Labor Market Improvements Can Help Unlock Potential of Bulgaria’s Digital Landscape

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The FINANCIAL — Countries in the European Union (EU) must enact policies designed to better help workers adapt to new jobs being created by the internet if they want to avoid increasing inequality and exclusion in the region, notes a new World Bank Report.

According to Reaping Digital Dividends: Leveraging the Internet for Development in Europe and Central Asia, presented in Ruse today, affordable and nearly universal access to the internet has not been enough for countries in the EU to fully benefit from opportunities being created by digital technologies and more needs to be done to develop a policy environment that can better leverage this access by linking workers to digital jobs.

“We are clearly seeing that internet access alone does not automatically translate into economic gains,” says Hans Timmer, Chief Economist for the European and Central Asia region of the World Bank. “Given their level of technological development, countries around Europe should be doing better in terms of e-commerce, but we are not seeing the Googles or Facebooks emerging out of Europe just yet.”

In the case of Bulgaria, the country has made significant progress in reaping the economic gains of the internet. According to the report, most countries in the EU – and Bulgaria in particular – outperform the United States in terms of affordability and quality of internet access.

Furthermore, despite a large increase in the supply of ICT professionals around Bulgaria, wage return on the skills complementing new technologies have significantly increased in the country over the last 15 years.

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Challenges remain for the country, however. While more than 10 percent of employees often telecommute in Northern and Western Europe, this figure is less than one percent in Bulgaria. Advanced computer skills decline rapidly with age in Bulgaria – especially for those without a college degree.

“Although new and unprecedented opportunities are being created by the internet, there also exists the possibility of further exclusion – especially for unskilled workers,” says Hernan Winkler, World Bank ECA Economist and lead author of the report. “We need to put policies in place that can help people adapt to new challenges.”

“Focusing on measures that increase health and pension coverage for workers of the ‘gig’ economy or facilitate the transition of displaced workers toward new jobs can be more effective than creating regulations aimed at preventing inevitable technological changes.”

In Bulgaria, where the internet is already widespread, more focus is needed on the complements of the digital agenda, including improvements to the labor market. Policies to facilitate tax and social contribution payments in the sharing economy could nudge workers out of the shadow economy and provide them with some employment protection, according to the report.

The rise of the sharing economy and alternative work arrangements pose a new challenge to existing labor market regulations and the social contract, which were established to protect workers in lifelong salaried jobs. The EU has the unique opportunity to lead the policy agenda to make the jobs of the digital economy more inclusive and more productive.


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