprises the old areas have become large dormitories whose town regions built before the war. It also inhabitants come back only at night. This prevails in the city expansions in which the is especially true of the new housing com- private lots have been preserved and the plexes in the big cities. Many settlements new construction follows the street regula- have lost their homogeneity which made tion plan. Housing complexes began to be them viable and attractive throughout the Box 5.2. day and week. That is why in last decades the town-planners resort again to the inte- Industrial zones need reconstruction grated multi-functional structure that includes habitation, labour, public services The privatization of industry is found restructuring not before and recreation. The extensive use of elec- expected to enable the recon- the influx of fresh capital and tric power, coupled with the introduction struction of industrial zones. the beginning of their techno- of new non-waste technologies facilitated They will be subjected to pro- logical renovation. this process.

It is typical for Bulgaria that its indus- built in the fifties. The first major endeavor trial potential is focused in the large and was the Lenin housing complex in Sofia middle-size towns. In 1989 739 industrial (Architect V.Vulchanov). In this type of enterprises were located in 38 towns. The housing environment the terrain is public attempts to overcome this disproportion- property, while the houses are privately ate situation by establishing small enter- owned. The majority of dwellings are in prises during the eighties failed to produce multi-storeyed and multi-family prefabs. lasting results. Half of the new enterprises The last four decades saw the construction were again oriented towards big and of some 120 housing complexes number- middle-size cities. The branch workshops ing 660,000 prefabs. They are inhabited by in small towns and villages were often en- about two million people, i.e. nearly one- gaged in ineffective production. Yet they fourth of Bulgarias population. helped solve many employment problems and the utilization of building and housing The advantages of the first type of Streets and districts or resources. The close-down of these produc- housing environment are rooted in the tra- tions in the early 1990s boosted unemploy- ditional social importance of street and housing complexes? ment in many settlements. district space for the urban structure. The private ownership of housing lots ensures After 1989 the industrial regions, their that owners take care for their mainte- management, maintenance and function- nance. Another advantage is the location ing experienced a severe crisis. Many proof shops and community services along the ductions were either downsized or closed

SETTLEMENT NETWORK, SETTLEMENTS AND HOUSING POLICY 61 main streets that makes them bustling with crowded with parked cars and a general life. deterioration of the environment. Amend- ments in the normative system have not tan- Box 5.3. gibly changed the situation.

Improving the street-district housing environment In the second type of housing environment - housing complexes - the buildings The street-district construction be increased by demolishing location is not restricted by the district demands an expansion of the inferior farm and other build- framework and the street regulation line. areas for car traffic and park- ings and replacing them with This enables the construction of composi- ing. Wherever possible solu- greenery and relaxation areas; tions richer in volume and space. Houses tions should be sought at un- old buildings and the techni- can be removed from the street noise and derground and ground level; cal infrastructure should be re- oriented towards the most favourable ex- internal-district space should built. posure. Lawns and playing grounds, where children can play and adults relax, can be built between the blocks of apartments. The shortcomings of the existing Housing complexes are free from transit street-district housing environment are the traffic. In many of them pedestrians alleys narrow streets that cannot meet the grow- are separate from the car traffic which less- ing needs of the car traffic. It often clashes ens the chance of an accident. Public ser- with pedestrians interests. Internal district vices are focused in large and well- space is also insufficient. It lacks greenery, equipped centers offering a wide range of sun and air. Some of the buildings and the goods and services. The major advantage engineering infrastructure of streets and of housing complexes is the possibility of a districts, built before the war, are obsolete. quicker and more effective construction via The sagging layout of the districts entails advanced industrial methods. inadequate airing of the internal district space, while the street looks like a dull cor- In Bulgaria the shortcomings of hous- ridor. ing complexes stem mainly from their in- completeness. In most cases only the edu- Box 5.4. cational and health-care establishments are built, while many of the shops, public ser- Improving the environment in housing complexes vices, cultural and sports centers envisaged by the project are usually non-existent. The The housing complex environ- lawns, ponds, night lights and in technical infrastructure is often also incom- ment can be improved by com- a synthesis with other arts. The plete. Lawns are either missing, or unkempt pleting the construction of the buildings functional, heat-tech- because the municipalities lack money. social and technical infrastruc- nical and architectural charac- ture envisaged in projects. The teristics will be improved by The architectural layout of the hous- space between the blocks should their completion, raising addi- ing complexes is often uniform and dull. have a face of its own through tional storeys, changing their This is mainly due to the uniformity of pre- small architectural facilities, facade, etc. fabs. The latter also have many shortcomings, especially in regard to heat and noise isolation. The state ownership of land is a In recent years this type of housing major problem of these complexes. It de- environment has increasingly attracted the termines their inhabitants unwillingness to new contractors. Through partial district- take care of and maintain the environment. building and silhouette projects they aim Recent years have witnessed the birth at utilizing the building sites to the utmost of a third type of housing composed of big so as to make the largest possible profit. family buildings situated on large area and The result is ruined greenery, buildings surrounded by high walls. They are inhab- shadowing one another, streets over- ited by the new well-to-do. These houses

62 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 are usually built in the outskirts of big and central shopping streets. Within a very middle-size towns in environment-friendly short time the shops and restaurants got areas. Due to its isolatedness this housing reconstructed. Big shops were built with environment has not yet affected the ur- large showcases laden with goods and glar- ban structure in a tangible way. ing lights. The streets and squares got rife with stalls and vendors, as well as with In the post-war period much work was beggars. The unquestionable architectural Preservation and done to renovate the city centers. All towns successes coexist with the kitsch and imi- had several general town-planning and tation of West European and American renovation of city detailed construction plans, and many na- models. The Bulgarian language disap- centers is necessary tional and international competitions were peared from trade logos. Pornography has held. However, only a small part of the made itself at home at kiosks. projects was implemented. In the post-war years major changes The city center renovation work could have also occurred in the implementation provisionally be divided into three periods. of the recreation functions of the urban During the sixties city center projects and environment. City dwellers have tried to their implementations were characterized make up for the lack of a courtyard of their by destroying the existing street-district own and contact with nature by purchas- structure and establishing new structures ing a second house or a terrain in the city (Dobrich, Montana and others). The next outskirts. This striving, caused by the dis- decade was characterized by projects and turbed conditions and quality of urban life, implementations that preserved individual has grown out of control and given rise to buildings of architectural and cultural-his- malformations in the settlement structure. torical value, while providing for sizeable As a result, by 1989 in 5485 Bulgarian lo- new construction (Yambol, Lovech, etc.). calities there were 555,235 decares in villa The eighties saw a time of careful consid- zones and arable and recreational land with eration of the architectural and town-plan- 128,041 houses. These areas have proved ning heritage and a striving to preserve it. to be a source of grave tension in the resti- The projects of this period, as well as their tution of arable land after 1991. Although implementation, preserved and restored the they are not included in construction ar- existing street-district structures downtown. eas, they belong to the urban territory and A case in point are the towns of Vidin, are a potential reserve for future urban de- Pazardjik, Blagoevgrad, Lom, and Varna. velopment and low-storey housing con- Many pedestrian zones were built down- struction. Their inclusion in the town-plan- town, coupled with renovation of old ning projects and determining their pur- streets, squares and city districts. In a short pose and construction regime are impera- time Bulgaria ranked among the top coun- tive. This will ensure their expedient future The villa zones create tries in Eastern Europe in this respect. Yet utilization and development without dis- problems this construction quite often was just a turbing the sustainability of the urban struc- showcase. It was not accompanied by the ture and the environment. necessary reconstruction of the remaining part of the city. Many problems of central In the period of industrial develop- city zones remained unresolved - lack of ment the mass tourism has strongly influ- sufficient traffic and parking areas, need enced the settlement network and the struc- of an urgent reconstruction of many pri- ture of many inhabited localities. Bulgaria vate and public buildings, need of updat- boasts over 200 resort complexes with ing the technical facilities, deteriorated en- 221,000 beds in temporary housings. Some vironmental conditions. of the resorts are small and can house less than 1000 tourists. Others, like Slunchev The most tangible change that set in Bryag, Zlatni Pyassatsi and Albena can ac- towns following 1989, was the bustle in the commodate 30,000, thus coming closer to

SETTLEMENT NETWORK, SETTLEMENTS AND HOUSING POLICY 63 the rank of middle-size towns. Nearly 500 supply. Settlements without a water-supply towns and villages with a permanent popu- system include small villages located in lation of their own offer accommodation hard-to-access mountain regions. They to 357,000 tourists. Many of these settle- have natural water sources and water-sup- ments, mainly small towns, have their own ply is economically unjustified at this stage. resort areas that shape an essentially new Water consumption is the largest in Sofia

Box 5.5. region - 309 l per person, and the smallest in Plovdiv region - 116 l per person. Se- Tourism as a factor for settlement development vere droughts have led to the 1994 water regime in 38.6 per cent of towns and 36.8 Despite the favourable natural economic development, the per cent of villages. and recreation conditions in market processes can be regu- Bulgaria, tourism is still under- lated by the state so as to boost Towns with a sewage system account developed and not used to the the development of certain for 70.2 per cent, and villages - for 2.1 per full for enlivening and stabiliz- settlements, while protecting cent. The lag behind in the construction of ing the small inhabited places. others against disturbing the sewage networks is obvious, especially in If it becomes a priority sector environmental balance and the villages. Electricity is supplied to 5273 of Bulgarias future social and sustainability. settlements, i.e. 98.8 per cent of their total number. This figure shows that the problem has been solved in principle. Bulgaria settlement structure. But the large number lags behind in providing central heating to of tourist lodgings often makes life diffi- dwellings. Sofia has 78.1 per cent of its cult for local population and tourists alike, housing centrally heated, while for the other as well as jeopardize the sustainability of cities this figure is much smaller. The rest the settlement environment and the nor- of towns and villages have no central heat- mal life in high season. ing. Green areas in the countrys towns and villages total 337,000 decares, i.e. 33 sq m The inadequate development level of per urban dweller, and 36 sq m per villager, the technical infrastructure and the related which is a very good indicator. difficulties in electric power and resource supply create major problems for the settle- 5.3. Houses and housing policy ments and their environment. Most Bul- garian towns suffer an acute shortage of drinking water. At the same time, owing to In the years prior to 1989 houses were the inadequate and obsolete water-mains, built along three parallel lines: state, coop- water wastes account for half the total erative and private for the construction of amount of drinking water passing through family houses. The state housing construc- them. The low technological effectiveness tion enjoyed privileges in ensuring the in industry and everyday life make settle- building sites, projects, building materials ments a vast consumer of electric power. and manpower. The cooperative and pri- No power-effective technologies, materi- vate housing construction were done mainly in central urban regions on individual plots The quality of housing als and approaches are used in town-planning, housing construction, industry and of land, and on a large scale in the villages. environment depends daily life. The construction of waste water An apartment house could have no more on the infrastructure purifying installations in towns and villages than eight apartments. Housing contraction is slow. Town-planning in many settlements was forbidden. The people had to organize has been neglected. The engineering equip- themselves the cooperative and individual ment of their territory lags behind, and construction. The state helped them finan- transport services are inadequate. cially, by granting them long-term low-interest loans and providing them with rela- By the end of 1994 84.6 per cent of tively low-priced construction materials. Bulgarias towns and villages have water This was how 2,999,300 houses, i.e. 74.3

64 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 per cent of the countrys overall housing there were potential conditions for devel- fund, were built in Bulgaria between 1945 oping the housing market, but real pro- and 1985. cesses were contradictory.

The state housing construction was First, the state did not control the aimed at goals that stemmed from the prin- prices and the change of the original des- ciples of the socialist system - to provide ignation of housing, failed to introduce tax every family with a house of their own at regulations, did not claim the return of sub- Overt and covert goals prices commensurate with their income. At sidies invested in houses that were first of state housing the same time the state used this construc- privatized and then sold at the free mar- tion to keep the citizens in long-term de- ket. construction pendence. The distribution of houses became a powerful tool of subordination. It Second, the solvent demand for dwell- included two major systems: municipal and ings for housing needs was far less than departmental. that for buildings for non-housing needs (mainly for offices, shops and warehouses). The municipalities provided houses to The private business sought to invest the buy, and departments - houses to rent. capital it had quickly and easily accumu- Upon retirement the lessee could buy the lated. The negative effects of this develop- department-owned house. The housing ment were the loss of a large number of prices depended not on the real construc- houses, the profiteering prices of real es- tion cost, but on the peoples purchasing tate and the impossibility to buy a house of power. In practice, the peoples problem those who badly needed it. lay not so much in paying for the house, but in falling into the group that had the Third, nationalized real estates were right to a house. This was accomplished restituted. But according to restitution laws, by a complicated classification system that only those owners whose houses had not was socially fair in principle. been privatized, and whose lands had not been built upon had the right to a restitu- The commitments of the socialist state tion. to ensure housing to every family were not Figure 5.1. fulfilled, despite the sizeable volume of housing construction. Mid-eighties saw the Number of completed new housing in Bulgaria (1980-1995) beginning of the housing shortage in big cities. Applications for houses in Sofia only numbered 110,000, and the annual rate of state construction was between 12 and 15,000 apartments. At the same time, villages had a large number of practically uninhabited houses.

The suppression of private initiative and the difficulty in finding building sites and materials limited the share of private and cooperative construction, which nonetheless was impressive (over half the houses built). Fourth, the main interest rate soared: Following 1989, the organization of with small exceptions it was well over 50 housing construction and acquirement per cent during three consecutive years changed profoundly. Previous restrictions (1992-1994). This has practically braked on the quantity, locality and disposal of real housing credits and hence new housing con- estate were abolished. Already in 1990 struction, that plummeted.

SETTLEMENT NETWORK, SETTLEMENTS AND HOUSING POLICY 65 Against this background, the hitherto - full abolishment of subsidies for prevailing reform in housing policy can be newly arising housing needs; summarized as follows: - completed privatization process; - abolishing all legal restrictions on real estate; - a record-breaking value of the price/ income indicator: 14/25 as against 3.5/5.0 for Western Europe; Table 5.2. - a limited housing market, covering a Usable area of new housing 1989-1995 (thousand sq m) mere 10 per cent of potential demand;

1989 1990 1991 1992 1993 1994 1995 - justice has triumphed for a small number of owners of nationalized property; Throughout - awakened hopes for compensating the country 2 852 1 865 1 377 1 384 850 727 517 former housing deposits of over 80,000 In towns 2 369 1 557 1 200 1 251 755 644 426 households under the law of long-term In villages 482 309 177 133 95 83 91 depositors. In practice, most changes in recent years have been following the logic of sim- Box 5.6. ply negating the old restrictions, mechanisms and norms, without establishing and The state beats a retreat from the housing sector affirming new ones, adequate to the newly evolved market relationships and protect- The state policy has shifted from suring the link between needs ing both public and private interests. the pole of overall responsibil- and possibilities and facilitating ity for housing supply towards labor mobility. The state does By 4 December 1992 inhabited dwell- the pole of complete lack of re- not fulfil its basic function to ings in Bulgaria numbered 2,741,395. By sponsibility, getting rid of the provide legal, financial and or- the same date 40.4 per cent of dwellings last vestiges of social housing ganizational conditions to vul- were overcrowded - the number of inhab- policy. Bulgaria is a far cry from nerable population groups for itants exceeded that of rooms. This means a balanced housing market en- solving their housing problems. that by this date 4,744,000 Bulgarian citizens lived in adverse housing conditions. As regards the average housing area per capita, 71.5 per cent of Bulgarias popula- Figure 5.2. tion occupied less than 16 sq m of housing area. For the sake of comparison, the fig- Level of satisfaction with housing conditions (June 1995, in %) ure for West European countries is about 40 sq m per inhabitant. The public opinion mirrors this state of housing needs met.

The quality of housing conditions depends not only on the housing area available, but also on the availability of modern engineering facilities: plumbing, drainage, phones, central heating and heated water. According to the last housing census in 1992, 87.5 per cent of Bulgarian dwellings have plumbing. The relative share of urban dwellings with drainage is 97.4 per cent, while that of village dwellings is 77.1 per cent. Dwellings that have heated water (ei-

66 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 ther as part of the central heating system, after the intensive privatization in the last or boiler-heated) account for 82.4 per cent few years. The privatization model allowed in towns, and 37.7 per cent in villages. Cen- for purchasing the houses built before the tral heating lags behind with only 28.9 per price increases at the same prices between cent of urban, and 1.4 per cent of rural 1990-1993. dwellings. Table 5.3.

As regards the form of ownership in Prices of housing and inflation rate (1990-1994) 1992 93.6 per cent of houses in towns and 98.7 per cent of those in villages were pri- Growth in % over 1990 vately owned, and this fact had a negative 1990 1991 1992 1993 1994 effect on the populations mobility. In the last 50 years public housing never exceeded Consumer prices 100.0 438.5 786.7 1228.0 2297.2 16 per cent. The transition has caused two main trends of structure changes: Nominal per capital incomes 100.0 267.6 516.2 766.8 1272.9 Housing prices 100.0 156.7 467.7 902.7 1476.4 - a growing reduction of social lease housing;

- appearance of rapidly expanding pri- Shadow economy has played a ma- vate lease housing, that is still not controlled jor role in the housing sector. In the field officially. of transactions its most common manifes- tation are the prices declared before the The social lease housing fund is owned notary that are much lower than the real by municipalities (about 3.5% of the fund), ones. In the field of investment, control on departments (3.0 %) and public organiza- the origin of capital is non-existent. This tions (0.2%). The system of its functioning turns housing into a convenient tool of le- is entirely a past inheritance: with fixed low galizing shadow economy incomes. Size- prices, well-regulated lease rights and clear- able amounts of rent incomes evade taxa- cut accessibility criteria. tion.

