Next year the minimum wage will rise by 19.6%, which will lead to an increase in the compensation of one busy, predicts the BNB in its Macroeconomic Forecast.
In practice, this means that it will become 1,115 BGN, or increase by a little over 182 BGN from its current level - 933 BGN. Despite the slowdown in consumer price inflation, compensation growth per employee in nominal terms is expected to remain high at 10.2% in 2024.
This is the second indication for the last week only, related to the possible increase of the minimum wage, after during the week the Central Bank of Ukraine announced that, according to their calculations, the levels should be around BGN 1,080-1,100.
Factors that will support wage growth over this period include an increase in economic activity, a 19.6% increase in the minimum wage since the start of the year, an increase in public sector remuneration and the continued trend towards an increase in the share of firms, considering the labor shortage as a factor limiting their activity, the BNB states.
According to the bank, as a result of tight labor market conditions and growing labor shortages, we expect the growth rate of compensation per employee to remain higher than the projected increase in labor productivity and consumer prices, to stand at around 7.5 % in 2025 and 2026
This development will support growth in real household disposable income and, accordingly, private consumption throughout the forecast period. At the same time, higher wages will also lead to an increase in labor costs per unit of production.
In 2024, employment in the country is expected to increase by 0.5%, which is in line with the increase in economic activity during this period. Despite projected real GDP growth over the remainder of the forecast period, the number of employed persons is expected to grow weakly – by 0.1% in 2025, and to remain at a similar level in 2026 as a result of the ongoing unfavorable demographic processes in the country, which lead to a reduction in the labor force.
At the same time, the unemployment rate will continue to gradually decrease from 4.4% in 2024 to 3.6% in 2026, which will reflect both the increase in economic activity and the decrease in the working-age population.
According to the analysis, real labor productivity growth will reach 1.5% in 2024, then rise to 3.2% in 2025 and 2.9% in 2026, in line with the stronger growth rate. of GDP with increasingly limited labor supply in the country.