Industry in Bulgaria And Romania: preliminary policy recommendations). Vassil Kirov - Zagreb 24-26 April 2017 Industry in Bulgaria And Romania: preliminary policy recommendations). Mid-Term Conference Project IndustriAll-EFFAT “Strengthening the industrial trade unions’ role in South East Europe in shaping the industrial policy agenda in the light of the objectives of Europe 2020” Zagreb – 24-26.04.2017 Dr Vassil Kirov, Associate Professor, Bulgarian Academy of Sciences Associate Researcher ETUI vassil.kirov@gmail.com

Vassil Kirov - Zagreb 24-26 April 2017 Objectives Shortly remind the outcomes of the SWOT analyses for the two countries (focusing on similarities); Discuss, complete and validate the first draft of the policy recommendations. Few preliminary remarks: 1. I will present the finding first for Bulgaria and second for Romania (alphabetical order), but you will see that there are many commonalities. Part of the data is contextualise in comparative context. What is really important, in line with ETUI researchers Drahohoupil and Bela ??? In to see how the two countries examined are situated in comparison to Central Europe (Visehrad countries) 2. Part of the indicators are complex and they should not be perceived as ‘an absolute truth’ – e.g. different indexes… However they can orient… 3. The analysis has no pretention to be ‘comprehensive’ and all encompassing, its objective is to provide ground for

Policy recommendations Vassil Kirov - Zagreb 24-26 April 2017 Policy recommendations The first findings of the SWOT confirm the need of targeted and consensual industrial policy in both countries. Few concrete proposals and recommendations are provided below:

1. Need to establish ‘authentic’ industrial policy Vassil Kirov - Zagreb 24-26 April 2017 1. Need to establish ‘authentic’ industrial policy Background: Industrial policy is often designed for the programming of EU funds or in relation to EU membership obligations, but those documents are just ‘formal’ strategies on paper, without the back-up of resources and mechanisms Recommendation: governments should put in place consensual (after real consultations with social partners and other stakeholders) and effective (backed up with resources, responsibilities and mechanisms – including with social partners participation) industrial policy.

2. Move to high value-added industry and support wage increase Vassil Kirov - Zagreb 24-26 April 2017 2. Move to high value-added industry and support wage increase Background: in the context of low competitiveness, lower productivity and outdated technologies, the industry in both countries is in a vicious circle – wages are low, industries can not attract qualified workers (who often move abroad), and so on. Recommendation: support industrial policy increasing competitiveness, productivity and innovation and connecting economic performance and growth to policies oriented to incomes increase.

3. Better connect smart specialization and real economy challenges Vassil Kirov - Zagreb 24-26 April 2017 3. Better connect smart specialization and real economy challenges Background: the existing strategic documents in both countries focus on new ‘high tech’ sectors, including ICT, greening, etc. However the bulk of the existing industry is concentrated in more traditional branches (but some of them also have potential to upgrade). This move should be carefully analysed from the perspective of skills and jobs. Recommendation: need to better connect new segments of the industry with more traditional sectors, to anticipate impacts on jobs and skills.

Vassil Kirov - Zagreb 24-26 April 2017 4. Skills development Background: despite the increasing share of highly educated population and the fact that general skills levels are high, there are indications for the existence of specific skills gaps in both countries. Recommendations: support policies aiming to address the skills gaps – including the development of the dual apprenticeship, life-long learning and CVT in companies, sectoral funds. Better targeting of EU funds and national funds for training and re-training. Involvement of sectoral social partners in the design/monitoring of sectoral instruments.

5. Tackling informal economy Vassil Kirov - Zagreb 24-26 April 2017 5. Tackling informal economy Background: both countries have large shares of informal economy and widespread practice of envelope wages. The informal economy represents a threat to loyal competition and undermines the social security funds. Recommendations: continuity in the actions towards the limitation of the informal economy. From a labour perspective the labour inspections, social security funds and so on could have a role here.

Vassil Kirov - Zagreb 24-26 April 2017 6. Better use of EU funds for the development of technologies and skills in the industrial area Background: Bulgaria and Romania are members of the EU since 2007 and have access to the EU structural funds, including for technologies, competitiveness, human resource development, modernization of infrastructure. However in both countries the use of EU funds was not optimal (lack of targeting, low absorption, increase of the regional disparities) Recommendation: Better programming, targeting, use and absorption of EU funds for technological modernization, human capital and infrastructure and linkage with the industrial policy objectives.

Vassil Kirov - Zagreb 24-26 April 2017 7. Development of supportive and inclusive administration and regulative framework Background: both SWOTs identify the problematic regulative framework (including the risk of corruption) in different spheres related to the development of the industry (including public procurement, enforcement of the labour legislation, etc.), weak judiciary system. Recommendations: actions towards the optimization of the legal and administrative system, the move towards more transparent regulative framework (including the development of e-government) and enforcement of labour and collective bargaining rights.