News

Adrian Nikolov

When it announced the 2017 matriculation results, the Ministry of Education highlighted the decrease of failed students compared to the previous year. Truly, there is something to write home about -  the number of the failed students in 2017 has dropped from 4189 to 3887. In general, this decrease amounts up to 1% of the total number students. However, this downward trend is only compared to last year outcome. In reality, 2017 marks the second worst performance in the record of matriculation exams in Bulgaria.

Much less attention was payed to the slight fall in the average exam results – from Good 4.17 to Good 4.13. Despite the fact that this is a continuation of a relatively stable trend towards a decrease in the average results in the past years, a decrease of four points is not as much a sign of decreasing quality of education as it is of the higher difficulty of the particular exam and a confirmation of the lack of significant improvements in quality. The weak performance of the students could also be explained with improvements in mechanisms sanctioning cheaters – in other words the newer grades represent the real capabilities of the students much better compared to years ago.

Aggregated data point to even more curious trends on the local level, because of this we will investigate those trends on the basis of data provided by the Ministry of Education on the district level level.

The map shows the “fail” grades in the districts as  percentage from the total number students who sat the exam. The uneven distribution of the quality of education is obvious here, and it cannot be captured in the national average. For example in the capital a mere 2% have failed, while in Yambol and Kardjali one fifth were unable to pass the exam. A positive example is Smolyan, where the results have improved significantly over the years as a result of long-term policies aimed at improving the quality of education.

The dynamics of failed grades on the matriculation exam come as a clear result from the improvements in cheating control - in regions like Kurdjali, for instance, where there were only 3% failed students in 2014, but in the following three years their number has grown more the six times. A similar trend, but with smaller variance can be observed in Yambol, Pazadjik, Silistra and Sofia regions. An interesting outlier is Montana, where the share of failed grades has halved within a year. The regions with traditionally high results and high quality education– Sofia-city, Plovdiv, Varna, Burgas do not mark any significant shifts in the past years.

Shifts in the average grades follow closely the failed grade trends. However, there is some evidence of deepening inequality in the quality of education between the diffrent regions – the leaders improve their performance while the worse performers show a trend towards decreasing results. Generally, new data point to stagnation and lack of any significant change within the school education system.

District-level results from the latest matriculation exams do not point only to negative  conclusions – the dynamics of the failed grades, for example hint that the current form of examination is getting better to achieving a realistic representation of the actual quality of the district educational systems. They also underline the need for reform of the system of financing and the school network, without which the inequality of education quality will continue to widen.

The quality of education in Bulgaria can be measured in several different ways. The education system itself has independent assessmentс for all students following each of its three stages. Apart from that, Bulgaria takes part in several international sturdies of educational achievement, PISA and TALIS among them. In broad terms, they point out that in a comparative context the quality of education provided by the Bulgarian educational system is on an average level compared to other countries and does not change significantly over the years.

The country level analysis - especially a country like Bulgaria, where there are considerable regional differences – however, often hides the inherent inequalities and the broad range of the level of educational attainment within the country. Because of this, here we will examine the performance of the students in the different municipalities in the country.

The quality measurement used is the performance of the students on the compulsory exam in Bulgarian language and literature held after the seventh grade. This indicator is chosen because it covers the entire country. This allows for a perfect comparison, as the tests used are the same for all students in the same year.

There are significant differences between the municipalities. While in Novo selo, Vidin district, the average result is barely 7.9 out of 65 points, in Zlatitsa, Veliko Turnovo district - 10.2, the seventh grade students in Zlatograd, Smoyan district achieve an average result of 39.8 and in Smoyan itself - 39.7. These extreme differences are probably not only the result of low teaching quality, but also of random variations and the relatively small number of students in these municipalities. Nevertheless, there is an obvious proportional relationship between the size of the city or town and the mean result of the external evaluation, i.e. larger municipalities generally achieve higher evaluation results. The reason behind this is most likely not only the concentration of better schools and teachers in those municipalities, but also the fact that better students are choosing schools in the bigger cities. The opposite conclusion however cannot be made for smaller municipalities, at least not with high certainty – they achieve both good and bad results, but the lower ones are predominant compared to the bigger municipalities.

