The State Budget Is Ready—What Will the Minimum Wage Be?

Finance Minister Galab Donev on June 23 announced that the state budget for this year has been finalised and will be presented tomorrow.

According to preliminary guidelines, state employees are expected to begin paying 20% of their social security contributions from August. As a result, their salaries are likely to be increased. From next year, the minimum wage, as well as salaries in the defence, interior and education sectors, will be linked to the average wage and determined under a new formula.

Earlier, the government, trade unions and employers failed to reach agreement on social security contributions for public sector employees.

Preliminary information suggests that the minimum wage could remain at €620 over the next two years.

Finance Minister Galab Donev:

"These are entirely standard letters that have been sent to the primary budget holders, so the instructions we have issued must be followed. Negotiations with the social partners will continue, as you can see from the tripartite council meeting. Thank you, I have no further comment."

Lyuboslav Kostov of the Confederation of Independent Trade Unions in Bulgaria (CITUB):

"Usually, the same figure is included in the medium-term budget forecast for three consecutive years. It may simply be an administrative measure. We will see when the budget is presented tomorrow."

Maria Mincheva of the Bulgarian Industrial Association (BIA) commented:

"There is no mechanism that has gained political support and the backing of the trade unions. The most sensible approach would be to suspend this mechanism and stop the automatic increases."

Prime Minister Radev provided further clarification.

Rumen Radev, Prime Minister: "The minimum wage will not be frozen. When discussions on the 2027 budget begin in August, a new mechanism for determining the minimum wage will be reviewed at a meeting of the tripartite partners."

Trade unions, however, warned that freezing the minimum wage would effectively amount to a reduction because of accumulated inflation and the operation of the current mechanism.

Yoana Dimitrova from Ruse, who works as a cleaner, and Daniela Datseva, a waitress, both earn the minimum wage and say it barely covers their living costs.

Yoana Dimitrova:

"I believe it is completely insufficient. If some of the MPs had to live on this amount with one child, I do not think they would manage, even if the other parent was working."

Daniela Datseva:"If you have a family, a home and expenses to cover, the minimum wage is certainly not enough. I do not see how things can continue like this because everyone wants to earn a living and cope with life, and that simply cannot be done on the current minimum wage."

The Tripartite Council also discussed proposals by Democratic Bulgaria for public sector employees to begin paying part of their social security contributions gradually.

Minister Donev:"These are proposals that the Tripartite Council will discuss again. We are working on an option that would achieve equal treatment without removing rights or reducing incomes."

According to unofficial information, the government plans to propose that state employees pay 20% of their social security contributions from August. An exception is expected for the Ministry of Interior and defence sector. Democratic Bulgaria had proposed a rate of 2%.

Martin Dimitrov of Democratic Bulgaria: "The security sector cannot be exempted from the reform. We are talking about the Ministry of Interior, which received the largest pay rise last year. That created a strong sense of unfairness, and if there is to be reform, they must take part in it."

Business representatives support the idea that public sector employees should pay social security contributions in the same way as employees in the private sector, but only after broader reforms have been implemented.

Maria Mincheva:"If compensation is provided, the level of insurable income will increase, which would subsequently lead to higher benefits, higher pensions and potentially higher expenditure. The proposal therefore needs to be considered very carefully in its entirety."

Trade unions are insisting on compensation measures and the restoration of seniority-related payments for public sector employees.

Lyuboslav Kostov:"If there is compensation, salaries will have to increase by double digits. I cannot say exactly by how much yet; we need to calculate it. Tomorrow's budget presentation should provide greater clarity."

A new meeting of the Tripartite Council is expected by the end of the week to discuss the actual parameters of the budget.