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Budget updates are important for business

It is imperative that business support for maintaining the existing employment of employees by providing financial resources to employers in the affected sectors and economic activities following the COVID-19 pandemic continues until the end of 2021 and with a horizon of 2022, This was stated by the experts from the employers’ organization Union for Private Economic Enterprise, asked for comment on the topic with the budget update.

For many companies and for entire industries, the recovery from the crisis has not yet begun or is proceeding at a slow pace – about 31% of the members surveyed in June and early July 2021, although they report the beginning recovery processes have not yet reached pre-crisis levels, and 15% have not yet started recovery. For other sectors, the recovery is going fast, and some companies have even exceeded the levels of 2019. This creates an imbalance in the market, makes the crisis asymmetric, which is an extremely unfavorable scenario. Therefore, adequate support must be provided for those who are actually affected by the crisis, who are still experiencing difficulties and have not recovered. The Union for Private Economic Enterprise has long warned that measures to tackle the economic crisis must be pursued with a horizon, because one of the main problems facing business in connection with the crisis is the lack of predictability.

Violina Nakova

According to Mrs. Violina Nakova, Chair of the UPEE, if the planned update of the Law on the State Budget of the Republic of Bulgaria for 2021 through the allocation of additional funds to address the adverse impact on the economy through business support programs and employment, if not implemented, this will lead to business closures and increase unemployment in certain sectors. Analyzes of the effects of the measures implemented so far to overcome the economic consequences of the crisis show that these measures are yielding results. In this sense, support is key for sectors such as urban hospitality, air transport, freight transport and other export-oriented sectors that are easily vulnerable to fluctuations in foreign markets.

According to the organization’s experts, in an economic crisis, it is important to stimulate consumption. In this sense, they support the additional funds provided in the budget update for the implementation of measures and social support of eligible persons and families, in order to prevent social tensions in complicating the epidemic and hence the economic situation in the country, including ensuring a new targeted measure. to compensate for the low income of the most vulnerable age group of retirees; to ensure the costs for payment of monthly targeted assistance in case of declared emergency or declared emergency epidemic situation of families with children up to 14 years of age for the period October-December 2021; to cover the costs of targeted heating allowances and to cover the costs of the personal assistance mechanism.

The amendments to the State Social Insurance Budget Act for 2021 envisage an increase in the minimum amount of the pension for length of service and age and the minimum amounts of all pensions for employment; increase of the amount of the old-age social pension and of the pensions not related to labor activity, as well as of the supplements, the amount of which is tied to the amount of the old-age social pension; increase in the maximum amount of received one or more pensions; increase from 1.2 to 1.35% of the percentage for each year of insurance experience under Art. 70, para. 1 of the Social Insurance Code in the pension formula, both for already granted and for newly granted pensions. These are all measures which, according to the SSE, in addition to being social in nature, will also have a corresponding economic effect, as they will stimulate consumption.

Increasing the “burden” per year of service by 12.5% ​​will lead to an increase in the basic amounts of all pensions for employment. With the proposed amendments to the Social Security, a complex approach between the pension insurance system and social assistance is applied for the first time. The applied method of increasing the pensions by increasing the length of service is in accordance with the fundamental principle in the pension system “Sustainability”, which requires such a price to be paid that it does not threaten the financial stability of the social security budget. It is extremely important with regard to the proposed model that the contribution of the insured persons to the pension insurance system is respected.

Given the emerging epidemic situation in the country as a result of the pandemic of COVID-19 and expectations for the recent development of the so-called. “Fourth wave”, additional financial resources should be provided to provide health measures related to overcoming the pandemic, including the provision of support to frontline personnel directly involved in activities to prevent the spread of COVID-19. , for the administration of vaccines against COVID-19 to uninsured persons, for the purchase of medicines.

The expected increased migratory pressure also requires a change in budget estimates. And this is a very serious problem that needs to be addressed in a timely manner, because its impact on society in the face of a new wave of COVID-19 can be extremely negative and catalyze a deepening economic crisis.