Coping with the Global Economic Crisis: How did Bulgarians Respond?

February 21, 2012

SOFIA, February 21, 2012 — The 2009/2010 global economic crisis hit Bulgarian families mainly through the labor market, increasing unemployment and reducing working hours and wages for a large segment of the population.  While the crisis led to a significant drop of GDP in 2009, Bulgaria was able to mitigate the most severe impact of the crisis on the standard of living of families, thanks to an adequate social protection policy. These are some of the conclusions in the World Bank latest report “Bulgaria: Household Welfare during the 2010 Recession and Recovery” presented today.

The public presentation and discussion of the report brought together high level government officials, including Valentina Simeonova, Deputy Minister of Labor and Social Policy, as well as representatives of the trade unions, think tanks and academia. Emil Tesliuc, Senior Economist with the World Bank and one of the main authors of the report, presented some of the findings and Georgi Stoytchev, Director of OSI Sofia, moderated the discussion.

The main objective of study was to understand how Bulgarian families coped with the sharp decline in GDP and earnings. The study was completed after three rounds of detailed surveys conducted by the Open Society Institute - Sofia. The survey data reveal that families felt the impact of the crisis mainly through jobs and incomes. Families tightened their wallets, with reducing expenditures for utilities, food, investments in preventive healthcare and education. To cope with the crisis, Bulgarians tried to work more, or look for an extra job. At the same time, Bulgaria’s social protection spending increased significantly in 2009, and cushioned the impact of the crisis especially for the most vulnerable groups in society.

“Social protection benefits protected the living standard of Bulgarian families. Nonetheless, poverty and inequality slightly increased, mainly in urban areas and among minorities”, said Emil Tesluic, World Bank Senior Economist and one of the main authors of the report.

The report shows that the impact of the crisis has not substantially changed the poverty profile. Households with a higher risk of poverty are those with unemployed or inactive heads; with no or only primary education; female-headed; with many children and/or of large size; and of Roma and Turkish minorities.

According to Markus Repnik, World Bank Country manager for Bulgaria, “the effectiveness of Bulgaria’s social protection system cushioned the impact of the crisis. But looking ahead, social protection needs to be further strengthened, taking into consideration short term economic uncertainties in Europe and substantial longer term challenges related to the aging of Bulgaria’s society.”

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