Bulgaria - Poverty and wealth



Before 1989, Bulgaria was arguably a land of economic equality. Almost no private initiative was allowed, but the vast majority of the population was employed by the state, and large government funds were allocated to free health care, free higher education, maternity and disability benefits, and pensions. Most Bulgarians owned their houses, and many had small country "villas" and motor cars. Traditionally, even the poorest Bulgarians, the ethnic Roma, held jobs, received social security payments, and enjoyed a decent standard of living, particularly in rural areas. The only exceptions to this modest yet guaranteed standard of living were the nomenklatura and the informal economy players, whose privileges inflamed discontent among the population.

The market reforms of the 1990s created both new poverty and new wealth. Unemployment, hitherto almost unknown, skyrocketed, inflation all but wiped out most social benefits, and the cooperative farms that were the livelihood of many formerly landless villagers were disbanded. Many entrepreneurs, corrupt politicians and officials, and mobsters amassed spectacular fortunes, which most people resented. Restitution of urban real estate, and particularly of farmland and woodland, was controversial and failed to generate much wealth. Mass privatization also failed in this respect.

For all its problems, Bulgaria was in 1995 still more egalitarian than neighboring Greece or the wealthy United States. The poorest 20 percent were responsible for 8.5 percent of the nation's consumption (compared to 7.5 percent in Greece and 5.2 percent in the United

GDP per Capita (US$)
Country 1975 1980 1985 1990 1998
Bulgaria N/A 1,329 1,553 1,716 1,372
United States 19,364 21,529 23,200 25,363 29,683
Russia 2,555 3,654 3,463 3,668 2,138
Romania 1,201 1,643 1,872 1,576 1,310
SOURCE: United Nations. Human Development Report 2000; Trends in human development and per capita income.

Distribution of Income or Consumption by Percentage Share: Bulgaria
Lowest 10% 3.4
Lowest 20% 8.5
Second 20% 13.8
Third 20% 17.9
Fourth 20% 22.7
Highest 20% 37.0
Highest 10% 22.5
Survey year: 1995
Note: This information refers to expenditure shares by percentiles of the population and is ranked by per capita expenditure.
SOURCE: 2000 World Development Indicators [CD-ROM].

States), while the wealthiest 20 percent consumed 37 percent (40.3 percent in Greece, 46.4 percent in the United States). Bulgaria's Gini index —which rates a country's level of equality with 1 representing perfect equality and 100 representing perfect inequality—was 28.3 in 1995, while Greece's was 32.7, and the United States' was 40.8. Polarization increased between 1995 and 2000, but it is believed that economic growth over the next decade and the accession to the EU will gradually increase living standards for all Bulgarians.

By 2001 most of the population was enduring hardship. The growth of wages and pensions lagged behind the index of consumer prices and unemployment is officially estimated at 15 percent, although it is believed to be much higher. The prospects for many small businesses seem bleak, due to the unavailability of loans, weak demand, crime, and corruption. Agriculture is struggling to provide a sustainable livelihood for small farmers. While many professionals and business owners make a good living, thousands of Bulgarians can afford only the bare necessities. Numerous chronically ill people suffer from an inadequate supply of life-supporting medicines, and many children, particularly those of Roma families, are unable to attend school because of the growing cost of textbooks and clothing. Many people who live in small towns and villages with high unemployment rates, as well as single parents, pensioners , persons in state social homes, disabled people, and others face considerable personal distress.

According to the United Nations Development Programme (UNDP), Bulgaria is currently behind Hungary and Poland, but ahead of neighboring Turkey and Romania, in terms of its human development index. In 1998, Bulgaria still had a smaller population per physician and per hospital bed than the EU average, but health-care spending per head was much lower. Food constituted 33.1 percent of household spending (but was believed to be rising), while the EU average was 14.1 percent. Cars in use per 1,000 population were 219.9 for Bulgaria and 399.7 for the EU. Houses with piped water constituted 83.4 percent of households in Bulgaria and 99 percent in the EU, and houses with flush toilets were 57.7 percent in Bulgaria against 96.3 percent in the EU.

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