5. Improving the governance of the skills system in Bulgaria

A wide range of actors have an interest in and influence the success of policies to develop and use people’s skills. They include central government ministries and agencies, subnational authorities, such as municipalities, education and training institutions, workers and trade unions, employers and their associations, civil society organisations and more. As a result, skills systems are complex and multi-faceted and require effective co-ordination between a wide variety of actors to design, implement, evaluate and fund skills policies.

The OECD identifies four distinct but interconnected pillars central to developing an effective approach to skills governance. They include: promoting co-ordination, co-operation and collaboration across the whole of government; engaging stakeholders effectively throughout the policy cycle; building integrated information systems; and aligning and co-ordinating financing arrangements (Figure 5.1).

The first pillar emphasises the importance of co-ordination across the whole of government (a “whole-of-government approach”). This includes horizontal co-ordination between the ministries directly responsible for skills policies, and with those indirectly impacting skills policies (such as the ministries of finance via their roles in funding decisions). A whole-of-government approach also includes vertical co-ordination between different levels of government, from central government to regional authorities and municipalities.

The second pillar emphasises the importance of stakeholder engagement in skills policies. Stakeholder engagement can occur during policy design, implementation and evaluation and ranges from stakeholders voicing their interests or concerns to taking responsibility for implementing skills policies. Effective engagement can provide important intelligence for policy makers and build stakeholders’ buy-in to reform, all of which help to ensure the success of skills policies.

The third pillar recognises that integrated information systems on skills needs and outcomes are necessary for the actors in the skills system to cope with the inherent complexity and uncertainty of skills investments. Such systems help governments develop evidence-based skills policies; learning institutions to provide relevant and responsive courses; employers to plan hiring and training; and individuals to make informed learning and career decisions.

The final pillar underscores the necessity of aligning and co-ordinating financing arrangements within skills policy. This includes the need to respond to financial challenges, such as the potential reallocation of funding commitments across different elements of the skills system (e.g. between initial and adult vocational education and training [VET], higher education, active labour market policies [ALMPs], etc.), dedicated funding commitments for strategic goals, and making the most efficient use of external funding (e.g. the European Social Fund).

These four pillars of skills governance represent enabling conditions for developing and using people’s skills effectively, as discussed in Chapters 2, 3 and 4 of this report. For example, without integrated skills information systems informing the supply and demand for learning programmes, youth (Chapter 2) and adults (Chapter 3) may not develop the skills most needed in work and life, thereby perpetuating skills imbalances. Likewise, without effective stakeholder engagement to design tailored policies and targeted and sustainable funding arrangements, policies for activating the skills of out-of-work adults (Chapter 4) may be ineffective.

Bulgaria’s two levels of government – national and municipal – have formal skills policy responsibilities (Table 5.1). At the national level, the management of education institutions and the formal education and training system overall comes under the Ministry of Education and Science (MES). The Ministry of Labour and Social Policy (MLSP) is responsible for the National Employment Agency (NEA) and its programmes, including the delivery of some VET programmes by education institutions for unemployed adults. Other ministries have more limited responsibilities and activities in the area of skills.

These ministries are responsible for a range of skills-related strategies (see Chapter 1), including the National Development Programme “Bulgaria 2030”, the Strategic Framework for the Development of Education, Training and Learning (2021-2030), the National Strategy for Employment (2021-2030), the Strategy for the Development of Higher Education (2021-2030), the Innovative Strategy for Smart Specialisation (2021-2027) and the National Strategy for Small and Medium Enterprises (2021-2027), among others. Each ministry has distinct objectives and processes, key success indicators and timetables while also depending on other ministries and agencies to achieve its objectives. To help ensure the achievement of these strategies, MES will work with other ministries and stakeholders to develop an action plan for skills policy, with support from the Directorate-General for Structural Reform Support (DG REFORM) of the European Commission and the OECD (OECD, 2021[2]).

Beyond the national level, MES also has 28 regional departments of education (REDs) whose task is to create the conditions for implementing the state education policy. REDs provide a forum for co-ordination between different education and training providers and stakeholders, and monitor compliance with the state educational standards, within regions (Eurydice). Furthermore, the constitution gives Bulgaria’s 265 municipalities a relatively broad set of powers and autonomy, including in skills policy. Municipalities have state-delegated competencies for primary and secondary education, and welfare and social protection, among others. However, most Bulgarian municipalities are financially dependent on fiscal transfers and policy direction from the central government as their own revenue sources and capacity are limited.

