Bulgaria's Labor Market Struggles Amid Record Demand and Limited Workforce

Labor supply in Bulgaria remains exceptionally constrained amid record-high demand, making it increasingly challenging to tap into the limited available workforce, according to recent Eurostat data analyzed by the Institute for Market Economy. The report offers insight into the labor market slack across EU countries in 2023, extending its scope to include people aged 15-74, rather than just the 15-64 range, reflecting the growing importance of older individuals in the workforce amid a declining labor supply.

The labor reserve metric is comprehensive, encompassing not only the unemployed but also the inactive willing to work and part-time workers, representing the full potential for labor market growth. The data reveals notable disparities across the EU, where post-pandemic labor market conditions vary widely. In countries like Spain, Italy, Greece, Sweden, and Finland, labor market slack exceeds 15% of the population aged 15-74, while Central European countries, including Poland, Malta, Hungary, and the Czech Republic, have successfully minimized their labor reserves to around 5-6%, largely through high demand and policies focused on workforce activation and retraining. Bulgaria sits close to this level, with a reserve rate of 7.1%.

Labor reserve characteristics differ significantly between countries: unemployment is predominant in nations like Hungary and Poland, while Western European countries such as the Netherlands, Ireland, and France see a higher proportion of underemployment. In Italy, the Czech Republic, and Germany, the inactive population willing to work forms the bulk of reserves, underscoring the difficulty of transferring workforce policies across the EU due to distinct economic and labor market structures.

For Bulgaria, the 2023...