Bulgaria has made notable labour market and social progress in recent years. However, the country faces a pressing demographic challenge, with a rapidly declining and ageing population, which will have significant repercussions on its labour market and economy. In addition, large labour market disparities across different population groups persist and informal employment remains widespread. Poverty is still common in Bulgaria despite rising living standards, and particularly minorities, including immigrants, face social disadvantage. This report provides an overview of the main labour market and social challenges facing Bulgaria and a comprehensive analysis of Bulgaria’s policies and practices compared with best practices in OECD countries in the fields of labour, social and migration policy. It also includes recommendations on how Bulgaria can tackle key challenges. The report will be of interest to Bulgaria as well as to other countries that are looking to promote more inclusive labour markets and societies.
OECD Reviews of Labour Market and Social Policies: Bulgaria 2025
Abstract
Executive Summary
The Bulgarian labour market has made significant progress over the last 10 years despite temporary headwinds from the COVID‑19 pandemic. The employment rate rose from below 60% in the early 2010s to 71% in the second quarter of 2024, slightly above the OECD average. Indeed, today, Bulgaria performs in line with the OECD average in employment, unemployment and labour force participation. However, despite these improvements, the Bulgarian labour market, and the economy more generally, face challenges, including very rapid population ageing and population decline. According to current projections, the number of 15‑64 year‑olds will fall by almost one‑third between today and 2060. Informality and undeclared work remain widespread, and labour market inequalities are large, with pronounced regional differences, a significant divide between high and low earners, and major disparities by ethnic background, age and level of education.
While household incomes have significantly increased in Bulgaria, poverty remains widespread. Severe material deprivation in Bulgaria is highest among EU member countries, affecting 19% of the population, three times more than on average in the EU. Poverty and material deprivation are among the factors explaining why Bulgaria consistently ranks last among EU countries in terms of overall life satisfaction, with dissatisfaction spanning across multiple domains, including financial stability, housing quality, personal relationships, and professional fulfilment. Especially the situation of minorities – who face challenges with labour market and social integration – is a source of major concern and deserves close policy attention. Tolerance, in particular towards sexual and ethnic minorities, is much lower than in other EU countries.
Bulgaria has made a number of reforms to its labour market legislation over the last years, touching upon different policy areas including social dialogue, undeclared work and inactivity. These reforms reflect Bulgaria’s awareness of the need for policy action to overcome the challenges facing its labour market. In order to unlock Bulgaria’s full employment potential and enhance labour productivity and job quality, policies to promote workforce training, upskilling and reskilling will need to play a stronger role. Poor educational outcomes of young people are a major concern in Bulgaria and participation in adult learning remains very low. Bulgaria has significantly improved its active labour market policies over the last years, but spending remains well below the OECD average. Further support is needed to assist those excluded from the labour market, including young people, people with low educational attainment, ethnic minorities, and people living in remote areas. Labour market informality is widespread, and Bulgaria’s efforts to combat undeclared work through controls, legislative measures and information campaigns will have to be maintained and reinforced.
Bulgaria has also been taking measures to improve social support, notably for vulnerable groups, but major challenges persist. While public social expenditure levels in Bulgaria are comparable to those in many OECD countries, the Bulgarian income support system has not been very effective at reducing poverty and income redistribution is weak. Bulgaria significantly raised the level of minimum-income benefits for low-income households struggling to make ends meet in 2023, but the adequacy and accessibility of benefits remains comparatively low. A reform social services is underway, and Bulgaria is currently preparing, for the first time, a complete overview of its network of state‑financed social services. While there is substantial scope to reduce the care burden on women, notably by expanding the capacity of early childhood education and care services, the recent introduction of two months of paid parental leave reserved for fathers is an important step towards a more equal sharing of family and work responsibilities. Bulgaria has also taken steps to improve the situation of minorities, such as explicitly banning discrimination based on gender identity and sexual orientation, and adopting a National Strategy for Equality, Inclusion and Participation of the Roma. A recent pension reform increased the financial sustainability of Bulgaria’s pension system, but pension benefits remain low for many retirees and poverty levels among older Bulgarians are very high.
Migration and integration have been neglected policy areas in Bulgaria. While policy reforms have opened Bulgaria to labour migration, and inflows have increased, there has been little national policy development beyond a liberal transposition of European directives. Current labour migration channels have yet to be accompanied by measures to attract skilled immigrants. Given the few restrictions to labour migration to Bulgaria, migration programmes need to be monitored and evaluated, and this will become more important as migration inflows are expected to increase once the country fully joins the Schengen Area. The large number of asylum requests in the past few years have overwhelmed the capacity of reception services, and Bulgaria urgently needs to increase resources in this area. Moreover, in contrast to most OECD countries, Bulgaria has no integration programme for immigrants, including no integration measures for beneficiaries of international protection.
