'One and the same amount of physical work applied to a hoe and to a tractor will yield very different production.'
This is a favourite quote that Georgi Ganev, programme manager of the Centre for Liberal Strategies, and professor in economics at Sofia University, often shares with his students when explaining the problem of low labour productivity.
Bulgaria is last but one in terms of labour productivity among developed countries, according to a report by the International Labour Organisation, issued last week. Its labour productivity is also 36 pct of the average for EU 25 (all members of the European Union (EU), except for Bulgaria and Romania) in 2007, according to Eurostat data. This is hardly a surprise to anyone, but it raises serious concerns related to Bulgaria's catching up with EU's more wealthy members. Something which Bulgarians fight for every day, mainly by strikes for better salaries.
Bulgaria has a higher growth of labour productivity per hour of work - 3.3 pct for 2006 compared with 2005 - than some of EU's wealthiest members, Sweden, Italy, Denmark and Germany, whose labour productivity growth for the period was respectively 2.7 pct, 1.0 pct, 0.6 pct and 2.2 pct. The positive difference is obviously due to the lower starting position, and is by no means enough to allow us to catch up with these countries.
Reasons for the Inefficiency
Low labour productivity is a result of a range of interrelated factors, the technical outdatedness of the Bulgarian economy, the quality of labour force, and the impact of the government on the labour market. These are to a large extent historically determined by the tens of years of planned regulation of the economy. 'The Socialist economy made sure for 45 years that everyone had a job, irrespective of the end result, which led to its distortion; a job that could be done by one person, was done by three or four people here. It is very difficult to overcome this momentum within 15 years,' says Evgeniy Ivanov, executive director of the Confederation of Employers and Industrialists in Bulgaria (CEIBG). 'Bulgarians have forgotten how to work. It is a fact that there are many unemployed people who simply do not want to work. So many years of all-embracing state property and idleness has brought us to this,' believes Dikran Tebeyan, deputy chairman of the Bulgarian Industrial Association. Valeria Zhekova, chairwoman of the Association of Bulgarian producers and exporters of clothes and textiles, shares the following example: 'There are Turkish clothing manufacturers with production units in Bulgaria and in Turkey. In the Turkish units the same number of people as in Bulgaria produce 30 pct more for an equal period of time, despite a lower level of education and intellectual capacities. It is only normal that their salaries are higher than the ones of our workers. The average Bulgarian does not seem to understand that in order to have a satisfactory income they must put in the appropriate amount of efforts,' Zhekova concludes.
Past mistakes also affect another important factor. 'After the fall of the Communist system we were lagging behind in terms of technological development of the production,' Dikran Tebeyan notes. Our whole economy prior to 1989 was based on exporting machine-building production to the Soviet Union and the members of the Comecon (Council for Mutual Economic Assistance). After the changes these markets crumbled, not only because of the fall of the system, but also because it turned out we were not able to meet the new technological requirements of these countries. For the same reason we were not able to enter new markets.'
Another aspect of the current situation is that as a result of the high unemployment rate and, respectively, the opportunity for hiring cheap labour, investors focused on starting technologically low and labour-expensive activities here, according to economists and employers.
Hoes Are More than Tractors
'We should accumulate more capital,' says Georgi Ganev. 'This can be done in the usual ways, such as improving the business environment, better property rights, improving credit conditions, etc. But these take time, the business needs time to react to any new measures.' Employers have united around several measures which they consider urgent; simplifying the regulatory regime, reducing bureaucratic barriers, and changing the Labour Code. The current serious restrictions on downsizing the the workforce should also be lifted, so that when an investor comes with the necessary capacity for introducing modern technologies and equipment, they would be allowed to replace unqualified employees with better prepared staff. Limitations to overtime work are also harmful; people who want, must be allowed to work more, employers believe. Last but not least Bulgarians must change their individual approach to work itself.
15-21/09/07, P24-25
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