Bulgaria to provide over 1 billion levs to support employment

SOFIA (Reuters) - Bulgaria will spend more than 1 billion levs ($566 million) to pay part of workers’ salaries in companies whose operations have been hit by the coronavirus crisis, Prime Minister Boyko Borissov said on Monday.

FILE PHOTO: Bulgarian Prime Minister Boyko Borissov arrives for a special European Council meeting in Brussels, Belgium February 20, 2020. Julien Warnand/Pool via REUTERS/File Photo

The government has approved the plan and will later on Monday vote to revise its 2020 budget to reflect the higher spending, Borissov said. The government will also ask Brussels to approve the state aid.

“We will revise the budget later on Monday because the optimistic scenario is that measure will cost about 1-1.5 billion levs, but I think that would not be enough,” Borissov told reporters.

He said the government would be paying about 60% of the workers’ regular salaries to affected businesses who apply for the support.

Some leading business organizations are skeptical about whether the support will work efficiently because the social security payments that companies have to pay to workers are not included.

The Association of Industrial Capital has also said the government support drops to just 23% when the total cost of labor is calculated, and many struggling businesses may choose to send their employees on paid or unpaid leave - or even to the dole queue.

The plan will cover companies that have had to close because of the stringent measures the government has imposed to contain the virus as well as companies whose sales revenue has dropped by 20% in March on an annual basis.

About 10,000 people from a 3.2 million-strong workforce have already lost their jobs since the coronavirus hit the country.

As of Monday, the country has confirmed 354 cases of the disease and eight deaths.

Restaurants, cafes, gyms and theatres have been closed since March 13, while many firms in tourism or manufacturing of car parts, which combined account for more than 15% of the country’s economic output, have closed or limit operations due to falling demand.

Prior to the coronavirus crisis Bulgaria had been aiming to balance its fiscal plans this year.

The country’s finance minister has said the budget revision would also allow Sofia to raise “billions” when the global markets allow.

The job-support measures are part of an overall 4.5 billion-lev government package aimed at cushioning the blow to the economy from the coronavirus pandemic.

Reporting by Tsvetelia Tsolova; Editing by Jon Boyle and Hugh Lawson