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1editor's notes

Labor market in Bulgaria resembles a riddle, overwhelmed with opposite-side arguments in a way that whatever you say, it may well be true.

There is a high percentage of youth unemployment, but at the same time big portion of highly quali ed older professionals were kicked out of the market due to their retirement age. Moreover, the labor market is not prepared for the new challenge of older workers’ needs and the pension system is increasing the retirement age. Qualitative labor shortage versus being an overquali ed professional striving to nd a decent job, are another two sides to the story.

In trying to solve the conundrum and indicate possible solutions, Business Connect assembled a medley of opinions from diverse social groups: a former minister of labor and social policy, researchers, AmCham business leaders and leaders of professional associations in the IT, outsourcing and automobile industries. The new political and economic realities will need more diverse human and professional abilities and our magazine has started a discussion about that.

The IT, healthcare, automotive parts industry, manufacturing and tourist sectors are experiencing serious dif culties in nding quali ed workforce. Companies train their own staff for most key positions since these sectors generally require speci c skill sets. This said, a clear need exists for quality and modern education that creates specialists who have not only acquired professional knowledge and skills but who are capable of independent analytical thinking, who are communicative and intelligent.

From the labor conundrum we went to the human one when trying to answer the question can human bodies regenerate? Not yet, is the short answer. In the cradle section on Page 36 you will nd more.

We are also looking at the implications of the new Trump administration for businesses, and the pitfalls of its early actions (for more, turn to Page 8).

In Bulgaria a new bill on electronic identi cation was passed in 2016, aiming at the digitalization of public administration services. Read the analysis of Kambourov & Partners on Page 40. To nd out information on the new companies that got added to the AmCham community, go to Page 42.

Sincerely Yours,

Irina BachevaEditor-in-Chief

Labor Conundrum

Chamber News. . . . . . . . . . . . . . . . . . . .4directions

Government of Political Balance . . . . . .5standpointDetroit to Trump: Slow Down . . . . . . . . . . . . . . . . . . . . . .8

analysis

Tourism Breaks Records . . . . . . . . . . .10

Bulgarians Advised to Invest in Farmland. . . . . . . . . . . . . . . .13

the american college of sofia

Future Learning: New Campus Center Transforms 157-year-old College . . . . . . . . . . . . . .14interview

Unemployment Falls But Employment Does Not Rise . . . . . . . . . . . . . . . . . . .16cover story

Labor Market in Bulgaria: Between Paradox and Reality . . . . . . . .18

Content

Business Connect

Board of Directors of the American Chamber of Commerce in Bulgaria

President Ms. Krassimira Chemishanska Amgen BulgariaTreasurer Ms. Stanislava Taneva Citibank Europe Plc, Bulgaria BranchMembers Mr. Iravan Hira Hewlett Packard Enterprise Bulgaria Ms. Iva Todorova IBM Bulgaria Mr. Venislav Iotov AIG Europe Limited (Bulgaria Branch) Mr. Petar Ivanov Individual Member Mr. Stoyan Ivanov The Coca-Cola Company Bulgaria Mr. Sergey Koinov AG Capital Mr. Olivier Marquette AES Bulgaria Mr. Solomon Passy Atlantic Club Bulgaria Ms. Zlatina Ruseva-Savova Individual member Mr. Plamen Zhechev Cisco Systems BulgariaEx-Officio Member Ms. Maria Galindo Senior Commercial Officer, U.S. EmbassyActing Executive Director Mr. Alex Nestor

