Personnel costs in the public sector in our country are reaching unprecedented levels in our modern history, exceeding the mark of 11 percent of the gross domestic product. This was stated to NOVA by economist Petar Ganev from the Institute for Market Economics, warning that the current spending model is killing economic growth and creating serious inflationary risks.
According to the economist, normal employment levels in the administration should be around 20 percent of all workers, while currently our country is reporting significantly higher values.
"They passed 10 percent for the first time last year, and they are now passing 11%. This has never happened in our entire recent history. This is an unsustainable level of personnel costs," Ganev commented, emphasizing that currently every fourth employee in our country works for the state.
He warned that simple current spending on salaries and benefits is stopping the development of the economy, giving as an example the situation in neighboring Romania, where the record deficit does not lead to economic growth. The economist called for an immediate change in the automatic mechanisms for salary increases in the administration in order to avoid creating expectations before the adoption of the 2027 budget.
However, the release of personnel from the public sector is accompanied by serious financial burdens for the relevant departments, it became clear from the expert's words.
"If you keep a person at work, you owe him 12 salaries. If you fire him, you owe him 20 salaries and you are in the red. The reformist minister is in the red because he has relieved the burden from all of us, but he has paid 20 salaries, not 12", explained Ganev.
As possible solutions to the problem, he indicated the deferred payment of these benefits or the creation of a specialized trust fund outside the budgets of individual ministries. Such a reform would not cause turmoil in the labor market, since our country maintains one of the lowest unemployment rates in the European Union, and the dismissed employees would easily find employment in the service sector.
Regarding the state's attempts to control the prices of goods, Ganev expressed serious skepticism about the effectiveness of such interventions.
"If someone thinks that a ministry can make decisions and this will reduce prices, this is unlikely to happen. The important thing is not to confuse the market with some excessive measures that do not work," said the expert in connection with the expected new proposals of the cabinet to limit the increase in prices.
The economist is categorical that the central driver of inflation remains the state budget and the huge deficit spending, which in combination with record lending pumps up consumption and raises the general price level according to the model already observed in countries such as Hungary and Romania.