BEST PRACTICIES FOR FLEXICURITY IN BULGARIA

1. Republic of BULGARIA MINISTRY of LABOUR and SOCIAL POLICY BEST PRACTICIES FOR FLEXICURITY IN BULGARIA Elka Dimitrova, Ph. D. Director of Labour Market Policy Directorate WORKSHOP ON FLEXIBILITY OF LABOUR MARKETS Ankara, Turkey 21 February 2011

2. Outline of the presentation • The labour market in Bulgaria – key challenges • Bulgarian pathway for flexicurity on the labour market • Best practices for flexicurity

3. Bulgaria: Key labour market indicators

4. Bottlenecks and key challenges on the labour market • Limited flexibility and not sufficient security on the labour market • Rigid working time arrangements • Low labour productivity in the conditions ofgrowing globalisation • High unemployment of young persons and low-skilled • Low participation in lifelong learning • Undeclared work

5. The Danish model -the so called“goldentriangle” Basic axesof the flexicurity model Flexible labour market Effect of the vocational training as an element of LMP Generous schemes for social protection Active Labour Market Policy Effect of the motivation as an element of the labour market policy 5

6. Bulgarian pathway for flexicurity on the labour market2009 – 2011 • Elaborated in co-operation with the employers’ organisations and trade unions and adopted by the Council of Ministers in June 2009 • System of coherent activities and measures under the four components of flexicurity: • Flexible contractual arrangements and collective bargaining • Active labour market policy • Stable and responsive system for lifelong learning • Modern social security system The aim is to provide a balance between flexibility and security for both employers and workers The implementation is through the whole labour market policy by the National Employment Action Plan, other plans and programmes 6

7. First component of Bulgarian pathway : Flexible and reliable contractual arrangements • Flexible forms of employmentand work arrangements – temporary employment agencies, distant work, home work, working time • Collective bargaining and bilateral social dialogue and wage bargaining • Legislative regulation of internships, on-the-job training, etc. • Reduction of the undeclared work • Management of occupational and health risks in enterprises

8. Second component of Bulgarian pathway : Comprehensive strategies for lifelong learning • Better access to lifelong learning - vouchers for training • System for monitoring and forecasting of the demand and suplly of labour force • Training on the job and apprenticeship for early school leavers • „Second chance” for low-skilled unemployed • Promotion of apprenticeship, vocational guidance, training in key competencies • Improving the quality and attractiveness of vocational education and training - new curricula, training of teachers and trainers, enhanced practical training, etc.

9. Third component of Bulgarian pathway : Effective active labour market policy • Activation of long-term unemployed and inactive people • Support for active ageing • Creation of more "green jobs “ • Improving employment services - mobile offices, terminals for electronic services, one stop shop, processing model etc.

10. Fourth component of the Bulgarian pathway : Modern social security system • Stability of the Social Security System • Enhanced control of the National Revenue Agency, local tax authorities and the Executive Agency “General Labour Inspectorate”

11. Examples for working time flexibility • Working time with flexible limits • the working day may be divided into two or three parts • Work in shifts • Accumulated calculation of working hours (on a weekly or longer basis) • Introducing an open-ended working day • Increased number of working hours • Short-time work caused by reduced economic activity 11

12. Short-time work for internal flexibillity • According to the Labour Code, upon reduction in the volume of work, the employer may introduce short-time work for a period of up to six months during the year, an agreement with the trade unions or representatives of the employees is required • Employees from the sectors of “Industry" and "Services", working short time, may receive a public subsidy - 60 Euro per month - from the State Budget during 4 months. The enterprises are selected at local level and approved at regional level by social partners • In 2009, 12 820 workers saved jobs after the end of the short-time work which is 66% of the total number of participants. In 2009 from the total of 513 employers who participated only 22 employers made mass redundancies. • As a result during 2009 and 2010 over 20 000 employees received subsidies. • Provision of vocational training funded from the European Social Fund for the part-time workers, they can receive training vouchers 12

13. Regulation of Home Work and Distance Work • Agreement between employers’ organisations and trade unions • The choise is of the employee • Working conditions are negotiated in a collective agreement or in individual labour contract • The employer provides the equipment of the workplace and the communication with the employee • Home workers and distance workers have equal rights with other workers in terms of leaves, working conditions, working hours, wages etc. • To prevent isolation there are meetings with employers and other staff, they have to participate in social life of the team, they are entitled to union protection • They have the same access to education, training and career development

14. Training Vouchers • In Bulgaria vouchers for training are applied for training of employed and unemployed. Every person is entitled to one voucher for vocational training and one voucher for training in key competencies • The voucher for training has the status as a banknote with fixed nominal value in BGN, entitling the holder to training. As securities, the vouchers have series, number and assured protection. Only the Employment Agency has the right to provide vouchers for training. • The nominal value of the voucher depends on the type and duration of training selected. • Funding is from the European Social Fund and the "Human Resources Development 2007-2013 " Operational Programme • Training institutions are included in a List which is published on the website of the Employment Agency and announced in the Labour Offices. After receiving the voucher he or she chooses himself or herself the training provider from the List. 14

15. Difficulties • Limited state budget for subsidies and big number of applicants • Workers prefer full time work and do not like work in shifts, open-end working day etc. • Lower wage due to the short-time working day means lower insurance and lower pension • Low participation in training after the short-time (four hours) working day • Deadweight losses (some workers would have been kept even without subsidies; some employers introduced reduced working day because of the subsidies) • The labour inspection is difficult for the distance work and the home work • Sometimes it is difficult to decide what vocational training will increase the chance of the unemployed to find a new job • The favorite training for the key competences “foreign language” sometimes is not needed for the present job of the employed person

16. Bulgaria: Lessons Learned • Flexibility is not the monopoly of the employers, just as security is not the monopoly of the employees • It is much more expensive and long process to amend the results of failures: educational, labour market, etc., proactive approach reaps tangible results • To keep the staff in the enterprise is better than to fire during the crisis and than to hire after the crisis • Education and training are the key factors for labour force adaptability and flexibility • Subsidized employment needs more funding than the monthly social benefits for the same people but the social impact is higher • The integrated approach is the key for the success 16

17. Thank you for your Attention! Elka Dimitrova, Ph. D. Director of Labour Market Policy Directorate Ministry of Labour and Social Policy 2, Triaditza Str., Sofia 1051 Tel. + 359 2 8119 429 E-mail: edimitrova@mlsp.government.bg www.mlsp.government.bg www.az.government.bg http://ef.mlsp.government.bg