Why Burgas is still catching-up with other big cities

Why Burgas is still catching-up with other big cities

The Black sea urban center looks for potential new investors in high-tech manufacturing to attract employees from the apparel and food industries


It wouldn't be right to claim that economic growth in Burgas has stopped. Yet, it's slower than that of other Bulgarian regions.

Take the average gross wage growth during 2014-2019 as a clear indicator. Within a 5-year period, wages in Plovdiv surpassed those in Burgas, while wages in Ruse caught up. Wages in Varna were 16% ahead of those in Burgas, while they had been only 5% higher 5 years ago. Wages in Sofia are 71% higher than those in Burgas, compared to 53% difference in 2014.

Those other regions managed to take advantage of the investment wave in two industries in Central and Eastern Europe (CEE): mechatronics and automotive; IT and outsourcing. While the development in the IT and outsourcing sectors has been heavily concentrated in Sofia, the regional leaders in mechatronics and automotive were different and one of them could possibly have been Burgas.

Yet, it still isn't.

Underestimating Burgas potential as an industrial investment destination is probably understandable considering the significant presence of consumer services and tourism in the region. Manufacturing is responsible for 15% of all jobs in Burgas region, while its share is around 33% in Plovdiv and Stara Zagora.

If we try to predict the future of the city and the region, it must include more industrial investments, more jobs, combined with rapid productivity growth.

It is very unlikely that growth will be driven by the tourism sector

even though it plays an important role for the region's economy, providing 14% share of all jobs - three times higher than that in Plovdiv, for example.

Rapid productivity growth is observed in the processing industry, yet again it is highly unlikely that this sector can contribute to a serious rise in job numbers. The processing industry in Burgas includes the largest employer in the region, Lukoil Neftochim Burgas oil refinery, as well as a relatively large food and drinks sector.

Burgas needs to focus on attracting investors in high-tech industries, which are concentrated mainly in the mechatronics and automotive sector. At national level, this sector is the industrial engine responsible for economic growth, as well as for productivity and income growth. The sector has wide value chains and а well-developed ecosystem comprising numerous suppliers and partners.

There are 4500 jobs in mechatronics and automotive in Burgas

which is close to ¼ of the industrial employment in the region. The sector is largely driven by two large enterprises, part of multinational companies with manufacturing processes outsourced to Bulgaria, which produce components for the automotive industry.

On the other hand, the sector seems to stagnate in recent years. Even though this is one of the few industrial sectors in Burgas that created new jobs in recent years, the mechatronics and automotive sector is growing faster in 14 other districts. Improvements to public infrastructure and the efforts that the local authorities put in the development of Burgas Industrial and Logistics Park are a necessary but clearly insufficient prerequisite for achieving such pace of growth.

It is important to keep in mind that attracting investors is not only limited to companies that haven't invested in the country till now. Manufacturers with production plants in other Bulgarian regions are potential investors too. These can be both foreign and Bulgarian manufacturers, even smaller ones, but with a very strong export potential.

Burgas has a strong, yet still hidden potential

for rapid economic development. The region has good competitive positions compared to other regions in the country due to its good demographic indicators. Burgas region has had a positive net migration growth since 2010, while in 2020 it even reached its highest values for the last 20 years. The region's labor market is among the largest in the country.

The potential development of the region in mechatronics and automotive will mean attracting people from other industries and even non-industrial sectors, which have lower productivity and average wages. In the case of Burgas, the food and textile industries pay lower wages. Wages in freight transport and wholesale are still higher, but rise more slowly. With an annual growth rate of 12% mainly driven by similar productivity growth, wages in mechatronics and automotive are expected to soon outpace those in wholesale and freight transport.

It wouldn't be right to claim that economic growth in Burgas has stopped. Yet, it's slower than that of other Bulgarian regions.

Take the average gross wage growth during 2014-2019 as a clear indicator. Within a 5-year period, wages in Plovdiv surpassed those in Burgas, while wages in Ruse caught up. Wages in Varna were 16% ahead of those in Burgas, while they had been only 5% higher 5 years ago. Wages in Sofia are 71% higher than those in Burgas, compared to 53% difference in 2014.

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