Income Distribution and Growth in SMEs Sector: The Case of Bulgaria
Teodora Diakova Iordanova, Manchester Metropolitan University
After the perestrojka period and the gentle revolution in Bulgaria, the country took it’s way of market economy. It brought drastic changes in the fundamentals of the economy. The basic law was that there is not such a term as a “private property”. It presumed that the people have the right to work and to add value depend on their qualification and capabilities. The distribution of wealth/ income was on a basis of the needs of every one single member of the society. The economy was ruled as planed according future prognoses of the needs of the society. In market economy it is not valid anymore. The new era changed all this and the society accepted the principles of market economy. The holy rule is the private property and the individuals that could bring changes by their own efforts. The liberalisation of the individual in philosophical meaning found it’s mirror in economy as the new type of hero - the entrepreneur and the rich man.
The picture of the economy changed from limited number big entities on national level to the fast growing, flexible and improving SMEs sector. There were two major ways for companies to emerge. One was during the privatisation process of old-fashion “monsters” - the government companies, that often were privatised “in pieces” . The second one - when an entrepreneur establishes a new SMEs that often were duplicating the profile of the government companies, but smaller in size.
The picture of the economy nowadays is very colourful, having all types of enterprise’s structure, more or less efficient. Unfortunately, this process of restructuring doesn’t work in favour of the employment of labour forces and the impact for distribution of the wealth became irrational and the social price paid - very high. The middle class, mainly consisted from professional qualified labour force faced income crises and even disappeared or transformed to a poor deprived social class. The accumulated wealth into the Government entities was simply leaked abroad. A few powerful businessman become extremely rich, the ex-deprived social groups, e.g. gipsies, etc. found very good implementation of their survival skills through establishing import/export or retail SMEs . The main proportion of the educated population, wasn’t unfortunately flexible and enough adaptable to adjust quickly to the new entrepreneurial market economy. They tried to find employment abroad. This leaded also to migration of the labour.
As a result, the income structure is based on employment in government agencies, privatised companies, ownership or employment of SMEs, new NGOs sector and employment abroad. The changing force is SMEs sector that can respond to the internationalisation of the economy and establishing a new contacts with developed economies. There is a survey of EBRD for the development of SMEs sector in Bulgaria, making analyses of representative group of 216 SMEs and their sector distribution, income distribution and labour indicators. Also interesting issue is the links between the government and new enterprises; issues on corruption.
The paper will try, in it’s final version, to give the distribution of income within SMEs sector, depending from the industry. Detailed empirical data will be presented on later stage because the topic is still under research.