Lyuben TOMEV, Director of ISTUR at CITUB European Economic and Social Committee Bulgarian Presidency of the Council of the European Union Group II Workers' Group EXTRAORDINARY WORKERS' GROUP MEETING 21-22 June 2018, Sofia "Working Europe and European Pillar of Social Rights“ Wage inequalities in EU Lyuben TOMEV, Director of ISTUR at CITUB

Compensation of employees per hour worked - 2017

Compensation per hour worked 2017 г. C/1h in Bulgaria 5.1 EUR (ЕU – 23.1) Nominal gap 4.5 times, and in PPS – 2.2 times Comparative level of C/1h in PPS 46.3% of EU 2007 г. C/1h in Bulgaria 2.3 EUR (ЕU - 19.5) Nominal gap 8.5 times, and in PPS – 3.9 times Comparative level of C/1h in PPS 25.6% of EU

Minimum wages – levels and growth rates (2018/2017) High levels of MW – Luxembourg, Ireland, Netherlands, Belgium, France, Germany, UK (1999-1463 EUR), average rate - 1.8% Middle levels of MW –Spain, Slovenia, Malta, Greece, Portugal (859-677 EUR), average rate – 2.9% Low levels of MW – (the 10 new member states: Poland 503, Bulgaria 261 EUR), average rate – 8.4%

Average monthly salary 2017 (Gross, Net and in PPS) State Gross (EUR) Net (PPS) Bulgaria 542 423 887 Denmark 5191 3270 2436 Luxembourg 4412 3159 2612 Netherlands 2855 2155 1944 Estonia 1221 957 1305 Slovakia 980 748 1121 Hungary 955 635 1076

Low paid workers – relative share (2014)

Apparent labour productivity and average personnel costs in Manufacturing 2015 (thousand EUR per employed/employee)

Wage adjusted labour productivity and gross operating rate in Manufacturing 2015 (%)

Average wage in EUR and PPS in Manufacturing 2017

Main conclusions from international comparisons In the Bulgarian industry there is social dumping and low labour costs. Wages and labour costs are much lower than the labour productivity; In the sectors where the nominal labor productivity is lower, this is offset by a higher rate of profit; There is a significant problem in the distribution of added value between labor and capital in favor of capital; There is significant difference between the pay of labour in Bulgaria and the other member states – from 140% to 950% (in nominal terms); Even when adjusted nominal rates with comparative price levels, the pay gap remains high – from 120% to 440% higher wages in the other member states compared to Bulgaria.

Policy recommendations These differences can`t be overcome within the expected upward convergence if the imposed social dumping and cost competitiveness policy does not change; There is a need for: - The emergence of new quality high added value jobs; - Greater fairness in the distribution of added value between labor and capital; Important role of the ETUC Initiative Alliance for upward convergence of wages