Bulgaria’s performance in horizontal co-ordination between national ministries and agencies and in vertical co-ordination with subnational authorities is relatively low, including for skills policies. Project participants stated that policy design and delivery are often fragmented and poorly co-ordinated. As noted in Chapter 1, while not limited to skills policy, the Bertelsmann Foundation’s 2022 Sustainable Governance Indicators (SGI) scores Bulgaria’s performance in inter-ministerial co-ordination below the OECD average (Figure 5.2) and ranks it 37th of 41 countries (Stanchev, Popova and Brusis, 2022[4]). This result reflects Bulgaria’s low performance in several domains, including the government office’s limited capacity to evaluate ministries’ policy proposals, the lack of formal cabinet or ministerial committees to co-ordinate such proposals, and limited inter-ministerial co-ordination by senior civil servants. Vertical co-ordination with subnational actors (especially municipalities) is hampered by these actors’ limited capacity and the lack of a central institution to oversee the skills system and bring subnational actors to the table. More generally, public governance in Bulgaria, including of the skills system, has been hampered by instability arising from repeated short-lived coalitions and caretaker governments (Stanchev, Popova and Brusis, 2022[4]).

Inter-ministerial co-ordination is not effectively mitigating against complexity and fragmentation in Bulgaria’s skills system, or assuring effective strategic planning, implementation or monitoring of priorities. Project participants often raised these challenges, with some stating that ineffective inter-ministerial co-ordination had led to a plethora of related projects being started by different ministries. Many of these have not been fully implemented or evaluated since the initial project funding expired. This “churn” in developing and introducing new policies and instruments is indicated by, for example, the estimated 27 amendments to the VET Act since 1999 (European Commission ESIF and World Bank, 2020[5]).

Bulgaria’s performance in stakeholder engagement is also relatively low, including for skills policies, but appears to be improving. Again, as noted in Chapter 1, the Bertelsmann Foundation’s 2022 SGI ranked Bulgaria’s performance in stakeholder engagement below the OECD average (Figure 5.3). On the positive side, various interests are represented in consultations in the policy-making process, including through the National Council for Tripartite Cooperation’s formal and expanding role and through Bulgaria’s 70+ advisory councils, which sometimes include academia and research institutes and cover skills topics. However, there is little systematic practice of publishing minutes of meetings and decisions taken by these various consultative bodies and working groups. This makes it difficult to assess these bodies’ effectiveness and to monitor the implementation of adopted decisions. In some cases, public consultations on policy proposals have often been short or altogether skipped. That said, government agencies are becoming more transparent about their deliberations, and in 2021, the government substantially increased the number of consultations (Stanchev, Popova and Brusis, 2022[4]).

Stakeholder engagement remains fragmented despite the growing number of mechanisms in place. Several recent studies suggest that ministries lack the capacity for effective engagement in VET (OECD, 2019[7]; Ganev, Popova and Bonker, 2020[8]) Officials and stakeholders consulted during this Skills Strategy project (hereafter, “project participants”) suggest this is a more generalised challenge for Bulgaria’s skills system as a whole.

Insufficient co-ordination between ministries and with stakeholders appears to have contributed to, and been amplified by, fragmented and inconsistent collection and use of skills information and evidence. There are examples of good practices of data collection, evaluation and analysis within different ministries and agencies. For example, Bulgaria’s skills assessment and anticipation (SAA) activities include numerous activities, such as quantitative forecasts, assessments of workforce skillsets and needs, and surveys of employers and sectoral studies (Tividosheva, 2020[9]). However, skills data collection, evaluation and analysis are not comprehensive or systematically used in decision making. For example, the information generated by Bulgaria’s SAA activities sometimes lacks detail or relevance for end users, such as education and training providers seeking to update their programmes or counsellors seeking to provide advice and guidance to learners and workers. Moreover, unlike many European Union (EU) countries, Bulgaria has only recently made progress on developing a mechanism to track the labour market outcomes of VET programmes and graduates and lacks the capacity to rigorously and systematically analyse data and conduct research on VET (Bergseng, 2019[10]). While Bulgarian authorities generate a substantial and growing amount of data on skill needs and priorities at the national and local/regional levels, they could better co-ordinate this information and use it more strategically in decision making (European Commission ESIF and World Bank, 2020[5]).

Bulgaria lacks a strong culture and practice of evidence-based skills policy making. Once again, as noted in Chapter 1, the Bertelsmann Foundation’s 2022 SGI ranked Bulgaria’s performance in key domains of overall evidence-based policy making below the OECD average (Figure 5.4). For example, Bulgaria is ranked 28th of 41 countries for the quality of ex post policy evaluations and the utilisation of expert advice (Stanchev, Popova and Brusis, 2022[4]). The rules for impact assessments in Bulgaria, established in 2016, require an ex post evaluation of policies and their effects within five years of implementation. However, by the end of 2021, only two such evaluations had been published through the government’s public consultation portal. In addition to contracting experts to undertake evaluations, the government can consult experts for advice on policy evaluation via existing councils. However, representatives of academia and research institutes are usually included in policy consultation processes only on an ad hoc basis. It is unclear if or how often experts’ inputs in these processes are utilised.