Despite the lack of reliable statistical Box 5.7. information the private lease sector can be Affordability of dwellings characterized as dynamically developing. Experts report that it comprises about 3.5 As a result of the total paupe- minimum. This precludes credit per cent of housing in big cities. Over 60 rization and the heavily dis- solvency even for house repairs per cent of privately leased dwellings are torted structure of household and improvements. Therefore either converted, or originally rented as expenditures the available income deficiency is among the offices. Their owners usually have more means for purchase of a house priority aspects of the housing than one house, while big owners are an have fallen below the critical issue. exception. There are no legal restrictions on the size of the rent. The average private rents are more than 20 times those of mu- The classical criteria for affordability nicipalities. of housing in Bulgaria are much more unfavourable than that in advanced mar- The right to purchase houses from the ket economy countries. In 1994 an aver- social fund had existed throughout the pe- age household needed six annual incomes riod of state socialism and during the first in order to buy a house of 75 sq m. For four years of the transition (1989-1993). Sofia, the income needed was twice higher. The adoption of a new regulation in early 1994 put an end to the privatization pro- The model of housing complexes from cess. This helped preserve the shrinking the recent past tends to die away, as the municipal housing fund that has remained conditions for their implementation no

SETTLEMENT NETWORK, SETTLEMENTS AND HOUSING POLICY 67 longer exist. The newly-built housing struc- used for office purposes. The tax levied on tures hardly fit the definition of a housing sales is 10 per cent of the contract price, complex. Former construction plans are which is usually well below the real price likewise irrelevant in the new conditions. paid. The new construction plans are drafted on an essentially new principle - all require- 5.4. Towards a new housing policy Radical changes have ments of owners (investors), that comply with the law, are taken into account. This set in the utilization of is a precondition for a profound change in The housing sector is a major factor building sites and the both the model of land utilization, and the for the countrys macroeconomic stabili- type of construction. zation. Its dependence on the budget, mu- type of construction nicipalities, financial sector, industrial Although self-construction has sharply sphere and legal system makes it highly dropped in comparison with the total vol- vulnerable in view of the deep crisis in ume of new construction, traditions and its them. This necessitates a new housing sizeable economic advantages have helped policy to be based on the following prin- its survival. It is still the most widespread ciples: type of construction in the villages. - The adequate and affordable hous- A telling proof of the collapse of in- ing is a premise for the normal reproduc- dustrialized technologies is the fact that tion of the nation and the individual and their share in new housing construction in should be regarded as an investment in the 1993 was a mere 6.9 per cent. At the same countrys sustainable development. time the dwellings built by the public sector account for 75.0 per cent. This practi- - The housing sector is a key compo- cally means that the large housebuilding nent of every economy and can be used as plants have stopped manufacturing prefabs. a motive force of the economic develop- They still have their output capacity of over ment during transition. This calls for inte- 100,000 prefab houses annually, but it is grating the housing policy with the countrys idle. No alternative has been found so far overall economic policy. for transforming them into a new type of - Housing policy should enable the housebuilding facility. No new industrial- balance between economic effectiveness ized technology has been introduced. The and social justice. In other words, it should present technological level of housing con- provide protection to marginal and vulner- struction can be compared to that of half a able groups, guaranteed effectiveness and century ago. competition among construction compa- Direct housing subsidies were abol- nies, state control for maintaining economi- ished in 1990. There have remained only cally objective and affordable prices of some provisional modifications of housing sites, credits, building material and con- subsidy covering the price difference of struction. houses for non-compensated owners of na- - Housing policy should guarantee the Housing construction is tionalized estates, for the National Com- diversity of forms of ownership, their sta- pensation Fund, and for overdue munici- bility, availability and affordability. a factor of economic pal loans. stabilization - Housing policy should help mobilize No reforms have been implemented both public and private resources, combin- in the field of housing taxation yet. The ing them with subsidies. key inherited form of taxation is the tax on buildings based on the tax valuation of the - Housing market is a unity of the dwelling. Usually it is much lower than its markets of land, credits and housing. The market value. The new tax (1996) essen- state should make it attractive to investors. tially changed the taxation of dwellings

68 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 - The dwelling is a national wealth providing an adequate reserve fund to ac- which must be preserved for the genera- commodate the homeless. tions to come. That is why sustainability should be an invariable component of ev- 2. Prevent the loss of housing fund due ery housing policy. to inadequate maintenance. Most owners of houses need support. The granting of indi- In view of these formulations and of rect subsidies in the form of tax reliefs would the housing sector deformations the follow- help allocate sizeable resources for repairs The housing policy ing goals of the national housing policy can and improvements. A strict legal regulation demands clear-cut be formulated: of owners obligations is also needed. goals 1. To overcome quantitative deffici- 3. Prevent the usage of housing for encies in housing consumption, reaching non-housing purposes. The municipal mo- average European indices of 400-410 stan- nopoly in the construction permit regime dard dwellings per 1000. should become an effective tool in the natural transformation of funds in the city cen- 2. The updating and reconstruction of ters, but not at the expense of the housing the housing funds should be regarded as a fund. Its losses should be compensated. major reserve for attaining strategic goals. Figure 5.3. 3. To develop a housing market serving a mass solvency. Who should provide the housing (June 1995, in %)

4. To improve the housing fund structure so that the correlation between privately-owned and rented housing changes from 90:10 to 70:30.

We must admit that in the conditions of present-day shortages, the goal to create a true housing market cannot be attained. The private markets possibility to provide the mass form of housing is and will remain very limited for long. This means that Bulgaria urgently needs state- regulated housing policy and public-owned dwellings. Such approach would correspond to the mass attitude in society. 4. Ensure the raising of new affordable dwellings. New construction on a mass Most people have urgent housing scale on state subsidies is impossible in the needs that demand timely, concrete and present conditions. Given the low purchas- feasible measures. ing power, the balance between demand 1. Help the homeless and vulnerable. and supply is achieved at levels well below The most adequate measure is to introduce the construction value of new housing. Sup- a system of housing allowances, as well as porting self-construction at adequate localities is a feasible and effective solution.

SETTLEMENT NETWORK, SETTLEMENTS AND HOUSING POLICY 69 REGIONAL SPECIFICITIES OF 6 EMPLOYMENT AND UNEMPLOYMENT

6.1. Trends in the regional - A high unemployment rate has con- Imbalance in the employment policy tinued; regional labour - There are structural imbalances be- markets During the period of centralized plan- tween the supply and demand of labour; ning regionalism was an important element of administration. One of the objectives of - The passive policy with respect to the economic and social policy pursued in employment and unemployment has pre- the regions was to maintain full employ- dominated. ment of the able-bodied population. The These negative general trends are political centre determined the production manifest to a varied extent on the regional specialization by means of budgetary sub- labour markets: sidies and preferences as regards taxation and prices. It secured relatively full em- Table 6.1. ployment and guaranteed, though low, in- State of the regional labour markets in October 1995 comes. The production specialization en- forced, reproduced regional and settlement Regions Able-bodied Employed Unemployed People outside differences in the quantiative and qualitative parameters of manpower resources. population the manpower

Regionalism in the economic policy Total 100.0 100.0 100.0 100.0 affected the entire chain of reproduction Sofia city 14.5 16.7 6.9 13.6 of the manpower resources. Regional pref- Bourgas 9.9 10.0 10.4 9.7 erences were used in the education and training of manpower and in the forma- Varna 10.7 10.9 10.9 10.4 tion of wages and salaries. Additional in- Lovech 12.1 11.6 12.3 12.5 centives were secured for a territorial mo- Montana 7.5 6.1 10.3 8.4 bility of manpower. The economic priori- Plovdiv 14.3 14.4 14.3 14.3 ties on a regional scale were combined with Rousse 9.0 8.7 10.5 9.1 efforts to level out the social development of settlements. In many cases the effects of Sofia 11.5 11.2 13.5 11.4 this policy were, however, detrimental to Haskovo 10.5 10.4 10.9 10.6 the economic efficiency.

During the past five years the development of the regional labour markets has The state of the labour markets calls also had some general characteristics: for a reassessment of the labour policy pursued in the modelling of the economic - Decrease of population and particu- reforms. The extremes in the overall and larly of the able-bodied population; in the regional economic policy have to be reconsidered. A balance between them - An enduring imbalance has become should be sought, which would make it established in the regional labour markets possible to step up the economic and so- owing to the supply considerably exceed- cial reforms and to reduce their social costs. ing the demand of labour;

REGIONAL SPECIFICITIES OF EMPLOYMENT AND UNEMPLOYMENT 71 6.2. Regional differences in the Regionally, the rate of employment employment rate has been affected by the overall economic and social environment in which the labour markets have been developing. The geo- In Bulgaria the reforms set off with graphical features and natural resources of the radical elimination of the regional dif- the territorial systems of settlements stand ferences in prices, taxes and subsidies from out predetermining to a high extent the the budget. Placed in conditions of a sharp production structure of the economic ac- transition from centralized administration tivity as well as its branch specificities. The to economic liberalization, the individual natural conditions determine, for instance, regions adapted to varied extents to the one or another rate of labour intensity in local economic conditions. That painful agricultural production and the differences process negatively affected the regional de- in the demand for labour. The nature of velopment of the labour resources. Against the tourist services and of farm work pre- the background of the drastic drop of em- conditions seasonal employment and latent ployment in the country by 37.7 per cent in seasonal unemployment. the 1989-1994 period, the regional decline of employment singnificantly varied. Stand- The demographic features of the re- ing out at the one pole was the region of gions and the quantitative and qualitative Haskovo, where the drop of employment characteristics of the labour resources in was the highest. At the other pole was the terms of sex, age and ethnic background city of Sofia, where an increase in employ- also determine the specificities in the sup- ment was registered. ply of labour. There is a high concentra- Figure 6.1. tion of able-bodied population in the city of Sofia, in the Plovdiv and Sofia regions. Changes in the coefficients of economic activity and In other regions like those of Montana and employment in the 1993-1995 period by regions 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 What has been common to all regions cent respectively of the jobless in the coun- has been the drop in the economic activity try. The relative share of the unemployed of the population. In the region of Haskovo is the smallest in the capital city. But the it was by 7.1 per cent, of Bourgas - by 5.8 decline of the labour force is likewise the per cent and of Lovech by 4.5 per cent, highest in the capital and in the region of while the average for the country was 3.3 Plovdiv. The explanation of these regional per cent in the 1993-1995 period. states of employment and unemployment should be sought in the economic factors

72 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 shaping employment and the labour mar- Investment activity for the country as kets prior to and during the period of tran- a whole continues to be low and has been sition. one of the key factors of economic stagnation. On a regional scale, the capital city No doubt, of top importance from has been the region with the biggest invest- among the economic factors, determining ments, followed by the regions of Plovdiv the regional labour markets, has been the and Varna. The structure of investments There are sructural structural factor. It shapes the production according to forms of ownership of the character of a region and determines the enterprises for the country as well as by causes of regional demands for manpower. The domestic spe- regions has shown that the investments in unemployment cialization of Bulgarias economy was state enterprises have been the main invest- strongly dependent on specialization within ments made in the economy. There has the framework of the Council of Mutual been a very small share of investments in Economic Assistance. Individual regions private and cooperative enterprises. were centres of specialized industries. Me- chanical engineering dominated in the re- Private investments have been of in- gions of Lovech, Varna, Plovdiv, Haskovo dubitable importance for encouraging em- and Sofia, the latter accounting for about ployment and reducing the unemployment 14% of its output. The electrical engineer- rate. So far, however, the rates of private ing and electronic industry was concen- sectors growth have not helped it become trated in Sofia (21%), the regions of Lovech a compensating factor with regard to the (20%) and Plovdiv (14%). The region of drastic drop of employment in the state Bourgas was the centre of the chemical sector. In the 1992-1994 period, the num- industry (48.5%). The textile industry ber of private firms in the country had in- dominated the production structure of the creased almost 2.5 times over. The private Haskovo (17.7%) and Lovech (16.4%) re- investors prefer to open firms in the big gions. The food and beverages industry cities. The city of Sofia has the highest num- centred in Sofia (21%), the regions of ber of private companies (30 664), followed Plovdiv (15.2%), Varna and Lovech and by Plovdiv (27 707), and Varna (21 081), Haskovo (11% each). while Montana has the smallest. The growing share of the profitable private firms In these structural conditions, employ- from 61.7% in 1992 to 73.5% in 1994 comes ment changed on a regional scale depend- to show the trends of stabilization and de- ing on the extent to which a certain market velopment of that sector. This has been a of products had collapsed. Several regional precondition for certain optimistic expec- labour markets have an excess of skilled tations as regards its role in the provision manpower, employed formerly in the sec- of new jobs. But private capital began to tors of electronics and mechanical engi- develop in the sector of trade, accounting neering, in which Bulgaria had specialized for 64 per cent of all private companies in within the CMEA. The unemployment rate 1992, and it continued to be leading in that among the highly skilled manpower of these sector of the economy (70% of the net The private sector does regions was particularly high in the early value of revenues from sales). This trend not make up for the years of the transition to a market economy. does not correspond to the anticipated The disintegration of the food and bever- growth of private capital investments in reduced employment in ages industry and agriculture affected the industry and the provision of new jobs, so state-owned enterprises livelihood of approximately one-fifth of the that a breakthrough could be achieved in able-bodied population. Economic imbal- coping with unemployment. ances and social problems emerged. Large groups of the ethnic minorities in the coun- The problem has not rested solely in try lost their jobs. the quantity of investment and the growth of the private sector. The main problem concerns the development of a stable and

REGIONAL SPECIFICITIES OF EMPLOYMENT AND UNEMPLOYMENT 73 efficient private sector. In this respect there continuing economic stagnation, as well as is a need of streamlining the labour mar- of the inconsistency and contradictions of ket to the provision of greater possibilities the economic reforms carried through. for the private entrepreneurs to improve their managerial skills. Such a programme The result has been a growing disap- could be successful in the region of Mon- pointment of the population in the prospects of economic life and a drop in the The distrust in the tana, where the share of profitable private companies at the end of 1994 was the low- confidence in the institutionalized labour labour market has been est - 66.0% of all private companies. Ex- market. Long term unemployment, tempo- growing perience could be exchanged whit compa- rary employment without a formal job reg- nies from Pleven, where the share of prof- istration, and involvement in illegal eco- itable companies is the highest - 79.4% of nomic activities have been growing. The all private companies. decline of economic activity in individual regions has reflected the complexity of the The social policy pursued in a spirit of unresolved problems of the sectoral restruc- the centrally planned economy and of the turing of economy. This is more specifi- ideology of general prosperity whereby cally valid for the problems of the incom- there was levelling out in labour and dis- plete agricultural reform and for the col- tribution, resulted in the effects of slack- lapse of some agricultural branches like ening on a regional scale. Their direct tobacco production. The inflexible policy source was the centralization of profit and in the restructuring of the mechanical en- its redistribution via the budgetary system. gineering industry after the disintegration The market should operate in such a way of the CMEA has had its adverse effects that the mechanisms of distribution could as is the case with the region of Lovech. motivate the producers to increase their profits and to reinvest in industries and in According to statistics provided by the the infrastructure. regional labour markets, the employment coefficient dropped from 43.5 to 41.8 in the 1993-1995 period. Adverse changes set 6.3. Characterization of the in in the ranking of the regions as a result regional labour markets of the dropping rate of employment. In September 1993, the employment coeffi- The lasting decline in the populations cient in the regions of the city of Sofia, economic activity from 55.4% in Septem- Haskovo, Varna and Bourgas was higher ber 1993 to 51.5% in October 1995 had than the average for the country. The low- specific manifestations in the regions. The est employment coefficient was registered economic activity was lower than the aver- in the region of Rousse. In March 1995, age in the regions of North Bulgaria - only two regions had an employment coef- Montana, Lovech, Rousse. The region of ficient higher than the average for the coun- Plovdiv had a coefficient of economic ac- try - the city of Sofia and the region of Sofia. tivity equal to the average for the country. The rest of the regions had a rate of em- There was higher than the average eco- ployment lower than the average. The low- nomic activity for the country in the city of est rate of employment was in the region Sofia, in the regions of Bourgas, Varna and of Montana. Sofia. In October 1993 the economic ac- Against the background of the high tivity in the Haskovo region had a coeffi- overall unemployment rate maintained in cient higher than the average for the coun- the country in the period between 1992 and try, while in October 1995 it was already 1995, the share of the individual labour below the average. markets in the overall unemployment rate The decline in the populations eco- has presented substantial differences. nomic activity has been a reflection of the

74 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 In October 1995, the region of Mon- term unemployment rate is the lowest. The tana had the highest rate of unemployment capital city and Varna are the most prom- followed by the region of Rousse and the ising in view of finding employment. This region of Sofia. A comparison of this rank- Figure 6.2. ing of data from September 1993 points to stability of the unemployment rate of the Structure of unemployment by regions - September 1993 regional labour markets. (countrywide unemployment = 100)

The differences in the rate of unemployment, particularly critical in some settlements, are determined by the scale and concentration of the former economic structures and by the specific way in which they have disintegrated under the new economic conditions. The abolition of the cooperative farms and the restoration of the right to ownership of agricultural land have also exerted certain influence. Due to the varied degree whereby the individual settlements, regions, municipalities and areas had been affected by the introduction of Figure 6.3. economic reforms, their inequality in terms of employment and unemployment, and in Structure of unemployment by regions - October 1995 terms of living standards of the socially (countrywide unemployment = 100) weak groups as well as of some ethnic minorities, has increased.

Whereas the average rate of unemployment was 21.4 per cent in September 1993, 15 out of all the 28 regions in the country had higher than the average unemployment. In October 1995, when the average rate of unemployment was 14.7 per cent, the number of regions with higher than average rate of unemployment was already 19.

In the conditions of transition, unem- A. Sofia city B. Bourgas C. Varna ployment has been made necessssary for D. Lovech E. Montana F. Plovdiv G. Rousse H. Sofia I. Haskovo the elimination of the imbalances of the inefficient full employment by the restructuring of production and technological relations, of the domestic and international has been borne out by the employment and markets. When the economic reforms un- unemployment rates monitored in view of dertaken are not strategically streamlined, the causes whereby part of the labour force when they do not proceed in a compre- has remained unemployed. Long-term hensive way and at the necessary rate, un- unemployment is the employment increasingly becomes long- Staff reduction has been the basic term. The data in the figure illustrate the source of unemployment in the country ac- fundamental problem importance of the problem: counting for 66.3% of all unemployed in of the regional labour the region of Rousse and 49.1% in the The city of Sofia and the Varna re- Haskovo region in October 1995. What is markets gion are the two regions in which the long- typical of the city of Sofia, the Bourgas,

REGIONAL SPECIFICITIES OF EMPLOYMENT AND UNEMPLOYMENT 75 Plovdiv and Rousse regions is also the large is needed for the reduction of long-term proportion of unemployed who are school unemployment and for the provision of al- graduates or who have completed their ternative opportunities for employment.

Box 6.1. Presented by the registered unoccupied jobs, the search for employment ac- Settlements with a critically high rate of unemployment cording to regions points to moderate dy- According to statistics gathered gion; Loznitsa - Rousse region; namics far below the level of the manpower by the monthly registration at the Nevestino - Sofia region; discharged. This is the key imbalance of employment offices, the follow- - unemployment rate between the regional labour markets. Current ob- ing settlements had a particularly 20% and 30% was registered in servations of vacancies jobs show that in high rate of unemployment in Souvorovo, Dolni Chiflik, Dul- their structure by regions, the relative share August 1995: gopol, Venets - Varna region; of jobs offered is the highest in the capital - above 40% was the rate of un- Zlataritsa - Lovech region; city. The regions in which the unemploy- employment in Samouil - region Belogradchik, Byala Slatina, ment rate is the highest are also the regions of Rousse; Oryahovo - Montana region; with the lowest rate of offering of jobs. This - between 30% and 40% was the Sadovo, Devina, Zlatograd - comes to show that the source of unem- unemployment rate in Kaolino- Plovdiv region; Isperih, Tsar ployment has been the stagnating economy vo, Varna region; Ougurchin - Kaloyan, Omourtag - Rousse on a regional scale. New trends in the de- Lovech region; in Yakimovo, region; Gurmen, Belitsa - Sofia velopment of unemployment are, however, Dimovo, Rouzhintsi, Koula, region; Harmanli, Bratya Daska- also taking shape. The structural imbal- Boinitsa, Medkovets - Montana lovi, Mineralni Bani - Haskovo ances increase in the labour market of region; in Banite - Plovdiv re- region. labour. This is an indicator of the shift of emphasis in the policy of the labour market from the opening of new jobs to the Private employers on service in the army. Statistics indicate that qualitative balancing of the available jobs the policy with respect to employment and and manpower. the regional labour unemployment applied so far has not The establishment of an effectively markets yielded the desired results. Urgent action operating labour market in the country pre- supposes the existence of well functioning Table 6.2. regional labour markets, which promptly and adequately react to the continuously Duration of unemployment by October 1995 (%) changing economic and social environment. One of the indicators of adaptability Regions Less than 1-5 months 6-11 months More than of the market to the new conditions is the 1 month one year diversity in the status of those employed. Data of studies on employment and unem- Total for the ployment have shown that as a whole the country 2.8 20.0 11.0 65.6 labour market is slowly getting out of the Sofia city 4.0 22.7 14.3 59.0 stereotype of the centralized control of Bourgas 3.7 26.8 9.9 58.5 manpower resources. Five years after the start of the economic reforms, nearly 90% Varna 4.0 24.5 12.4 58.3 of the labour force is hired labour. About Lovech 2.6 20.1 12.7 64.1 73% are employed in the state sector. For Montana 0.9 16.1 9.5 72.2 the time being, the countrys labour mar- Plovdiv 3.4 16.6 9.5 71.4 ket is making its first toddling steps as re- Rousse 2.1 17.7 10.4 68.8 gards the presence of private employers and self-employed individuals. The causes Sofia 2.1 16.0 11.2 70.7 of this are mostly hitched to the unresolved Haskovo 2.8 23.9 10.4 62.6 problems of privatization of fixed capital, of investments and the legislative stipula-

