More on economics

Joblessness to climb by summer ’10, economy to bounce in ‘11 

Ravaged by its first recession in 12 years, Bulgaria could see a double-digit unemployment rate, peaking at around 10% in the spring of 2010, business groups forecast. 

The economy shrank by 4.9% in the second quarter in comparison with 6.8% year-on-year growth in third-quarter 2008 when it still kept clear of the downturn. The jobless rate sprang by almost 40% over the past year to almost 7.8% at the end of August. 

“I think we have hit the bottom. But it’s too low and so unemployment will rise further as redundancies lag the drop in orders by around six months,” said Vasil Velev, chairman of the Bulgarian Industrial Capital Association (BICA). In this period companies are using all options to cut costs by soft measures such as putting staff on shorter working hours, he explained. 

Kamen Kolev, deputy chairman of the Bulgarian Industrial Chamber (BIC), companies could not stick to this approach for more than six months as slumping order intakes will force them to slim down their workforce. 

Bulgaria’s main trade partners such as France and Germany have shown signs they are shaking off recession but Bulgaria will see the green shoots of recovery in the spring of 2010. This will perk up the job market in a few months and so unemployment will stay high through the summer and even the autumn of 2010, Kolev reckons. 

The state could salvage some jobs if it covers a portion of the wages paid by companies that have been hit by recession, according to Evgenii Ivanov, executive director of the Confederation of Employers and Industrials in Bulgaria (CEIBG). The government put in place a similar programme but keen interest sapped quickly the allocated amounts. The social ministry has pledged to tap into Human Resources Development programme of the European Union (EU) to extend the scheme. 

Ivanov believes that by lending businesses a hand against the downturn, the state could stave off double-digit unemployment in 2010.