Bulgaria’s spending on skills development and use is relatively low (Figure 5.5). Total general government expenditure on education in Bulgaria was 4% of the gross domestic product (GDP) in 2020, below the EU average of 5% (Eurostat, 2022[11]). Bulgaria’s expenditure was below the EU average at all levels of education except secondary education. Although data are sparse, public funding appears low in adult education and training, as indicated by low participation and frequent reports of financial barriers to training by individuals and enterprises (see Chapter 3). In terms of skills use, Bulgaria spends far less than the EU average on unemployment support. Spending on ALMPs for unemployed persons, in particular, is low and focused on direct employment creation programmes rather than employment incentives and training measures, which tend to be more effective (OECD, 2022[12]). Funding of skills programmes is often highly reliant on European Social Funds, which can limit the continuity of programmes as funding periods end or priorities change. In addition, there are limited cost-sharing arrangements for skills policies across ministries and with social partners.

Bulgaria’s performance in governing its skills system reflects a range of institutional and system-level factors. However, three critical opportunities for improving Bulgaria’s performance have emerged based on a review of the literature, desktop research and analysis, and input from the project participants over the first half of 2022.

The three main opportunities for improving the governance of the skills systemin Bulgaria are:

  1. 1. developing a whole-of-government and stakeholder-inclusive approach to skills policies

  2. 2. building and better utilising evidence in skills development and use

  3. 3. ensuring well-targeted and sustainable financing of skills policies.

These opportunities for improvement are now considered in turn.

Developing a whole-of-government and whole-of-society approach to skills policies can help Bulgaria improve its performance in developing the skills of young people (Chapter 2) and adults (Chapter 3) and in using these skills effectively (Chapter 4).

Project participants confirmed that promoting co-ordination and co-operation across the whole of government and with stakeholders will be critical for more effective and efficient skills policies in Bulgaria. Government engagement with stakeholders can help policy makers tap into “on-the-ground” expertise and foster support for skills policy objectives and reforms. This can also help increase collective capacity and expertise throughout the system. In addition, a whole-of-government approach to skills can create the conditions for improving and integrating skills information (see Opportunity 2) and better co-ordinated financing (see Opportunity 3).

Strengthening inter-ministerial oversight bodies and bilateral relationships between ministries can be effective ways to strengthen whole-of-government co-ordination on skills. Inter-ministerial bodies can be given a formal remit to supervise and guide the skills policies of different ministries to ensure overlaps and gaps are minimised and that policies complement each other. Identifying and prioritising key bilateral relationships between ministers, officials and agencies working on skills policies can facilitate formal and consistent collaboration across the policy cycle. It involves establishing clear protocols and processes for co-operation, including in the form of partnerships, co-funding and other mechanisms. Without effective inter-ministerial oversight and relationships, skills policies risk being fragmented and ineffective.

Effectively engaging stakeholders in the skills policy-making process is critical because such a broad spectrum of stakeholders influences the outcomes of skills systems. Stakeholder engagement can occur during policy design, implementation and evaluation and ranges from stakeholders voicing their interests or concerns to taking responsibility for implementing skills policies. Effective engagement can provide important intelligence for policy makers and build stakeholders’ buy-in, all of which help to ensure the success of skills policies. For example, engaging employer representatives and trade unions during policy design and implementation, including the piloting of new initiatives, can help ensure programmes are fit for purpose for end users. Successful implementation of skills policies cannot be restricted to the government but requires co-operation from stakeholders.

As noted earlier, there is evidence of fragmentation and weak co-ordination between ministries and national agencies on skills policy development and implementation (OECD, 2019[7]; Tividosheva, 2020[9]; Ministry of Education and Science, 2021[14]; European Commission ESIF and World Bank, 2020[5]). Establishing a more effective whole-of-government approach to the skills system is therefore critical to improving co-ordination and governance across the whole system (both horizontally and vertically).

Project participants highlighted the need to develop a whole-of-government approach and shared vision for the Bulgarian skills system. At the national level, existing arrangements, such as the Council of Ministers and ad hoc bilateral co-ordination between ministries and agencies, do not ensure that skills policies are coherent and complementary. To overcome these challenges, Bulgaria should consider forming an overarching Skills Policy Council, similar to the council introduced in Norway (Box 5.1). This council could lead and oversee policy design, implementation and evaluation across the entire skills system and help manage and co-ordinate different actors and strategies, including those currently planned at the sector and local levels. The council could be chaired by a minister (as in Norway) or chaired by a senior official from the centre of government (as the OECD proposed for Lithuania; see OECD (2021[15])). Making it a permanent council would help to ensure continuing and much needed whole-of-government co-ordination on skills policies beyond the life of individual policies or programmes. A strengthened Consultative Council and experts should also support it (see Opportunity 2 below). Such a deliberate shift in organisational arrangements and oversight would send a clear signal within and beyond government that the effective governance of the skills system is an important priority for Bulgaria and help to increase the accountability of skills policy makers to each other and stakeholders.

