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PRESS RELEASE

One third of Bulgarian households affected by the crisis

May 13, 2010




Almost one third of Bulgarian households are affected by the global economic crisis. Many of them are forced to limit expenses for food, medical services and education, which create future risks. These are the main findings of the Bulgaria Crisis Monitoring Survey done jointly by the Open Society Institute and the World Bank.   The survey follows a nationally representative sample of 2400 households over time, with interviews in February 2010, September 2010 and February 2011. The first wave of the survey, implemented in February 2010, has collected information from about 2400 households with 6600 individuals. 

BACKGROUND
The Bulgarian economy was moderately affected by the global economic crisis in 2009, experiencing a 5% decline in GDP.  The impact of the crisis, however, tends to be felt by households after the peak of the macroeconomic contraction.  Thus, the World Bank has partnered with the Open Society Institute (OSI) Sofia in late 2009 to assess impact of the crisis on households.

The primary tool by which this assessment is conducted is a Crisis Monitoring Survey, which quantifies the economic impacts of the financial crisis on households and individuals.  The survey focuses on:

  • Assessing the main transmission channels of the crisis (such as labor markets,  access to credit, remittances/informal transfers, relative prices, government services) through which it is affecting household welfare;
  • Determining the impacts on welfare that cannot be quantified through administrative data, including on: expenditures, health, education, food security, indebtedness
  • Understanding coping strategies of households and the extent to which existing safety nets (including government assistance and informal transfers) allow families to cope effectively. 

The Bulgaria Crisis Monitoring Survey follows a nationally representative sample of 2400 households over time, with interviews in February 2010, September 2010 and February 2011.  The first wave of the survey, implemented in February 2010, has collected information from about 2400 households with 6600 individuals. 

KEY PRELIMINARY FINDINGS
Who has been affected and how?

  • Approximately 30% of households reported a decline in income between March 2009 and February 2010.
  • These income shocks primarily through lost or reduced employment or wages —approximately 34% of workers reporting an income shock through their primary job.
  • Job loss that results in unemployment is the most severe type of labor market shock and has affected 5% of workers.  Reductions in wages and work hours, a more moderate shock, are more widespread, affecting close to 30% of workers.
  • Workers from the most vulnerable groups — those with a primary education or less, and Roma — are the most likely to suffer from the most severe labor market shocks, particularly unemployment.


How have they coped?

  • Most households try to cope with a reduction in income by sending non-working family members to look for work or by seeking additional part-time work—but only the better educated and richer individual succeed to find additional work.  Of households that are crisis-affected and poor, 60% looked for additional work, and failed to find any.
  • Only 22% of Bulgarian households reported having any savings, and X% of crisis-affected households have no savings and are also indebted.
  • Key social assistance programs (child allowances, heating allowances and the guaranteed minimum income program) are responding to the crisis— 60% of the households from the poorest quintile who suffered an income shock are receiving at least one benefit from the three programs mentioned above.

What are the impacts?

  • Households responded to the economic contraction by reducing expenditures on basic necessities: 41% reported reducing use of basic utilities, 29% reduced consumption of staple foods, and 8% reported skipping meals.
  • As in other Central and Eastern European countries, crisis-affected households significantly reduced expenditures on health, including stopping use of regular prescribed medications, and skipping doctors visits.
  • Crisis-affected households were more likely to stop paying social contributions and health insurance—increasing their vulnerability if exposed to additional shock (falling ill or becoming unemployed).
  • Households that suffer from labor market and income shocks during an economic crisis will suffer from persistently lower income and human development outcomes.

 

PRESS RELEASE NO:
2010/05/13/BG

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