The cabinet will begin in March negotiations with the labor unions and the employers for possible increase of the minimum wages and retirement pensions in Bulgaria.

The surprising news was announced Tuesday by the Social Minister, Totyu Mladenov, who pointed out the government plans for 2011 to reduce the insurance system deficit by BGN 600 M.

The Minister declined committing to an exact amount of the increase on the grounds precise calculations were needed in times of strong fiscal discipline.

"Compared to last year, when Finance Minister, Simeon Djankov, was skeptical about increasing wages, his forecast for 2011 is much more optimistic," Mladenov said.

The 2011 budget, however, does not include funds for wages and pensions.

The Minister further explained that from the EU "Human Resources" Operational Program, BGN 400 M were slated for 2011 to assist the labor market while the Bank for Development would offer loans in the amount of EUR 25 000 to people who want to open a small business.

Mladenov expects to receive by the end of January a report of the Main Labor Inspectorate listing companies which fail to pay their workers regularly.

74 companies owe about BGN 19 M. Those who fail to pay will be prosecuted, the Minister warned.