Grey sector of Bulgarian economy exceeds 30%

The grey sector of the Bulgarian economy exceeds 30% and is even bigger on the labor market, according to Kamen Kolev, Deputy Chair of the Bulgarian Industrial Association (BIA).

Kolev, as cited by Mediapool, explained on December 26 that grey practices on the labor market were work without employment contract, lowered social security payments, envelope payments, etc.

He suggested that a series of measures adopted by the National Revenue Agency (NRA), such as the connection of cash registers to the NRA database, cash payments, and access to credit records of audited firms, had helped reduce the share of the informal economy in Bulgaria.

Kolev noted that a reduction of the administrative and financial burden on the business sector would further curb the share of the grey economy in 2013.

The Deputy Chair of the BIA highlighted the proposal of BIA to introduce payment orders for tax and social security payments of companies to state institutions, stressing that the step would save some BGN 50-60 M in expenses of the business sector.

He recommended the full electronization of all public services and relations between natural and legal persons and the public administration.

Kolev argued that the electronization of public procurement, regulatory regimes, licenses, permits, payments to the state, etc, would help eliminate the serious problems of red tape and corruption.

The BIA Deputy Chair, as cited by the Focus news agency, said that 2013 would be a year of stagnation like 2012 due to the increased labor costs.

He reasoned that higher labor costs, combined with decreased domestic consumption and smaller export volumes, would prolong the bad economic situation in Bulgaria.

Kolev noted that the main problem of the Bulgarian economy would be unemployment as many employers were expected to resort to staff cuts in a bid to boost efficiency and productivity.

Adapted from Novinite