This report studies the Bulgarian labormarket with a view to understand the interactions betweenthe performance of the Bulgarian economy and the functioningof its labor market. The report assesses also the positionof Bulgaria vis-a-vis compliance with the "acquiscommunautaire," and provides a set of key policyrecommendations that may enhance job creation potential inyears to come. In the aftermath of a steep adjustmentprocess, the Bulgarian labor market resembles a scleroticmarket, not dissimilar from the worst performing Europeanmarkets. Nevertheless, the existing labor market policiesand institutions, with the exception of excessively highpayroll taxes and a somewhat strict employment protectionlegislation, are not necessarily synonymous of labor marketrigidity: unemployment support schemes are modest, theminimum wage is not high, and industrial relations systemsdo not appear to prevent an efficient wage dispersion acrosssectors. Thus, the poor performance of Bulgaria is likely tobe the result of a chronic inability to restructure its oldsector and to tackle fundamental structural problems. Interms of compliance with the "acquiscommunautaire," Bulgaria's legislation appearsaligned with most of the European Union requirements in thelabor area. However, the standardization of workingconditions requires substantial investments and astrengthening of administrative capacity to implement EU legislation.
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