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Bulgaria needs higher productivity: World Bank

(SOFIA) - Bulgaria has to dramatically boost productivity growth if it wants to bring incomes and living standards up to European Union averages, the World Bank found in a report published on Monday.

"If productivity in Bulgaria continues to grow at 2.0 percent per year, Bulgaria will never fully converge with the EU-25 gross domestic product per capita," wrote World Bank economist Satu Kahkonen.

"But if Bulgaria manages to raise productivity growth to 5.0 percent per year by 2040, you will receive the parity with the average GDP per capita in the rest of Europe," the economist said.

Bulgaria, which has around 7.6 million inhabitants, is currently facing increasing demands for higher wages in many sectors of the economy, with groups such as public transport drivers and teachers recently staging strikes.

But experts are concerned that if wages rise faster than productivity, it could push inflation -- which recently topped 12 percent in August -- even higher.

Average per capita income in Bulgaria, which joined the EU at the start of this year, is currently only around one-third of that in the rest of the bloc.

Finance Minister Plamen Oresharski said last week that salaries could not be increased while productivity growth remains low.

The World Bank report pointed to the need for Bulgaria to improve its education system, strengthen labour mobility, encourage research and development, and support innovation to develop competitive product markets.

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