Bulgarian Public Sector Salaries Soar: A Deep Dive Into the Record Highs

Sofia, BTA - Valentin Evstatiev

While many sectors strive for efficiency, Bulgaria’s public personnel costs are reaching unprecedented levels, causing a financial ripple effect that could shake the state budget to its core. The Institute for Market Economics (IME) reveals staggering statistics: personnel costs, backed by Bulgaria’s state budget, are projected to skyrocket to BGN 22.8 billion in 2025, a leap from BGN 7.1 billion just a decade earlier. As stated in БТА, this reflects a 3.2-fold increase, signaling deeper fiscal implications and concerns.

A Historical Surge

The trajectory of personnel costs over the past ten years is both impressive and alarming. What was once a manageable figure at approximately 7-8% of GDP has now swollen to 10.6%. The bulk of this surge has occurred within the past three years, pushing policymakers and economists alike to question the sustainability of such financial growth.

Mechanisms Fueling the Growth

Petar Ganev, a senior research fellow at IME, attributes this explosive growth chiefly to legislative changes enacted in 2024. These changes introduced automatic salary determination mechanisms across various sectors, particularly in “power” agencies. Ganev warns of the potential budgetary repercussions for 2025 as salary increases of up to 50% take hold. Departments like the Ministry of Interior and Defense have already reported personnel expenses rising by over 40% in comparison to 2024.

Disparities Across Sectors

It’s not just the “power” agencies witnessing growth; other departments are not far behind, albeit at a slower pace. Reports show the Ministry of Finance, Health, and Social Policy maintaining a steadier increase of 5-10%, a reflection of more tempered policy implementations. This discrepancy, however, spotlights the National Assembly’s peculiar prioritization of certain sectors over others.

Broader Economic Ramifications

This unchecked increase adds roughly 2 percentage points to GDP, exerting added pressure on national inflation and the private labor market. The ripple effects of such a policy could inadvertently push minimum wage levels higher, further inflating business costs across the board. The call for budgetary consolidation in 2026 is being sounded by experts like Ganev, advocating for the rollback of these automatic rules to prevent more severe financial corrections in future years.

Urgent Policy Revisions Needed

With warnings from international bodies like the International Monetary Fund, the need for strategic financial policymaking is evident. Bulgaria stands at a crossroads: continue the current path at the risk of fiscal instability, or adopt a more measured, sustainable strategy to safeguard the nation’s financial future.

In conclusion, the rise in Bulgaria’s public sector personnel costs is a clarion call for immediate policy adjustment. The pending financial corrections may well be the country’s biggest test in maintaining budgetary stability while fostering economic growth.