Bulgaria’s Ministry of Labor and Social Policy released its National Employment Action Plan (NAP) for 2025 in early May, aiming to boost both the quantity and quality of the labor force in line with economic demands. While the core objectives largely mirror those of 2024, the 2025 plan places greater emphasis on importing labor and reactivating economically inactive individuals, according to an analysis by the Institute for Market Economics (IME).

However, beneath the surface of these well-intended goals for "quality labor" and "innovative skills" lies a persistent issue in Bulgaria’s labor market policies: subsidized employment remains the dominant strategy to address labor market imbalances. The total budget for active labor market policies (ALMP) stands at 88 million leva, unchanged from last year, yet it will now cover fewer individuals, resulting in a higher average cost per participant.

At first glance, this might suggest a strategic shift from simply increasing employment numbers to focusing on the quality and durability of supported jobs. Yet, IME points out another reality: the rise in average cost per participant is largely due to the hike in the minimum wage rather than real improvements in skills, training, or longer-term employment prospects.

In 2025, the state’s employment policy still prioritizes the volume of labor supply over enhancing the quality of the workforce, despite employers’ urgent need for qualified personnel. Instead of strengthening vocational training or retraining programs aligned with actual labor market demands, the state continues to rely predominantly on short-term subsidized employment schemes.

Nearly 85% of ALMP funds are directed toward subsidized jobs, leaving only a small share for training, qualifications, and retraining efforts. This approach contrasts with most EU member states, which have moved away from heavy reliance on subsidies due to their limited long-term benefits.

Subsidized employment fails to address structural unemployment for several key reasons. Its effects are temporary, offering short-term income boosts but rarely ensuring sustained employment after subsidies end. Moreover, it risks market distortions, as employers might replace regular workers with cheaper subsidized labor or delay investments in automation and training. Finally, funds spent on subsidies could be more effectively used for tools like training vouchers, personalized career services, or qualification accounts that better support lasting workforce development.

For example, under the “Starting a Job” program within the Operational Program for Human Resources Development (OPHRD), 115 million leva is allocated to create 2,000 jobs, which means one subsidized position costs nearly 60,000 leva. Meanwhile, the DiGi program, funded by the same source but focused on enhancing digital skills for 200,000 people, has a budget of 109 million leva - translating to just over 500 leva per person for training.

The 2025 National Employment Strategy highlights the goal of an “adaptive workforce,” yet the budget still heavily supports subsidized employment, sustaining the status quo. Redirecting resources from subsidies to training and retraining could prove a far more cost-effective strategy to increase human capital productivity. Well-targeted training programs not only boost employment but also strengthen competitiveness in the medium and long term, preparing workers for future technological changes, the IME analysis concludes.