Bulgaria's government, employers and trade unions have not reached an agreement on the social contributions payment and the steps to overhaul the country's pension system.

Only the increase in the social contributions payment by 1,8% was agreed during Sunday's debate. A new meeting of the National Council for Tripartite Cooperation will be held Tuesday.

A consensus has not been reached on the number of years people have to work before drawing a full pension starts to increase by four months as of 2013, as the government proposed, or 2015, as the trade unions demand.

In was also not decided the starting date of the increase of retirement age for different categories employees. According to the trade unions, for employees of third category labor, this has to happen 2024 the earliest, reaching 65 years for men and 63 years for women.

The most debated point of the negotiations has been the retirement of different category employees through professional funds in private pension funds.

According to the law, from 2011, first and second categories workers should start to receive pensions from their personal accounts in these funds.

The Bulgarian Finance Minister, Simeon Djankov, has stated that this would reduce the deficit of the National Insurance Institute (NOI) by BGN 36 M.

This is one of the alternatives. The other, which is supported by the trade unions, envisions an extension of the period in which workers could retire through the state fund with four additional years.

The Bulgarian Labor Union KNSB (Confederation of Independent Syndicates in Bulgaria) has opposed the capitalization of pensions of category workers and has explained that their personal contributions should be transferred to NOI.

Earlier this month Bulgaria's Prime Minister Boyko Borisov said the government decided to up payments for social security for retirement by 3 percentage points in a bid to relieve the country's strained health care system.

The move was motivated by the fact that funds for healtcare, which are not sufficient anyway, are apparently being used to supply the state retirement pensionsystem.

Business and employer associations slammed the increase and warned the move will hinder the country's fragile economic recovery.?

Bulgaria's seasonally adjusted gross domestic product marked an increase of 0.5% in the second quarter compared to the first three months of the year thanks to a rise in exports, pulling the country out of recession.

This was the first time that Bulgaria's GDP expanded since the recession set in at the end of 2008 and the beginning of 2009.

Bulgaria, the European Union's poorest country, faced its first recession in 12 years after a three-year lending boom stalled and foreign investment dried up.

The government has pledged to stick to a tight fiscal policy and keep the deficit below 3 % by the end of this year.

The recovery of the Bulgarian economy, which operates in a currency board regime, is lagging behind that of other Eastern European countries.

Analysts from local think-tanks have forecast that Bulgaria's economy is likely to continue to contract in the second half of this year and may fail to return to growthearlier than next year.

The European Commission said last month that Bulgaria's economy is likely to start to recover towards the end of 2010 under the impact of the international cycle.