3content

3M Bulgaria EOOD . AA KRES EOOD . AbbVie EOOD . Abrites . Accedia . Actavis Bulgaria EAD . Adecco Bulgaria Ltd. . ADM Bulgaria Trading EOOD . Advance International Transport EOOD . AES Corporation . AFA OOD . AGORA-IN Ltd. . AIG Europe Limited (Bulgaria Branch) . AIMS Human Capital . Albena AD . Alcomet AD . Alcon Bulgaria EOOD . ALD Automotive OOD . All Channels Communication . Alliance One Tobacco Bulgaria . Allied Pickfords Bulgaria . America for Bulgaria Foundation . American College of Sofia . American English Academy . American Research Center in Sofia . American University in Bulgaria (AUBG) . Amgen Bulgaria EOOD . Amway Romania Marketing Srl. . Anglo-American School of Sofia . AON Bulgaria . Apis Europe JSC . APOLO Ltd. . Architect Nikolay Mihaylov Galabov . Architectural Agency Kadinovi Bros LTD . Arexim Engineering . Ashtrom International Ltd. . Association Srednogorie Copper Industrial Cluster . Astra Zeneca Bulgaria EOOD . AT Engineering 2000 Ltd. . Atlantic Club Bulgaria . Atos IT Solutions and Services EOOD . Attica Eva AD . August Research . Auto Bavaria Ltd. . Auxionize Jsc . AVAir Ltd. . AVON Cosmetics Bulgaria . AW-Tronics LLC . Axway Bulgaria EOOD . Baker Tilly Bulgaria . Balkan Star Automotive EOOD . Ballistic Cell Ltd. . Baxter Bulgaria EOOD . BG Radio . BICA International Ltd. . BLVD Ltd. . BMG Ltd. . BMW Vertriebs GmbH - Branch Bulgaria . BNP Paribas S.A. - Sofia Branch . Bojinov & Bojinov . BOYANOV & Co. . Braykov's Legal Office . British American Tobacco Bulgaria . Brown-Forman Bulgaria Ltd. . Bulgarian Charities Aid Foundation (BCAF) . Bulgarian Executive Search Association . Bulgarian International Television . Bulgarian Property Developments EOOD . Bulgarian Tennis Federation . Bulgarian-American Commission for Educational Exchange Fulbright . Bulgarian-American Credit Bank . BulPros Consulting JSC . Bulstrad Life Vienna Insurance Group . Business Intellect Ltd. . Business Park Sofia EOOD . C3i Europe EOOD . CAD R&D Centre Progress Ltd. . Castello Precast OOD . Center for the Study of Democracy . CEZ Bulgaria EAD . Chaos Software ltd. . Cheque Dejeuner Bulgaria Ltd. . CheckPoint Cardio . Cibank JSC . Cisco Systems Bulgaria . Citibank Europe Plc, Bulgaria Branch . Cleves . CMS Cameron McKenna LLP - Bulgaria Branch . Coca-Cola Enterprises Services Bulgaria EOOD . Coca-Cola HBC Bulgaria AD . Coface Bulgaria Credit Management Services EOOD . COLLIERS International Bulgaria . Comverse Bulgaria . Congress Engineering Ltd. . Contitrans M Ltd. . ContourGlobal Maritsa East 3 AD . Curtis / Balkan Ltd. . DA Travel Ltd. . Danailov, Drenski, Nedelchev & Co. . Delchev & Partners Law Firm . Deloitte Bulgaria EOOD . denkstatt Bulgaria OOD . Dentsu Aegis Network Bulgaria OOD . Deutsche Bank AG . Devin AD . DHL Express Bulgaria Ltd. . Diamed Ltd. . Dimitrov, Petrov & Co. . Djingov, Gouginski, Kyutchukov, & Velichkov . Dobrev & Lyutskanov Law Firm . Dr. Greenberg Medical Center . Drujba Glassworks SA . Dundee Precious Metals Inc. . DuPont Bulgaria EOOD . Economedia . EcoPack Bulgaria AD . Edenred Bulgaria . Ekoterm Proekt EAD . Ekotoi - Service Ltd. . Ekzotika EOOD . EL-A-Project Ltd. . Eldrive . Electron Progress EAD . Eli Lilly and Company . Eltrak Bulgaria Ltd. . eMAG . EMC Computer Systems Austria GmbH . Emerson Process Management . EnergoService AD . Engineeringservice Sofia Ltd. . Enterprise Communications Group OOD . EOS Matrix Ltd. . EPAM Systems Bulgaria . EQE Control OOD . Ernst & Young Bulgaria EOOD . ESRI Bulgaria Ltd. . Eurobank Bulgaria . European Bank for Reconstruction and Development (EBRD) . European Trade Center EOOD . EVS Translations Bulgaria . Expat Capital . Experian Bulgaria EAD . FairPlay International . Fama Consulting OOD . Flying Cargo Bulgaria Ltd. - Licensee of FedEx . Force Delta Ltd. . Forton AD . Foundation Glob@l Libraries - Bulgaria . Founders Foundation . Galardo Real Estate . Garitage Investment Management EOOD . Gasstroymontaj Jsc . General Electric International . Georgiev, Todorov & Co. . Geostroy AD . Geotechmin OOD . Geotrading AD . GfK Bulgaria, Market Research Institute EOOD . Gi Group . GIFTA . Grand Hotel Sofia . GSK . GTC Bulgaria . Gugushev & Partners Law Office . Harley-Davidson Sofia . Helios Power Jsc . Hewlett-Packard Enterprise . Hilton Sofia . Holzindustrie Schweighofer . Honeywell EOOD . Hotel Marinela Sofia . HP Inc Bulgaria EOOD . Hydroenergy Company JSC . IBM Bulgaria . ICAP Bulgaria JSC . IDC Bulgaria . Ideal Standard - Vidima AD . IIA Bulgaria . Imperial Tobacco Bulgaria EOOD . Industrial Holding Bulgaria . Ingram Micro SSC EMEA EOOD . InterConsult Bulgaria Ltd. . Interlang Ltd. . International Legal Advice center - ILAC . Intertek BA . Intracom Bulgaria EAD . Investbank JSC . Investor BG AD . IP Consulting Ltd. . Janev & Janev . Japan Tobacco International Bulgaria . Jobs.bg EOOD . JobTiger Ltd. . Johnson & Johnson Bulgaria EOOD . Junior Achievement Bulgaria . KAI Group . Kalamaris Group . Kambourov & Partners Attorneys at Law . Kamenitza AD . Katilin Popov Enforcement Officers . Kempinski Hotel Grand Arena Bansko . Kinstellar . Kolcheva, Smilenov, Koev and Partners Law Firm . KPMG Bulgaria OOD . LANDMARK Property Management AD . Law Firm McGregor & Partners . Lexim Sofia Co. Ltd. . Lindner Immobilien Management EOOD . Lirex BG Ltd. . M3 Communications Group, Inc. Hill+Knowlton Strategies Partner . Maria Vranovska, MD, MBA . Mars Incorporated Bulgaria EOOD . Marsh LLC. . MBL| Part of the CBRE Affiliate Network . Medical Center AmeriMed . Megatron EAD . Mellon Bulgaria EAD . Merck Sharp & Dohme Bulgaria . MetLife Europe Ltd. - Bulgaria Branch . Microsoft Bulgaria . Miltech Ltd. . Minstroy Holding Jsc . Mnemonica . Mobiltel EAD . Monbat Plc. . Mondelez Europe Services GMBH - Bulgaria branch . Moten Sport . Moto-Pfohe Ltd. . Mr. Alex Nestor . Mr. David Hampson . Mr. Jean Talmon . Mr. Kalin Kostov . Mr. Nikolay Ouzounov . Ms. Kalinka Kovatcheva . Ms. Margarita Radeva, CPA . MTAC . Municipal Bank Plc . Musala Soft AD . Mylan EOOD . National Network for Children . NDB Ltd. . Nemetschek Bulgaria . NEXTDOOR Ltd. . Novacon Bulgaria Ltd. . Novotel Sofia . Oiltanking . On Bulgaria Ltd. . Oracle East Central Europe Limited - Branch Bulgaria . Orak Group Europe Ltd. . Orbit Ltd. . Panchim Ltd. . PANDA - IP Ltd. . pCloud . Pedersen & Partners . Penev LLP . Penkov, Markov & Partners . Petar Ivanov . Pfizer Luxembourg SARL Branch Bulgaria . Philip Morris Bulgaria EOOD . Philips Bulgaria Ltd. . PPD Bulgaria EOOD . Premier Luxury Mountain Resort . Premier Tours Ltd. . Prestige 96 AD . Provident Financial Bulgaria Ltd. . PSG Payroll Services Ltd. . PwC Bulgaria . Quintiles Bulgaria Ltd. . Radisson Blu Grand Hotel . Raiffeisen Investment Bulgaria EOOD . Raiffeisenbank Bulgaria EAD . Red Devil Catering Plc . Refan Bulgaria Ltd. . Regus Bulgaria Ltd. . Renault Nissan Bulgaria SRL . Right Rental Ltd. . RSM BX Ltd. . S&T Bulgaria EOOD . Sanofi - Aventis Bulgaria EOOD . Santa Fe Relocation Services . SAP . Sb Accounting and Consulting . ScaleFocus . Schenker EOOD . Schneider Electric Bulgaria . SECTRON . Sensata Technologies Bulgaria EOOD . Shell Bulgaria EAD . Sherita M Ltd. . Siemens EOOD . Siemens Healthcare EOOD . SIENIT Holding . Silver Ridge Power . Sitel Bulgaria EOOD . Sodexo Pass Bulgaria EOOD . Sofia Airport Center EAD . Sofia Hotel Balkan . Sofita Translation Agency . Sogelife Bulgaria IJSC . Sopharma AD . Sopharma Trading JSC . Sportal.bg JSC . Stanton Chase International Bulgaria . Stefan Dimitrov, Norman Realestate Co. Ltd. . Sterling Serviced Office Group . Sunfoods Bulgaria EOOD - Development Licensee of McDonald’s in Bulgaria . Sutherland Global Services Bulgaria EOOD . Synchron-S OOD . Tavex EOOD . TBI Bank EAD . Techceramic-M . TechnoLogica EAD . Telelink EAD . Telenor Bulgaria . TELUS International Europe . The Coca-Cola Company Bulgaria . Titan Zlatna Panega Cement . TMF Services EOOD . Tocheva & Mandazhieva Law Office . Uber Bulgaria EOOD . UniCredit Bulbank . UniCredit Leasing EAD . Unimasters Logistics Plc . Unique Estates . United Bulgarian Bank . Veolia Energy Bulgaria EAD . Videolux Holding / Technopolis . VIP Security Ltd. . VISA Europe . Visteon Electronics Bulgaria . Vitosha Soft Ltd. . VIVACOM . VMware Bulgaria EOOD . VSK Kentavar - IZ Dinamika EOOD . VUZF University Higher School of Insurance and Finance . Walltopia Ltd. . Welcome to Bulgaria . Westinghouse Energy Systems Bulgaria Branch . Woodward Bulgaria EOOD . World Courier Bulgaria Ltd. . World Transport Overseas Bulgaria Ltd. . WorleyParsons Nuclear Services JSC . Xerox Bulgaria Ltd. . Xogito Ltd. . Yatoto . Zlatina Ruseva-Savova, LL.M., MBA . Zobele Bulgaria EOOD .