76 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 tions and incentives for the development of the education and training of the unem- of big and medium-sized business in the ployed and their subsequent enlistment in country, of tax preferences granted to petty employment should be of primary impor- producers. Box 6.2. Four regions have registered a relative share of private employers and self- How do the unemployed look for employment? employed individuals above the average For the time being the forms in arranging meetings with em- rate for the country, namely the regions of preferred in the search for employers, in publishing or re- Rousse, Bourgas, Plovdiv and Haskovo. In ployment have been registration sponding to advertisements is a these regions the share of unpaid family at the employment offices and less common practice. The workers is also the highest. The develop- applying for assistance to behaviour of the unemployed is ing private business, however, has mostly friends and relatives. The regis- an implication of distrust in the had one-man character and has not pro- tration in the employment of- market forms of the demand vided many jobs. The relative share of those fices ensues from the legislative and supply of labour. This employed in it is even below the average regulations for receiving unem- prompts whereto the efforts in for the country. The private business in ployment benefits, social assis- the employment policy should Sofia is totally different. The relative share tance, enrollment in retraining be directed. A more stringent of hired labour is the highest in the capital. courses, and the like, but it is a legislative regulation and moni- Overwhelming on all regional labour less reliable source of getting a toring of the abidance by the markets is still the share of those employed job. The behaviour in the search stipulations of the law in the em- in the state sector. The state is still the ba- for employment is more often ployment should no longer be sic employer and its behaviour has been passive; the personal initiative delayed. determining in the balance of the labour market. Table 6.3. A concentration of population with higher education in the capital and a high Dynamics of unoccupied jobs (%) share of people with primary, elementary and unfinished elementary education takes Regions 1991 1992 1993 1994 1995 shape according to the educational standards in the regions of Rousse - 54.4%, Total 100.0 100.0 100.0 100.0 100.0 Montana - 53.4%, Bourgas - 52.4%, Sofia Sofia city 28.3 27.7 21.3 17.3 28.5 - 52.3%. That potential in terms of education is not a good base for prompt voca- Bourgas 8.3 7.1 7.2 10.4 6.6 tional and professional response to the dy- Varna 10.7 10.4 13.3 10.0 10.3 namically changing economic environment. Lovech 7.5 8.4 7.6 7.0 5.9 The situation of the unemployed is made Montana 6.1 6.2 5.5 5.0 4.9 even more difficult by their slow adaptabil- Plovdiv 11.1 10.7 12.7 11.4 9.8 ity, engendered by the low level of their education. In regions where unemployment Rousse 5.8 5.5 6.6 6.3 3.3 continues to be high for a long period of Sofia 10.4 12.1 13.3 15.9 17.1 time, the share of unemployed with low Haskovo 11.1 11.0 11.7 16.3 13.1 educational level is the greatest. In the region of Rousse, 53.0% of the unemployed have elementary or lower education. In the tance in the labour policy of some settle- region of Haskovo they account for 49.3% ments. In other regions, the problems of Low educational of the unemployed. In Sofia the unemploy- the rechannelling of the highly skilled standards hamper ment is one of the lowest with the highest labour force and its reintegration in em- adaptation to the share of unemployed university graduates. ployment should have priority. This fact comes to show that the problems changing labour market

REGIONAL SPECIFICITIES OF EMPLOYMENT AND UNEMPLOYMENT 77 6.4. Sex, age and ethnic differences - The coefficient of economic activity of the regional labour markets of women (47.1) is much lower that that of men (56.2);

Women predominate among the able- - The coefficient of employment of bodied population. Their share in employ- women (40.0) is much lower that that of ment during the past two years has shown men (48.1); a stable level of about 46%. In individual regions, this relative share ranges between - The coefficient of unemployment 45 and 49 per cent. The indices of the rela- among women (15.0) is higher that that tive share of women of the unemployed among men (14.4). (48.1% in October 1995) as well as of the The highest relative share of the un- people outside the labour force (56-57%) employed women is in the regions of have also been stable. In the region of Plovdiv - 14.7% and Sofia - 13.3%. Varna, the share of women in the overall unemployment is more than half - 52 per Youth unemployment has its highest cent. The greater part of the unemployed share in the region of Plovdiv - 15.9% of entitled to unemployment benefits in all all unemployed young people, in the re- spheres are women - 57.6% on the aver- gion of Sofia - 13.6% and the region of age for the country. Haskovo - 12.3%. An analysis of the group Box 6.3. of unemployed, receiving social welfare benefits has shown that the relative share Economic causes underlying the high unemployment of young people among them is 93.6%. of some ethnic groups The ethnic groups make up 14.6% of The changes have greatly af- cil for Mutual Economic Assis- the countrys population. The share of the fected the sectors and manufac- tance. The liquidation of the co- Turkish ethnic group (9.4%) and of the turing lines employing labour operative farms and the collapse Gypsy ethnic group (3.6%) is the largest. from the Gypsy and Turkish eth- in agriculture engendered mass From the point of view of quantity, the nic groups. These are the sub- unemployment among the popu- labour force of the ethnic groups does not sidiary production lines of me- lation of the Turkish ethnic present any substantial problem to the chanical engineering, the textile, group, employed in the tobacco labour market. The problems ensue from tailoring and shoe-making indus- industry, and of the Gypsies, who the concentration of that labour force in tries, developed in small settle- earned their living by farming. individual towns and villages. Typically that ments with the purpose of pro- In this way the economic break- labour force was employed in industries, viding livelihood to the popula- down tangibly affected the work greatly affected by the restructuring of the tion. Their close-down was one force of these two ethnic groups. economy and the subsequent high unem- of the first steps taken by the Their limited opportunities of ployment. What characterizes this part of enterprises at the beginning of self-employment have made the countrys labour resources is their slow the economic crisis in 1990. The them a permanent contingent of adaptation to the new conditions, owing to canning and the tobacco indus- the labour markets. After the ex- their comparatively unfavourable quality. try, where workers of Turkish or piry of the period of unemploy- These problems give rise to latent discrimi- Gypsy origin predominated, ment benefits provided for by the nation of ethnic groups on the labour mar- were also affected by the dwin- laws, they pass into the group of kets. This can become the source of social dling of the external markets due the socially weak, supported by tensions. to the disintegration of the Coun- the state via social benefits. In the conditions of centralized economy, the state pursued a paternalistic The involvement of men and women policy with respect to the employment of in the labour markets has the following some ethnic groups. That is why the specific features in October 1995: changes in the states socio-economic function and its giving up the policy of full em-

78 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 ployment has affected particularly strongly 4. The unemployment is the highest these groups of the labour force. among the Gypsy population - 17.3%, with variants from 21.2% (Rousse region) to The problems of unemployment of 13.9% (the city of Sofia). The labour force ethnic groups have been looming large in of the Turkish ethnic group has a coeffi- the following settlements: cient of unemployment of 12.3% on the - municipalities with predominant average. There are ethnic population of the Turkish ethnic group and 5. There is no sharp differentiation by differences in the with high rate of unemployment like the sex of the unemployed and of the economi- labour market Isperih municipality - 32%, the Ardino cally inactive population for the individual municipality - 21.5%, the Kirkovo munici- ethnic groups. The adverse after-effects of pality - 20.2%, the Razgrad municipality - the economic changes concern the two 17.1%, the Kurdjali municipality - 12.2%; sexes equally.

- municipalities with a large share of 6. What characterizes the unemploy- Gypsy population like the Stolipinovo resi- ment in terms of ethnic background and dential district in Plovdiv, the residential age is that in all ethnic groups, the share of districts of Lyulin and Filipovtsi in Sofia, the unemployed aged between 20 and 29 the towns of Pazardjik, Stara Zagora, is the highest. This inference holds good Harmanli, Kazanluk, Ihtiman and Blagoev- for the country as well as for the regions grad. without exception.

Census data show that in terms of eco- 7. The situation of the ethnic groups nomic activity, employment and unemploy- on the labour market is complicated by the ment of the ethnic groups, the individual significant differences in their quality char- regions have the following specific features: acteristics. The problems affecting the 1. The economic activity of the Turk- Gypsies and most of the Turks are particu- ish ethnic group is the highest as a total for larly complex. The introduction of special the country (49.3%), as well as in all the educational and qualification programmes nine regions of the country. The economic for the ethnic groups, which could ease their activity of the Gypsy population is the low- problems on the labour market started with est - 44.1% for the country as a whole. In great delay. the region of Varna, where the relative 8. An assessment can be made of the share of Gypsies is the highest, the coeffi- quality characteristics of the unemployed cient of their economic activity is the low- of the ethnic groups by the census data from est - 42.8%; the end of 1992. Out of all unemployed 2. The coefficients of the economically with primary or lower education in the re- inactive population bring to the fore the gion of Rousse, at the time of the census Gypsies again with the highest figure 55.4% were of the Turkish ethnic group. (55.9%). In individual regions it is even In the region of Haskovo that share was higher - 58.4% in the Lovech region and 41.3%, in the Lovech region - 22.3%, in 57.2% in the Varna region. the Plovdiv region - 20.3%. The Gypsy population accounts for 17.8 per cent of 3. The Gypsies have the lowest coeffi- the group of unemployed with primary or cient of employment (26.8%). In the re- lower education in the country and respec- gions where the Gypsy population has the tively for 24.2 % of that group in the re- highest relative share of the total popula- gion of Varna, 28.8% in the region of tion this coefficient is as follows: 26.2% for Montana, 18.1% in the region of Bourgas, the Varna region; 25.3% for the Lovech 18.8% in the region of Haskovo. region; 24.5% for the Rousse region and 23.6% for the Sofia region.

REGIONAL SPECIFICITIES OF EMPLOYMENT AND UNEMPLOYMENT 79 The analysis of the regional labour Within the frameworks of these spe- markets from the point of view of sex, age cific features of the policy pursued in the and ethnic characteristics of these supply- sphere of labour relations, its regionali- ing manpower, brings out the specific fea- zation has been weak. In the long run, too, tures of the labour market in individual re- the regional aspects of the labour markets gions. These are the complexity of the prob- will be treated within the framework of the The labour market lems of the labour market in the region of general problems. The strategy of the Plovdiv, the need of a more active policy labour market, elaborated by the Ministry policy is most effective concerning entrepreneurship in the Has- of Labour and Social Welfare (MLSW), on the municipal level kovo and Varna regions, as well as more specifies the priorities of the policy in active policies of reintegration of the young labour relations as follows: unemployment, people and the ethnic groups into the restructuring of the economy, legislation. labour market. The inferences proceeding Within the context of these goals and of from these data are related above all with the means of their attainment, the regionali- the mechanisms of labour market policy. zation of the policy finds an outlet in indi- They should be designed in such a manner vidual programmes. An important element as to stimulate the solution of specific in the enhancement of the regional ap- labour problems on local administrative proach to the labour policy is the overcom- level. It is at that level that the state of in- ing of the isolation of the bodies of local dividual groups can be registered most pre- self-government and of the local adminis- cisely in the total unemployment and flex- tration existing so far. For the time being ible countermeasures can be taken in the they have not been bound by the legisla- specific situation. The government should tion with any obligations in the sphere of provide recommendations to the local ad- the labour market policy. That is why the ministrations as to how to act in the pres- strategy of the MLSW concerning the ence of a specific labour problems. labour market explicitly states the need of involving the municipalities for joint actions 6.5. Effectiveness of the regional with the offices on employment. labour market policy The strategy worked out in 1995 by the MLSW concerning the labour market, The policy pursued with respect to which has been coordinated with the employment and unemployment in the Governments investment programme, en- 1989-1995 period underwent an evolution. visages several programmes aimed at open- What best characterized it at the beginning ing jobs and encouraging employment. The of the period was that it followed in the regionalization of the labour policy is also wake of the phenomena, reacting to the pursued within their frameworks. These are changes that had set in. That meant mostly programmes for temporary employment, the registration of the unemployed and the for youth employment and for the social payment of unemployment benefits. More welfare of the employed. vigorous activities have begun since 1992 The specific regional programmes are aimed at directing the policy pursued to Towards a those of eliminating illiteracy, of training the protection of employment via the work- and employment, involving the Gypsy mi- regionalization of the ing out and implementing programmes for nority and applied in Pazardjik and in the making the two sides of the labour market labour market policy Stolipinovo residential district in Plovdiv. more active. The employers have been en- Their spread to other regions is forthcom- couraged to provide jobs and to employ ing. labour. Those supplying labour have taken an orientation to a greater initiative on the The working out of regional program- labour market. mes for a mobility of labour during the restructuring of the economy has been en-

80 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 visaged. In this context the work of the 6.6. Prospects of employment and business consultations centre in Blagoev- unemployment on a regional grad and the business incubator in scale Lovech, opened within the frameworks of the programmes aimed at making the ser- The assessment of the variants in the vices of the labour market more accessible development of the countrys labour mar- with the help of the Know-How Fund, have kets proceeds from the continuing uncer- Vagueness of the been a promising beginning. tainty of economic development over the prospects of the labour The establishment of clubs of special- medium and the long term. The multiple market ists with the offices on employment in variants of economic development can be Razlog, Razgrad and Pazardjik to provide tentatively summarized along two lines: motivation to people with higher and sec- According to variant A, moderately ondary education to look for job or to start sustainable economic development can be independent economic activities are also provided with a further improvement of the regional initiatives aimed at curtailing un- economic parameters, stabilization and employment. Meetings are organized be- moderate growth. Under such a variant, the tween employers and unemployed, as are problems of the regional labour markets consultations for unemployed wishing to will be focused on the working out an ef- start up their own business. The establish- fective application of measures, associated ment of a job club with the employment with more vigorous structural and techno- office in Varna aims at encouraging the un- logical changes in the economy. This im- employed to look for employment. Two plies the direction of the efforts to the re- teams of consultants are working in Sofia structuring of the quality parameters of the and Montana, which train persons wishing labour force via varied programmes of edu- to start their own business. The financing cation and vocational training. of their activity is along the lines of the PHARE international programme. A Variant B assumes a wavering eco- programme for a transition from the status nomic growth, more unstable economic of socially weak to that of employed people development with declines and stabiliza- has been experimented since 1995 in tions, more imbalanced development of the Haskovo, Vidin, Lom and Isperih. labour market. Under such a variant, the policy of the labour markets will preserve The basic problems in the develop- its present character of combining passive ment of the regional labour markets stem and active measures. Depending on the from the financial restrictions imposed by period of economic cycle, the ones or the the centralized budgetary means, assigned others will have priority. This is a more to the regions. At the same time, the local unvafourable variant for the development bodies of economic management are of the labour resources, because it assumes mostly passive and display a lack of inter- that part of them remain temporary out- est in independently taking up the solution side the labour market with all the nega- of the problems of employment and of un- tive economic, social and personal conse- employment. That is why the efforts over quences proceeding therefrom. the short, medium and long term should be aimed at granting greater independence The anticipated demographic influ- to the local bodies of economic manage- ences on the supply of labour both over a ment and at their encouragement to tackle medium and over the longer term, show a the labour problems on a regional scale. trend towards the declining supply of

REGIONAL SPECIFICITIES OF EMPLOYMENT AND UNEMPLOYMENT 81 labour owing to the unfavourable demo- intellectual labour will predominate; agrar- graphic indices in the natural growth rate ian regions where the demand for labour of the population. The age characteristics will be with specialization in agriculture; of the labour force will worsen. Changes labour markets with a more tangible pres- are also to be anticipated in the quality of ence of manpower from the ethnic minori- the manpower, which would be higher for ties; labour markets actively employing fe- the younger, while the adaptability to the male labour. From the point of view of the changes among the ageing labour force will specific features of these markets and the decrease. policy pursued in them, regional strategies should be elaborated of the labour policy. On a territorial scale, specific labour Reckoning with the complexity of the fac- markets will ever more clearly take shape tors affecting the labour market, it should in the future, following the requirements also map out the policies balancing the de- of the production in the settlements that is mand and supply of labour on the regional taking shape. Some of the frameworks of labour markets. this process can be outlined: regions where

82 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 THE DEMOGRAPHIC SITUATION: 7 PROBLEMS AND TRENDS

7.1. Marriages, birth rate and decade. At the same time a stabilization of death rate the biological balance has set in most West- ern European countries and there is even a small increase of the natural growth rate Bulgaria is one of the countries in there. Therefore, on that indicator Bulgaria Central and Eastern Europe with the most is not in line with the trends characterizing clearly noticeable demographic decline. the developed countries of Europe. This trend has been long-term. But during the past few years its negative features have Figure 7.1. become obvious in the basic demographic Marriage, birth and death rate per 1000 processes. of the population (1950-1995) The result of this demographic development and of the wave of emigration has been the substantial decrease of the countrys population. According to statistics provided by the census held on De- cember 4, 1992, it numbered 8 487 000 000, or by 462 000 less than the population during the 1985 census. Whereas in 1989, less than 8000 were needed for the nation to reach the 9th million, at the end of 1994, the countrys population was 8 427 000 000, or by 565 000 less than 9 million. This has been a demographic collapse unprec- edented in the history of the Bulgarian nation. The population density has dropped from 81 people per square kilometre in 1989 to 75.9 people in 1994.

