The Association of Bulgarian Employers' Organizations (AOBE), uniting the nationally represented employer organizations: The Bulgarian Industrial Capital Association (BICA), Bulgarian Industrial Chamber - Union of Bulgarian Business (BIA), Bulgarian Chamber of Commerce and Industry (BCCI) and Confederation of Employers and Industrialists in Bulgaria (CEIBG), does not take political positions and distances itself from any political initiatives. The guiding principle for us is the approach of openness, engagement and finding long-term, sustainable solutions.
We have already repeatedly declared that the current draft state budget for 2026 deviates from the position stated by the ruling majority to preserve the tax and social security model of Bulgaria. On the contrary, it envisages an increase in social security contributions by 2 percentage points (which leads to an over 10% increase in the cost of social security contributions for the Pension Fund) and a two-fold increase in the dividend tax. Thus, additional funds will be seized from each employee in the real sector every month to finance inefficient budget expenditures, including a new double-digit increase in wages in the Security and Defense and Higher Education sectors. All this shifts the burden of political populism onto business and workers, discourages investment, slows down economic growth, expands the shadow economy, and ultimately reduces budget revenues. For this reason, the AOBE does not support the submitted draft Budget Law for 2026.
To our regret, the development of the budget procedure does not imply a real debate, the search and finding of optimal solutions at the present time. For this reason, the organizations united in the Association of Bulgarian Employers' Organizations will not participate in the upcoming meeting of the National Council for Tripartite Cooperation (NCTC) on November 13. We do not accept being participants in a process that replaces social dialogue with a formal discussion of the most important law in the country. After an attempt last week to formally consult the draft state budget in the National Council of State Budgets, at the next stage of discussion we are offered the same document, without any corrections to the content. This is not a statesmanlike approach, but an imitation of consultations, devoid of real debate and responsibility.
The National Council of State Budgets will not legitimize such a decision. Our responsibility is to protect the competitiveness of the Bulgarian economy, and not to participate in a process that ignores reforms and continues inefficient spending, including of borrowed funds. We remain ready for a real dialogue with sufficient deadlines, publicity and impact assessment and we will cooperate in this!
The proposed draft budget is not the only possible one. Our view is that efforts need to be made to find a consensus to optimize the expenditure side.
We list some of the specific measures that free up resources in the budget, including:
Abolition of the automatic mechanisms for determining the salary – the total amount saved is over 742 million euros;
Reduction of at least 5,500 permanently vacant positions in the state administration and introduction of bonus limits – with a total effect of over 138 million euros;
Keeping the costs of maintaining the state apparatus (these are the current total costs, excluding those for personnel) at the 2025 level – the saved resources are over 480 million euros;
Maintaining the size of the judicial system budget at the 2025 level, including the budget of the Supreme Judicial Council – saves over 108 million euros;
Reducing the size of the capital program by 234 million euros (about 3%);
Cutting expenses of the "Central Budget" - the project includes over 990 million euros without specifying programs and policies - we propose to maintain a buffer of 660 million euros and thus save at least 300 million euros.
Among the measures that can generate additional revenues, we will also indicate:
Update of property tax assessments - even a conservative doubling of the current values will generate at least 1.1 billion euros, including VAT revenues of over 140 million euros. This measure has a stimulating effect on municipalities, will stabilize their situation and minimize deficits in municipal budgets, which will also affect the total deficit in the CFP. The measure is also a strong tool for brightening up business in Bulgaria.
In total, the above measures will have a positive impact on the budget by over 3.1 billion euros, without affecting taxes and social security rights.
We understand that a number of promises have been made to increase salaries in the public sector. In this regard, we present alternative calculations that again allow, even with an increase in salaries, not to change the tax and social security model.
We do not support the increase in social security contributions for the Pension Fund by 2 percentage points from 01.01.2026, the increase in the tax rate on dividend income and the increase in the maximum social security income to 4,600 BGN.
It is not clear when the effect of the increase in the social security contribution will be exhausted, especially in the absence of changes in the other parameters. The question remains unanswered as to how much effect it will have on the adequacy of the amount of pensions and other benefits in the long term. The proposal is being made very shortly before its implementation, which contradicts the government's stated intentions to ensure predictability for business. It also does not correspond to the estimates set out in the medium-term budget forecast from just a few months ago.
The rate of increase in the maximum social security income must be considered comprehensively and with a view to the long-term development of the pension system. It is necessary to take into account its interrelation with the average social security income, the minimum wage, the amounts of the minimum, average and maximum pensions.
In general, the changes in the revenue side are not linked to measures related to the elimination of problems accumulated in recent years and on which there is an agreement between the social partners[1], related to the conditions for access to the system, social security contributions, the contribution-rights relationship, the adequacy of payments and long-term financial sustainability.
AOBR insists on introducing a legislative obligation that, as a minimum, all changes in the pension insurance legislation leading to: a) changes in the scope of insured persons; b) social security contributions; c) the pension formula, the determination of pensions and their updating, be necessarily accompanied by actuarial assessments and calculations.
These actuarial assessments and calculations must be public and clearly show the overall impact of the proposed changes on the long-term adequacy of pensions, the financial sustainability of the SOA budget, the contribution-rights relationship and ensuring the application of the principles of solidarity and non-discrimination.
II. On the expenditure side
We do not support:
The change in Art. 50a, para. 1, Art. 53d, para. 1 and 54, para. 1 of the Social Security Code, providing that the mother (adoptive mother) who does not use leave for pregnancy and childbirth, leave for adoption of a child up to 5 years of age and additional paid leave for raising a child up to 2 years of age or the person who uses such leave or interrupts its use, shall receive financial compensation in the amount of 75 percent of the compensation she would receive if she used this leave.
The measures were introduced in 2018 with the aim of encouraging mothers to return to work earlier. According to data from the National Social Security Institute, over the past 5 years, just over 15,000 women have benefited from this right under Art. 54, para. 1 of the Social Security Code[2]. At the same time, the growth of benefits paid to women who returned to work in the second year doubled in 2024 compared to 2020 – from 10,591,725 BGN to 20,860,645 BGN. In other words, the amount of the benefit did not have an impact on the decision whether a mother should return to work earlier. In addition, women who enjoy rights under Art. 50a for each year of the period are less than 1,000, and under Art. 53c for each year of the period are less than 100
From a legal point of view, there is no logic in a benefit that replaces income from work continuing to be paid when the mother (adoptive mother) returns to work. If the state wishes to encourage women through financial incentives not to be separated from the labor market for too long a period of time – a measure supported by the Bulgarian Chamber of Commerce and Industry, then this should be done through funds from the state budget, and not at the expense of social security funds.
RESPECTFULLY,
RUMEN RADEV,
CHAIRMAN OF THE BOARD OF DIRECTORS OF The Bulgarian Industrial Capital Association (BICA),
ROTATING CHAIRMAN OF THE AOBE FOR 2025, BY ORDER OF THE BICA, BCCI, BIA and CEIBG