Figure 5.6 sets out a potential model for configuring a Skills Policy Council in Bulgaria, including additional bodies recommended later in this chapter.

Bulgaria should also seek to strengthen critical bilateral and/or multilateral relationships between ministries and agencies, where skills policies need to integrate with each other and related government priorities. One example of this would be the relationship between MES and the Ministry for Innovation and Growth (MIG), which could be improved to better foster the co-ordination of strategies for skills with strategies for economic growth, innovation and research and development (R&D). Another example would be the relationship between MES and the MLSP, which could be improved to better foster the co-ordination of policies for employment and activation (especially those aimed at minority groups and the un/under-qualified), as well as skills needs forecasting. While these examples are illustrative rather than exhaustive, the overall objective should be to increase formal co-operation processes to facilitate a shared understanding of policy agendas and responsibilities between ministries.

Key bilateral relationships between ministries in the area of skills policy can be improved and formalised through various mechanisms. These include the creation of memoranda of understanding, jointly established and managed policy projects and delivery teams, partnership agreements between relevant delivery agencies and standing, bilateral meetings of ministers and officials, among others (OECD, 2018[17]). For example, MES and MIG could form joint project teams to design and implement skills policies supporting growth sectors and clusters. Strong bilateral relationships between ministries are likely to be (Stanchev, Popova and Brusis, 2022[4]) more difficult and important when multi-party coalition governments appoint ministers from different political parties.

As noted earlier, Bulgaria has a growing number of consultative processes and advisory bodies for policy making that involve stakeholders and experts. These include, for example, the Council of Ministers’ portal for public consultations, as well as 70+ advisory councils (Stanchev, Popova and Brusis, 2022[4]), such as the National Council for Tripartite Cooperation, the National Employment Promotion Council and the National Council for Labour Migration and Labour Mobility (Council of Ministers, 2022[18]). Examples of stakeholders engaged through these processes include the Confederation of Trade Unions KNSB, the Confederation of Labour Podkrepa, DBBZ State Enterprise, Znánie Associations, the Association of Industrial Capital in Bulgaria, the Bulgarian Industrial Association, the Bulgarian Chamber of Commerce and the Chamber of Craft Trades, among others. Capacity and co-operation with stakeholders has improved in some parts of the skills system in recent years, for example, in the area of SAA (CEDEFOP, 2020[19]).

However, project participants raised concerns that stakeholders are still not being fully engaged in the skills policy-making process, a challenge identified in other recent policy studies (OECD, 2019[7]). Effective co-ordination mechanisms for involving stakeholders at all levels are still missing and/or slow to develop. In addition, research institutions and scientific/academic organisations should contribute more to SAA (CEDEFOP, 2020[19]). The government could thus better harness the insights and expertise of key stakeholders in governing the skills system.

Existing and planned advisory bodies and processes could be enhanced and/or broadened to strengthen stakeholder engagement. For example, the Consultative Council for Vocational Education and Training (CCVET) could be expanded to also cover skills development beyond school. The CCVET was established in 2018 by the Minister of Education and Science. It works on reforming and modernising VET curricula and attracting more students with high levels of skills and competencies to the VET system. The secretariat for the CCVET is the VET Directorate of MES. There is also an expert group, co-ordinated by MES, that supports the CCVET (Box 5.2). The CCVET’s function and role could be extended to cover skills development more broadly (beyond secondary VET), for example, to include tertiary education and adult learning, including training for out-of-work adults. It could help increase capacity, evaluation and analysis across these parts of the skills system. An expanded Consultative Council could also support and advise the proposed Skills Policy Council (see Recommendation 4.1), for example, by providing research and analysis of skills issues, consolidating knowledge and data from social partners, and assisting with campaigns and communications on skills topics.

Planned sectoral skills councils could provide detailed sectoral skills insights from industry to government, including via the recommended Skills Policy Council. Bulgaria has started introducing sectoral skills councils, with a pilot in operation for manufacturing electric vehicles. Other sectors have been selected, and their key responsibilities established. Sectoral skills councils offer the opportunity to build the influence of sector-based voices in the skills policy-making and delivery process. Sectoral skills councils in Bulgaria also offer an important opportunity to better engage stakeholders at national and local levels in the design and delivery of skills policies and programmes (Box 5.2). However, ministry membership of sectoral skills councils is limited to MES, and their focus is on issues of formal VET, such as curriculum and qualifications. As with the CCVET, their remit and coverage could potentially be broadened. Poland has successfully utilised sectoral skills councils to this end, particularly in the finance sector (Box 5.3). Sectoral skills councils could report to the proposed Skills Policy Council on detailed sectoral issues, whereas an expanded Consultative Council could provide a horizontal “skills system” perspective Figure 5.6).

