An increase in the minimum salary and pension required by trade unions from July 1 will cost Bulgaria's budget about BGN 400 million, calculations by the National Social Security Institute (NSSI) and the labour ministry show.

A 5.3% hike in pensions, proposed by the Confederation of Independent Trade Unions in Bulgaria (CITUB), would widen NSSI's deficit by a further BGN 290 million, which will have to be covered with funds from the state budget, that is by all taxpayers.

Social security funds are expected to run up a deficit of BGN 1.39 million, but figures released in January showed that the shortfall would deepen further because of lower receipts.

Estimates of the labour ministry show that the proposed hike in the guaranteed minimum income to BGN 290 will result in an increase in expenses for social benefits by about BGN 95 million in the second half of the year.

According to the Bulgarian Industrial Association (BIA), however, raising minimum wages should be considered when drafting the 2012 budget and after an assessment of the revenue performance in the first six months of 2011.

In turn, CITUB insists that the increase in wages should be introduced in July to compensate for a decline in incomes and higher prices over the past two years.(Dnevnik)