Information from CITUB on the WDDW 2015 occasion

Bulgaria (Central & Eastern Europe)

CITUB has been working together with the Confederation of Employers and Industrialists in Bulgaria (CEIBG) in a campaign under the motto: « Business at a day light for a better future! »
CITUB and CEIBG have started a massive nationa lwide campaign under the logo: “Business at a daylight for a better future!”
Under the joint initiative two regional meetings: on 24 September 2015 in the cities of Burgas and Varna and a national final meeting on 25 September 2015 in Sofia were organized. Participants at meetings were representatives from leading companies and organizations of employers with the assistance of mayors, National Association of Municipalities in Bulgaria, representatives of state administration, regional offices and branch organizations of CEIBG and federations of CITUB.

Faces of the National Campaign are Mr. Plamen Dimitrov, President of CITUB and Mr. Cyril Domuschiev, Chairrman of the CEIBG.
Government representatives were Mr. Ivaylo Kalfin - Deputy Prime Minister and Minister of Labour and Social Policy, Mr. Vladislav Goranov - Minister of Finance, Ms. Nikolina Angelkova - Minister for tourism and Mrs. Ginka Chavdarova, Executive Director of the National Association of Municipalities in Bulgaria.

During meetings issues related to the environment to unlock the potential of regions for accelerated economic growth, prospects for economic development, infrastructure and the labor market for a better future of the country by reducing the “gray” economy were discussed.
CITUB is working on the issue of limiting grey econonomy for many years. We are aware of the dimensions and challenges arising from the grey/informal economy for all national economic sectors and on the global level as well.

