Collective bargaining as a tool for real wage increases

Abstract

Over the past three years, the cumulative Consumer Price Index in Bulgaria has reached nearly 35%, while inflation in the small consumer basket rose even more. Low and middle-income earners spend an ever-increasing proportion of their income on essential goods, which have risen significantly in price. Against this background, the trade unions in Bulgaria, through collective bargaining and negotiations at national level, have taken a number of actions. These have led to accelerated income growth that has largely offset the increase in the cost of living and prevented a loss of real purchasing power in the medium term. In Bulgaria, the presence of a collective agreement guarantees that the wage is at least 14% higher than in a situation in which there is none. The past inflationary crisis provides solid empirical information about the role of trade unions in the conditions of the imperfect commodity and labour markets in which the national economy is situated. Taking manufacturing as a focus, the author concludes that the number of challenges the industry has cannot be faced without an enhanced role for human capital.