The results indicate that the quality of the education is quite uneven between the municipalities – the schools in the smaller ones are incomparable in terms of education quality and attainment with the ones in the big cities. Should it even be assumed that the family and social background in smaller municipalities  offer a worse start to students it is obvious that the schools do not manage to overcome these deficits but rather maintain them. 

There are at least two solutions to this problem. The first option is to intentionally direct human and financial resources with to municiaplities with bad results. The current financing system, however, already distributes financial resources unevenly and gives priority to places where assessments show weak results;despite that the differences in quality remain significant. Redirecting  teachers to smaller cities on a large scale seems hard to achieve even if there is  financial motivation, given the advancement opportunities and living conditions in smaller cities and towns.

For years now such redirecting of highly-educated young people to schools in poorly developed, minority-dominated and rural communities has been done  by the “Together in class” program. Notwithstanding that the program creates good conditions and motivates young teachers, which are an ever rarer sight in the educational system, its scope at this stage is way too narrow (according to the website of the program for the 2016/2017 school year there are 170 young teachers that participated in it) in order to lead to a systematic change in the quality of the education in underachieving areas. Should its approach be taken up and replicated on a much larger scale though, it could provide a solution to the education quality issues.

The second option is to consolidate schools. Statistical analysis on the school level indicates that schools where more students are taking the after-seventh-grade exam achieve higher scores (the effect is 0.15 points per student taking the exam). The consolidation of the school system will lead not only to the provision of access to higher quality education to more students, but also to a reduction of costs for maintenance  of school buildings and staff in places where low-quality education is provided. The present system of secondary education funding hinders this process as unified cost standards are allocating more resources exactly to students in smaller municipalities. Apparently, however, larger the larger per-student payments in these municipalities cannot guarantee better education, but has the opposite effect – it artificially supports schools with poor quality teaching.

Yavor Aleksiev

The latest data on European regional development clearly show that Bulgaria is by far not the only country where regional differences are not only significant, but are also becoming greater. There are basically no countries which manage to simultaneously increase the wealth in their poorest and richest regions, while at the same time achieving a meaningful internal convergence.

A brief look on Bulgaria

The differences between the poorest and richest Bulgarian region (Northwest and Southwest) remain significant. While GDP per capita (expressed in purchasing power standard) of Northwest Bulgaria is barely 29% of the EU average, Southwest Bulgaria has reached 76%, primarily due to the development of the capital city. The gap between the two regions widened primarily in the 2006-2010 period, when the indicator for Southwest Bulgaria increased from 59 to 77% of the EU average, while the increase in Northwest Bulgaria was only from 26 to 28%. In 2015 the country average reached 47 % of the EU average, but all regions, except the Southwest, remain far from this rate. The closest to it are the Northeast and Southeast regions (39%).

Regional differences in Europe

The first figure shows the poorest and richest regions in each of the countries that have more than one region in Europe and for which Eurostat published comparable data for 2015. The average value for each country is also shown.

Fig.1 GDP per capita (PPS) as % of EU average (2015)

Source: Eurostat, IME calculations

In percentage points the difference varies from 512 pp in the UK to barely 4 pp in the Croatia, while in Bulgaria the difference is 47 pp – the sixth lowest in the EU.

Change in the 2006-2015 period

During the 2006-2015 period regional differences decreased significantly (by more than 10 pp) in 6 out of 21 countries with comparable data and increased significantly (more than 7 pp) in 7 countries, Bulgaria among them. We should mention that in most of the countries with diminishing differences (Belgium, Portugal, Greece and even Romania) this process is due to the decrease of the relative wealth in the richest region and not because of faster economic development in the poorest one. In Austria the dynamics is bipolar – there is a clear wealth increase in the poorest region and a mild decrease in the richest one. Only in Germany there is a clearly visible convergence process – the richest region maintains its level of wealth (without increasing it), and the poorest one slightly improves its position.

Fig.2 Increasing and decreasing differences (2015/2006), pp

Source: Eurostat, IME calculations

In the countries where there are deepening differences between the poorest and richest region (shown in red, including Bulgaria), the reason is usually in the faster development of the wealthiest region, but we can still differentiate two groups:

• In Sweden, Denmark, France and the UK the wealth of poorest region has decreased, while GDP per capita in the richest one has increased;
• In Bulgaria, Poland and Slovakia the wealth of both the poorest, and the richest region has increased, but the difference has widened due to the faster development of the richest one.