What has been characteristic of the The depopulation is higher by several 1970s and 1980s was the increase of the times in the villages. It started there as early death rate and a drop of the birth rate. In as in the mid 1970s. In 1994 it amounted the late 1980s, the country was already com- to 10.4 per thousand. In the towns and cit- ing close to the point when the birth rate ies the depopulation became manifest in and the death rate became almost equal. 1994 amounting to 0.7 per mille. These dif- The nation is In 1990 the death rate already exceeded ferences can be explained with the pre- experiencing a the birth rate by 4 000 people, and the coun- dominance of aged people in the villages. try reached a state of depopulation. In 1991 There the birth rate is lower, while the demographic collapse, that imbalance already reached 14 000 death rate is twice as high as in the urban unknown in its history deaths more than births, which meant 1.6 centres. per thousand, while in 1994 this indicator In 1994 all regions of the country were was already calculated to reach 3.8 per in a state of depopulation. It varied from mille, or 32,000 people. These facts are in- 2.1 per mille in the region of Plovdiv to 9.0 dicative of the continuous depopulation per mille in the region of Montana. Be- starting from the beginning of the current sides Montana, the regions of Lovech and

THE DEMOGRAPHIC SITUATION: PROBLEMS AND TRENDS 83 Sofia also have depopulation above the cades. From among the member-countries average for the country. of the Council of Europe, only in Turkey Table 7.1. and in Hungary there is a lower average age at the conclusion of the first marriage Marriages, birth rate, death rate and natural growth per 1000 by women. A more tangible drop in the of the population in 1994 by regions (in %) early marriages (up to the age of 20) has been noticed among men, whereas among Marriage Birth rate Death rate Natural growth women it has been insignificant. This has been due to the change in the common Total for the country 4.5 9.4 13.2 -3.8 practice of the past for the rural men to marry older women. This change has been City of Sofia 5.2 8.6 11.5 -2.9 helped by the accelerated urbanization of Bourgas region 4.5 10.4 12.7 -2.3 the country after the Second World War. Varna region 4.7 10.1 12.6 -2.5 Now the main cluster of marriages of Lovech region 4.0 8.7 15.9 -7.2 women is in the age groups between 18 and Montana region 3.8 8.9 17.9 -9.0 22 years of age, whereas among the men it is between the ages of 20 and 26. Plovdiv region 4.5 9.6 11.7 -2.1 Rousse region 4.4 10.0 13.8 -3.8 Up to the Second World War there Sofia region 4.4 9.2 13.2 -4.0 was a slightly higher number of marriages in the villages. In 1994, the numbers of mar- Haskovo region 4.4 9.6 12.2 -2.6 riages were already 3.4 per thousand in the villages and 4.8 per thousand in the towns. In these critical conditions the institu- This difference has been the result of the tion of marriage has been the object of spe- decreasing young generations in the vil- cial concern on the part of society. Accord- lages. The lowest number of marriages has ing to the Bulgarian legislation, the lowest been registered in the region of Montana marriageable age is 18 years. A permit is and the region of Lovech. In these regions required for a marriage under that age. the decrease of the younger generations has During the past few years the share of these been most tangible and this has also reflected on the number of marriages. Box 7.1. Among the women as well as among Absolute and relative decrease of marriages the men, most of the marriages are con- cluded by those contracting a first marriage. Both the absolute and the rela- years, Bulgaria has had a stable In 1994, they accounted for 89.6 per cent tive drop of marriages began in number of marriages of between of the women and 88.2 per cent of the men. the late 1970s. Whereas in the 8 and 10 per thousand of the When compared with 1960, these values 1970s there were 70 000 mar- population. In the 1980s, it be- have increased insignificantly, and in com- riages a year, in 1991 their num- gan to decrease, reaching 7.0 parison with 1991 they are almost un- ber dropped to 49 000, and in per thousand in 1989, whereas changed. 1994 to 38,000. Excluding the during the past few years it has war periods and the demo- sharply decreased reaching 4.4 During the past two decades, there has graphic redress of the post-war per thousand in 1995. been a stable and relatively low rate of divorces in Bulgaria, namely less than 2 per thousand. With this rate of divorce, the country is close to most of the countries of marriages has been insignificant (less than South Europe, where the family institution 0.5 per cent). But Bulgaria is among the has been relatively stable. The main accu- European countries where early marriages mulations of divorces are at the beginning are typical. The average female age at the of married life up to the age of 30 or in the first marriage is 22 years. This has been a interval between 45 and 49 years of age. stable magnitude during the past two de-

84 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 Featuring in the first group are the marital 1975 period, where there was a relatively relations that had not been well considered high birth rate - 16-17 per thousand. The in advance and are dissolved. In the sec- rate of that contingent in 1994 was 47.9 ond group are families whose children have per thousand or by 1.5 points higher than already grown up. This makes possible the that in 1986, although it had been largely dissolution of unstable marriages. swept by emigration. That increase, however, did not bring about a higher birth rate. From among the reasons cited for the dissolution of marriages in 1994, most im- Box 7.2. portant has been the incompatibility of The birth rate has been decreasing characters (32.7 per cent) and unfaithful- ness (11.5 per cent). The share of dissolved rapidly and significantly marriages by mutual consent has been During the past decade the birth birth rate was noted in the steadily growing and reaching 23.7 per cent. rate has been continuously de- 1980s. Against this background, Up to the mid-1960s, the birth rate was creasing. Since 1990 it has not the low birth rate in Bulgaria higher in the villages than in the towns. been capable of securing a posi- cannot be explained or excused Then a decline of the birth rate in the vil- tive natural growth. In 1995 the by the world trends. Indicators lages began reaching 8.8 per thousand in birth rate reached the point of as the total coefficient of fertil- 1994 as against 9.7 per thousand in the 8.6 per thousand. Only a few ity (average number of children towns. This has been due to the acceler- countries of Southern Europe born by one woman during her ated aging of the rural population result- like Italy, Greece and Spain, as period of fertility), which in ing from migration. The fertility of the well as countries in transition 1994 was 1.37, as well as the net population, measured by the total coeffi- like Lithuania and Estonia have coefficient of reproduction (the cient of fertility, is higher in the villages had such a low birth rate among possibility of the girls born to (1.67) than in the towns (1.27). The lowest the member-countries of the live to reach the age of their birth rate for 1994 was registered for the Council of Europe. In most of mothers) amounting to 0.68 city of Sofia - 8.6 per thousand, followed the advanced countries an in- show divergence from the pre- by the region of Lovech - 8.7 per thousand crease or stabillization of the dominant trend in Europe. and the region of Montana - 8.9 per thousand.

Research of the reproductive beha- The curtailing of the active fertility viour does not lead to any optimistic con- period has been characteristic. At the be- clusions. The two-children model, charac- ginning of the century, a considerable pro- teristic of the country in the 1970s and the portion of the women bore children first half of the 1980s (2.08 desired chil- throughout their period of fertility. Now dren in 1985) was rapidly eroded. The chil- most of the births accumulate in the age dren desired by one woman in 1991 were groups from 15 to 24 years of age. In 1994 1.8. In reality, the figure reached 1.37 chil- the births of this age group of mothers ac- dren per woman in 1994. counted for 65.0 per cent of all live births, whereas in 1901-1905 that percentage was The low birth rate has Demographic, socio-economic, socio- 34.6. been due to a set of psychological and other factors influence the formation of the reproductive beha- Fertility also depends on the number demographic, economic of children born. Statistics point to a con- viour. The fundamental demographic fac- and cultural factors tors have already a negative effect on the tinuous increase of the births of a first child. birth rate. The number of marriages is The leap has been particularly big during steadily decreasing, adversely influencing the past three decades, when from 40.8 per the birth rate. The contingent of women in cent in 1960-1962, the percentage of these fertile age was expected to increase, be- births reached 54.1 in 1994. The births of cause after the middle of the 1980s it was a second child dropped from 38.6 of the joined by the generations born in the 1968- total number of child births in wedlock in

THE DEMOGRAPHIC SITUATION: PROBLEMS AND TRENDS 85 1963 to 33.5 per cent in 1994. The birth of relegate to the background the needs of a third child was stable within the range of having children and result in putting off, 16-17 per cent up to the early 1940s, when and to giving up the birth of the next child. that percentage began to decrease to reach The erosion of the multiple children, and 7.1 in 1994. The relative share of births of of the two children model, intensifies. The a fourth, and especially of a fifth and sixth contraction of marriage and the birth of child has tended to be continuously de- the first child are often delayed too long. creasing, which has been particularly clear The aims of the parents are mostly directed during the past three decades. to the search for ways for their own better self-realization and the provision of the The major socio-economic factors, de- conditions for their childrens better future, termining the decrease of the birth rate which limits their number in the families. in the conditions of transition, boil down to the following: The family business which could lead to a reproduction of the manpower needed - Drop in the real incomes of most of by the family, instead of hiring it on the the young families, a change in the struc- labour market, has not begun to operate ture of consumption, mostly directed to the yet. The interest in increasing the family is support of the family, and the rising costs expected to stabilize with the development of bringing up children; of private farming and private business. It - High rate of unemployment and should not be forgotten, however, that simi- vague prospects for the professional real- lar expectations failed to materialize in ization of a great number of young people; Hungary and in some countries of South- ern Europe. - Delay in the tackling of the living and social problems concerning young The rise of the death rate has reflected families, like the provision of housing, and unfavourably on the biological balance of the services provided to the families; the country. With certain vacillations, this trend has continued throughout the period Box 7.3. of the mid-1960s to date. The lowest death rate was registered in 1961 and 1964 - 7.9 Infant mortality is rising per thousand. In 1995 the death rate reached 13.6 per thousand. A share of this Registering a considerable de- Estonia and Lithuania among increase has been due to the aging of the crease from 138.9 per thousand the member-countries of the population. But this cannot give a full ex- live births in 1939 to 13.6 per Council of Europe. Only Tur- planation to the considerable rise of the thousand in 1988, infant key and Romania have consid- death rate. This has also been borne out mortanlity has tended to rise erably less favourable indices. by the standardized coefficients of death. during the past few years. In The most advanced countries Among the member-countries of the Coun- 1990 it was 14.8 per thousand, like Sweden, Switzerland, Den- cil of Europe, the death rate in Bulgaria is while in 1994 it was 16.3 per mark, Norway and the Nether- exceeded only by the death rates in Hun- thousand. In this indicator Bul- lands have about three times gary, Lithuania and Estonia. garia is almost on a par with lower infant mortality. After the Second World War, the main causes of death have changed, too. In the - Ambiguity in the system of assistance past, the main causes of death were pneu- to the families in the support, upbringing monia and tuberculosis, which ranked sec- and education of the children. ond and third as causes of death in the 1939-1949 period after the diseases of the Socio-psychological factors have also blood circulation organs. At that time, quite had quite a negative impact on the birth significant were also the deaths caused by rate under the conditions of transition. The acute infectious diseases, typhoid fever and hardships in the satisfaction of basic needs paratyphus, scarlet fever, malaria and epi-

86 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 demic typhus. During the past ten years, The problem of the death rate is also cardio-vascular diseases have become the topical from the point of view of attaining main causes of death in the country. a certain average future longevity. After the Throughout the past ten-year period they end of the Second World War and up to have accounted for more than 60 per cent the mid-1970s, Bulgaria had an increase of the lethal cases. Among them the share by 20 years of the average future longev- of deaths resulting from diseases of the Table 7.2. brain vessels and from ischaemia has been the highest. The causes of death next in Relative share of deaths due to basic socially significant importance have been malignant tumours, diseases (1985-1994, in %) traumas and intoxications and the diseases of the respiratory system. Causes 1985 1989 1994

The death rate among men is higher Total number of deaths 100.0 100.0 100.0 than that among women with cases of all Cardiovascular diseases 60.1 61.2 62.2 socially significant diseases. This difference is more than three times in the death rate Neoplasia 13.7 14.4 14.5 ensuing from traumas and intoxications and Diseases of the respiratory more than two times from diseases of the system 7.7 6.3 4.9 digestive system. Like in most of the Euro- Traumas and intoxications 5.3 5.3 5.2 pean countries, in Bulgaria, too, men are more susceptible to the main causes of Diseases of the digestive death. The ensuing result is an increase in system 3.1 3.2 3.2 the difference in the life expectancy of men Others 10.1 9.6 10.0 and women.

The types of settlement also exert an ity. This has been beyond any doubt a suc- influence on the total death rate and on cess of public health, particularly in the the deaths resulting from the main causes treatment of infectious diseases, the dis- of death. In 1994, the death rate in the vil- eases of the respiratory system and in the lages was 19.2 per thousand, or nearly twice drastic reduction of infant mortality. The as high as that in the urban centres, where opening of public health establishments, the it was 10.4 per thousand. In Bulgarian con- increase in the number of medical person- ditions, the death rate of all basic socially nel, the introduction of new medicines, the significant diseases is also higher in the vil- raising of the peoples educational stan- lages than in the towns. This difference is dards as well as the introduction of free particularly clear-cut in the diseases of the medical aid have played a positive role in respiratory system, as well as in the car- the reduction of the death rate and in pro- diovascular diseases. These differences are longing the life of the people. After the influenced both by living conditions in the expiry of that period, however, there has towns and villages, and by the higher health been though slight decrease of the average care standards and better health care se- future longevity of men and of women. In curity in the towns than in the villages. It 1994, the average longevity of future life should also be borne in mind that the rural was 67.2 years for men and 74.8 years for population is considerably older than the women. From among the member-coun- urban. The death rate is the highest in the tries of the Council of Europe, it is only in regions of Montana and Lovech. To some Bulgaria, Hungary and Poland, that there extent the high rate of death in these re- has been a trend towards the stabilization gions is due to the population that is well of the average future longevity. In the 1980s advanced in years. and particularly in the early 1990s, even a slight drop in that indicator has been noted in these countries. In the other European

THE DEMOGRAPHIC SITUATION: PROBLEMS AND TRENDS 87 countries there is not only an increase, but (18 per cent of the average annual popula- in individual cases (the Scandinavian coun- tion), gradually dropped to 2.3 per cent in tries and Switzerland) there is future lon- 1994. gevity by 5-6 years higher than that in Bul- garia. The data point to changes in the basic flows of migration. From the middle of the Table 7.3. 1980s, resettlement from one town to an- Migration flows (in %) other occupy a leading place in the flows of migration amounting to 38.9 per cent of Directions of periods the migrants in 1994. For the first time, migration 1966-1975 1976-1985 1986-1992 1994 resettlements from town to village ranked second. This comes to show that the process of leaving the urban centres which Total 100.0 100.0 100.0 100.0 started in the country in the 1970s is al- From town to town 30.2 38.3 44.7 38.9 ready underway and encompasses 24.3 per From town to village 9.9 13.3 17.7 24.2 cent of the migrant population within the From village to town 42.7 34.3 22.6 23.9 country. The migration flow from the villages to the towns, which was basic for the From village to village 17.2 14.1 13.0 13.0 entire period up to the mid-1970s, already ranks third, encompassing 23.9 per cent of The negative trends in the develop- the migrant population. The last place is ment of the death rate and the average fu- occupied by the migration flow between ture longevity observed during the past few villages (from one village to another), decades, have been exerting a grave im- which included 13% of the migrant popu- pact on the formation of the living and lation over the past decade. labour potential of the nation. The causes of the high death rate are multifaceted in The share of the urban population their nature. In the period of transition, the from the total number of population in drop in the living standards and the dete- Bulgaria was comparatively stable up to the rioration of nutrition, particularly in low- middle of the 1930s. Up untill that time income strata has had an adverse effect. about one-fifth of the population lived in Damage to the environment, as well as the towns. During the subsequent censuses distancing of the working environment taken, the relative share of the urban popu- from the optimum working conditions, lation steadily grew reaching 67.8 per cent which do not harm mans health also exert by the end of 1994. their influence. The social environment is Since the bulk of Bulgarias popula- also adverse, full of a great number of prob- tion lives in towns and cities, its develop- lems: from unemployment and poor living ment in terms of size is of special interest. conditions to the continuous violation of At the end of 1994, the city of Sofia had a mans psychological comfort by situations population of 1 164 000 people, showing of stress, typical of the crisis period. No an annual negative natural growth of about positive assessment can be given to the sys- 3 000 people for that year. But the capital tem of public health, which has not out- city has population, which is still, though grown the red tape and suffers from im- insignificantly, growing, owing to the posi- proper provision of the required material tive migration balance which is 5,800 base and medications. people.

From among the big cities with popu- 7.2. Migration and emigration lation exceeding 100 000 people, the following cities have positive natural growth The intensity of the internal migration, and positive migration balance: Plovdiv, particularly high in the 1956-1965 period Sliven, Stara Zagora and Bourgas. The cit-

88 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 ies of Pleven and Dobrich have a positive around Bolyarovo and Straldja. There is natural growth but a negative migration greater depopulation in a number of settle- balance, exceeding the natural growth and ments in Central North Bulgaria and in the resulting in a decrease of the population. region of the Central Balkan Range, like Ougurchin, Souhindol, Apriltsi, Sevlievo In Varna and Rousse, the population and others. There has been a positive natu- decreases both owing to the natural nega- ral growth in the regions of Smolyan, From intensive internal tive growth and as a result of the negative Kurdjali, Momchilgrad, as well as in the migration balance. This comes to show that settlements around Sliven, Kotel, Turgo- migration towards depopulation begins to be manifest not only vishte and most of the settlements in the intensive international in the villages and in the small towns, but Loudogorie area. also in some of the largest cities, where the migration age structure favours an increase in the The great internal mobility of the birth rate, while conditions from the point population, brought about during the fore- of view of public health care and reduc- going decades by the intensification of ag- tion of the death rate are better. The wan- riculture and by the development of indus- ing of the domestic migration processes try and the services, has evolved into a high limits the possibilities of growth of some intensity of the international migration of the big cities, which have started to lose during the past few years. Emigration has from their population, as well as from the very essential and direct aftereffects on the negative migration balance. population and the labour force. It has been the main factor leading the country to an One-third of the towns with popula- unheard-of demographic collapse, of which tion below 100 000 people lose from their it is hard to forecast when and how it would population both owing to the natural de- be surmounted. According to current development and the negative migration bal- mographic statistics, the number of emi- ance. Only 16.1 per cent of these towns grants in the 1989-1991 period was 406 000 show a population growth resulting from people. In 1992 alone they were 70 000. natural growth as well as from a positive This is a net loss of human and labour po- migration balance. The rest of the towns tential at the height of their working abil- of this group (25.8 per cent) have a nega- ity, and in whose physical growth as well tive natural growth and a positive migra- as in whose education and intellectual ad- tion balance. One-fifth of these towns mani- vancement great funds have been invested. fest a positive migration balance and a negative natural growth. As a whole, this The major part of the emigrating group of towns loses from its population population is of the age cohorts from 20 to both as a result of the negative natural 35 years of age. From among those who population dynamics and of the migration, emigrated in 1989, 35.9 per cent were of the bulk of which has during the past years this group, in 1990 - 44.7 per cent and in merged into the migration flow from 1991 - 34.2 per cent. What is noteworthy is towns to towns, or from the smaller towns that in 1990, when emigration among the to the bigger cities. Bulgarian population intensified, the share of young emigrants increased by about 9 Depopulation has particularly inten- points. This means still greater loss of hu- sified in some regions. These are centres man potential, bearing in mind the fact that of population in Northwestern Bulgaria, people of higher educational and qualifi- especially around Bregovo, Koula, Grama- cation standards emigrated. da, Dimovo, as well as in Central Western Bulgaria like Godech, Dragoman, Trun, The human potential that the country Zemen, Kocherinovo. The region of the loses by that huge wave of migration Strandja and Sakar also continues to be amounts to 19 628 000 life years, or an depopulated, especially the settlements average of 41 per person. The labour po-

THE DEMOGRAPHIC SITUATION: PROBLEMS AND TRENDS 89 tential of the emigrants amounts to 11 392 It may be assumed that emigration 000 working years, or an average of 24 from Bulgaria will gradually decrease. This years of working life. Predominant from trend has been obvious during the past few among those who have taken a firm deci- years, when emigrants have been about 30 sion to emigrate are young people. Most 000 people a year. The grounds for these of the potential emigrants are men. The forecasts are the prospects associated with highest share of potential emigrants con- the gradual sophistication and utilization sists of Turks, followed by Gypsies. Among of the available machinery in industry, the the Bulgarians, emigration is planned un- development of agriculture and of the food der certain conditions and for the future. processing and light industries related to Die-hard emigrants are mostly Turks this, the development of tourism and other from the villages. The overwhelming share sectors of the economy, for which Bulgaria of them have an educational standard lower has good conditions and traditions. A nec- than secondary education. essary condition for this development is the stepping up of the privatization and of the In the period of transition, accompa- structural reform. The international insti- nied with a high unemployment rate, soci- tutions, as well as the economically ad- ety shows an understanding to those emi- vanced countries have a stake in the accel- grating. This is assumed to be their human eration of the reform in the countries in right. transition, as that would create livelihood Box 7.4. for the local population and would save the advanced countries from the wave of im- Directions of the emigration flows migration, creating tensions on their labour markets. The bulk of the potential emi- ture, which under the measures gration (72 per cent) is aimed of closed frontiers of a great to the Balkan countries followed number of the Western coun- 7.3. Sex and age characteristics of by the countries of Western tries is becoming increasingly the population Europe - 18.1 per cent, and to more difficult to accomplish. the former socialist countries - The basic reasons for emigra- In the past there was a predominance 8.8 per cent. The unambiguous tion are associated with the wish of the male population, which with certain potential emigrants are directed to live and work in conditions vacillations continued to the period of the above all to Turkey. For those of a high living standard, settle- Balkan and the First World War. After the aiming at Western Europe, emi- ment of material problems, and wars, the female population exceeded the gration is not a specific inten- acquiring better production ex- male for some time. Very soon, however, tion, but rather a dream of a fu- perience. there was again a predominance of the male population. From the middle of the 1930s there was a trend of levelling out the sexes, In the 1990s, after the opening of the which in 1956 resulted in a predominance countrys frontiers, a certain immigration of the female sex. This predominance in- has also accumulated whose size has been tensified in the 1980s and 1990s, and in approximately calculated to be 25 000 1994 the ratio was already 1040 women to people. These have been mostly people 1000 men. This has been a trend affecting from the Arab countries and from the the population of towns and villages alike. former republics of what used to be the Soviet Union. Some of them have the in- This transformation has been the re- tention to emigrate to the West, but with sult of the higher death rate among men the close-down of the frontiers of the West- and of their smaller average longevity than ern countries, they have been forced to re- that of the women - by about 6 years dur- main in Bulgaria. ing the past 10 years. The wave of emigration has also contributed to the greater im-

90 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 balance during the past few years, as men began as early as in the middle of the 1950s. joint it on a larger scale. Since 1977 this contingent has also been decreasing in absolute values. Up until The demographic transition taking Table 7.4. place also determines the changes in the age structure of the Bulgarian population. Sex ratio of the population From a progressive type at the beginning of the century, in which the share of the Years Women per 1000 men young generations was high (40 per cent), Total in towns in villages in the 1970s it became stationary, whereby the young and old generations were evenly 1946 999 953 1014 distributed. During the past few years there has been a regressive type of the age struc- 1956 1004 1002 1005 ture, whereby the young generations (from 1965 1000 1000 1000 0 to 14) are about 18 per cent and the old 1975 1003 1010 993 (50 and above) are already about 33 per 1985 1019 1024 1008 cent. The age pyramid has been seriously 1992 1035 1043 1019 eroded. In future, increasingly less numerous generations will join the able-bodied 1994 1040 1049 1023 contingent.

