Stara Zagora region is considered the heart of Bulgaria's energy sector, housing the country's biggest coal-fired power plants.
Before the coronavirus crisis began, the region boasted some of the best results in the country in terms of employment, educational attainment, value-added, wages.
However, as the EU-led transition to low-carbon economy accelerates, Stara Zagora's economic future seems uncertain. The good news is that there's a lot of potential in Stara Zagora and the neighboring Haskovo region's prospective industrial zones. But a question remains about how successfully the workforce would adapt to new conditions and whether it would be willing to take advantage of new opportunities.
Growth slowing down
Stara Zagora had the highest GDP per capita in Bulgaria after the capital Sofia - 16,300 levs per person in 2019. However, the number is not indicative of the region's entire economy. Rather, behind it lurks the high value-added of the energy sector. Also, whereas other industrial regions like Gabrovo and Plovdiv saw a continuous increase in GDP per capita in the period 2017-2019, in Stara Zagora this indicator has been in decline.
Stara Zagora is the only district in Bulgaria with three economic centers - Stara Zagora municipality, Kazanlak, where arms manufacturing dominates, and Radnevo/Galabovo, where energy is the primary engine of the economy. Although each center has its focus, the whole district's future would be tied to the energy sector's green transformation - a process in which, so far, success is not guaranteed, and which could endanger the livelihoods of thousands of people.
Inequalities in the labor market
At first glance, Stara Zagora is among the best performers in terms of labor market trends. In 2015, unemployment was 9.7% - a little higher than the national average of 9.1%. Five years later, the rate has dropped to just 1.4%, whereas employment nears 65% of the local population - 5 percentage points higher than the average for Bulgaria.
Theoretically, this means that nearly everybody looking for a job would manage to find one. However, data from the government's Employment Agency shows significant gaps between supply of and demand for skills.
In Bratya Daskalovi municipality (population: 8,700), unemployment, according to the local labor bureau, was 28% of the working-age population at the end of 2019. In Gurkovo and Nikolaevo municipalities, that share was 16% and 33%, respectively. These differences demonstrate that even the presence of several strong industrial centers is far from sufficient to provide adequate employment for all who want it, and in a number of municipalities labor market problems remain significant despite the good performance of the district as a whole.
Gaps among the municipalities of Stara Zagora region can be seen in wage distribution as well. Galabovo topped the chart with an average salary of 1,691 levs (865 euro) in 2018 coming from the energy sector. At the bottom end of the ranking were smaller municipalities like Opan, Nikolaevo, Bratya Daskalovi, where average wages were a little higher than 700 levs.
Stara Zagora may rank close to national averages in terms of macroeconomic indicators, but in education, it stands lower. For example, only a fifth of the working-age population had higher education in 2019 against 28% nationally. For the most part, that's to be expected in areas with an industrial focus where secondary and vocational education is more widely spread. However, the economic transformation process might step on high-tech industries which would require more university graduates, especially engineers.
Another reason for concern is the gradual increase in the share of people with primary and lower education among the local population, up to 19% in 2019 compared to 15% three years earlier.
At the same time, there are no visible problems with school education - the achievements of students in both primary and secondary school are close to the national average, and enrollments in high school were higher than the national average in 2019. Part of the problem may be rooted in the local Thracian University's inability to keep a large number of its graduates in the region, losing them to competition from both the capital and nearby Plovdiv.
Zones with potential
A ray of hope in Stara Zagora's uncertain industrial future is Zagore - the region's industrial zone, still under development but at an advanced stage. Public infrastructure like streets, lighting, parking space, is fully developed, and there's a lot of interest from investors, according to Stara Zagora municipal government.
Also, Bulgarian Telecommunications Company operating under the brand Vivacom has submitted a letter of intent to the municipality of Stara Zagora to build a new station to supply up to 10 gigabits of connectivity to the industrial zone. The company intends to build a LoRa network providing the so-called Internet of Things connectivity that enables smart devices to communicate with each other. According to Iliya Petrov, regional director of Vivacom for Stara Zagora, the station would cover the entire area and would negate the need for wiring.
There are also plans to build an industrial zone a bit further south, in the neighboring Haskovo region. Trakia Economic Zone (TIZ), the enterprise behind neighboring Plovdiv's industrial success, has submitted an investment proposal to buy municipal properties near Haskovo where it intends to develop an industrial zone.