An alternative look at the differences

In the same time, there are only four countries in the EU where the difference between the poorest and the richest region is greater than that in Bulgaria – the UK, Slovakia, the Czech Republic and Belgium. More than two times greater differences can be seen in Italy, Germany, Hungary, Poland and France. The smallest differences are observed in Croatia, Slovenia, Romania and Portugal.

Fig.3 Difference in GDP per capita (PPS) between the richest and the poorest region in EU countries

Source: Eurostat, IME calculations

The English version will be available on April 7th, 2017.

On March 16th, 2017 the IME presented the study "Regional Profiles: Indicators of Development" in front of Bulgarian students for the first time.

A special focus was put on issues related to poverty and inequality at the regional level. Apart form IME's Desislava Nikolova, PhD and Yavor Aleksiev, the panel also included prof. Neno Dimov form the Sofia Univercity and Aleksander Tsvetkov PhD form "Regiostat". 

The presentations are available in Bulgarian here:

• Poverty and Inequality - Measurment and Interpretation
• Poverty and Inequality in Bulgaria

The negative demographic processes over the last decades have lead to a significant decrease of the population in a number of Bulgarian municipalities. This ongoing process makes the question of a territorial-administrative reform more and more topical with each passing year.

The first rule of Article 8 of the Law for the Administrative-Territorial Structure of the Republic of Bulgaria foresees a minimum of 6000 people for the establishment of a new municipality. This requirement is not applied to already existing municipalities, which can be seen on the applied map.

Municipalities with less than 6000 inhabitants

In 2015 there are 69 municipalities that fail the above mentioned initial requirement for establishing of a municipality, while in 2000 those were only 32. The majority of these are situated in the border regions – a clear concentration of such municipalities can be seen in Northwest Bulgaria. In addition, there are 16 municipalities where the population is above 6000 but less than 7000 people. In most of these there is a clear tendency of decreasing population, with the exception of Nikola Kozlevo, Primorsko, Kuklen and Mineralni Bani.

The question whether the requirements for establishing a new municipality should not apply for already existing ones remains open, but it leads to a number of problems, such as:

• Turning many municipalities and municipal enterprises into a major  employer, which creates obvious risks for the local democratic process;
• Inability to apply adequate policies (including successful realization of European projects) due to lack of administrative capacity and enough funding;
• Reaching exceptionally high levels of the ratio between number of municipal workers and the local population.

The regulatory framework has a number of loopholes that allow the establishment of smaller municipalities (Article 8 in relation to Article 9 of the Law for the Aadministrative-Tterritorial Structure of the Republic of Bulgaria ), which basically limits the process to an expression of will of the local population (followed by a referendum) and a decision of the Council of Ministers. Such was the case with the newest Bulgarian municipality – Surnitsa.

There is also a requirement for a distance not higher than 40 km. of the populated places from the municipal center, as well as for proving the ability to finance the expenses of the particular municipality in an amount not less than half of the country average according to data from the last annual report for the execution of municipal budgets. The last rule is also not applied by the majority of the existing municipalities, as in the anecdotal case of the smallest Bulgarian municipality in terms of population – Treklyano. Its own revenues are about BGN 70,000 per year, 45,000 of which come from renting land and property. The yearly expenses of the municipality are almost 10 times higher.

In the light of a  future and much needed  territorial-administrative reform all these requirements will have to be changed. Due to the condition of proving financial capabilities, the process of financial decentralization should be given a priority and its effects should be considered before respective changes in the law are made. This will show which municipalities can finance themselves, at least to a certain point, and which need additional financial support.
In any case the rule for distance not higher than 40 km. from the municipal center should be revised, while the lower limit of population number should be set high enough so it can guarantee the sustainability of the new borders.

The consolidation of municipalities cannot be seen as a panacea for problems of the regional development but the current fragmentation makes it impossible to implement  adequate regional policies in more and more of the country’s regions.

The negative demographic processes over the last decades have lead to a significant decrease of the population in a number of Bulgarian municipalities. This ongoing process makes the question of a territorial-administrative reform more and more topical with each passing year.