A forecast of the movement of the dif- 1989, the process was mostly determined ferent generations envisages a sharp de- by the enlistment in the contingent of able- crease of the youngest generations from 0 bodied people of ever less numerous young to 15 years of age. From 1 876 000 in 1990, generations and the departure from the they are expected to decrease to 1 638 000 contingent of ever more numerous old gen- in the year 2000, or to be by 238 000 less. erations. In 1990 the absolute number of The decrease over 10 years is expected to the able-bodied population was calculated affect about three generations, according Figure 7.2. to the birth rate during the past few years. In this demographic situation a decrease Dynamics of the relative weights of the population under, both of the young generations and of the in and above working/able-bodied age able-bodied contingent is to be expected.

The young contingents from 16 to 30 years of age had, under normal conditions, to show an increase at the end of the 1980s and early 1990s, since generations born in the decade from 1968 to 1975 joined them. That natural growth, however, was consumed by emigration. In this way their relative share of the total population remained unchanged - 20 per cent. If emigration is avoided, a slight decrease is expected by the year 2000. After that period, however, a rapid decrease is expected of the young generations as a result of the enlistment of the generations, born during the period of transition.

The relative decrease of the contingent of able-bodied people (16 to 54 years for women and 16 to 59 years for men)

THE DEMOGRAPHIC SITUATION: PROBLEMS AND TRENDS 91 to be 4 806 000 people, or 55 per cent of The policy of free medical assistance the population. According to 1994 statis- has detached the physician from the fam- tics, it is 4 741 000, or by 65 000 people ily, resulting in greater red-tape in medical less. If the wave of migration stops to suck services and failing to sufficiently work to- up population of the able-bodied contin- wards the decrease of the death rate. On gent, there are some chances that by the the other hand, paid medical services dur- year 2000 it might not undergo tangible ing the years of transition have been finan- changes. Afterwards, however, an acceler- cially unbearable to a great share of the ated decrease will begin, brought about by Bulgarian population. The poor state of the the addition of generations, small in num- health-care establishments should also be ber, born during the period of transition. added. Conditions in them greatly differ So even by optimistic forecasts, the able- from conditions at home and have an op- bodied contingent in 2020 is expected to pressive influence on the sick. In the hos- decrease by nearly 4 generations in com- pitals modern medical apparatus and the parison with 1990. necessary medicines are either lacking or in short supply.

7.4. Population development policy The high rate of unemployment, the insecurity as regards the professional real- In the conditions of transition, a great ization particularly of young people and the number of the measures taken to secure low pay, encourage potential and real emi- the development of the population do not gration alike. The measures aimed at the produce the anticipated result. The hous- development of the private sector, at cre- ing policy, envisaging privileges for the ating livelihood and at tackling a number young families in acquiring housing and of economic and social issues fail as yet to loans for housing construction does not produce the expected results in stopping operate due to the restriction of housing emigration and resolving the development construction and the introduction of mar- problems of the population. ket mechanisms in the purchase of a dwelling. The rising costs of housing under con- The grave demographic situation is temporary conditions become unbearable one of the most difficult challenges, which Bulgaria has to resolve at the end of the for the young families, quite a few of which are part of the group of the socially weak 20th century. What is needed is consensus among the political forces and institutions people. The single lump sum assistance and the family allowances do not produce the with regard to the countrys demographic anticipated effect either, for despite of their policy. A national strategy and programme for coming out of the complicated and ad- increase they are not in a position to cover the higher cost of upbringing of children. verse demographic situation must be worked out by common efforts. The radical policy of granting 3 year In line with the international recom- The traditional long leaves for rearing children also loses of its impact in the conditions of dropping mendations, the demographic policy should be aimed at providing conditions for the population development real incomes of the families. Parents often ignore that privilege, preferring to work and normal reproduction and realization of measures are not people, taking into account their wishes and receive higher incomes than the minimum effective working salary, which is provided during possibilities, as well as the needs of soci- the basic part of the maternity leaves. The ety. The activities have to include the pursuit of an effective economic policy pro- higher cost of childcare establishments, of clothes and foods for children and infants, viding livelihood, raising the living standards, helping the family in the upkeep and as well as of the services offered to the family, is becoming increasingly more difficult upbringing of children, as well as in hous- to bear by the young families. ing provision. Social security should cover

92 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 to a high extent the needs of the lonely and tion relevant to the Bulgarian family and aged people and invalids. the reproduction and self-realization of its members. What is needed is a well sub- Maternity and childrens health care stantiated governmental strategy and a should secure the birth of a healthy child programme which would pool the efforts and the bringing up of a healthy and viable of the ministries and institutions for the so- generation, which is a prerequisite for a lution of the demographic problems. longer human life. So that an up-to-date The key to the family planning might be secured and the The demographic development is di- successful demographic massive resorting to abortions, exceeding rectly related also to the implementation policy is the success of the number of births, might be avoided, the of the reform in the country. It is to be re- family must have information and means gretted that so far it has been operating the economic reform to make use of the entire range of safe and mostly via its monetary component, which effective methods of birth control. does not sufficiently help the development of production. What is needed without any In the attainment of family stability, delay is the intensification of structural re- which is also a guarantee for an effective forms, which means development of effi- demographic policy, of major importance cient industries. Serious attention should are family relations, and especially the re- also be paid to the introduction of new tech- affirmation of the equality of man and nologies, which will make the Bulgarian woman and their interaction in the upbring- economy competitive and will enable it to ing and education of the children. secure better satisfaction of the domestic In order to be effective, the demo- market and exports for the foreign mar- graphic policy must be complex, system- ket. Privatization, technological innovations atic and must take into account the speci- and new investments can influence the de- ficities of the individual regions and social mographic develoment. The economic stir, groups, to which people belong. The ac- securing more dynamic production, may tions of the institutions which have rel- become a prerequisite for securing the nor- evance to the problems of the demographic mal reproduction of the countrys popula- development should be coordinated. Spe- tion, characterized by a moderate growth cial attention should be paid to the legisla- and slow change of generations.

THE DEMOGRAPHIC SITUATION: PROBLEMS AND TRENDS 93 REGIONAL PROBLEMS OF HEALTH AND OF 8 HEALTH CARE SERVICES

8.1. Morbidity Rate the country was in the region of Lovech - The drastic drop of 50.8. living standards has The populations morbidity rate is in- The average morbility for German worsened the health fluenced by a great number of demo- measles in 1994 was 72.7 per 100 000 of graphic, social and economic factors. The the population for the country. In the re- status of the population direction and intensity of their impact gion of Lovech that incidence was two change during individual periods of the times higher or more - 181.9. The lowest social development. Their influence on the incidence of that disease was in the Bourgas morbidity rate may be positive or negative. and Haskovo regions - 22.6 and 37.8 re- Since the influence is comprehensive, the spectively. impact of the individual factor is hard and Table 8.1. sometimes impossible to measure. There is no doubt, however, that the sharp drop Cases of active tuberculosis registered in 1989 and 1994 of the living standards in the period of a per 100 000 of the population by regions socio-economic crisis has resulted in a tangible deterioration of the health status of Regions Total Of them newly diagnosed the population. However, even in a small 1989 1994 1989 1994 country like Bulgaria, the changes in the health status greatly differ in the individual For the country 108.1 142.2 25.6 37.5 regions. City of Sofia 99.0 135.7 19.8 31.4 The socio-economic changes that have Bourgas 100.9 131.0 26.6 32.8 set in reflect in most varied ways on the Varna 89.9 126.3 21.9 30.4 spread of individual diseases. The total morbidity rate of communicable diseases, Lovech 128.6 150.9 30.1 40.0 for instance, does not cause any special Montana 130.7 198.6 30.4 48.3 problems for the time being. Some diseases Plovdiv 106.9 132.2 30.7 34.9 like scarlet fever, varicella, serous menin- Rousse 111.8 161.6 23.5 43.3 gitis, and epidemic cerebrospinal meningi- Sofia 109.5 135.9 23.9 43.9 tis tend to decrease. Others have been wiped out or reduced to incidental single Haskovo 104.4 132.4 24.4 39.1 cases (measles, encephalitis, malaria, po- liomyelitis, anthrax, leptospirosis). How- Similar differences can also be noted ever, the morbidity rate of bacillary dysen- with other communicable diseases. After a tery and infectious hepatitis is rising. long period of decrease, the incidence of tuberculosis has been showing a clear up- The epidemic situation widely varies in the individual regions. The local epi- ward trend. The fundamental reason has demic outbreaks bring about considerable been the weakening of the populations immunity under the influence of a great digressions of the morbidity rates from the average for the country. Whereas the av- number of economic and social factors. In the 1989-1994 period, the newly diagnosed erage morbidity of scarlet fever for the country was 80.8 per 100 000 of the popu- cases of tuberculosis increased from 25.6 lation, in Sofia in 1994 that morbidity was to 37.5 per 100 000 of the population. An increase has been registered in all regions, 187.0. The lowest incidence registered in but at different rates. In 1994, the highest

REGIONAL PROBLEMS OF HEALTH AND OF HEALTH CARE SERVICES 95 morbidity was registered in the regions of regions. This process is most intensive in Montana (48.3), Sofia (43.9) and Rousse the region of Haskovo where the increase (43.3). The lowest incidence of tuberculo- in 1994 is by 518.5 per 100 000 of the popu- sis has been in the region of Varna (30.1) lation in comparison with 1989. Next comes and in the city of Sofia (30.4). the region of Varna with an increase of Table 8.2. 397.3 cases and Sofia - with 345.6 cases. Whereas the average increase of the newly Registered cases of malignant neoplasms for 1989 and diagnosed diseases for the country was by 1994 per 100 000 of the population by regions 36.8 points in 1994 in comparison with 1989, that increase in the region of Mon- Regions Total Of them newly diagnosed tana was by 88.1 points.

1989 1994 1989 1994 Such differences in the morbidity in individual regions have also been registered For the country 1674.0 2040.1 254.4 291.2 in the most widespread localizations - ma- City of Sofia 1794.0 2139.6 267.7 307.3 lignant neoplasms of the trachea, the bron- Bourgas 1629.3 2032.0 233.4 264.5 chi and the lungs, of the abdomen, of the Varna 1537.0 1934.5 244.5 272.0 skin, etc. These differences have been noticed in the morbidity as well as in the Lovech 2019.1 2340.4 321.8 341.7 trends and rates of change. No higher mor- Montana 1924.5 2185.8 235.1 223.2 bidity of malignant neoplasms of the tra- Plovdiv 1697.8 2074.9 271.3 299.0 chea, bronchi and the lungs has been reg- Rousse 1424.0 1779.0 224.7 264.8 istered in the regions of the city of Sofia Sofia 1558.6 1821.4 250.2 255.0 and the region of Varna, while in the region of Sofia there is also an insignificant Haskovo 1480.6 1991.1 217.6 268.5 decrease. Whereas there is a general decrease in the morbidity of malignant neoplasms of the abdomen in the country, there The malignant diseases tend to increase is a doubling of that morbidity in the re- both in the country as a whole and in all gion of Montana. This is reflected on the essential differences in the death rate due Figure 8.1. to malignant neoplasms in the individual Death rate due to malignant neoplasms in 1994 per 100 000 regions. of the population by regions The current situation of crisis adversely influences the psychological status of the population. The number of people registered for follow-up in the mental dispensaries is steadily rising. From 2529.7 per 100 000 of the population in 1989, their number reached 2771.0 in 1994. The situation varies in the individual regions. Dur- ing that year the highest rate was registered in the Bourgas region - 4181.4 per 100 000 of the population (1.5 times the average of the country), followed by the Sofia region (1910.7 per 100 000) and the Varna region (2846.4). The city of Sofia (2137.2) and the Haskovo region (2170.6) have the lowest incidence. In most of the regions the number of persons registered for follow-up in

96 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 the mental clinics rose in the period 1989- 8.2. Health care services network 1994. and health care personnel The share of those registered for follow-up treatment was greatest for cases of The network of establishments render- schizophrenia, mental deficiency, epilepsy, ing medical services (diagnosis, treatment, the syndrome of alcohol addiction and neu- rehabilitation, some kinds of preventive roses. During the period under scrutiny, treatment) is well developed in the coun- there was an increase of the incidence of try, having at its disposal the necessary such cases registered for follow-up treat- stock of buildings and staff. ment for the country as a whole. The situ- Table 8.3. ation varies widely in the individual regions. Differences in the level and incidence as Health care establishments and stock of beds - 1994 well as in the trends of change, which are not always analogous to those for the coun- Kinds of health care establishments Establishments Beds try, have been observed. I. Hospitals - total number 294 86092 The morbidity resulting in lasting dis- Of them: ability (invalidism) has tended to steadily Amalgamated regional hospitals 30 27435 rise during the past few years. In the 1990- 1993 period the incidence of primary inva- Municipal hospitals 96 25443 lidism increased from 4.68 to 6.33 per thou- Workers hospitals 10 1166 sand insured persons. This trend has been Faculty hospitals 12 4660 observed in all regions, though at varying Lung disease hospitals 14 3466 rates of growth. In 1993, the highest inci- Paediatric hospitals 3 251 dence of invalidism was in the region of Rousse (7.63 per one thousand persons Maternity and gynaecology hospitals 4 1320 insured) and of Varna (7.23 per one thou- Psychiatric hospitals 15 5002 sand persons insured). That incidence was Dispensaries 59 4727 the lowest in the region of Lovech (5.44) Higher institutes of medicine 5 5059 and in the city of Sofia (5.93). No substan- II. Outpatient polyclinics - total number 3726 2104 tial changes have been registered in the ranking by regions during that period. In- III. Other health care establishments 107 55 validism increased at the highest rate in the IV. Sanatoria and health resort establishments 160 18950 regions of Rousse and Varna. The increase was comparatively small for Sofia and the region of Lovech. The public health care sector has been developed on a national, regional and mu- From among the diseases resulting in nicipal level. The national level of health invalidism, the diseases of the cardiovas- care comprises the clinics of the five uni- cular system (ischaemia and disease of the versities of medicine with 12 state univer- blood vessels of the brain) have occupied sity hospitals, as well as the clinics of the the major place causing invalidism in about national medical centres of cardiovascular The network of health 1/4 of all cases of primary invalidism. Com- diseases, haematology, oncology, treatment care establishments is ing next are the neoplasms, the diseases of of drug addicts, physiotherapy and reha- the nervous system, psychiatric disorders bilitation and the N.I.Pirogov National In- well developed and others. The nosological structure is stitute of Emergency Aid. Included in this similar in the individual regions, too, de- level are also the health care establishments spite the specificity in the incidence and of the Ministry of Defence, the Ministry of the rates of change. Transport and the Ministry of Internal Af- fairs.

REGIONAL PROBLEMS OF HEALTH AND OF HEALTH CARE SERVICES 97 The regional level is made up of 30 village health centres, health care services amalgamated regional hospitals (ARH), centres of physicians and doctors assis- each one with an average capacity of 950 tants. There are also dentists rooms in beds. This accounts for 31.3% of the na- them. tional stock of hospital beds. The ARH provide specialized consultations and hos- Workers hospitals and polyclinics pro- pital medical services to the population of vide medical services at major industrial the respective region (an average of 330 enterprises, having at their disposal 1.4% 000) and primary medical assistance to the of the stock of hospital beds, as well as inhabitants of the municipality in which the doctors health centres. respective hospital is located. On regional In the public health sector, primary level there are also specialized dispensa- medical services are secured by the outpa- ries in oncology, psychiatry, dermatologi- tient polyclinic of most varied categories. cal and venereal diseases, and lung dis- In the urban centres they are provided in eases, acounting for 6.0% of the stock of profiles by general practitioners, paediat- hospital beds. Of regional and inter-re- ricians, gynaecologists, school and work- gional importance are the specialized hos- shop physicians. In the villages the physi- pitals of one single profile (maternity and cians are primarily general practitioners. gynaecological, of lung diseases, psychiat- Specialized medical aid is provided in the ric) accounting for 7.0% of the total stock polyclinics of the municipal hospitals in the of hospital beds. main specialities, in the polyclinics of the Table 8.4. amalgamated regional hospitals in an extended list of specialities and in the dis- Stock of beds in the hospitals and outpatient polyclinics pensaries, in the consultation rooms of the per 10 000 of the population clinics with the medical universities and the national medical centres. Emergency medi- Regions 1990 1994 cal aid is provided by the regional centres, and urgent health care services - by the Total 103.9 104.7 outpatient polyclinics. City of Sofia 120.0 130.9 Dental aid is secured on national level Bourgas 81.7 79.2 by the clinics of the dentistry departments, Varna 99.6 98.0 on regional level by the dentistry polyclin- Lovech 127.0 123.1 ics, and on municipal level - by the den- Montana 100.8 105.2 tists rooms at the polyclinics of the mu- Plovdiv 96.3 90.0 nicipal hospitals, village and workers health care services. Rousse 97.2 101.4 Sofia 93.8 96.0 There are substantial differences in the Haskovo 109.7 112.3 provision of hospital beds for the population by regions, which is not always associated with higher or smaller needs of health The municipal level includes the mu- care services. The number of hospital beds nicipal hospitals (MH) with outpatient ranges between 81.8 per 10 000 of the popu- polyclinics and an average capacity of 267 lation (Bourgas region) and 126.0 (Lovech beds, which account for a total of 27.6% region). These differences have largely of the stock of hospital beds. They have at been determined by the existence of health least four specializations: therapeutic, sur- care establishments on the territory of the gical, paediatric and maternity and individual regions, which have national and gynaecological. Village polyclinics with 3 inter-regional functions. to 6 doctors have been opened in the small municipalities in the villages, along with

98 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 While there is a high number provided Figure 8.2. per 10 000 of the population of doctors (33.3), dentists (6.6) and paramedical per- Doctors provided to the population at the treatment and sonnel (96.6), in 1994 their break-down in preventive treatment establishments in subordination of the regions was uneven. The provision of doc- municipalities by December 31, 1994. tors and dentists at the health care establishments in subordination of the municipal councils of the regions of Rousse and Bourgas is considerably below the average for the country, as is that of semi-higher education and secondary education medical personnel in the Plovdiv and Varna regions.