membersBig, Smart Business and Exponential Future of Bulgaria . . . . . .20Ilia Krastev: Bulgaria Attracts Outsourcing – For Now . . . . . . . . . . . .22Stoyan Boev: Education Should Prepare Specialists for the ICT Industry . . . . . .25Iravan Hira, HP: Bulgaria Can Reinvent Itself and Overcome Stagnation . . . . . . . . . . . . . .27IBM Believes Cognitive Technologies Will Transform Our Personal and Professional Lives . . . . . .29Developing Dual Education System Is Key . . . . . . . . . . . . . . . . . . .31Stoyan Zhelev: Businesses Must Cultivate Own Staff . . . . . . . . . . . . . . . . . . . . . .34cradle

Can Human Bodies Regenerate? . . . . . .36

Right Rental – the Partner of Event Managers . . . . . . . . . . . . . . .39advice corner

Electronic Identification for Public Services . . . . . . . . . . . . . . . .40amcham events

AmCham Adds 8 New Members. . . . . .42new members . . . . . . . . . . . . . . . . . . . .44EldrivePetar IvanovJanev & Janev

4

Chamber News

AmCham Adds 8 New MembersEight new members of AmCham took part in the Meet New Members party on Feb. 1, 2017: Founders Founda-tion, Georgiev, Todorov & Co., Ingram Micro SSC EMEA EOOD, Institute of Internal Auditors in Bulgaria, law rm McGregor & Partners, Refan Bulgaria Ltd., and Techceramic-M.