The first rule of Article 8 of the Law for the Administrative-Territorial Structure of the Republic of Bulgaria foresees a minimum of 6000 peoplefor the establishment of a new municipality. This requirement is not applied to already existing municipalities, which can be seen on the applied map.

In 2015 there are 69 municipalities that fail the above mentioned initial requirement for establishing of a municipality, while in 2000 those were only 32. The majority of these are situated in the border regions – a clear concentration of such municipalities can be seen in Northwest Bulgaria. In addition, there are 16 municipalities where the population is above 6000 but less than 7000 people. In most of these there is a clear tendency of decreasing population, with the exception of Nikola Kozlevo, Primorsko, Kuklen and Mineralni Bani.

The question whetherthe requirements for establishing a new municipality should not apply for already existing ones remains open, but it leads to a number of problems, such as:

• Turning many municipalities and municipal enterprises into a major employer, which creates obvious risks for the local democratic process;

• Inability to apply adequate policies (including successful realization of European projects) due to lack of administrative capacity and enough funding;

• Reaching exceptionally high levels of the ratio between number of municipal workers and the local population.

The regulatory framework has a number of loopholes that allow the establishment of smaller municipalities (Article 8 in relation to Article 9 of the Law for the Aadministrative-Tterritorial Structure of the Republic of Bulgaria ), which basically limits the process to an expression of will of the local population (followed by a referendum) and a decision of the Council of Ministers. Such was the case with the newest Bulgarian municipality – Surnitsa.

There is also a requirement for a distance not higher than 40 km. of the populated places from the municipal center, as well as for proving the ability to finance the expenses of the particular municipality in an amount not less than half of the country average according to data from the last annual report for the execution of municipal budgets. The last rule is also not applied by the majority of the existing municipalities, as in the anecdotal case of the smallest Bulgarian municipality in terms of population – Treklyano. Its own revenues are about BGN 70,000 per year, 45,000 of which come from renting land and property. The yearly expenses of the municipality are almost 10 times higher.

In the light of a future and much needed territorial-administrative reform all these requirements will have to be changed. Due to the condition of proving financial capabilities, the process of financial decentralization should be given a priority and its effects should be considered before respective changes in the law are made. This will show which municipalities can finance themselves, at least to a certain point, and which need additional financial support.

In any case the rule for distance not higher than 40 km. from the municipal center should be revised, while the lower limit of population number should be set high enough so it can guarantee the sustainability of the new borders.

The consolidation of municipalities cannot be seen as a panacea for problems of the regional development but the current fragmentation makes it impossible to implement adequate regional policies in more and more of the country’s regions.

Yavor Aleksiev

The regional analysis of 2016 NSI and EA data for the development of the labor market in the country shows that despite the ongoing decline of  unemployment, job creation is gradually losing pace in many regions of the country.

Based on the data published thus far, we expect an average annual decline in the number of the employed aged 15-64 in 2016 with nearly 20 thousand people compared to the previous year. Nevertheless we expect aslight increase in the average employment rate in the same age group – up to 63,4% (compared to 62,9% from the prior year)- due to the rapidly declining population of the country.

On the basis of the quarterly data we can expect a drop in the employment rate by more than 1percentage point in 5 of the 28 districts in the country and an increase of over 1 percentage point in 11 districts.

In 2016 the employment rate decreased in all districts of Northwestern Bulgaria – the largest decline is observed in the following districts – Lovech (2.2 pp), Vidin (1.8 pp) and Pleven (1.7 pp). While trends in Vidin and Pleven  have been relatively positive, in the other three districts (especially Vratsa) the consequences of the crisis are clearly visible and the employment rate remains far from the pre-crisis levels.

In 2016 Vratsa is expected to register the lowest employment rate since 2005 and so become the district with the lowest employment rate in the country. Lovech (52.4%) and Montana (53.3%) are respectively third and fourth in this negative ranking, while the second place goes to Silistra (52.2%). EA data  show that  the Northwest region of the country has the largest concentration of municipalities with unemployment rate above 25%. Except for the regional centers Montana, Vratsa, Pleven and Lovech the only other municipality in which the unemployment level is below 10% is Troyan.