The volume of the work carried out by the health care establishments in the country has been decreasing during the past few years. Fewer home visits, fewer pro- phylactic examinations, smaller number of people that had been taken to hospital for treatment, fewer mothers-to-be and infants followed up by the maternity and child care consultations, fewer occupied hospital beds have been registered in all regions of the of the levels of health care services; break The changes in the country. of the administrative and governing order health care services The fundamental problems valid for without the establishment of the manda- all regions are as follows: tory balance between centralization and have not been guided by decentralization; the lack of legislatively a lucid strategy - structures inadequate to meet the established relations between the public needs, especially in the case of hospital Figure 8.3. treatment, which are an obstacle for their effective functioning; Dentists provided to the population in the treatment and preventive treatment public health establishments in - underdeveloped economic and financial mechanisms, stimulating the develop- subordination of the municipalities by December 31, 1994 ment of the system and the quality of medical services;

- acute shortage of finances, which stands in the way of the supply with medicines, consumer supplies and the introduction of new technologies. At the same time the available finances are not adequately and effectively used;

- unjustified and incidental changes with elements of voluntarism since 1990. Featuring among them have been the re- scinding of legislative acts, without their having been promptly substituted by new ones; the break off of organizational, meth- odological and consultation interrelations

REGIONAL PROBLEMS OF HEALTH AND OF HEALTH CARE SERVICES 99 and the private sector within the system of 8.3. Administration of health care health care services; services - no guaranteed possibility of securing the selection of a personal doctor and The administrative system of the dentist; health care services was substantially distorted due to the delayed or inadequate The renovation of the - unsatisfactory quality of the health tackling of a number of problems. Most of legislation concerning care services provided, due to the absence them have been administrative and orga- of material incentives for the staff and in- nizational. With the administrative reform the health care should sufficient control; of 1987, the country was divided into 9 regions, each one of which had a different be accelerated - narrowing down of the volume of number of municipalities. With the aboli- health care services, especially in pre-hos- tion of the district administration, health pital medical services on the municipal level care services were deprived of regional owing to organizational and financial rea- administration, which greatly frustrated the sons. co-ordination of medical activities. The The functions related with preventive district administration has neither the rights health care, state sanitation control and nor the competence to govern the health health promotion activities have been care services, while the local bodies set up within the scope of work of the Hygiene with the municipalities are not sufficiently and Epidemiology Department. It is a well trained for the tasks they have to deal with. structured organization financed by the The two-pole model introduced in the ad- state budget. The operative network of the ministration of hospitals, polyclinics and HED is made up of 28 Hygiene and Epi- dispensaries (management of the medical demiology Inspectorates, whose activity functions by a medical director, and of the covers the territory of the whole country. administrative and economic - by an eco- Working on the staff of the inspectorates nomic director), successfully applied in are 1115 doctors, or 3.9 per cent of all doc- some Western European countries, has tors. The territorial location and material proved unsuitable for Bulgaria. and technical base of the HED correspond The handing over of the health care to the needs. The Ministry of Defence, the establishment to municipal ownership by Ministry of Internal Affairs and the Minis- virtue of the Local Self-Administration and try of Transport also have hygiene and epi- Local Administration Act has engendered demiology units. new problems. In the small municipalities, Box 8.1. in particular, the local authorities are not competent to manage the health care es- Health care services are a national priority tablishments. The financial resources for their maintenance are mostly received from The deepening of the existing population en masse make the the state budget through subsidies for the trends and the emergence of health care services a priority. municipalities, where they are located. A new negative trends in the The problems of the nations number of these establishments, however, health and demographic state of health can be dealt with only by provide services to the population of the population, the significant way of extensive co-operation neighbouring municipalities, too. This is territorial differences, as well as among the sectors - interdepart- continuously giving rise to tensions between the impoverishment of the mental and with the public. municipalities.

Prerequisites were created in 1995 for an improvement of the management of health care services. The newly established 28 Regional Centres co-ordinate health

100 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 care activities in the respective regions cil of Ministers and the National Assem- pooling the efforts of the municipalities for bly. the implementation of the health care programmes and retraining initiatives. A guiding idea of the strategy is that Measures have been taken for the improve- the effective solution of the nations health ment of the management of the health care care problems calls for the adoption of both establishments. The legislative base of medical and other socio-economic, educa- health care is being updated. tional, technical and technological measures based on extensive partnership among The system of the health care should the sectors of society. Moreover, the main at this stage guarantee a basic volume of emphasis in the modern health care policy health care services, accessible to every should be shifted towards the prevention citizen. This is what the mass consumer of disease and to work with the healthy of health care services expects. For the contingent of the population. What is time being, regardless of the vacillations, needed is basically an improvement of the his preferences on the average for the way of life as well as of the environment. country, for the big cities and for Sofia, Figure 8.4. are for the free-of-charge services provided by the public health care establish- Whose concern should the payment for the medical ments. services be? (June 1995) The system of public health care services indeed has a material base and cadre resources, which are sufficient in terms of volume. They, however, are not rationally used. The reform in the system should overcome the break-down of the mechanisms of administration and control, the lack of incentives for the cadre owing to the insufficient public appreciation of their labour, the absence of a legislative base for a considerable portion of the medical activities as well as for control over them. These tasks are being resolved in conditions of an acute shortage of finances for public health care services and of their inefficient use owing to organizational causes. Containment of the risk factors related to the way of life should be achieved This has made it imperative for the through the implementation of national and Ministry of Health Care to put in consid- regional programmes, committing a wide erable efforts to the working out of a strat- range of specialists within and outside the The main emphasis of egy for action. The National health care sphere of health care services. The strategy has been the result of the efforts of programmes of making the environment the health care policy is medical and other specialists, helped on by more healthy could, for instance, yield good the prevention of the active co-operation of the European results, if they rest on effective co-opera- Bureau of the World Health Organisation, tion in reducing the most widespread risk disease of UNDP, the World Bank, the Council of factors: toxic substances, noise, poor qual- Europe and other specialists. After exten- ity foodstuffs, health hazards in the work- sive discussions, at the end of 1995, the ing environments, radiation. Alongside the Health for Bulgaria project (National health containment of the risk factors, a behaviour care strategy) was endorsed by the Coun- has to be shaped of protection of those groups which are imposed to intensive

REGIONAL PROBLEMS OF HEALTH AND OF HEALTH CARE SERVICES 101 health hazards. These are mainly children, There is consensus in the country old people, invalids, the chronically ill, the about the need of the establishment of in- unemployed. surance funds in the sphere of pensions, social welfare and health care services. The relatively limited range of diseases Notwithstanding the hardships of the pe- determining morbidity, the death rate and riod of transition, the objective is the es- invalidism, makes it possible to channel the Urgent regulation is tablishment of a national health insurance prevention, treatment and rehabilitation system which is to guarantee the financial needed of the private measures selectively to them. These are the provisions for the needs of the health care sector of health care cardiovascular diseases, the malignant neo- services. What is needed is the further de- plasms, the diseases of the respiratory sys- services velopment both of the traditional activities tem, traumas and intoxication, tuberculo- related to sanitation and epidemiological sis, diabetes, the sexually transmitted dis- control, and of health promotion activities. eases, the psychiatric disorders, some con- tagious diseases. The reform of medical services has to respect the citizens right to a choice of a The reaffirmation of the Ministry of physician and a dentist within the system Health Care as the carrier of the changes of primary medical aid. An important ob- in the system of health care services is part jective of the changes is the gradual attain- of the necessary changes in the health care ment of equal status of the public and of system. The regional health care bodies the private sectors in health care services. have to be consolidated. An important step For the time being, however, what is the in the reform is the elucidation of the rights most important is not to allow the further and obligations of the municipal health care destruction of the health care system, the administrations. There is a strong public further restriction of the volume and lower- anticipation that the management of the ing of the quality of the health care services health care establishments is to be im- provided. Within this context, special atten- proved. There should be no delay in the tion should be assigned to the consolida- regulation of the private sector in health tion of the primary health care services care services. One of the important tasks units. The technological renovation of the is the improvement of the training of the health care system is of primary importance managerial cadre of the health care ser- for the higher quality of the medical activi- vices. ties.

The main emphasis of co-operation The main objective of the policy re- among various groups and institutions has garding medicines is to ensure for the Bul- been the understanding that the health care garian people effective, safe and sufficient system is just the initiator and co-ordinator quantity of medicines at affordable prices. of actions, committing a wide range of par- Despite the financial hardships, certain ticipants for the attainment of the funda- groups of patients or citizens will receive mental objectives of the national health medicines free of charge, or against par- care strategy. It is one of the responsible tial payment, whereby priority will be given factors for the health of the Bulgarian to life-saving and life-maintaining medi- people. The formulation of an adequate cines. health care policy and its effective implementation call for a close co-operation The development of the medical edu- between the state administration of the cation should comply with the require- health care services with the trade unions ments, ensuing from the reform in health and the scientific organisations of the medi- care services. The information system of cal personnel as well as with non-govern- health care should be rapidly reorganized mental organisations on the municipal, re- in view of the new goals of the health care gional, district and national levels. system. An essential resource for the ac-

102 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 celeration of the reforms and for the higher citizens. efficiency of the health care system is the international co-operation. The implementation of the national health care strategy calls for the most se- The priorities orienting the work in rious attention being paid to the manpower fulfilment of the national health care strat- resources and to finances. Not a single egy are as follows: problem of the health status of individual groups should be underestimated. The Priorities of the - redution of the cardiovascular dis- success of the reform of the health care national health care eases; services depends on a multitude of fac- services strategy - higher effectiveness of the preven- tors: on the trade union organisations, on tion and treatment of oncological diseases; the work of humanitarian non-governmental organisations, on the support rendered - protection of the health and life of by the international organisations and in- children and strengthening of their physi- stitutions, on the medical university circles, cal and mental endurance; on the Bulgarian National Academy of Medicine. The task is common, while its - protection of the health of women in resolution calls for combining the require- fertility age; ments of medical, economic and social - purposeful care taken of the health efficiency with the requirements of hu- of old people, invalids and socially weak maneness.

REGIONAL PROBLEMS OF HEALTH AND OF HEALTH CARE SERVICES 103 10 MEASURES TO REDUCE POVERTY

10.1. Poverty as a component of the production relations became inevitable. It The bulk of the social costs of transition is linked with economic stratification and a sizeable drop of living standards for large population grew poor in groups of people. Yet the society lacked absolute and relative The macroeconomic stabilization poli- the strong political will to implement the cies implemented until late 1994 consisted terms changes required by transition. mainly of restrictive monetary measures which negatively affected the populations Table 10.1. incomes. This resulted in an unbearably high cost of reforms for millions of Bul- Change in the base minimum income and in childrens garians with the bulk of the population allowances (1991-1995) growing poorer in absolute and relative terms and broad population strata living Indicators 1991 1992 1993 1994 1995 on the edge of survival. BASE MINIMUM INCOME In the first half of the nineties the incomes policies were determined by a situ- (Leva) 403 500 885 1225 1600 ation of economic crisis reflected by a fall Real growth as per in the countrys gross domestic product and the previous year (in %) 0.0 -30.9 8.0 -37.6 -1.7 industrial output, mass unemployment and Real growth as per high inflation rates. This put the majority 1991 (in %) 0.0 -30.9 -25.4 -53.4 -54.2 of the population to severe trials with large groups losing economic prospects. The MONTHLY CHILDRENS populations impoverishment is clearly outlined by the plunging values of major so- ALLOWANCES (Leva) 145 185 251 372 480 cial and economic indicators. Real growth as per the previous year (in %) 0.0 -28.9 -17.2 -33.2 -2.9 Public opinion is a clear indicator of the scope of impoverishment as a social Real growth as per problem (See Fig. 10.1.). 1991 (in %) 0.0 -28.9 -41.1 -60.7 -61.8

Impoverishment during the transition period has developed under specific cir- Second, the restrictive tools of macro- cumstances whose clarification will help economic stabilization have reduced all determine the measures to be taken for its types of populations protected incomes: reduction and elimination: salaries, pensions, indemnities, allowances, stipends, as well as peoples savings. The First, before the reforms began, the There are different drop in the purchasing power of incomes population had reached satisfactory living has affected all citizens - employed, pen- degrees of poverty and standards as measured by domestic crite- sioners, unemployed, the disabled, the so- ria and in comparison with the other former impoverishment cially weak, students. The average real in- socialist countries. There were solid social comes plummeted by almost 50 per cent. guarantees for education, health care, em- But pauperization may take different forms. ployment, working salary, and social secu- Poverty and impoverishment differ for the rity. Coupled with a number of other fac- groups of able-bodied population and the tors, this set of guarantees has resulted in rest of the people. This requires that dif- the societys decay. A profound change of

MEASURES TO REDUCE POVERTY 121 ous training. The diversity and quality of During the past few years the number the school training can be attained via a of the secondary vocational schools has balance between the general education and been relatively stable. The number of pu- vocational training whereby obligatory and pils in them, however, decreases. This has optional subjects are combined. An inter- been particularly manifest in the case of action is necessary between the school and the technical schools and the schools in the the other social factors influencing educa- arts. In the 1994/95 academic year, the tion as well. number of students in them was by about

Table 9.1. one-fifth smaller than in the 1989/90 academic year. Number of pupils in the secondary vocational schools The ebb from the secondary voca- (by academic years) tional schools has been due to two basic factors. The first is the economic recession Type of schools 1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 and the lower rate of employment connected with it. The drop of industrial production Secondary voc- by 50% after 1989, the close-down of en- ational-technical 103966 113139 111609 110384 107839 100355 88427 terprises or their subsidiaries results in the Technical schools release of a great number of workers and and art schools 135606 125728 121919 111329 103396 112046 120859 specialists. In October 1995 the unemployed having secondary special education TOTAL 239572 238867 233528 221713 211235 212401 209286 were 86,500, or 16.9 per cent of all unemployed. There are no clear prospects for a restoration and development of the indus- The practical implementation of these trial sectors, to which training at the voca- principles requires a restructuring of the tional schools is aimed. This does not stimu- educational system and changes in the con- late the young peoples interest in special- tents and organization of the training pro- ized secondary educational establishments. cess. The objective is to align training to That is why increasing numbers of young conform to the criteria of an up-to-date type people opt for getting secondary education of education, and to resolve the problems at general educational schools. that have cropped up during the past few years in the secondary schools. The substantial increase of the enrolment in the higher educational establish- Alongside the problems of contents, ments is the other factor reflecting on the qualitative imbalances also come to the fore vocational training in secondary education. in vocational training. In view of the cur- The access to higher education has been rent absence of vocational training in the extended and the number of university stu- most general education schools, the second- dents has sharply increased. This encour- ary vocational schools assume great respon- ages large groups of young people to con- sibility for the quantity and quality of the tinue their education at higher educational new recruits of the labour force. Accord- institutions. Education gained in the sec- ing to their functions, they are divided into ondary technical schools, however, is fo- two basic types: secondary vocational tech- cused on vocational training. Less atten- nical schools, technical schools and schools tion is paid to the general educational sub- in the arts. The first type is with a three- jects, which are fundamental for the en- year term of training and produces skilled trance exams of the higher educational es- workers. The technical schools and the tablishments. What is more, the term of schools in arts have a four- or five-year term studies at the technical schools is longer. of studies and train secondary school spe- Under these circumstances, there is under- cialists. standable preference for the secondary schools, which by their school curriculum

106 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 and term of studies give greater opportu- correspond to the future needs of second- nities for continuation of the education at ary school specialists. Modernization brings the institutions of higher learning. to the fore new sector and branch priorities. The vocational training of the labour During the past few years, the num- force should be conformed to their tech- ber of children and young people leaving nological and organizational characteris- school before they have completed their tics. education has been rising. Most of them Box 9.2. discontinue their studies as early as at the primary school levels. In 1994, out of a to- For vocational training at the general education schools tal of 44869 that left school, 27667 were in elementary schools. They join the labour The national economy has no tional schools and the introduc- market without the required educational other alternative but technologi- tion of vocational training to the minimum and vocational training. A cal renovation and the develop- general education schools. The change is necessary, which is to contribute ment of up-to-date industries. consistent implementation of to the tackling of the acute problem of edu- They require specialists of high that line in the education policy cational inequalities and should conform vocational skills. That is why the should eliminate the existing to the world trends towards the introduc- organizational, personnel and contradiction between the need tion of mandatory standards of mass voca- financial potential of the educa- of personnel of a better vocational training. One opportunity for this is tional system should be stream- tional training and the decreas- the development of conditions for vocational lined towards extending the ing number of secondary school training within the frameworks of the elemen- scope of the secondary voca- graduates, possessing it. tary school. The formation of vocational- technical classes in the elementary school course (after the 6th grade) would enable children and young people, who have no The solution of this task requires a wish or abilities to continue their educa- precise defining of the priority sectors of tion, to master a certain trade. In this way the national economy. Guidelines for the the vocational and qualification basis can restructuring of the educational system be created for their integration in labour should be deduced from the strategy of re- and the social tensions, engendered by the structuring of the economy. This is the way significant distances in terms of educational to provide correspondence between the standards that are currently taking shape, required labour force with a certain pro- may be alleviated. file and level of training and the future skilled workers and specialists trained by Industrial specialities predominate at the secondary vocational schools. the secondary vocational schools. In 1995/ 96, 81.7 per cent of all students of the sec- The territorial distribution of the secondary vocational technical schools and ondary vocational schools is comparatively 64.1 per cent of the students at the second- even. It meets above all the local needs of ary technical schools were trained in them. workers and specialists. The location and The restructuring of Most widespread is the training in the field sector specificity of the industrial enter- of mechanical engineering, metal working, prises and services in the regions, areas and education depends on electronics and electrical engineering. The municipalities is the crucial factor for the the restructuring of the share of young people trained to work in scope and character of vocational training the services sector is small. in them. That is why the state and dynam- economy ics of the network of vocational educational This structure of vocational training establishments is directly dependent on the corresponds to the economic structure of territorial parameters of the socio-eco- the country so far. But it does not corre- nomic development. At the same time the spond to the process of de-industrialisation demographic trends in the various types of going on on a world scale and does not

NATIONAL AND REGIONAL PROCESSES IN EDUCATION AND SCIENCE 107 settlements and regions also exert certain economy will make it necessary to reorga- influence. nize vocational training. In the big cities, Table 9.2. focusing most varied industrial capacities and schools of differing profiles, the possi- Number of secondary vocational schools and students in them bilities of organizational flexibility, rechan- by regions (1994/1995 academic year) nelling of resources and mobility of the educational cadre are greater. In the Region Secondary vocational Technical and art schools smaller settlements training at the voca- technical schools tional schools conforms to the character of individual enterprises. The local orga- Schools Pupils Teachers Schools Pupils Teachers nizational potential for the preparation and carrying through of the necessary reforms City of Sofia 14 11902 576 34 16804 1872 is usually not great. That is why in the re- Bourgas 22 10691 668 28 10832 1279 structuring of vocational training, special Varna 21 10018 615 32 11961 1305 attention and institutional support are Lovech 39 13082 826 42 14398 1689 needed for the introduction of changes in Montana 24 7372 543 17 6747 702 the secondary schools in the smaller municipalities. Plovdiv 28 14861 1012 38 15418 1752 Rousse 28 9153 625 28 10229 1122 9.2. Higher education Sofia 26 12667 745 37 12471 1431 Haskovo 26 10609 830 29 13186 1293 The beginning of the 1990s has been a period of considerable changes in higher The spatial proximity of the produc- education. They have been aimed at align- tion enterprises and the vocational schools ing education at the higher educational training workers and specialists for them, establishments to the new socio-economic paves the way for a link-up of training with conditions, raising the educational effec- the needs of the specific technological and tiveness and making Bulgarian higher edu- organizational structures. Within the con- cation on a par with the leading world stan- text of the legislatively regulated decentrali- dards. The principles of decentralisation of zation of administration and autonomy of management and of academic autonomy the separate schools, that interaction is a have determined a new organisational necessary prospect. It makes possible the structure of the higher educational estab- functional integration of production and lishments. A differentiation has been go- education, the involvement of the employing on in the structure and contents of uni- ers in determining the quantity and quality versity education. The forms of training and characteristics of training and in enlisting of integration between the educational and the students in the production process. In scientific research activities at the higher this way the economic structures become educational establishments are being diver- The higher education committed to the vocational specialization sified. Access to higher education has been experienced a and to the continuing training. The prob- extended, including training paid for by the lems of the imbalance between the theory students. considerable and practice in training can thereby be re- quantitative growth solved, its practical orientation can be en- An undisputed result of the reforms hanced and continuous education secured. that have started has been the impressive quantitative growth and extension of the The link-up of the secondary voca- system of higher education. Within only five tional schools with certain industries, de- years the number of university students in- veloped within the frameworks of a given creased by 90 076, reaching 223 260 dur- region or municipality, has another aspect, ing the 1995/96 academic year. With the as well. The pending restructuring of the two new universities legalised in 1995,

