Labor supply in Bulgaria remains exceptionally constrained amid record-high demand, making it increasingly challenging to tap into the limited available workforce, according to recent Eurostat data analyzed by the Institute for Market Economy. The report offers insight into the labor market slack across EU countries in 2023, extending its scope to include people aged 15-74, rather than just the 15-64 range, reflecting the growing importance of older individuals in the workforce amid a declining labor supply.
The labor reserve metric is comprehensive, encompassing not only the unemployed but also the inactive willing to work and part-time workers, representing the full potential for labor market growth. The data reveals notable disparities across the EU, where post-pandemic labor market conditions vary widely. In countries like Spain, Italy, Greece, Sweden and Finland, labor market slack exceeds 15% of the population aged 15-74, while Central European countries, including Poland, Malta, Hungary and the Czech Republic, have successfully minimized their labor reserves to around 5-6%, largely through high demand and policies focused on workforce activation and retraining. Bulgaria sits close to this level, with a reserve rate of 7.1%.
Labor reserve characteristics differ significantly between countries: unemployment is predominant in nations like Hungary and Poland, while Western European countries such as the Netherlands, Ireland and France see a higher proportion of underemployment. In Italy, the Czech Republic, and Germany, the inactive population willing to work forms the bulk of reserves, underscoring the difficulty of transferring workforce policies across the EU due to distinct economic and labor market structures.
For Bulgaria, the 2023 labor market reserve rate of 7.1% is the lowest in 15 years, down from a peak of 21% during the global financial crisis, when high unemployment and inactivity levels prevailed. Currently, unemployment accounts for 4.2% of the population, while inactive individuals willing to work make up 2.1%. The remaining reserve groups are small, with 0.3% underemployed and 0.5% unable to start work immediately.
These trends point to a strategic direction for expanding the labor market in Bulgaria, focusing on potential reserves among the unemployed and inactive individuals. However, the inability to mobilize these resources amid heightened labor demand signals notable barriers, such as low skill levels, limited geographic mobility, and orientation challenges in less developed regions. To address these obstacles, policies should emphasize skills enhancement, adult education and tailored support for the inactive and unemployed, concludes the analysis. (Novinite)