Building and better utilising evidence in skills development and use will be integral to Bulgaria’s efforts to improve the governance and performance of its skills system. It is essential that skills policy makers, learning providers, learners and other stakeholders can make informed choices. For this, they require relevant, reliable and accessible data and information on current and future skills needs, as well as evidence on the performance of skills policies and programmes.

Comprehensive information on current and future skills needs is an essential building block of well-governed skills systems (OECD, 2019[1]). Effective skills assessment and anticipation (SAA) tools and arrangements are integral for producing skills needs data and information to guide decision making. Effective SAA systems typically draw on a variety of qualitative and quantitative data sources and methodologies (OECD, 2016[23]). For example, forecast-based projections and quantitative models at the national level can cover all economic sectors, ensure analytical consistency across time and sector, and are relatively transparent and objective. In addition, qualitative exercises, surveys and interviews can help policy makers collect information that is not available in datasets, while foresight exercises provide a framework for stakeholders to jointly think about future scenarios and actively shape policies to reach these scenarios.

High-quality evidence on the performance of skills policies and programmes is critical for enabling policy makers and service providers to allocate their limited resources where they will have the greatest impact. Generating evidence about what works in the skills system requires processes and capacity for evaluation and, ultimately, a culture of evaluation among policy makers (OECD, 2019[1]). Relevant, reliable and accessible skills data, information and evidence support a whole-of-government and stakeholder-inclusive approach to skills policies (see Opportunity 1), as well as targeted and sustainable skills financing (Opportunity 3). For example, a common data and evidence base can help different actors reach a shared understanding of skills challenges and opportunities. On the other hand, whole-of-government co-ordination on skills can facilitate ministries’ identification and communication of their data needs and gaps.

Project participants expressed concerns that existing approaches for generating and utilising skills information and evidence are not performing well enough. While Bulgarian authorities generate substantial amounts of data and statistics, they could be better used to inform skill needs and priorities at both the national and local/regional levels (European Commission ESIF and World Bank, 2020[5]). More specifically, project participants and recent reports suggest that Bulgaria faces the challenges of a lack of co-ordination of qualitative and quantitative information; limited subnational capacity to generate and utilise skills data; as well as partially outdated classifications of economic activities, professions, training courses and qualifications.

Ensuring the quality and effective use of skills needs information requires effective SAA tools, instruments and governance that involve and meet the needs of diverse stakeholders (Figure 5.6). The tools and instruments used for skills anticipation in different countries vary in terms of the time span they consider, the frequency with which they are employed, the methods used to identify skill needs (i.e. quantitative or qualitative), and their national/regional/sectoral scope. The results of skills anticipation exercises can be used for a variety of purposes, including to improve labour market information for students, and inform the design and/or funding of qualifications and courses. Models for governing and involving stakeholders in skills assessment and anticipation exercises can include independent agencies such as statistical offices, universities or research institutes implementing skills assessment and anticipation exercises, public institutions doing this, or a hybrid combination of the two (OECD, 2016[23]).

SAA in Bulgaria is conducted through numerous activities, including regular the MLSP forecasts, skill assessment initiatives, employer surveys and privately funded sectoral studies (Tividosheva, 2020[9]). Central to this is the MLSP’s system for short- and long-term forecasting of employers’ demand for specific qualifications and skills based on a quantitative forecasting model and employer surveys (Box 5.4). This represents good practice in both the design of the SAA process and the analysis of SAA information.

However, as noted earlier, skills data collection, evaluation and analysis are not comprehensive or systematically used in decision making. Bulgaria’s current forecasts are mainly designed for planning labour market policies. The information generated by existing SAA activities sometimes lacks detail or relevance for end users, such as education and training providers seeking to update their programmes or counsellors seeking to provide advice and guidance to learners and workers. For example, in VET, Bulgaria has only recently made progress on developing a mechanism to track the labour market outcomes of programmes and graduates and lacks the capacity to rigorously and systematically analyse data and conduct research on VET (Bergseng, 2019[10]). Overall, while Bulgarian authorities generate a substantial and growing amount of data on skill needs and priorities at the national and local/regional levels, they could better co-ordinate this information and use it more strategically in decision making. Project participants largely confirmed this assessment of Bulgaria’s SAA activities.

A particular challenge for policy makers is how data on SAA is translated into the design and operation of career guidance and advisory services. Services that offer career advice to individuals – including both young people and adults (whether in work or unemployed) – and support services and advice to employers should be based on reliable, timely and relevant information on skills needs. All actors need such information to help ensure that people are able to develop skills that are in high demand.