108 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 namely the Varna Free University and the of economics are multiplying. In the 1994/ Slavic University, the higher educational 95 academic year their number reached establishments have become 41. The net- 40948, or 21 per cent of all university stu- work of their subsidiaries has been rapidly Table 9.3. extended. Now there are higher educational establishments or their subsidiaries in 18 Higher education establishments and university students by towns. The biggest university centres are university cities (1994/1995 academic year) Sofia, Plovdiv, Varna and Blagoevgrad. Towns Number of Universities Number of University Students The decentralization of higher educa- Sofia 20 88661 tion and its enhanced regional orientation is a trend producing positive results in vari- Blagoevgrad 2 14196 ous directions. It provides an opportunity Bourgas 2 6012 to a greater number of young people living Varna 3 18052 outside the traditional university centres to Veliko Turnovo 1 10003 get higher education. In view of the aggra- Gabrovo 1 4140 vated financial state of large segments of the population, the high costs of the sup- Pleven 1 1051 port of a student in the big cities are an Plovdiv 5 20984 insuperable barrier to the continuation of Rousse 1 6440 education at a higher educational establish- Svishtov 1 9513 ment. The decentralization of the educa- Stara Zagora 2 3012 tional structures is conducive to the elimination or alleviation of these financial re- Shoumen 1 7573 strictive factors. In this way it contributes to a broader access to higher education dents. On the other side, a lasting ebb from thereby reducing the possibilities of the the engineering, technical, agricultural and regional and economic differences devel- medical higher educational establishments oping into educational inequalities. and specialities has been witnessed. After The opening of academic centres in 1990/91 the students in them diminished different towns makes it possible to bring Box 9.3. education and research closer to the regional needs and specificity of socio-eco- Problems arising from the decentralization of higher nomic development. That motivates the education pragmatic orientation in the training of university students and gives an incentive The most serious problem asso- has not been resolved either. to the development of the local potential ciated with the decentralization There are subsidiaries in towns of lecturers and scientists. of higher education concerns the like Vratsa, Lovech and Mon- quality of education acquired. So tana without a single lecturer on The rapid quantitative growth of those that the planned enrolment of the staff in them. This adversely studying at higher educational establish- students may be achieved in the affects the training process and ments is accompanied by significant subsidiaries of the higher educa- the formation and reproduction changes in their distribution in terms of pro- tional establishments, lowered of the potential of lecturers and fessional spheres. During the past few years, criteria are often applied. Young researchers. At a number of the most rapid growth has been witnessed people lacking the necessary places the infrastructure of the of students pursuing studies on university qualities enrol in them. This en- educational establishments is un- and education specialities. In 1994/95 they tails unsatisfactory results in the derdeveloped lagging substan- amounted to 70053 people, or 35.7 per cent course of training. The problem tially behind the standards of of all university students. Especially high concerning the staff of lecturers modern training. is the interest in the study of law and education. The students at the higher schools

NATIONAL AND REGIONAL PROCESSES IN EDUCATION AND SCIENCE 109 by more than 10 per cent. Their relative tions is imperative in order to implement share of all students has been rapidly drop- the new Law on the Higher Education ping. (1995). At the same time, what is needed is the working out and application of uni- These trends in the structure of higher form state requirements for the enrolment education engender serious imbalances in of students for training at various educa- the labour market. An excess of special- State criteria are tional levels and specialities and for the ists with economic and legal qualifications graduation of students from the higher edu- needed for the is anticipated in the foreseeable future. At cational establishments. enrolment, training, the same time a shortage of university graduates is taking shape for strategic sec- evaluation and tors: industrial production and agriculture. 9.3. Institutional and thematic graduation of Urgent measures are needed for getting structure of science out of that situation aimed at a regulation university students of the enrolment and training in different The substantial changes taking place subjects at the higher educational estab- in scientific and technological research lishments. By specifying the total number have been determined by two groups of of university students for each higher edu- factors. The first group includes the state cational establishment, the state can con- policy in the 1960-1989 period. At that time, tain the emerging structural imbalances the institutional structure and thematic ori- and could harmonize the quality param- entation of scientific and technological re- eters of higher education with the real search was shaped, determining by and needs. large its present-day character. During these decades the human, financial, tech- So far the reform in the higher educa- nical and information resources for scien- tion has mostly had organizational and tific and technological research increased quantitative dimensions. Few steps have continuously, though in an insufficiently been taken or results obtained in the sphere balanced manner. of the quality of education. The disproportions between theory and practice continue The second group of factors have been to be reproduced in the educational prac- related to the radical transformation of tice. The low degree of tie-up between the society, started at the end of 1989. The individual subjects and the predominance withdrawal of the state from its dominant of passive methods in the training process position in society brought about shocks in continue. The differences and inequality in the scientific policy and in the development the standards of training at the different of the scientific potential. The allocations higher educational establishments stand out from the budget earmarked for the devel- clearly. Following the principle of academic opment of science and technologies were autonomy, each higher educational estab- abruptly curtailed. The decline of produc- lishment specifies the number and struction and the great indebtedness of most of ture of specialities, the curricula and the enterprises have rendered extremely programmes for training in them, as well hard the functioning and survival of the The withdrawal of the as the criteria of evaluation of the achieve- research and development units affiliated state destabilized the ments in learning. As a result of this, train- with them. The shortage of funds practi- ing in one and the same speciality pursued scientific policy cally isolated the majority of scientists from at different higher educational establish- the international scientific community. ments is different in contents and in quality. These negative influences affected all research and development institutions. The introduction of uniform state cri- They can be referred to four basic sectors: teria for the evaluation and control of the quality of training in all educational institu-

110 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 The first sector are the state scientific priority of lecturing at the structures of units, meeting a wide range of public needs, higher education. including also the needs of the major state institutions. The means for their financial During the past few years changes backup came mostly from the state bud- have also set in in the structures of units by get. Included here are the largest scientific scientific spheres. Most clear-cut are the institutions, incorporating institutes, experi- changes in the sphere of the technical sci- mental stations, laboratories and other ences. More than half of their total num- units. These are the Bulgarian Academy ber (56.9%) is focused on the higher edu- of Sciences (BAS), the Academy of Agri- cation sector. The share of company sci- cultural Sciences (AAS), as well as the na- ence has sharply dropped. The research tional centres in the sphere of public health. and technological units in most of the en- Referred to that sector are also the units terprises have been closed down. Their providing the scientific services to the min- number has been reduced almost three istries and the central departments. Table 9.4.

The second sector includes the higher Research units and researchers according to institutional and semi-higher educational establish- sectors (1994) ments, their specialized divisions for scientific research, as well as the state insti- Sectors Research units Researchers tute hospitals. They are financed through number percentage number percentage their own funds and through contracts.

The third sector includes the organi- State sector 227 50.4 8177 44.2 sations, carrying out research aimed at sup- Sector higher education 100 22.2 7998 43.2 porting the manufacture of commodities Sector of company science 118 26.2 2298 12.4 and services for the market. Their financ- Sector of non-profit Institutions 5 1.1 24 0.1 ing is based on contracts with those order- ing scientific and technological products.

The fourth sector encompasses insti- times. Despite the cuts, the influence of tutes, foundations and other non-profit as- science has to a certain extent been pre- sociations. They have been a new phenom- served in some sectors of the national enon emerging in the course of the past economy, which were priority sectors in the few years. Along with their other activities, period up until 1990. More than half of the they also engage in scientific research. units of departmental science (60.2%) have been concentrated in the scientific The Bulgarian Academy of Sciences servicing of the structure-determining sec- (BAS) has a significant weight in the insti- tors. Mechanical engineering and metal tutional structure of scientific and techno- working are serviced by 22% of the com- logical research, as there are 81 units in its pany research units, electrical engineering composition. The Academy of Agricultural and the electronic industry by 15.2% of Sciences has 72 organisations. Thus the them, the chemical and oil-processing in- academic structures focus one-third of the dustry by 13.6%, and transport - by 9.3% total number of research organisations. of them. The sharp curtailment of industrial production in the 1990-1994 period The decrease of researchers has been substantially affected these sectors. Some most significant in the sphere of higher of them turn out but one-fourth of their education. Their share of the total number 1989 output. This has been the main rea- dropped from 43.2% to 27.5%, while in son why the enterprises can no longer se- the state sector the number increased to cure the finances necessary for scientific 57.6%. These statistics are indicative of the and technological research.

NATIONAL AND REGIONAL PROCESSES IN EDUCATION AND SCIENCE 111 In the state sector and most of all in 9.4. Financing and infrastructure the Bulgarian Academy of Sciences are of scientific and technological almost all units conducting research in the research field of the natural sciences - 93.8%. The units carrying out research in the field of The trend of a long term increase of the agricultural sciences are also exclusively the spendings for science was discontinued concentrated in the state sector - 96.4% after 1988. In the 1979-1988 period that (Academy of Agricultural Sciences). This increase was by 2.8 times. Since the early sector has a leading role also by the num- 1990s the share of funds earmarked for re- ber of research institutions in the sphere of search has sharply dropped in relation to the social sciences, too - 63.4%. the gross domestic product (GDP). Table 9.5. This trend is in striking opposition to Share of the means allocated for scientific and technological the recommendations of the European research as percentage of the GDP (1988-1994) Union to the countries of the community regarding the allocation of 3% of their 1988 1989 1990 1991 1992 1993 1994 GDP for science. The continuation of the trend would bring the country closer to the % 2.5 2.4 2.2 1.3 1.4 1.1 0.9 states of Africa and Latin America, where an average of 0.5% of the GDP are set aside for scientific and technological research. The four institutional sectors have their specificity also in view of the differ- The important indicator of funds al- ent types of research, in which they engage. located for science per capita of the popu- In the units of the state sector the pure sci- lation has sharply deteriorated. From 44.5 ence predominates - 76.8%. Applied re- US dollars annually in 1990, this indicator search and development are dealt with in reached $10.4 in 1994. Quite a consider- the organizations of the enterprises - re- able difference can be noticed in the com- spectively 46% and 63.9%. Among the re- parison with countries close to Bulgaria in search completed in 1994 by organisations territory and population. In 1990 that indi- of all sectors, only 11.7% resulted in the cator for Belgium was $277, in Denmark - development of new and the improvement $242, and in Austria - $236. of already existing technologies. In countries in a situation analogous An analysis of the data concerning the to that of Bulgaria with limited possibili- research subjects completed in 1994 indi- ties and interest of companies and other cates a low degree of tie-up of scientific organisations to render assistance to sci- and technological research in the country ence, the state is involved in its financing with research carried out in other coun- with a share exceeding 50%. In Bulgaria The international tries. Out of all the 4954 investigations com- that share is 30-35%. pleted, only 393, or 7.9% , were along the scientific and lines of international scientific and tech- Institutional financing makes up the technological co- nological co-operation. Barely 1.4% were predominant share of the budgetary funds along the lines of co-operation with the Eu- allocated to science: subsidies for the BAS, operation is too limited ropean Union. Similar is the share (1.2%) the AAS and other units. Projects are fi- of the completed new and improved tech- nanced by the National Fund for Scientific nologies - 7 in number, produced along the Research, by the Fund for Structural and lines of international scientific and techni- Technological Policy as well as by funds cal co-operation. with the sector ministries. In the 1991-1994 period, the National Fund for Scientific Research financed 2512 projects amount-

112 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 ing to a total of 278.6 million leva. Projects Against the background of the finan- for the purchasing or leasing of apparatus, cial scarcity, the grave problems in the ma- equipment, licences and know-how were terial and technical infrastructure of Bulgar- financed in 1994 via the Fund for Struc- ian science are not surprising. According tural and Technological Policy to the to the results of a study conducted at the amount of 110 million leva. end of 1992, only one-fifth of the comput- ers and barely 29% of the unique research The spending on The absence of significant market de- apparatus were less than 3 years old. With mand for scientific services has had a le- the drastic curtailment of funds, the tech- science is mainly the thal effect on the research institutions of nological standards of Bulgarian science spending on salaries the company sector. The Ministry of In- have further deteriorated. Statistics of the dustry undertakes the elimination of the same study also point to the deterioration juridical independence of the research and of the stock of buildings. At the end of 1992, development units and their incorporation nearly half of the buildings needed current in the composition of the enterprises, which repairs and between 20 and 25% capital secure between 80 and 100 per cent of the repairs. The share of buildings which will contracts. soon be absolutely impossible to use is So far in Bulgaria there is no practice growing. of foreign countries investing in science. Table 9.6. According to statistics of the Agency for Foreign Investments, in 1995 not a single Employment in the sector of science and scientific servicing company with foreign participation invested capital in products of the scientific Years 1989 1990 1991 1992 1993 1994 1995 and technological activity. Total number of employed 97388 90918 67418 52571 36442 31568 30287 An indicator of the rather limited financial base of scientific and technologi- Research workers 31611 31704 29060 26598 26284 25696 24848 cal research is the share of the funds for salaries and insurance in the total expen- Post-graduate students ditures of the two biggest scientific institu- - Bulgarian citizens tions in 1994. At the BAS they amount to trained in Bulgaria and abroad 3454 5153 4811 2965 2215 1393 1326 55.9% of the overall expenditures and at the AAS - to 44.6%. The salaries them- Of them regular selves are a discouraging factor. The aver- students 2055 2286 2272 1425 926 439 440 age annual salary in the sector of Science and Scientific Services tends to decrease. In 1989 it was 1.13 times the average annual salary in the country, and in 1993 - The restitution of land ownership and 0.99 times. of large-scale urban ownership creates problems and tensions in the work of a An enduring trend has taken shape number of scientific units. Confronted with during the past 10 years of a decrease of such problems are the AAS as well as units the share of funds for capital investments of the BAS and some higher educational in the overall expenditures associated with establishments. research. The lowest acceptable value of this indicator is 10-12% of the spendings 9.5. The scientific personnel on research. In 1989 that share was 10.5%, and in 1993 - 3.2%. In 1994 that share in the spendings of the BAS and the AAS had During the 30-year period up until symbolic values - 1.6%. 1989, those employed in the sector of Sci- ence and Scientific Servicing increased in number at priority rates in comparison with

NATIONAL AND REGIONAL PROCESSES IN EDUCATION AND SCIENCE 113 the other sectors, reaching 97388, or 2.4% spheres of science or on the training of of those employed in the country. At the university graduates in certain disciplines end of 1994 employment in science was encouraged the inflow of new researchers 32.4% of that of 1989. and lecturers among the talented young people and stimulated their growth in the From 1980 to 1989 the number of re- scientific hierarchy. The nature of the research workers increased by 40%, whereas search also exerts an influence on the quali- their number at the end of 1994 had fications structure. Most of the research dropped by 20% as compared with 1989. workers, employed in the sphere of com- Since 1989, substantial differences in the pany science, deal with applied research number of research workers have also been and developments. The results obtained by noticed between the individual scientific them give smaller opportunities to their spheres. The downward trend has been authors to get scientific degrees, because most predominant in the technical and ag- they are more difficult to fit into the crite- ricultural sciences. ria specified for a contribution to science. There are differences in the qualifica- These criteria give priority to pure science. tion structures of the scientists from the Indicative in this respect is a compari- various fields of science. In the sphere of son of the qualification levels of the scien- the medical sciences the share of scientists tists of the different sectors. The share of without scientific degree is 76.1%, whereas scientists with a scientific degree in the state in the field of the agricultural sciences that sector is 61.6%, while in the sector of higher share is 59%, and of the technical sciences education it is 41.0% and in the sector of - 64.4%. In the natural and agricultural the enterprises - 19.8%. These statistics sciences more than half of the researchers come to show the different weight that the have a scientific degree of Dr. and Dr.sc. system of scientific degrees and titles has That percentage is from around 36.9% in for the professional reproduction of differ- the medical sciences to 48.0% in the social ent sectors of Bulgarian science. This sciences. makes it imperative to look for alternative Table 9.7. approaches and systems for the professional growth of scientists at the different Researchers by fields of science types of research and technological institutions. The mechanisms of promotion of Fields of science 1989 1990 1991 1992 1993 1994 1995 researchers, engaged in various types of research also need reassessment. Natural sciences 5351 5459 5272 5135 5227 5151 5050 Technical sciences 12799 12905 10541 9339 8583 7743 7125 Of major importance for the profes- Medical sciences 4573 4573 4917 4914 4796 4802 4802 sional growth and for the productivity of the science is the ratio between researchers Agricultural sciences 2310 2089 1930 1662 1632 1649 1633 and technical and auxiliary staff. At the end Social sciences 6578 6678 6400 5548 6046 6271 6238 of 1994, the ratio was 0.73 of technical and auxiliary staff per one researcher. This ra- TOTAL 31611 31704 29060 26598 26284 25616 24848 tio is indicative of the disproportions in the national research and technology spheres. Broken down in sectors, the ratio varies from 1:1.2 in the sector of company sci- These differences are associated with ence to 1:0.45 in higher education. Both the periodical shift of priorities during the on the national level and in the individual past decades in the field of the scientific institutions these ratios have been the re- and technological research, as well as in sult of the break-down of the personnel in the sphere of higher education. The great Bulgarian science. The strongest ebb for stress laid in the state policy on some reasons of the lower pay occurred among

114 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 the technical and auxiliary staff. As a re- policy up to 1990 justified the emergence sult of errors in the scientific policy during of centrifugal or centripetal trends in indi- the past few decades, that staff has always vidual periods in the establishment of sci- been far less numerous than the real needs entific and technological units. Several cen- of the research workers. During the best tres with high concentration of higher edu- years for science as a whole, the average cational establishments, subsidiaries of the ratio between research workers and the Box 9.4. technical and auxiliary staff was around the values of 1:2. A trend towards ageing of the scientific personnel The equal status of men and women in When combined with the ab- the sphere of research, the emi- Bulgarian society during the past few de- sence of operative mechanisms gration waves of young people cades, the absence of discrimination de- for accreditaion of researchers, after 1989, the regime of red-tape termine the place of women in the countrys the strategy adopted of restrict- dominating advancement in sci- scientific life. During the 25 year long pe- ing the quantitative increase of ence. The age structure is most riod from 1965 until 1990, the number of research personnel has been the unfavourable in the academies. women researchers increased almost six fundamental cause of the ageing In 1994, at the BAS researchers times, i.e. twice as fast as the total number of the scientific cadre potential. up to the age of 29 were 0.85%, of researchers in the country. A trend of The forecasts have materialized while those above 60 were 6.9%. higher share of the women post-graduate that in the early 1990s, the main No care was taken to stimulate students has come to the fore - from 28.2% contingent of scientists and young scholars. In the restructur- in 1970 to 45% in the period from 1980 to above all scientists with scientific ing of the units of the BAS, the date. This is an evidence of their outspo- degrees will go into retirement. young people were most often ken endeavour towards gaining profes- This process has been addition- dismissed. The inflow of young sional qualifications. The circumstances ally influenced by the low social people into academic science is conducive to this process have been the status of the scientists, the dwin- minimal. In 1994, there was a social benefits offered to mothers, post- dling interest of young people in zero enrolment of young schol- graduate students, which enable them to a professional self-realization in ars in the BAS. combine their functions in science with those of motherhood. That is why the share of the women Doctors (38% of the total academies and company institutions took number of holders of these title) almost shape. The capital city has had a leading corresponds to the share of women in the role as the centre of the fundamental cul- total number of research workers, too. But tural institutions, where a major research in 1990 only 20% of the Dr.sc., 20.4% of and technological potential is focused. It the professors and associate professors and sharply differs in quantity as well as in qual- 28.5% of the senior research associates of ity from that in the rest of the regions. At the first and second degree were women. the end of 1994, two-thirds of the staff en- The reasons for these differences are gaged in research and technology was lo- mainly linked to the care of bringing up cated in Sofia, including 72.7% of the re- children and with the duties in the family. searchers. The capital city is no doubt a leader in the sphere of pure science ac- 9.6. Regional dimensions of counting for 89.4% of the pure research scientific and technological carried out there. The projects of scientists research and teams from Sofia institutions account for the predominant part of the projects financed through competition by the Na- Most varied economic, political, cul- tional Fund for Scientific Research. In the tural, historical, natural and other factors 1991-1994 period, 2539 of their projects have influenced the formation of the re- were financed which is 83.7% of the total gional structure of scientific and techno- number of projects logical research. The state priorities in

