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The past years have been turbulent for the economies of the municipalities in the Burgas region. In 2020, they suffered one of the heaviest blows of the crisis nationwide. However, in 2021, they are experiencing rapid growth due to the recovery of tourism and the manufacturing industry. Among the main advantages of the region is its favorable demographic structure, but there are also visible challenges in terms of education, skills, and the quality of local school education.

• Rapid Recovery of the Burgas Economies

The year of the pandemic was particularly challenging for the local economies of Burgas in two aspects. On the one hand, there was a sharp decline in tourism and the disappearance of foreign visitors. On the other, there was a significant increase in uncertainty in demand for products from the manufacturing industry. In just one year, between 2019 and 2020, the Burgas region lost 17% of its gross domestic product per capita, placing it last in long-term economic growth among all 28 regions in the country. However, in 2021, the region achieved one of the fastest recoveries in the country, adding 4.4 thousand leva GDP per capita, reaching a total of 15.8 thousand leva per capita. Judging by the trends in tourism and the main industries of the region, we have every reason to believe that the positive trend in Burgas continued in the past year.

However, this by no means indicates that the levels of economic development or the pace of recovery within the region are uniform. Among the 13 municipalities that make up Burgas, the levels of economic development vary from 9.9 thousand leva per capita of added value in the non-financial sector in Burgas and 8.5 thousand leva per capita in Nesebar in 2021, to only 1.7 thousand leva per capita in Sungurlare and 1.9 thousand leva per capita in Aytos. In other words, the differences between the most developed and the least developed municipalities are almost 5 times.

In nominal terms, the largest local economy is that of the regional center, Burgas, with just over 2 billion leva, followed by the tourist center Nesebar (257 million leva) and Karnobat (150 million leva). In the year of rapid recovery, only two municipalities, Sungurlare and Karnobat, registered a decline in added value. However, Karnobat's contraction was minimal, at 4%, compared to a 24% decline in Sungurlare. The leading municipalities in terms of growth are Sredets (68% growth), Malko Tarnovo, Nesebar (both with 40% growth), and the municipality of Burgas itself (39% growth). The economic profile of the municipalities is diverse, with a focus on petroleum processing and the automotive industry in the manufacturing sector, but tourism also plays a significant role. The regional center, Burgas, is among the leaders in services and primary urban centers in the country.

• Investment Growth

After a significant slowdown during the pandemic year, the municipalities in Burgas are now experiencing widespread investment growth in the context of rapid recovery. Measured by the annual expenditure of companies on long-term tangible assets, the increase in investments is most evident in the small municipalities of Kameno (+96%) and Tsarevo (+97%). In almost all municipalities, investment growth on an annual basis is in the range of 30-50%, with the exception of the southern municipalities of Sozopol (12%) and Primorsko (no change), while in the regional center, expenses for land, buildings, and machinery are increasing by 41%. As expected, investment expenditures are concentrated in the largest local economy, the regional center, where investments worth 796 million leva were realized in 2021. In Nesebar, 129 million leva were invested, in Pomorie - 73 million leva, and in Karnobat - 41 million leva. However, in the other municipalities, the size of investments is relatively small, in the range of 15-20 million leva. When considered per capita, the most intensive investment activity is observed in Nesebar, with 4.3 thousand leva expenditure on tangible assets per person, as well as in Burgas - 3.9 thousand leva.

Against the backdrop of significant expenditures realized throughout the year in most municipalities, the total volume of foreign investments remains relatively unchanged. As expected, Burgas is also a leader in this regard, with just over 2 billion euros of foreign direct investment (FDI), or 9.9 thousand euros per capita. However, there is a slight decline in FDI in the municipality compared to 2020. There is a more significant presence of foreign capital in Nesebar - 113 million euros, as well as in Karnobat - 33 million euros. A significant positive trend is observed in Primorsko, with a 32% growth over the year, although from a very low base. Several municipalities in the Burgas region are among the leaders in the country in terms of utilizing funds from European funds, with Primorsko and Sozopol exceeding 5 thousand leva per capita, and Pomorie - 4 thousand leva. However, a significant portion of these European investments date back to the earliest program periods when the coastal towns were developing water treatment plants for drinking water and comprehensive water cycles.

• The Rise of the Labor Market

The economic growth of 2021 naturally leads to the recovery of the labor markets in the municipalities of Burgas. The only exception where the share of employed individuals among the population aged 15 and over was higher in 2020 is Karnobat, with a very small difference of 0.1 percentage points, reaching 33.6%. Sozopol remains unchanged. Nesebar registers a significant increase of over 3 percentage points, reaching 45.2%, due to the recovery of tourism. However, it should be noted that the employed individuals in Nesebar likely include a significant number of migrant workers from neighboring municipalities. The employment rate in Burgas is also high at 39.1%, but the increase compared to the previous year is not particularly significant. In half of the municipalities in the Burgas region, the employment rate is below 20%.

