The Impact of the Economic Crisis on Bulgarian Households


April 2011


The negative impact of the economic crisis on Bulgarian households remains high despite initial signs of recovery. In the beginning of 2010 almost one out of two households was affected by the crisis but in most cases these effects were temporary. However, one out of ten households experienced continuing difficulties and did not manage to find a way out. In March 2011 the number of households who claimed they were impacted by the crisis decreased to 23% from nearly 29% a year earlier according to a preliminary data analysis of a country-wide household survey carried out by the Open Society Institute – Sofia in cooperation with the World Bank.
The analysis shows that the poverty line remains steady and relatively high for an EU member state at a little above 21%. Two-thirds of the households admit that they barely manage to make ends meet, and about 5% of them run into debt. The poverty line estimated according to the Eurostat method is 246lv per person within a household. Due to insufficient financial funds, every third household is forced to save by limiting its consumption of basic food products, while every fifth household cuts the spending on essential medications. Nearly half of the poorest quintile of households have decreased the consumption of food stuffs, and every fifth individual has skipped meals due to lack of money.
Overall, the households’ assessments with regards to coping with the effects of the crisis remain controversial. The fraction of households whose incomes are falling has decreased in comparison with the beginning of 2010. The number of those coerced to work fewer hours due to the economic downturn has also decreased in most sectors of the economy with the exception of the construction, retail and auto repair sectors.
"In some sectors of the economy there can be observed some positive momentum. However, even if this were viewed as a sign of full-scale economic recovery, it is going to take at least a year until households start feeling a favorable change in their wellbeing", according to Mr. Boyan Zahariev, Program Director at the Open Society Institute – Sofia. He also mentions that optimism has to go hand in hand with caution when it comes to the speed of economic recovery. It is very likely that there will be serious structural changes in the economy. The appearance of new drivers of growth will require sectoral shifts that might cause structural unemployment, which on the other hand will call for investments in education and training. "The fall in average income has stopped but the income distribution gap has increased. The labor market is also unstable with the number of individuals who declared to have found employment during the last twelve months is lower that the number of those who have lost their jobs. This comes to shows that prospects for unemployment reduction are still not bright."
The case study on the effects of the economic crisis on Bulgarian households was conducted by the Open Society Institute – Sofia in cooperation with the World Bank. It is based on interviews from a sample of 2400 Bulgarian household members. The first stage of the study took place in February and March of 2010, the second in September and October of 2010, the third in February and March of 2011. The analysis of the data would not have taken place without the expertise of the World Bank, while the concrete observations, analyses and conclusions were conducted by the OSI-Sofia team. The opinion of the OSI-Sofia does not necessarily overlap with the opinion of the World Bank.


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