Bulgaria could develop a more comprehensive and consolidated SAA system to serve the needs of all key stakeholders in the skills system. This would require different ministries and stakeholders to discuss and define the SAA data and information they need. The proposed Skills Policy Council, broadened CCVET and sectoral skills councils (see Recommendations 4.1, 4.3 and 4.4) could support this process. Based on this assessment, Bulgaria could improve its SAA methods and information, for example, by generating more sectoral, occupational, educational, demographic, regional and temporal insights on skills supply and demand, and utilising qualitative analysis and foresight techniques to garner insights from employers and other stakeholders. Such improved SAA information could feed into career guidance for youth (see Chapter 2) and adults (see Chapter 3). It could also be offered to employers to inform their decisions about training, hiring and other matters.

Ireland and Estonia have relatively well-developed SAA systems, which rely on a range of methodologies and sources, and produce SAA information for various users (Box 5.5). Ireland has a history of utilising qualitative and foresight techniques to test and deepen quantitative estimates of labour market needs. Estonia also has a mixed methodology approach and identifies policy implications from its SAA information as part of this approach.

Related to improving SAA information, Bulgaria could also improve the quality and use of evidence on the performance of skills policies and programmes. As noted earlier, Bulgaria lacks a strong culture and practice of evidence-based skills policy making (Figure 5.4). Currently, Bulgaria has limited evidence on the outcomes achieved by its skills policies, programmes, institutions and agencies. It likely lacks the capacity and resources – human, organisational and financial – with which to collect, analyse and share such evidence (European Commission ESIF and World Bank, 2020[5]). This undermines efforts to build a shared understanding among different actors about challenges and priorities in the skills system.

Strengthening co-ordination and leveraging analytical capacity could help Bulgaria to improve evidence on the performance of skills policies. For example, employers and trade unions currently engage in research and data collection among their members at national and regional levels. Sectoral skills councils will help increase capacity and evidence at the sector level. Furthermore, Bulgaria’s universities and various non-governmental organisations and consultancies have analytical and research capacity that could be better leveraged for skills policies. Bringing these actors and evidence together in a systematic way could enrich the skills policy-making process. Current examples of bringing skills data and capacity together are evident in the Bulgarian University Ranking System (BURS) and the Pilot Model for Tracking VET Graduates (Box 5.6). There are also examples of consortia and partnerships building evidence in the skills system, such as the Human Capital Partnership, which carried out labour market forecasts for the MLSP (Ministry of Labour and Social Policy, 2019[24]). Experts and partnerships could be leveraged in a more systematic way to build evidence and provide additional capacity for skills policy makers.

A potentially straightforward way for Bulgaria to improve the quality and use of evidence on the performance of skills policies and programmes would be to create a cross-government data and evidence centre. In this centre, all national and regional data, comparative country information and indicators (e.g. from international bodies such as the World Bank, the European Union, the OECD, the International Monetary Fund, the International Labour Organization and the European Centre for the Development of Vocational Training [CEDEFOP]) and evaluation evidence could be collated and managed. Such a centre could be staffed with a small team that is supported with the secondments of officials and experts from across the skills system. The centre could support individual ministries and agencies, as well as the proposed Skills Policy Council (see Recommendation 4.1). The government could similarly formalise a network of experts to provide additional capacity in the skills system, building on the model of the CCVET and its resource working group (Box 5.2). The academics, consultants and stakeholders that currently collect and generate information and data on skills could be involved in such a formal network of experts and utilised to supplement the capacity of experts within the government. Denmark and Lithuania have created centres/agencies focused on improving data and evidence in the skills system, including by integrating and analysing skills data from diverse sources (Box 5.7).

Establishing financing arrangements for skills policy that are adequate, well-targeted and sustainable will be critical for improving Bulgaria’s skills performance. Project participants highlighted the importance of getting the distribution of funding right across different levels and sectors of education, ranging from general education schools, VET schools and centres, higher education and training for adults in and out of work. Given that the benefits of skills policies are most likely to be realised over the long term, funding arrangements should be sustainable over the long term.

Securing long-term funding for skills and efficiently and equitably allocating funding requires reliable and relevant evidence on current and future skills needs, the efficacy of different skills policies and programmes, and the needs of different groups of learners and workers in the population (see Recommendations 4.5 and 4.6). Allocating and targeting funding prudently (including from external sources such as EU structural funds) requires policy makers to prioritise projects that have proven particularly successful in evaluations over programmes or activities that have less impact or have become lower priority (OECD, 2019[7]). Reallocating funds is as important for system sustainability as increasing or seeking new funding.

