As a convinced optimist, I begin this article with the positive news that the economy in 2018 marked a decent uplift and we saw growing interest from foreign investors. These were mainly manufacturing companies that were looking at possibilities of opening factories in Bulgaria or were considering expansion of existing capacities. At the same time, currently there are companies scattered throughout the country that have no difficulties with finding markets for their products, but encounter challenges when it comes to ensuring timely and quality deliveries. This happens because they fall behind the production plan mainly due to lack of people combined with below expectations work discipline. They plan, in the medium term, to leave the country and move their production activities outside Bulgaria.
The encouraging macroeconomic framework has clearly shifted the labour market in favour of employees in 2017-2018, which resulted in the increased expectations of the financial compensation and increased pressure. Specifically, with managers at middle and top levels, we see an increase of about 13%. Similar growth is observed in the average rate of remuneration of executive directors compared to last year, leading to an increase at high level by 6% for the same period. Please refer to the table “Average rates of remuneration in Bulgaria in 2018”.
Salary increases will continue in view of the deepening demographic crisis and lack of sufficient qualified people of active working age.
On average, remuneration of top managers shows significant growth driven by the increased demand and expectations for the hired professionals. There is a clear tendency to attract Bulgarians with experience from abroad and this, of course, puts additional pressure on the salaries offered by the employers.
We observe a strong trend of growth - at an average of 20-24% - in the remuneration of the financial and accounting executives, especially those in the chief accountant position. The increase stems mainly from the demand for trained staff combined with the relatively low mobility. Financial conditions very often prove to be a strong factor in deciding to move from one firm to another. The salary growth for the financial managers can also be explained, to a certain extent, by the market mechanism, as well as to extended responsibilities of the function. More and more companies are transferring purely administrative duties to their financial directors, which inevitably leads to growth in compensation.
Surprisingly, remuniration packages of the operations directors, marketing managers and senior brand managers showed zero salary growth in 2018, according to our study. This trend can be explained by the delay in the entry of new players in the outsourced service sector. Of course, there are new entities mainly serving parent companies, however, the rapid expansion of the outsourcing industry that has been happening in 2014-2017 seems to be in the past. Some existing outsourced service centres have cut staff numbers and are even withdrawing from the country this year, thus bringing financial packages to normal levels.
In contrast to the significant growth of the executive directors’ remuneration, we notice a normal increase of less than 10% for the commercial director function. The overall positive picture with growing domestic consumption leads to a less frequent change of commercial directors than before.
This year, we saw a significant growth of the financial compensation for the Directors of manufacturing companies. Market demand is the main factor behind this growth, but not the only one. There has been an increase in the import of such personnel from abroad, specifically such specialised manufacturing professionals as Quality Managers. Attracting foreigners, as well as Bulgarians working abroad, determines higher growth than the standard market rate. The expected increase in demand for factory Directors in the current year proved to be founded and will continue to be a strong trend in 2019.
In conclusion, salary increases will continue in view of the deepening demographic crisis and lack of qualified people of active working age. Of course, if the economic growth is maintained, this will give even more pressure on the remuneration of the highly qualified managers. The balance can come if skilled people are attracted from neighboring countries where general salary standards are lower and for whom Bulgaria would be attractive in terms of work and standard of living.
Operations directors, marketing managers and senior brand managers have zero salary growth.
This is the proprietary data of Pedersen & Partners and concerns companies in Bulgaria regardless of annual revenue, employee number and location. The annual turnover, the profit and the number of people employed are an important reference point in determining the remuneration of a hired manager for top or mid-level position, but are not necessarily decisive. There are many cases where a company operates at a serious loss or is a start-up, but that does not mean that the executive director will receive a low pay, quite the contrary. With poor financial results, the expectations are for a positive change and influence of the leader on the company’s performance, therefore he or she should be adequately rewarded.
The data does not purport to be comprehensive or to cover all possible cases from practice, as remuneration is influenced not only by the factors listed above, but also by the specific industry, ownership structure, participation of the management personnel in the governance of more than one company, etc. The figures represent monthly salary before tax. Additional benefits and bonuses are not included, as they are too specific for each company.
has been the Country Manager for Bulgaria at Pedersen & Partners since 2009. Ms. Bushandrova brings a wealth of senior management experience in the financial services sector having worked in key management roles at ING Bank in Bulgaria for 11 years. Most recently, as Head of Corporate Lending at ING, Ms. Bushandrova oversaw ING’s credit portfolio, managed a team of relationship managers, and actively supported other profit-centers in the bank via product cross-selling. Before joining ING in 1997, she was part of the lending team at the Bulgarian American Enterprise Fund for three years.
Irena Bushandrova has a degree in Industry and Entrepreneurship from the University of National and World Economics in Sofia, Bulgaria. In addition to her native Bulgarian, Ms. Bushandrova speaks fluent English.
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