The biggest employers: strong wage growth, stagnant hiring

The Kazanlak Arsenal military production factory is the second largest employer in the country with 8,000 employees

The biggest employers: strong wage growth, stagnant hiring

The ranking of the top 200 companies by staff for 2023 shows layoffs in the automotive, bicycle and call center sectors, while IT and supermarket chains keep hiring

The Kazanlak Arsenal military production factory is the second largest employer in the country with 8,000 employees

© Georgi Kozhouharov


More cautious hiring in some sectors coupled with double-digit growth in average wages defined the Bulgarian labour market last year. High inflation combined with a 20% rise in the minimum wage and a shortage of people with certain competencies has led to strong growth in the average wage. It reached BGN 2,173 (EUR 1,111) in December 2023 - an increase by almost 14% from a year earlier, compared to an annual inflation of 9.5% for the same period. Judging by the half-yearly data for 2024, the trend of wages rising at a higher rate than inflation goes on. By the second quarter of 2024, the national average wage was up 17.3% year-over-year, with the inflation rate for August 2024 going down to 3%.

The unemployment rate in 2023 reached 4.3 %, coming slightly higher compared to 2022, but the indicator is generally projected to decline in the medium term. National statistics data show that the labour force has been declining each year in terms of the number of people, while the employment rate has been increasing slightly. This means that in the absence of policies to attract staff from other countries, labour shortages will worsen.

Author: KInsights

These numbers summarize the country's labor market situation - low unemployment among shrinking working-age population. The political crisis that has been persisting for four years now is also impacting companies' investment intentions.

Giants on a hiring diet

The cautious sentiment is evident in the data for the 100 companies with the most employees. Last year, they changed their headcount by less than 1% compared to 2022, to over 233,000. With a total of 2.22 million employees in the economy in 2023, the number means that one in 10 employees on labour contract worked in the top 100 companies.

In this edition of K100, for the first time the employer ranking has been extended by a further 100 positions to encompass the 200 largest companies by staff in the country. Consequently, the number of employees in the top 200 reaches 318,000. The total number of employees in the second hundred is over 84,000, down by 0.7% year-over-year. On average, for the top 200 the increase is only 0.45%. In short, stagnation.

Optimistic for 2024

Some of the companies in the ranking also provided a forecast for the number of employees in 2025. For 2024, with the exception of Schneider Electric Bulgaria and Plastchim-T, all other companies do not plan any redundancies. A little over one third of all companies participating in the survey do not plan to change their headcount and the majority seek to increase it. The largest nominal rise in employee numbers is planned by drugstore chain dm Bulgaria, which plans to increase its staff by a quarter, or 344, compared to 2023.

Several companies in the IT sector will also continue to grow their teams. Musala Soft, for example, is forecast to increase its team by 50%, or almost 245 people, this year, while SAP Labs Bulgaria lokks to add 271. Outside the top 200 employers, Telelink Business Services plans to grow its workforce by almost 150 people, and KPMG IT Services - by 56.

On the other hand, the double-digit jump in average wages in the country has caused some industries that rely on cheap labour to start leaving Bulgaria. In September 2024, the Japanese manufacturer of cable harnesses for the automotive industry, SE Bordnetze - Bulgaria, announced that it would close its plant in Mezdra by spring 2025. Its second plant in Karanobat will continue to operate, but at a reduced capacity. The reason given for these decisions was "high production costs in Bulgaria, especially rising labour costs."

For the same reason, the largest private employer in Pleven, Leoni Bulgaria, which also produces wiring arrays for the automotive sector, announced a phased withdrawal from the country a little earlier this year. The decision was taken by its German owner and is part of group-level optimisation measures that do not only affect the Bulgarian plant. For Pleven it means laying off 1,300 people.

Author: KInsights

Who made redundancies

Some sectors are already feeling the advent of AI. For example, service providers such as customer call centres from the 2023 K100 list have 7% less staff compared to 12,500 in 2022. One of the largest sectors in terms of employees - industry - lost 2% of its 52,000 staff in 2023 compared to a year earlier. Behaviour of individual companies is not uniform. Staff cuts were made mainly by companies that rely on lower skilled and more numerous manual labour (like automotive cable harness manufacturers) or businesses that are restructuring. Bicycle manufacturer Maxcom is among the worst hit due to stagnation in the sector, having lost 31% of its employees last year.

Traditionally, there have also been staff cuts at large state and municipal mastodons. Last year they employed over 63,000, or about 2% less than in 2022. The main redundancies are in the Sofia Urban Transport Company, the Bulgarian Posts and the Southeastern State Enterprise (a forestry business).

Outside the general trend are the staff reductions at Bulsatcom, which merged into Vivacom (but there the staff has increased by only 100 people this year), and at Sofia airport concessionaire SOFConnect. The reason here, however, is that the concessionaire outsourced some of its activities, such as cleaning of airport areas and management of duty free shops and restaurants, to external companies.

Who was hiring

Bulgarian manufacturers of arms and ammunition saw their business boom last year. Data on the number of people employed at the four major military plants in the country reflect a growing number of orders. In total, their personnel grew by almost 20% to 15,500. Ammunition manufacturer Arcus increased its staff by over 30% compared to 2022, Arsenal Kazanlak - by 20%, VMZ-Sopot - by over 16%. The companies' revenue figures also show a double-digit jump, with sales of Arsenal and VMZ-Sopot slightly below BGN 1 billion each.

Another sector that traditionally increases its staff is retail. Besides food chains, which continue to expand and open new outlets, it includes dm drugstores, DIY stores and chains that sell machinery. The total number of employees here topped 24,000 last year, growing by 3% compared to 2022. The main increase does not come from the grocery chains but from the expansion of the rest. dm Bulgaria, for example, announced plans to open at least 10 stores in 2023. In April this year, Praktiker opened its third hypermarket in Sofia. The sector is growing along with rising household incomes and consumption.

If a few years ago it was rare to see a representative of the IT industry in the employer top 100 ranking, now there are at least five large companies employing more than 10,000 people. Overall headcount numbers remain almost unchanged compared to 2022, but 2023 was a difficult year for the sector globally and this may have affected subsidiaries here. Still, judging by the forecasts the companies have given for this year, the crisis looks to be over.

More cautious hiring in some sectors coupled with double-digit growth in average wages defined the Bulgarian labour market last year. High inflation combined with a 20% rise in the minimum wage and a shortage of people with certain competencies has led to strong growth in the average wage. It reached BGN 2,173 (EUR 1,111) in December 2023 - an increase by almost 14% from a year earlier, compared to an annual inflation of 9.5% for the same period. Judging by the half-yearly data for 2024, the trend of wages rising at a higher rate than inflation goes on. By the second quarter of 2024, the national average wage was up 17.3% year-over-year, with the inflation rate for August 2024 going down to 3%.

The unemployment rate in 2023 reached 4.3 %, coming slightly higher compared to 2022, but the indicator is generally projected to decline in the medium term. National statistics data show that the labour force has been declining each year in terms of the number of people, while the employment rate has been increasing slightly. This means that in the absence of policies to attract staff from other countries, labour shortages will worsen.

Author: KInsights
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