Governments, employers and individuals play a key role in funding skills development and use. Sufficient funding for skills is essential to make societies resilient to external shocks (such as COVID-19) and to adjust to technological and other structural changes that alter skill requirements. As individuals and employers tend to underinvest in skills for various market and behavioural reasons, governments are in a key position to sustain and steer skills development with financial incentives and long-term system co-ordination (OECD, 2017[33]). Beyond public expenditure, policy literature also highlights many innovative mechanisms for raising the resources necessary for sustainable skills policy from non-government sources (OECD, 2019[1]). For example, cost-sharing mechanisms between the central government, employers and employees can help to meet short and longer-term costs.

Bulgaria will have significant financial capacity to invest in skills over the next decade from EU funds. Bulgaria is also set to receive substantial support from EU funds for investing in skills policies. For example, the current Partnership Agreement between the European Commission and Bulgaria allocates Cohesion Policy funds worth EUR 11 billion to the country in 2021-27. As part of this, Bulgaria will invest EUR 2.6 billion from the ESF+ to improve access to employment, increase skills so that people can successfully navigate the digital and green transitions, and ensure equal access to quality and inclusive education and training (European Commission, 2022[34]). Bulgaria’s recovery and resilience plan allocated EUR 6.3 billion in grants under the European Commission’s Recovery and Resilience Facility. The education and skills component of this plan totals EUR 733.5 million and seeks to increase the quality and coverage of education and training and improve the skill set of the workforce to adapt to technological transformation in the labour market (European Commission, 2022[35]). Ensuring skills funding is used to its potential will require reliable skills information and evidence, and effective co-ordination across government and with social partners.

Bulgaria’s expenditure on skills development and use is relatively low. As noted earlier (Figure 5.5), Bulgaria’s public expenditure on education as a share of GDP was low at all levels of education except secondary education. It was also low for active labour market programmes for unemployed persons. In comparative terms, Bulgaria spends less on education overall as a share of GDP than all other EU member states except Romania and Ireland (Figure 5.8). Nevertheless, compared to 2010, Bulgaria’s expenditure on education has increased in real terms by 14%, significantly faster than the EU average (3.7%). The increase has primarily benefited secondary education (+23%) and pre-primary and primary education (+18%), whereas spending in tertiary education decreased by 11% (European Commission; Directorate-General for Education, Youth, Sport and Culture, 2020[36]).

Bulgaria’s public spending on secondary VET has increased over time and appears to be increasingly reliant on municipal and EU funding. In 2019, Bulgaria spent about EUR 4 050 (in purchasing power standard [PPS]) per student in upper-secondary VET, up from about EUR 2 650 (PPS) in 2012, and higher than per-student spending in upper-secondary general education (about EUR 3 300 [PPS]) (Eurostat, 2023[37]). However, the share of the school education budget allocated to VET has fallen in recent years, and VET spending relative to general education is also decreasing (European Commission ESIF and World Bank, 2020[5]). Spending by municipalities plays a growing role in overall spending on VET, while a rising (and fluctuating) share of the VET budget also comes from EU funds. From 2011 to 2018, the share of public VET spending from municipalities more than tripled to 37%. The share of EU funding in total VET expenditure rose from 0.8% in 2011 to 12.3% in 2018.1 Previously, the OECD (2019[10]) highlighted the need to improve municipalities’ and schools’ financial autonomy and capacity, cost sharing between VET providers and employers, and funding to promote equity in Bulgaria’s VET system.

There is a low level of public investment in continuing VET for adults, especially compared to other EU countries. While continuing VET at secondary and post-secondary levels is mainly funded by the state, VET centres for adults are mostly private, and training is often self-funded by learners, employers, or, in some cases, through EU funding – mainly European Structural and Investment Funds (ESIF).2 Employers meet most costs. In 2015/16, employers in Bulgaria financed 80% of adult training. This is high by EU standards, and only Romania (86%), Luxembourg (85%) and Malta (82%) have a higher share (European Commission ESIF and World Bank, 2020[5]).

Annual public expenditure overall on tertiary education remains low in Bulgaria and is spread across a number of institutions. As noted in Chapter 1, public expenditure in Bulgaria’s higher education sector reflects a diverse and complex range of factors. These include the number of students enrolled (which has been falling), the fields in which students enrol, and the level of tuition fees, which in turn reflect the government’s assessments of the costs, benefits, quality and priority of different higher education programmes and providers. The higher education system in Bulgaria is considered to be quite fragmented. Bulgaria has one of the European Union’s highest numbers of higher education institutions compared to its population (European Commission, 2018[38]). The European Commission has recommended university mergers and a clearer definition of the mission of different types of universities in terms of research or teaching. In line with the prioritisation of specific subjects, Bulgaria has created and supported specialist institutions and provision, for example, through the creation of new higher education institutions and the designation of new centres of excellence and centres of competence for specialist provision among VET institutions (Box 5.9).