Employment in Veliko Tarnovo kept its level from the last year (65%), which is the highest  since 2003. The number of the employed people in the district shows a decline for the recent quarters yet still remains above 100,000 people despite the fall of the population of the district. Employment in Gabrovo still remains fairly high although it has not reached the levels of 2008 -2009.

The most stable positive trend of employment growth was observed in the district of Razgrad, yet due to the low base it remains significantly lower than the average for the region and for the country. After a long crisis period, improvement was observed in two other districts of the North Central Region - Ruse (in 2015 and 2016) and Silistra (2016). The latter, however, remains with the second lowest employment rate in the country. Ruse, in turn, marked seventh consecutive quarter of growth in the number of employees on an annual basis at the end of 2016, although the pace of job creation is gradually slowing down.

All districts in the Northeastern region of the country, with the exception of Varna, recorded an increase in employment in 2015 and 2016. Dobrich and Shumen respectively reached the record-breaking 62.6% and 61.2%.

Employment in Targovishte has increased  for three consecutive years, reaching 53.6%, but remains far from the pre-crisis levels and is among the lowest in the country. After registering a record of 68.4% in 2015, employment in Varna declined to 65.9%. Nevertheless, it remains the highest in the region and the fourth highest in the country.

The Southeastern region of the country is the only one in which the employment rate in 2016 grew in each of the districts. The recovery of the labor market in Burgas ended (in line with the IME forecasts) and now we can safely talk about an expansion. The average employment rate will be higher than the one from 2015 and will reach a record of 63,6%. The expansion also covers smaller municipalities such as Kameno and Aitos in which the unemployment rate (according to EA) in 2016 droped below 10%.

The data on the development of the labor marker in the other three districts (Sliven, Stara Zagora and Yambol) are also positive, given the fact that Yambol has surpassed and Sliven is approaching its pre-crisis level of employment. At the same time, the only municipality in the district of Sliven where the unemployment rate in 2016 was below 10% is Nova Zagora. Despite being part of the district of Sliven, its territorial location between the regional centers Sliven and Stara Zagora and the data for the daily labor migration show that its economy is rather bounded with the Western district - Stara Zagora. The labor market in the district of Stara Zagora continues to be fragmented and in the two of the municipalities, Kazanlak and Stara Zagora, unemployment is below 5% and in Radnevo and Galabovo - below 10%. The situation in municipalities such as Maglizh, Nikolaevo, Gourkovo and Bratya Daskalovi still remains critical, given the fact that in some of them unemployment is even above the levels of 2011.

The past year can be considered rather uneventful  in terms of the employment in the South Central region of the country. Employment in the districts of Plovdiv and Smolyan remained stable, but is still about 1 percentage point lower than its peak in 2008. Quarterly data for both districts, however, clearly shows a gradual deterioration in the second half of 2016, as the number of people employed in both of them has decreased on an annual basis.
Positive trends were observed mainly in the district of Haskovo. The employment rate reached pre-crisis levels and unemployment in the district center and in Dimitrovgrad is declining. Pazardjik registered a modest increase of the employment rate up to 60.3%.

Though we expect the average annual number of the people employed in the capital city to set a new record, the gradual increase in population means that the capital city has not reached its pre-crisis employment rate (73.9% in 2008). It is Sofia (capital), however, that is the main engine of the process of the job creation at a national level in 2016.

The data are positive for the districts of Blagoevgrad and Kyustendil are also positive as the latter is already approaching pre-crisis levels of employment of the population aged 15-64. Employment in the big district of Sofia and Pernik decreases as quarterly data suggests an improvement at the end of the year for Pernik and further deterioration in Sofia (district).

In conclusion

IME’s assessment of the labor markets in 2016, prepared on the basis NSI and EA data, shows that job creation is slowing down or has stopped altogether in many of the country’s districts. The data on the development of the labor market in the Northwestern part of the country is extremely worrying, especially in regard to the districts of Vratsa, Lovech and Montana. The only region in which we observe a growth of employment across the board  is the Southeastern one, though the recovery of some districts (such as Stara Zagora) remains extremely uneven.

The average annual rates for 2016 which we forecast relate to the employment of the population aged 15-64 and are based on a quarterly data from NSI.