NATIONAL AND REGIONAL PROCESSES IN EDUCATION AND SCIENCE 115 The implementation of the policy of holding of ones own scientific stand have priority scientific servicing of strategic sec- been expanded. The exemption of scien- tors of the economy, of accelerated tech- tific work from red-tape bans, political su- nological development and the provision pervision and acts of nepotism in the se- of specialists has been the basic factor, lection of the range of subjects treated, the stimulating the development of the regional research methods and in the selection of Two-thirds of the centres of research and development and personnel, in determining the parameters of higher education. These have been of a career in science have no doubt been scientific personnel are Plovdiv, Varna, Rousse, Gabrovo, Stara an achievement. located in Sofia Zagora, Veliko Turnovo, and Bourgas. The thematic orientation of the investigations These positive changes have been due and of the training of university graduates rather to the complete absence of a state has been associated with the regional policy than to the existence of any state economies. Varna has become specialized policy in science. Both at the beginning of as a centre of shipbuilding and of the re- the changes and in the middle of the 1990s search, channelled to the study of the prob- there have been no clearly outlined sectoral lems of the sea; Gabrovo - of the textile priorities for the development of the machine building, Plovdiv - of agriculture, economy. In such conditions two alterna- Bourgas - of oil-processing, Rousse - of tive approaches of the state to the devel- farm machine building. opment of the national science have been possible - of conservation and of liquida- A setback of the established pattern tion. The guideline of the approach of con- of territorial distribution of scientific and servation has been the preservation of the technological resources is that it has taken national resources available in science. The shape with a view to the sectoral division. guiding idea of that approach is that after The intentions of establishing regional sci- the priorities in the national socio-economic entific, educational and technological com- and cultural development have been speci- plexes have not been realised. The absence fied, these resources would be channelled of a tie-up between the sectors has not to the tackling of significant tasks. The fun- made it possible to create a sound scien- damental idea underlying the liquidation tific potential, stimulating the entire eco- approach has been that scientists have to nomic prosperity of the regions. A prereq- be left to look for their own survival in the uisite for the restructuring of scientific and conditions of market economy. Those sci- technological resources on a regional scale entific units and types of research, which and for raising the efficiency of their po- meet the needs of the market are expected tential is the endorsement of legislative to survive. The state is assigned a minimum changes. Of exclusive importance is the so- role in the development of the national sci- lution of the problems dealing with munici- ence. What is the most important is not so pal ownership and financing of the munici- much the states financial support to sci- palities. A solid base can thereby be cre- ence, as its stepping back in the specifica- ated for effective changes in the regional tion of the priorities of national science. scientific and technological research. There is no In the period following 1989, the sec- comprehensive state ond approach has gained the upper hand 9.7. Problems of science policy in Bulgaria. The state withdrawal from the policy in science administration of science has been the re- In the wake of 1989, positive changes sult not only of its general decline. It has have set in in the sphere of scientific work, proceeded from an understanding of the associated above all with greater freedom essential incompatibility between the inter- of professional self-expression. The fields nal needs of science and the role of the for contacts with colleagues in the country state policy. The assumption has been that and from abroad, for publication and up- the smaller the role of the state, the greater

116 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 the chances of science to develop success- of great creative potential could work with fully. This assumption has determined the relatively the greatest freedom and find absence of any state policy typical of the self-expression. Though they did not have modern states: the working out of national a high status in terms of incomes, the sci- priorities, programmes and mechanisms for entists were acknowledged to be the most organization, co-ordination and control in important part of the intellectual elite of the sphere of scientific and technological the nation. During the past few years, sci- Urgent legislative research. A contribution to the giving up ence has lost that privileged position ow- of a national science policy has been the ing to the crisis in it and owing to the emer- regulation of science is sharp confrontation of political forces and gence of spheres for the professional self- needed the ensuing lack of prospects and stability expression of the young which are more in the state policy as a whole. None of the prestigious both in terms of social status leading political forces has put on the and incomes. agenda the future of science from the point of view of the national interests. Instead of Against that negative background, tackling fundamental problems of Bulgar- what needs urgent legislative regulation are: ian science, in which the crisis endured by - the powers of the central and local society is painfully felt, the approach taken authorities in the sphere of the formula- to science proceeded opportunistically. tion and pursuit of the policy in science Important scientific units were closed down and technology; or substantially weakened. A considerable stock of scientific information and docu- Box 9.5. ments has been scattered. Valuable highly qualified specialists and young and hope- Science and the political conjuncture ful researchers left science. The conjuncture character of tific journals, etc. Those who were Other factors have also had a nega- state interference in scientific life affected turned out to be estab- tive impact. The personnel vacuum is in- stands out prominently when the lished scientists of international tensifying, the continuity of generations of legislative work is followed. With renown. Neither the passing of the researcher has been violated. The low sal- the exception of the law, regulat- Panev law in 1992 nor its re- ary has pushed scientists towards the search ing the activities of the BAS, un- scinding in 1995 has been unam- for opportunities of raising their incomes der the new conditions the great- biguously assessed by the scien- by engaging in additional work, sometimes est attention of the legislators and tific community. The almost far from science. The sharp increase of the the greatest amount of energy was three-year long concentration of number of higher educational establish- spent on the part of society in the the attention of the scientific com- ments in almost all former district cities, endorsement and subsequent re- munity on the debates in favour as well as the teaching of one and the same scinding of the Law on the of or against the Panev law has subjects in many of these establishments Decommunization in Science, resulted, however, in lasting ten- has attracted a great number of research- referred to as the Panev law. sions amidst the scientific com- ers to lecturing. They take on a high load- According to that law, scientists munity and has side-tracked the ing of lectures, which diminishes their po- who had occupied Communist attention from the most impor- tential for full-fledged research work. Party posts even on the level of tant problems of Bulgarian sci- primary party organizations were ence for a long time. The atmo- These have been phenomena detract- deprived of the right to be elected sphere of confrontation has con- ing from the motivation of scientists and on administrative positions in sci- tributed to the decline of the na- entailing a loss of scientific qualifications. ence from head of a chair up- tional scientific and technological Their complex impact has been drastically wards, as well as to bodies of ap- potential and to a sharp drop of demoting the prestige of science as a pro- preciative functions - scientific the public prestige of science and fession in the eyes of the young genera- boards, editorial boards of scien- the scientific profession. tion. In the period preceding 1990, the spheres of science was the only sphere in society, where highly qualified specialists

NATIONAL AND REGIONAL PROCESSES IN EDUCATION AND SCIENCE 117 - the status of the scientific and tech- body can synchronize the activity of the nological organizations; state with regard to the main spheres which play important role in the formation of the - financing of scientific and technologi- human capital. The full-fledged work of the cal research, including legislative regula- Ministry, however, needs special units, tion of the funds for research; which are to feed data about the state and The state has to specify - the mechanisms of social supervision trends in national science, education and technological innovations. the priorities of the of scientific and technological research and of co-ordination of interests, affected by development of science The situation of Bulgarian science the carrying out of research. makes it imperative both for the state and and technology The passing of adequate laws is not for the scientific community to be much sufficient. The state has to take up its role more active in resolving the fundamental of a main factor in the sphere of the for- problems of the scholars and of the re- mulation and implementation of the na- search units. Some changes in society make tional scientific and technological policy. it possible to come up with such solutions. It has to comply with the restructuring of It is proper to tie up the privatization with the economy and with the national priori- the encouragement of research in science ties in key spheres as education, public and technology. A certain percentage of health, environmental conservation and the revenues coming from privatization defence. The state is the factor, which has could be allocated to the funds, stimulat- to define, by democratic procedures, the ing research and the improvement of the national priorities of the scientific and tech- infrastructure of science. Outstanding in- nological development and the means of ventors, whose intellectual products have their attainment. contributed to the prosperity of Bulgarian production may be rewarded via the Box 9.6. mechanisms of mass privatisation.

Programme for the restructuring of the Academy of Two basic trends have stood out in the Agricultural Sciences sphere of international techno-scientific co- operation since 1989. The first has been Some 13.6% of the researchers regional specialization. Addi- conditioned by the international context are employed at the Academy of tional specialization is envisaged and by the democratic changes taking place Agricultural Sciences. The prog- of the research along fundamen- in the country. It finds expression in the ramme for its restructuring aims tal scientific lines. At the same establishment of direct contacts by higher at preserving to the maximum time units, which have so far spe- educational establishments, institutes, and the available scientific potential cialized in research on individual laboratories with governmental and non- and at adapting its work to the farm products, will secure a governmental research units in the coun- diverse forms of management of higher degree of comprehensive tries of Western Europe and North the land and to the changes in regional scientific servicing. America. Action taken in the sphere of international law has also been part of this It is a task of major importance for trend: the state to guarantee co-ordination be- - joining the European conventions on tween the development of national science, the recognition of certificates on comple- technological innovation and education. In tion of education; this respect it has been a positive fact that since 1995 the problems of the formula- - involvement in the West European tion of the national policy in science and programmes and structures - PHARE, technology have been brought to the fore TEMPUS, NATO, ACE, COPERNICUS; as an obligation of a state body of the ex- ecutive authorities, namely the Ministry of - assistance in the form of consulta- Education, Science and Technologies. This tions;

118 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 - specializations along the lines of bi- the beginning of 1995 that more active at- lateral co-operation and the application of tempts were made to revive the partner- the principle of competition in the sending ship with the higher educational establish- of specialists; ments and scientific organizations from these countries. This has been done on a - intensive interactions with founda- new basis and with due account being taken tions like Fulbright, Humboldt, Open So- of the present-day realities. ciety, John Marshall and the like. The responsible approach to the prob- The second trend is related to the lems of the national science on the agenda discontinuation of co-operation within the of Bulgarias socio-political life, the find- comprehensive programme for interna- ing and implementation of adequate solu- tional scientific and technical co-operation tions is the only way to stop the processes of the Council of Mutual Economic Assis- of deterioration of the scientific resources tance member-states and of almost all bi- and to involve them in the stabilization of lateral relations with the traditional part- the country. ners from this community. It was only in

NATIONAL AND REGIONAL PROCESSES IN EDUCATION AND SCIENCE 119 APPENDIX TABLES

Life expectancy at birth (years) 1994 70.8 1. Human development Adult literacy rate (%) 1992 97.9 index Combined first-, second- and third-level gross enrolment ratio (%) 1994 67.5 Real GDP per capita (PPP$) 1994 4908 Adjusted real GDP per capita 1994 4908 Life expectancy index 1994 0.763 Education index 1994 0.878 GDP index 1994 0.899 Human development index 1994 0.847

Life expectancy at birth (years) 1994 70.8 2. Profile of human Maternal mortality rate (per 100,000 live births) 1994 12.6 development Population per doctor 1994 300 Scientists and technicians (per 1,000 people) 1994 4.2 Combined first-, second- and third-level gross enrolment ratio (%) 1994 63.1 Tertiary full-time equivalent gross enrolment ratio Total (%) 1994 24.8 Female (%) 1994 29.0 Daily newspapers (copies per 100 people) 1994 171 Televisions (per 100 people) 1994 17.62

Real GDP per capita (PPP$) 1994 4908

1 Single circulation 2 Only registered

Unemployment rate (%) 1994 20.51 3. Profile of human Youth unemployment rate (%) distress Male (age 15-24) 1994 46.91 Female (age 15-24) 1994 42.61 Adults with less than upper-secondary education (as % of age 15-64) 1992 42.1 Ratio of income of highest 20% of households to lowest 20% 1993/94 5.7 Female non-agricultural wages (as % of male wages) 1994 80.1 Average annual rate of inflation (%) based on XII.1992 1993 63.9 based on XII.1993 1994 121.9 Injuries from road accidents (per 100,000 people) 1994 100

1Labour force survey by October 1994

APPENDIX TABLES 129 4. Violence and crime Prisoners (per 100,000 people) 1994 100 Homicides in selected cities (Sofia, per 100,000 people) 1994 4 Drug crimes (per 100,000 people) 1994 13 Total number of reported adult rapes (thousands) 1994 0.3751 Suicides (per 100,000 people) Male 1994 25 Female 1994 10

1Registered rapes committed on persons over 18 years

5. Health profile Adults who smoke (%) - Alcohol consumption per capita (litres) Wine 1994 10.2 Brandy 1994 3.3 Likelihood of dying after age 65 - AIDS cases (per 100,000 people) 1994 0.09 Population per doctor 1994 300 Health bills paid by public insurance (%) 1994 - Public expenditure on health (as % of total public expenditure) 1994 8.81 Private expenditure on health (as % of total public expenditure) 1994 3.0 Total expenditure on health (as % of GDP) 1994 3.8

1 From the state budget

6. Education profile Enrolment ratio for all levels (% age 6-23) 1994 64.0 Upper-secondary full-time equivalent gross enrolment ratio (%) - Upper-secondary technical enrolment (as % total upper-secondary) - Tertiary full-time equivalent gross enrolment ratio (%) 1994 24.8 Tertiary natural and applied science enrolment (as % of total tertiary) - Expenditure on tertiary education (as % of all levels) 1994 13.6 Public expenditure per tertiary student (PPP$) - Total expenditure on education (as % of GDP) 1994 4.2 Public expenditure on education (as % of GDP) 1994 4.0

7. Employment Labour force (as % of total population) 1994 43 Percentage of labour force in Agriculture 1994 23 Industry 1994 35 Services 1994 42 Future labour force replacement ratio 1994 89.6

130 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 Earnings per employee annual growth rate (%) - 7. Employment (continuation Labour force unionized (%) - from page 130) Weekly hours of work (per person in manufacturing) - Expenditure on labour market programmes (as % of GDP) -

Unemployed persons (thousands) 1994 7401 8. Unemployment Unemployment rate (%) Total 1994 20.51 Male 1994 20.41 Female 1994 20.61 Youth unemployment rate (%) Male (age 15-24) 1994 46.91 Female (age 15-24) 1994 42.61 Incidence of long-term unemployment (%) More than 6 months Male 1994 71.21 Female 1994 74.01 More than 12 months Male 1994 57.91 Female 1994 60.91 Unemployment benefits expenditure (as % of total government expenditure) - Total public expenditure on social protection (as % of GDP) -

1 Labour force survey by October 1994

Real GDP per capita (PPP$) 1994 4908 9. Wealth, poverty and social investment GNP per capita (US$) - Share of industrial GNP (%) - Income share Lowest 40% of households (%) 1993/94 19.8 Ratio of highest 20% to lowest 20% 1993/94 5.7 Social security benefits expenditure (as % of GDP) 1994 11.9 Public expenditure on education (as % of total public expenditure) 1994 10.31 Public expenditure on health (as % of total public expenditure) 1994 8.81

1From total expenditures of the state budget

APPENDIX TABLES 131 10. Resource flow Export-import ratio (exports as % of imports) 1994 103.21 imbalances Export growth rate as % of import growth rate 1994 134.42 Trade dependency (exports plus imports as % of GDP) 1994 87.03 Terms of trade 1993=100 1994 100.8 Net workers remittances from abroad (US$ millions) - Government net debt interest payments (as % of total expenditures) - Gross international reserves (month of import coverage) - Current account balance before official transfers (US$ millions) -

1 Calculated on FOB/FOB basis 2 The Exports growth is calculated as the ratio of average annual growth rate of Exports value indices and average annual growth rate of Exports value indices. 3 Data refer to exports/imports of goods and services.

11. Urbanization Urban population (as % of total) 1960 38.0 1994 67.8 2000 69.0 Urban population annual growth rate (%) 1960-1994 1.4 1994-2000 -0.6 Population in cities of more than 750,000 As % of total population 1994 13.2 As % of urban population 1994 19.5 Largest city - Sofia Population as % of urban population 1994 19.5 Growth rate (%) 1990/1994 -0.5

12. Demographic Estimated population (millions) 1960 7.9 profile 1994 8.4 2000 8.0 Annual population growth rate (%) 1960-1994 0.2 1994-2000 -0.9 Total fertility rate 1994 1.4 Contraceptive prevalence rate, any method (%) 1994 - Dependency ratio (%) 1994 49.2 Population aged 65 and above (%) 1994 14.9

132 HUMAN DEVELOPMENT REPORT ! BULGARIA 1996 Land area (1,000 km2) 1994 111.0 13. Natural resources Forest and woodland (as % of land area) 1994 34.3 balance sheet Arable land (as % of land area) 1994 42.3 Irrigated land (as % of arable land area) 1994 19.9 Internal renewable water resources per capita (1,000 m3 per year) 1994 2.4 Annual fresh water withdrawals As % of water resources 1994 18.8 Per capita (m3) 1994 444

Production as % of national energy reserves 14. Energy consumption Coal - Natural gas - Crude oil - Commercial energy poduction average annual growth rate (%) 1994-1990 -12.8 Commercial energy consumption average annual growth rate (%) 1994-1990 -25.2 Commercial energy use (kg of oil equivalent per capita) 1994 2654 Commercial energy efficiency (energy consumption in kg of oil equivalent per $100 GDP) 1994 221.4 Commercial energy imports (as % of merchandise exports) -

CO emmissions by source 15. Environment and 2 pollution Mobile sources (millions of metric tons) 1994 10.2 Energy transformation (millions of metric tons) 1994 34.0 Industry (millions of metric tons) 1994 15.4 Sulfur and nitrogen emissions (1,000 metric tons of SO and NO ) 1994 2 2 SO 1469.2 2 NO 298.1 2 Share of greenhouse gas emissions (greenhouse index) (%) - Greenhouse gas emissions per capita (world median=1) - Nuclear waste from spent fuel (metric tons of heavy metal) - Hazardous waste production (1,000 metric tons) - Population served by Waste water treatment plants (%) 1994 36.4 Municipal waste services (%) 1994 35.4 Waste recycling (as % of consumption) Paper and cardboard 1994 39.8 Glass -

APPENDIX TABLES 133 16. National income GDP (US$ billions) 1994 10.1 accounts Agriculture (as % of GDP) 1994 11.01 Industry (as % of GDP) 1994 33.01 Services (as % of GDP) 1994 49.01 Consumption - Private (as % of GDP) - Government (as % of GDP) - Gross domestic investment (as % of GDP) - Gross domestic savings (as % of GDP) - Tax revenue (as % of GNP) - Central government expenditure (as % of GNP) - Exports (as % of GDP) 1994 43.22 Imports (as % of GDP) 1994 43.82

1 The percentages do not add to 100 because of the adjustments of GDP: - Imports duties - Taxes and excizes 2 Exports and imports of goods and services

17. Trends in economic GNP (US$ billions) 1994 9.91 performance GNP annual growth rate (%) GNP per capita annual growth rate (%) Average annual rate of inflation (%) based XII.1992 1993 63.9 based XII.1993 1994 121.9 Exports as % of GDP (% annual growth rate) - Tax revenue as % of GNP (% annual growth rate) - Overall budget surplus/deficit (as % of GNP) -

1GNI

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