The increase in employment and the creation of new jobs is accompanied by a natural decrease in unemployment in the municipalities within the Burgas region. The fastest decline, by 4.4 percentage points, is observed in Ruen, as well as in Pomorie (3.2 percentage points) and Sozopol (3 percentage points). The only municipality that experienced an increase in unemployment in 2021 compared to the previous year is Sredets. Compared to the rest of the country, the municipalities in Burgas are characterized by relatively low unemployment rates, with only Sungurlare and Sredets exceeding 10%. In the regional center, the unemployment rate is already below 4%. Most municipalities have unemployment rates ranging from 4% to 6%, indicating a well-functioning local labor market.

In the year of the population census, we also have information about overall employment in the municipalities. The distribution is similar to that of the employed individuals, with the regional center Burgas leading at 53% of the population aged 15 and over, followed by Nesebar with 50%, Primorsko with 47%, and Pomorie with 44%. The lowest employment rates are found in Sungurlare (32%), Malko Tarnovo, and Sredets (both around 34%), but compared to other small peripheral municipalities, their performance is relatively good. As expected, the regional labor market in the regional center is the largest, with the census indicating 88 thousand employed individuals in 2021. All other municipalities have fewer than 10 thousand workers, with Nesebar (9.8 thousand) and Pomorie (9.4 thousand) having the highest number of employees among the peripheral municipalities, while the lowest number is in Malko Tarnovo, with only 777 individuals.

Despite the good performance of the local labor markets, wages in the municipalities of Burgas remain low. Three municipalities - Tsarevo, Primorsko, and Ruen - have average gross monthly salaries below 1000 leva in 2021. The highest salaries are found in the municipality of Burgas - 1360 leva per month, but they still lag behind other leading economic centers. The salaries in the other municipalities range from 1000 to 1200 leva per month. One possible explanation for the statistically low wages could be the dominant role of the hotel and restaurant sector in many of the municipalities.

• Educational Challenges

The census allows us to examine the educational structure of the population at the municipal level, which is directly linked to the potential for local economic development and attractiveness for investments. Over 20% of the population aged seven and above in Nesebar (24%) and Burgas (32%) have higher education. As expected, considering the age segmentation of the census data, the dominant group in most municipalities is individuals with secondary education, with the highest share in Nesebar and Primorsko (around 51%), while in most municipalities, it ranges from 45% to 50%. However, in some of the smallest municipalities, people with primary and lower education levels constitute the largest share - in Ruen, they account for as much as 63%, and in Sungurlare, it's 56%. Illiteracy is also a visible problem, with Malko Tarnovo, Sungurlare, and Sredets having illiteracy rates of around 5% among the population aged nine and above, while only in Nesebar and Burgas, illiteracy is below 1%. As a result, the region has one of the most unfavorable educational structures in the country. This largely limits the potential for development in small and remote municipalities in terms of the skills of the workforce.

Similar conclusions can be drawn from the results of exams conducted at different stages of school education. In the latest edition of the Bulgarian language and literature high school graduation exam, only the municipality of Burgas achieved an average score above "Good" (4), while almost half of the municipalities - Sungurlare, Kameno, Sozopol, Sredets, Malko Tarnovo - had an average score below "Average" (3). This indicates serious problems in the local educational system of small municipalities to provide even basic literacy skills to many of their students.

• The Demographic Advantage

Against the backdrop of extremely negative demographic processes in almost the entire country, the municipalities of Burgas achieve relatively good results. The region is home to one of the five municipalities in the country that experienced population growth between the 2011 and 2021 censuses - Nesebar, which with a growth rate of 6.3% over the decade, ranks second out of the 265 municipalities in the country, following Bozhurishte. Sozopol also achieves a relatively good result, with a population decline of 5%, as well as Primorsko (-7.4%) and the regional center (-7.7%), which are among the better results among the large cities in the country. The fastest population decline occurs in the border municipality of Malko Tarnovo, where the decline is nearly one-third within the decade, but all others remain below a 20% decline. The municipalities in Burgas also fare relatively well in terms of aging, with only Malko Tarnovo having a share of people over 65 years old exceeding 30% of the total population, while in the regional center, it is 21%.

The positive demographic dynamics are a direct result of the migration and natural processes in the municipalities. The balance between mortality and birth rates is negative everywhere, but the values are among the more favorable in the country - around 7‰ for 2021 in Nesebar and Ruen, 8‰ in Burgas, and significantly lower only in Malko Tarnovo (-30‰). Migration processes play a major role in the Burgas region, and as a result, in the past year, Nesebar increased its population by almost 4%, and Primorsko and Tsarevo by 3.3% each. The regional center also enjoys a positive migration balance of 0.6% for 2021, following the outflow of population characteristics for all major cities in 2020.

Author: Adrian Nikolov