BND`s position for:

The negotiations between employers and trade unions about the minimum mandatory insurance contributions for 2010 are ending today, September 28. Yesterday, the Deputy Labor Minister, Hristina Mitreva,  said that in nearly 30 sectors there aren't yet agreements about the amount of minimum income as base for  the 2010 social insurance deposits. She added that for sectors where the unions and the employers fail to reach an agreement, the insurance thresholds will remain the same as 2009. Last year, the former Labor Minister imposed on such sectors the administratively agreed on average amount for all sectors.
A week ago Mitreva said that for about 15-20 economic activities the thresholds in 2010 will go up between 2% and 12%. The goal of the negotiations for higher thresholds is for the real income to become a better reflection of the declared one and to ensure more revenue from insurance deposits. In comparison, for 2009 the threshold was 26,6%. The increase next year will include only sectors that are less affected by economic hardship and where volume of work has not gone down drastically. The highest increase will be in the production of bread and pastry.
The minimum insurance contributions introduced in 2003 played a positive role as a necessary tool  helping the elimination of the gray economy and better protection of the workers' rights. Six years later, in a different situation on the labor market, and the raging economic crisis, it would be useful if the new rightist cabinet updates the vision towards the minimum insurance threshold and its benefits. The previous leftist government raised annually the insurance threshold mostly as a "disciplining measure for adherence to the labor legislation." It became evident, however, that such administrative-restrictive thinking gradually leads to most workers receiving much higher wages than the ones declared for insurance purposes.
Some employers, on their part, simply insure their workers on the lowest allowed insurance threshold.  We must admit the gray economy in Bulgaria continues to have a major share, because the expenses on the part of the businesses in the lit up side are higher than their expenses in the shady side – a situation especially valid in times of deepening crisis.
To this we must add the fact that workers prefer to take more money under the table because they lack incentive to insure themselves on higher income over the redistributing character of the retirement system. The conclusion is that continuing the administrative measure of annual increases of the minimum insurance contributions will mean continuing to attack the follow up of the problem not its cause. For this reason, the effect will remain always fractional, while there is even a danger of triggering negative processes in some of the economy's sectors.
The expectations towards the new center-right cabinet of the Citizens for European Development of Bulgaria (GERB) party are for them to use a more pragmatic and strategic thinking with the perspective to set in motion the needed long-term reforms. The local practice from the last years shows that the best incentive to lighten up the economy regarding labor pay is to continue the tax reform and lowering the insurance burden. In addition, as we from Bulgarian New Democracy, have pointed out on many occasions, there is a need of reform of the retirement model from the current system of covered expenses with prevailing State participation to gradually increase the share of the private capital accumulating retirement system. The positive sides of the capital accumulating model are numerous, but the most important ones relate to the increase of the citizens' incentives to obtain insurance based on their real income.