State Sector Layoffs - A Mere Shift of Expenses
On Sunday, Bulgaria’s government revealed its plans to lay off 40 000 state servants, starting 2014. Hours later, PM Plamen Oresharski promised pensioners Christmas bonuses, if the upcoming budget implementation succeeds.
As we enter the annual season of budget games, it becomes clear there will be winners and losers.
If the current government has earned any stars of merit during its 5 months, they have come from increased social benefits. But where is the money coming from?
The head of Bulgaria’s trade unions claimed the government is “filling gaps in the 2014 budget” by cutting administration.
Dismissing civil servants will do little to fill the treasury. Such a move implies hefty costs associated with compensating workers. Unless, of course, the government leaves them at their own mercy.
The spontaneity of this decision further leads me to believe that this is not a premeditated move. Neither does the current state of Bulgaria’s labor market lead to me to believe that they can effectively find work in the near future.
A majority of the laid-off employees will turn to social benefits, while the elderly could retire.
So what exactly are we saving money from? Aren’t the winners and losers the same?
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Several pensioners can have an increase at the cost of a single redundancy of a civil servant. Government loses one vote (that of the now redundant and unemployed civil servant) and attempts to gain the vote of several pensioners. This is politics, not economics.