site.btaMP Calls for Reform of Executive Pay Rules in State-Owned Companies and Institutions

Progressive Bulgaria's MP Stefan Belchev, Chair of the Parliamentary Committee on Economic Policy, Ivestments, and Indusrty, has called for ending the automatic increase of executive salaries in state-owned companies and public institutions through their linkage to the minimum wage.

In a Facebook post on Saturday, Belchev argued that while rank-and-file employees in key sectors have waited years for pay increases, remuneration for members of management boards and executive directors has risen sharply.

According to him, salaries for executives increased by around 50% between 2024 and 2026 following the introduction of a mechanism linking the minimum wage to 50% of the average national wage. Since executive remuneration is tied to the minimum wage under Article 56 of the Rules for the Implementation of the Public Enterprises Act, management salaries rose automatically over the same period.

Belchev said the increase has occurred even in institutions facing serious financial difficulties or operating at a loss. He cited state-owned hospitals as an example, noting that medical staff have staged protests demanding better pay while hospital debts continue to grow and management remuneration rises automatically.

He also referred to the National Palace of Culture and the six state forestry enterprises, arguing that executive pay has continued to increase despite financial challenges and difficult working conditions for ordinary employees.

According to Belchev, the current system allows for the manipulation of performance indicators used to determine executive remuneration. He said that, with the approval of line ministers, certain financial and performance criteria can be modified in a way that helps maintain high evaluation scores and correspondingly high salaries.

Belchev further claimed that substantial remuneration is also paid to members of audit committees, who are appointed from outside the management boards and whose compensation is often linked to the minimum wage or the enterprise's average salary.

He also alleged that additional benefits for senior management are sometimes provided through collective labour agreements or social programmes, including holiday bonuses and other allowances that remain largely outside public scrutiny.

Belchev argued that the methodology governing such remuneration is determined by the Council of Ministers and that successive governments have lacked the political will to reform the system.

He called for urgent amendments to the rules governing public enterprises, stricter limits on changes to performance indicators and evaluation scores, and full transparency regarding additional benefits and bonuses granted to senior management.