Regarding skills use, as noted earlier, Bulgaria’s spending on ALMPs is also low in comparative terms (Figure 5.9). The OECD (2022[12]) has previously recommended a bigger role for ALMPs in supporting out-of-work adults from vulnerable groups. At 0.16% of GDP, spending on these programmes in Bulgaria (excluding employment services and administration) is low compared to other EU countries (0.39%) and OECD countries (0.35%). This is despite spending on employment incentives and training measures increasing since 2015. Furthermore, spending on suitable training programmes within employment programmes should be increased – with just 8% of ALMP expenditure spent on training in Bulgaria in 2019, against an average of 40% in the European Union (see Chapter 4). Funding for learning for employed adults and enterprises will also need to be increased if Bulgaria is to prepare its workforce for the jobs of the future (see Chapter 3).

Bulgaria could consider initiatives from Estonia and Poland for increasing and allocating skills expenditure (Box 5.8). In order to ensure sufficient financing for diverse skills policies and programmes, Estonia systematically uses project pilots and evaluation before transferring successful projects to more permanent state funding. In Poland, the government ties a share of higher education funding to graduates’ employment outcomes to ensure that providers have incentives to ensure the labour market relevance of their programmes and the success of their students.

Overall, Bulgaria should look to set broad targets for investment in the skills system (as a proportion of GDP) – broadly broken down into each part of the system. As a target for the medium term, this should at least reflect the levels of comparator countries in south and central Europe. In the longer term, Bulgaria should aim to achieve the average levels of the European Union as a whole.

Furthermore, there should be robust and ongoing evaluation of existing spending in all areas in order to allocate – or reallocate – funding to those activities where there is the most return on investment. This might allow the freeing up of existing resources to spend on new priorities for the system – some of which, e.g. for SAA, career guidance and business support services – are recommended in this report. This would also enable a series of trial interventions that might further stimulate demand for skills and investment from employers and individuals – within a new balance of responsibilities – e.g. trialling and evaluating schemes involving tax incentives, investment allowances, vouchers and learning account schemes.

In addition to increasing public investments in skills and allocating funding effectively, Bulgaria could better share the costs of skills investments among different actors to ensure the skills system’s sustainability. There are four principal sources of funding for education and training in Bulgaria: the state budget, the ESIF, employers and the learners themselves. Bulgaria relies on state and ESIF funds in particular.

In addition to the state, employers and, potentially, individuals should contribute more systematically to skills development in Bulgaria, thereby financing the skills system in a tripartite manner. A tripartite funding agreement between these actors should establish the necessary commitment of all actors to raise contributions to skills development.

There is a need to ensure sufficient funding for skills from the state, employers and individuals according to clear principles of responsibility and benefits. Bulgaria has very recently succeeded in utilising cost sharing in certain parts of the skills system, namely in the case of specialist higher education and VET institutions, regional industrial parks and centres of excellence (Box 5.9). In addition, there are various case studies from other OECD and EU countries where such principles and schemes exist, such as in Norway and the Netherlands (Box 5.10).

Project participants stated that there may be a need to test and adapt different approaches to financing as well as the overall balance of responsibilities according to sector and/or geographical location. For example, funding the development of higher levels of skill in more productive firms and sectors may require greater contributions from the firms themselves. In contrast, funding for skills development in lower-skill/lower-productivity environments will likely require higher public contributions. Funding advisory services and activities to boost HPWPs (see Chapter 4) will also require cost-sharing arrangements depending on the characteristics of recipient firms (e.g. their size). It is also likely that other factors may come into play that reinforce the need for an integrated and co-ordinated government approach. For example, employer demand and funding for skills may be tied to other investments or activities, such as R&D or the introduction of new technologies and equipment.

Bulgaria’s new action plan for skills could set out the balance of funding responsibilities it expects in meeting these targets from the different actors, i.e. the state, employers and individuals, in all activities and at all levels of the skills system.


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← 1. EU funding for VET comes from the Operational Programme for Science and Education for Smart Growth and the regional development-related Operational Programme for Regions in Growth. In 2014-20, VET was supported by the Operational Programme for Regions in Growth for an amount of BGN 162.4 million (Bulgarian lev) (EUR 83 million) under the Support for VET Schools in Bulgaria programme. Under the Operational Programme for Science and Education for Smart Growth, an amount of BGN 29.1 million was allocated to projects that exclusively targeted VET (European Commission ESIF and World Bank, 2020[5]).

← 2. Money allocated for lifelong-learning-related interventions increased from BGN 1 049.3 million in the 2007-13 programming period to BGN 1 272.3 million in the 2014-20 period (European Commission ESIF and World Bank, 2020[5]).

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