"The Prime Minister rightly objected to the decision of his financial cabinet to freeze wages. Bulgaria is in a liquidity crisis, because only 800 million euros are free from the fiscal reserve. The deficit is twice as large as last year. Revenues are growing by 7%, but expenses - by 14%. In practice, there is no money for pensions and wages," said Assoc. Prof. Shteryo Nozharov, economic advisor to the Bulgarian Industrial Association and lecturer at the University of National and World Economy, in the program "The Day Live" on NOVA NEWS.
"Freezing the minimum wage will create an economic paradox. The poverty line in our country cannot be stopped from growing, because it is determined by a European mechanism. Those who are on the minimum wage receive 481 euros. If the minimum wage is frozen in the next three years, and the poverty line increases by 30 euros each year, i.e. in two years they will get closer. It will become pointless for people who receive the minimum wage to work 8 hours a day instead of receiving guaranteed social assistance. This is called the unemployment trap", he explained.
In his words, the current mechanism for determining the minimum wage contradicts the European directive, which we should have introduced a year and a half ago. "This mechanism has been discussed for more than 4 years and the social partners are aware of what it should contain. The tolerable period for its implementation has already expired, because if we don't do it by August - there will be sanctions", Assoc. Prof. Nozharov specified. "600,000 people in our country are dependent on the minimum wage. Social benefits are largely already untied from it, he added.
"The payment of social security contributions by civil servants is an attempt to manipulate the budget deficit. It was said that in the coming years their gross remuneration will increase, but this will preserve their net. In this way, the state is trying to do a trick and turn the expense into income," explained Assoc. Prof. Nozharov.
He also commented on taxation for more than one home. "The idea is illegal. There is an unacceptable mix between income and property taxes. Property taxes should be only by value. In this way, tax evasion will be very easy," explained the expert.