- Accoding the OECD data 1.8 billions of workers (60% of the world working power are concerned/working in the sectors of informal/grey economy).
- The annual loss of tax evasion in the EU-28, according to the EC, is equal to 1 trillion euros.
- The figures for Bulgaria are no less alarming. Various sources estimated the share of informal sector from 13.4% (NSI, 2011) to about 31% of GDP till an average of about 18% for the EU (Schneider, 2013).
- In its report on the implementation of the Convergence Programme of the National Programme for Economic Reform, the European Commission has warned that Bulgaria expected losses of about 25 billion BGN will be a result of companies operating in the informal sector.
The “hidden” economic sectors are proving an exceptional resistance, diversity and flexibility and always find their niches, despite of the economic cycles.They are deforming market relations and undermine the development of human capital, leading to dequalification and marginalization of a significant part of the workforce which results in social dumping, unfair competition, violations of basic labor and social rights and business standards.
According to CITUB’s estimations and analysis:
Very real is the possibility that informal employment becomes a problem of generations, following the trend towards informality reproduction established in studies of the World Bank, through patterns transmitted in the family ("informality trap" retaining back generations development).
On the one hand working under these conditions, workers and businesses "survive" but on the other they are "bondaged" in this sector with all the negative consequences for their future personal and/or business development.
During the last years CITUB has worked actively on improvement of the situation and on implementation of policies and measures which have to “bring to a daylight” the informal sector. Some of them are:
• Mandatory registration of labor contracts and negotiation of minimum insurance thresholds by economic activities (proposed by the trade unions and with the active participation of the social partners).
• Introduction of vouchers for food - after 2003, aimed at reducing cash payments on hand.
In July 2015 “one-day” employment contract was introduced. It is a contract for a short-term seasonal work in agriculture, which was concluded between the worker and the registered farmer.
• Connecting the fiscal devices to the NRA (National Revenue Agency) - a measure designed to prevent tax turnover, promoting tax compliance and fighting tax evasion.
• Introducing requirements for manufacturers of excise goods (alcohol and fuel) to install devices that send data directly to the Customs Agency.
• A number of measures for improving collection of VAT and its repayment/payment back.
• Ratification of ILO Convention №177 (home work Convention) and adopted ammendmends into the Labour Code.
• Simplification of regulations for registration, licenzation and others, aimed at reducing taxes and administrative burden.
• Regulation of the possibility to verify the submission of social contributions by the employer by entering a personal identification code.
• Limiting cash payments, a progressive limitation of the threshold limited cash payments, and introduction of electronic payments.
• Internet options for filing-in/submitting of tax and social security declarations and other electronic services.
• Criminalisation of frauds in social security system as from January 2015.
• In the period 2009-2014 social partner organizations have realized joint projects related to limitation and prevention of the informal economy in the frame of the Operative Programme "Human Resources Development".
Nevertheless still much more has to be done. CITUB has made an analysis on the lack of effectiveness of the introduced measure. The lack of effectivess is due to the lack of an integrated approach, clear interdependence and interrelations of the various measures and policies, lack of updated and upgraded policies, and the lack of monitoring and evaluation of the impact of specific policies and measures.
 The prevailing approach involves sanctions and preventive measures and incentives for employers and workers in order to encourage them to formalize their work which is apparently insufficiently. There are still existing measures and actions for promoting a culture of intolerance of such practices, for shaping a new type of tax and insurance culture.
 So far all till now conducted campaigns for raising awareness of employers, employees and citizens do not seem to have found the precise and clear message.
All this proves that pursued policies and legislative measures are not taking account for the diversity of situations and profiles in different segments of the informal economy.
 CITUB is insisting on introducing special information and motivation policies, and not just administrative and policies of sanctions.
 CITUB is providing a particular attention to the measures and tools presented in Recommendation 204 of the ILO of July 2015, aimed at the transformation of the informal economy into the formal. That is why CITUB is calling for:
 A coherent and integrated policy framework for facilitating the transition from the informal to the formal economy which should :
-  Promote creation and sustainability of decent jobs in the formal economy;
-  Ensure consistency of macroeconomic policies, employment policies, commercial, industrial, fiscal, sectoral and infrastructure policies, policies for enterprises, encouraging investment and establishment of sustainable enterprises and decent jobs;
-  Promoting education, social protection policies and other social policies.
-  Undertaken measures shall apply to all workers and economic units in the informal economy.
 Ensure commitment of the government to reduce barriers to the transition to the formal economy, improvement of legislation, regulations and capacity building of institutions, control, enforcement and enhance confidence in them.
 Strengthening the role of tripartite dialogue and involvement of social partners in the development of policies for facilitation the transition from the informal to the formal economy.
Special attention should be paid to informal work in enterprises of the formal economy, as well to informal work practices in global supply chains.
CITUB calls for urgent measures in the short term:
-  Equal application of laws to all businesses and citizens;
-  Ammendments in PPA (Public Procurement Act) towards greater transparency and fairness (non nominations for unfair employers);
-  Coordination of the activities of the Ministry of Finance and the MLSP (Ministry of Labour and Social Policy), the inspectors and supervisory institutions, such as NRA (National Revenue Agency), GLI (General Labour Inspectorate), customs and others.
-  Restriction of cash payments up to 5000 BGN.
-  Policies / measures for preventing participation in the informal economy of immigrants and Bulgarians - immigrants in other countries;
-  Wide publicity of the serious irregularities and consequences for employers who hire workers "in the gray/informal economy"
-  Introduction of services- vouchers in households promoting employment of declared workers;
-  Supporting and expanding specialized inspections on labor and social security legislation for homeworkers, employment and working conditions of foreign nationals and posted workers.
Following up all initiatives and actions CITUB has started a joined campaign with CEIBG. A joint project on research in sullpy chains of nationally represented MNC is in a preparation. The aim is to support good practices of the corporate social responsibility in business units of subcontractors and suppliers chains and to ensure rights and decent work for all workers employed there.
Occasionally to the WDDW CITUB is submitting again its appeal to employers and government for support to all initiatives in this direction in order to create an atmosphere of public intolerance to “gray”/informal practices of undeclared work, tax evasion, violation of fundamental labor and social rights. CITUB is calling its social partners to make every effort to overcome the deficit of decent work and for the effective implementation of the principles:
-  Productive and freely chosen employment
-  Quaranteed rights at the workplace
-  Social Protection
-  Social Dialogue
2. Another important initiative and action of CITUB is connected to appeal for Ratification of ILO Protocoll on the forced labour.

Bulgaria has ratified the ILO Convention 29 in 1932, and this Convention was one amongst the first ratified conventions from Bulgaria. In 2015 the Council of Ministries adopted a decision (Nr. 243/16.04.2015) approving the Protocol and Recommendation 203 of ILO on additional measures for effective counteraction towards forced labour. In the mentioned decision the Council of Ministries has proposed National Parliament to adopt a legislative act based on the Protocol and the Recommendation. In April 2015 in the Commission of labour, social and demographic policy by the Parliament the decision from the Councils of Ministers was submitted to a discussion.CITUB has expressed its position on the necessity for adoption of a legislative act in a letter addressed to the Chair of the mentioned Parliamentary Commision.
On the occasion of WDDW 2015 CITUB has expressed its urgent request for speeding up the procedure for ratification of the ILO Protocol (and Recommendation) on forced labour addressed to Mrs. Tsetska Tsacheva - Chair of the Presiding Body of the National Parliament and to Mr. Ivaylo Kalfin – Deputy Prime Minister and Minister for Labour and Social Policy in Bulgaria.

Sofia, Bulgaria
7.10.2015

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CITUB - nbotevska@citub.net

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