Read more on page 42

Electronic Identi cation for Public Services

By Mario Arabistanov Technology, Media and Telecommunications Associate Kambourov & Partners Attorneys at Law

In 2016 Bulgarian Parliament passed a new bill on electronic identi cation, aiming to digitalize public administra-tion services and making them faster and more accessible for people. The so called Electronic Identi cation Act was passed with a delayed effect and shall enter into force gradually, allowing the state to have enough time to implement the needed hard- and software needed for the functioning of the entire system.

By 2018 all Bulgarian citizens and residents shall be able to identify them-selves in digital environment through an electronic identity certi cate and to do various actions – including obtaining certi cates from public authorities, le documents, authorization.

Read more on page 40

Julian Spassov (L), manager of McGregor and Partners law rm.

Grand Hotel So a hosted the cocktail with over 100 guests.

5

Government of Political Balance

When Rumen Radev won the presidential election, he was faced with his rst serious challenge: appointing a caretaker cabinet. There were concerns that he would not cope with it successfully. The announce-ment of the cabinet ministers, however, seems to dispel those concerns for now.

Representatives of broad political spectrum The rst concern was connected with his lack of political experience. Radev went into politics directly from his position of a (depoliticized) general in the Bulgar-

ian armed forces. His task was made even harder by the fact that the caretaker cabinet was to have a limited term – two months until the parliamentary elections on March 26, 2017, which meant there were not many candidates for caretaker ministers. The composition of the cabinet as announced by Radev, however, includes representatives of various

political powers from the right and the left, as well as experts, some of whom have worked for governments of differ-ent colors.

Caretaker Prime Minister Ognyan Ger-dzhikov was elected MP twice on the ticket of the National Movement for Sta-bility and Progress (NDSV); Minister of Health Ilko Semerdzhiev held the same of ce in the Ivan Kostov’s right-wing government and until two years ago was member of Democrats for Strong Bul-garia (DSB). Deputy Prime Minister on Bulgaria’s Presidency of the Council of the EU Denitsa Zlateva was until recently in the leadership of the Bulgarian Social-ist Party (BSP). Minister of Finance Kiril Ananiev was deputy minister in Boyko Borisov’s government and prior to that he served in the governments of Ivan Kostov, Simeon Saxe-Coburg-Gotha and Sergey Stanishev.

Those appointments are a sign that while selecting ministers the head of state tried to achieve a balance in party represen-tation. Such was also his main stated appeal to the ministers when the cabinet was of cially presented: “To preserve non-partisan and institutional sovereign-ty during a wild election campaign.”

The caretaker cabinet was de ned as a balanced one by politicians from almost all parliamentary presented parties, including GERB, as well as by a number of analysts. It is also described as such by Prime Minister Ognyan Gerdzhikov, who will be relied on to maintain that balance as a former speaker of the Na-tional Assembly.

The suspicions that Rumen Radev would try and change Bulgaria’s Euro-Atlantic course towards Russia have not been con- rmed so far. Those concerns were caused

by some statements of Radev during the election campaign concerning Crimea’s status and the lifting of the sanctions against Russia. For the time being at least, the people in the government who will be directly in charge of conducting those policies are countering such fears. For-eign Minister Radi Naydenov is a career diplomat, a former chief of staff to Prime Minister Simeon Saxe-Coburg-Gotha and ambassador to Germany before taking of ce. Retired General Stefan Yanev is the deputy prime minister on Internal Order and Security and minister of defense. He served as Bulgaria’s military attaché in the United States until 2014 and has substan-tial experience in NATO’s structures.

The appointments in the caretaker gov-ernment have refuted another suggestion too: that the cabinet ministers would be determined at the headquarters of the BSP, which supported Radev’s presiden-tial bid. The presence of Socialist cadres is quite modest, at least in the higher ech-elons of the executive power. Except for Denitsa Zlateva, the government has just

directions

The caretaker cabinet is the fi rst serious test of

President Rumen Radev

Th e President tried to achieve a balance in party representation

6directions

one more representative connected with the Socialist Party, though indirectly: Min-ister of Tourism Stela Baltova was deputy chairperson of the State Tourism Agency during Sergey Stanishev’s government. That may well be a political move on the part of the BSP – the negatives of a pos-sible cabinet failure will not be transferred to the party.

