People looking to switch to a better-paid job this year may be facing a challenge. The pandemic made companies more cautious - not only in terms of hiring practices but also concerning wage growth in 2021. In short, most companies will be focusing on keeping their current employees rather than expanding their ranks and offering better-paid positions.
And yet, some companies - like export-oriented businesses, outsourcing, IT, pharmaceuticals, e-commerce - are planning to give employees a raise, albeit a relatively small one of 5% -12%, depending on the sector, the position, and the employee's qualifications. In comparison, the public sector has no such qualms.
Private sector lagging behind
The negative effect of Covid-19 on business in Bulgaria was significant last year. Many companies saw a decrease in revenues, liquidity issues, and some even decided to cease all business operations to cut losses. Unsurprisingly, this had an effect on the labor market. By the end of the year, over 220,000 people were unemployed - a 13% increase compared to 2019, according to the government's Employment Agency.
So far, wage growth seems to be relatively stable. Pre-crisis, average wages in Bulgaria were growing at a rate of over 10% on an annualized basis, both in the public and private sector. After a brief slowdown in the spring, the rate returned to 9-10%. By the end of the year, the private sector was offering on average 8.7% higher wages than in 2019, whereas in the public sector the increase was 11.4%, according to national statistics.
It's no surprise that the growth rate in the public sector is bigger - authorities increased the minimum wage in 2020 and raised average remuneration in government institutions on the frontline of the pandemic by 30% on top of the annual increase of 10% for all public sector employees.
In the private sector, some firms have had to decrease wages but, according to recruiters, they are few and far between. "Rather, some employers have been getting support from state-sponsored employment schemes, and rely on unpaid leave and layoffs. Many companies have drastically reduced their teams - in sectors such as FMCG, pharmaceuticals. On the other hand, there is a certain increase in the demand for labor in IT and BPO," Nadia Vasileva, President of non-profit organization Bulgarian Employment Confederation, told Capital Weekly.
Vasileva notes that now, when companies hire new employees, they offer lower starting salary - in IT, for example, the decrease is by 10-15%, in line with the reduction of working hours. "The same thing will likely happen when restaurants, hotels, transport companies return to normal - employers will either bring back their employees to the same wages as pre-crisis or look for new workers at lower levels so that they can make up for their losses," added Vasileva.
Still looking for people
"For the most part, recruiting campaigns have not been canceled but the final decisions are taking longer than before and new employees are not recruited 'at any cost'," Nikolay Nikolov, Managing Director of recruitment firm Horizons, told Capital Weekly. Nikolov added that the reductions in wages are often disguised as a reduction in the number of working hours, clearing unused paid leave, and using more unpaid leave.
"According to the surveys we conduct among companies in the manufacturing sector, employers are much more cautious in their intentions to increase wages in 2021. Rather, they are more willing to offer an increase of 10 to 15%) for niche positions that require specific expertise and education," said Maria Stoeva, Sales and Business Development Manager at HR firm ManpowerGroup Bulgaria. Due to the difficulty in predicting business processes last year, companies started turning to forms of employment new to Bulgaria such as staff leasing, project work, part-time/outsourced employees, Stoeva said.
"This gives companies much more flexibility," said Stoeva. Although that may mean lower wages in the short-term, the fact that companies are willing to experiment with more flexible forms of employment can be construed as a positive given that Bulgaria has had one of the lowest rates of flexible employment options in the EU for years. For example, in 2019 part-time positions in Bulgaria made 1.9% of total employment, whereas in the EU the rate was 16.5%, according to OECD data. According to Stoeva, employees in large cities often turn to such forms of employment.
The big winners in 2021
According to Krassen Krastev, manager of Plovdiv-based machine-building company Mecalit Bulgaria, a large part of manufacturing companies have also set aside funds for higher wages. "Plovdiv has mostly investors based in manufacturing where there aren't that many layoffs so the issue of labor shortages remains," Krastev told Capital Weekly. "The available labor force is unstable, and we're constantly requalifying people from other industries. With this shortage of people, you can't ignore the workforce and not offer an adequate pay," added Krastev.
According to Nikolay Nikolov of Horizons, an increase in the salaries of medical specialists, laboratory technicians, microbiologists, researchers, can be expected.
Employees in the public sector are also among the big winners. Despite the crisis, the government raised wages by an average of 10% in 2021. Staff at the Ministry of the Interior got a 15% raise, and the salaries of teachers and medical professionals were also increased.
IT has exploded in Bulgaria over the past decade. So much so that supply is still playing catch-up with demand for qualified specialists. As a result, wages in the industry have been rising consistently. Now, IT specialists are among the highest-paid employees in the country, with close to triple the national average in terms of annual gross remuneration. National statistics say that, on average, the gross annual salary in IT was 40,000 levs (20,450 euro) in 2020.
But IT recruiter Noble Hire says the number is closer to 49,500 levs, based on a survey the company conducted among 3,150 IT representatives at the start of 2021. According to the results of the survey, the average salary in the industry varies significantly depending on position, experience, and the technology the developer uses. For example, people with 0-1 years of experience receive on average 2,000 levs per month for engineering positions, whereas people with over 15 years of experience can be paid over 6,000 levs per month. Based on technology used, developers using Google's Go language are paid, on average, over 5,000 levs per month, whereas SQL is at the bottom of the ranking with 3,222 levs per month.
Another important factor is the location - IT specialists in Sofia are, on average, paid 35% higher wages than those working outside the capital. But even employees in Sofia receive 25% less when compared to their colleagues working remotely or abroad. The average salary also varies according to the position. For example, a software architect receives an average of 8,230 levs per month and a QA - 3,280 levs per month.