Social Safety Nets in Bulgaria Prove Crisis-Resistant

March 18, 2011

Commenting on the World Bank report ‘The Jobs Crisis: Household and Government Responses to the Great Recession in Eastern Europe and Central Asia’, its authors maintain that Bulgaria’s response to the crisis is adequate as compared  to most of the countries in the Region.

SOFIA, March 18, 2011 – ‘The global economic crisis had a very strong impact on the households in Europe and Central Asia. Unemployment soared and expenses in education and healthcare had to be reduced. While many Bulgarians also felt the effects of the crisis, the country’s social assistance system managed to cope better with its ramifications as compared to the systems in several other countries, with unemployment compensation mechanisms working quite well coupled with active labor market measures. Unemployment did mark an increase, but nonetheless, in 2009 its increase was lower compared to the average for EU10 and EU 27. The crisis brought numerous hardships to the Bulgarian citizens, yet the country succeeded in circumventing the most severe impacts of the crisis that were acutely felt by citizens in other countries’, says Jesko Hentschel, Sector Manager in the Human Development Department of the World Bank Europe and Central Asia Region, one of the authors of ‘The Jobs Crisis: Household and Government Responses to the Great Recession in Eastern Europe and Central Asia’ report.    

The study was presented on March 8, 2011 in Washington DC. It is based on specialized crisis response surveys and official government data for the period 2009-February 2010. The authors focus on data related to the peak of the crisis. The impact of the crisis on the labor market in the entire region was indeed enormous. Registered unemployment in 27 Eastern European and Central Asian countries increased from 9.4 to 12.2 million between December 2008 and December 2009. In Russia, Turkey and Ukraine unemployment increased by around 39 percent between 2008 and 2009. Youth unemployment also rose sharply, with up to a third of young people unable to find work. Workers who kept their jobs took home smaller paychecks as employers offered lower hourly wage rates and fewer work hours.

These effects were felt most strongly among poorer households which often did not have the required savings to cushion the impact of the crisis. Special prominence in the report was given to data in respect of the most vulnerable social groups in Bulgaria.
Government response to the crisis included a wide variety of tools. Bulgaria was among the countries whose social safety nets embraced the majority of people affected by the crisis. The existing system of unemployment benefits also contributed to mitigating the heaviest effects of the crunch.    

“Coping with the crisis proved a difficult task for all countries in Europe and Central Asia”, says Markus Repnik, World Bank Country Manager for Bulgaria. “The crisis had its heaviest impacts in Bulgaria throughout 2009 when 28 percent of the surveyed households stated that they were affected by it. Two surveys, that were carried out later, show that the respondents saw signs of improvement in 2010. After all, the prudent fiscal policy of the government sets good preconditions for economic recovery and enhancement of living standards of Bulgarian citizens”.

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