ExpertsThe appointment of Associate Professor Teodor Sedlarski, Dean of the Department of Economics at So a University, as the minister of economy is seen as a pleasant surprise. Under his leadership the depart-ment has turned into one of the most successful ones in the university. Minister of Environment and Water Irina Kostova is a university lecturer, too. Minister of Agriculture Hristo Bozukov has also a re-search background. Minister of Regional Development Spas Popnikolov comes from business – he owns a construction company. The Ministry of Energy is head-ed by Bulgrgaz’s CEO Nikolay Pavlov. He joined the energy sector as member of the team of the minister of economy and en-ergy in GERB’s rst government, Delyan Dobrev. Initially he was nancial direc-

tor of NEK and in 2013 was dismissed by Plamen Oresharski’s government. A man from the system heads the Interior Ministry. For many years Plamen Uzunov worked for the Interior Ministry’s struc-tures in Plovdiv and since 2015 he has been lecturer in Criminology at University of Security and Economics in Plovdiv.

PrioritiesWhile presenting the caretaker cabi-net, President Rumen Radev outlined three key priorities. First is ensuring the normal functioning of the state until the parliamentary election and holding a democratic and legitimate election, which is actually the main role of the caretaker cabinet. Another priority of the head of state is speeding up the preparation of Bulgaria’s presidency of the Council of the EU. That is probably the reason why there is a special vice premier in charge of the presidency. Radev also called on the new cabinet for transparency and integrity. “I will closely monitor whether the caretaker government has zero tolerance to cases of corruption. All vicious practices at the ministries should be ended,” he said.

The caretaker government has all the

At an of cial ceremo-ny in the Coat of Arms Hall at 2 Dondukov Blvd. President Rumen Radev presented the structure, members and priorities of the new caretaker cabinet.

BG

NES

7directions

powers of a regular cabinet appointed by the parliament, except for cases that require an act of the National Assembly, such as revision of the budget or borrow-ing of state debt. Despite the limited time it can do a lot of meaningful things – as well as make serious mistakes. It must be pointed out that the term of the cabinet can be substantially extended if the forma-tion of a regular gov-ernment is delayed after the parliamen-tary election.

Ognyan Gerdzhikov, Prime MinisterCaretaker Prime Minister Ognyan Gerdzhikov is a professor of commercial and civil law. He was elected MP twice on NDSV’s ticket. During Simeon Saxe-Coburg-Gotha’s government he was speaker of the 39th National Assembly. At the end of his term he was ousted from of ce by the opposition due to the failed discussion on the Bulgartabac deal in the plenary hall. His removal from of ce was made possible with the active role of NDSV’s coalition partner, the Movement for Rights and Freedoms (MRF), so Ger-dzhikov was more or less victim of MRF’s attempt to exert pressure on Prime Minis-

ter Saxe-Coburg-Gotha over the deal.

Associate Professor Teodor Sedlarski, Minister of Economy“We are taking steps to quickly boost the

competitiveness of the Bulgarian economy,” Sedlarski said upon taking of ce as min-ister of economy. He added he would work towards increas-ing employment and achieving added value through modern indus-tries in Bulgaria.

Sedlarski has been the Dean of the Depart-ment of Economics of So a University “St. Kliment Ohridski”

since October 2015. He obtained a bach-elor’s degree from the Faculty of Econom-ics and a master’s degree in business administration from Vienna University of Economics. He reads lecturers on institutional economics, economic theory, international economics, public sector economics, money, banks and nancial markets.

Nikolay Pavlov, Minister of EnergyUpon taking of ce Nikolay Pavlov said his main priority would be preserving Bulgaria’s energy stability. His other priorities include keeping and improving the nancial stability of the state-owned energy companies, continuing the lib-eralization of the electricity market and projects for diversi cation of the sources and routes for energy supplies.

Pavlov was nancial director of state-owned National Electric Company, but in 2013 the government of Plamen Oreshar-ski dismissed him. After GERB returned to power in 2014, he started working for Bulgargaz and in early 2016 became its CEO.

Professor Ognyan Gerdzhikov, Prime Minister

Term of the cabinet can be substantially extended if the new government is delayed

8standpoint

By Christopher Karadjov

Ford Motor Company’s River Rouge Plant in Dearborn, Mich., has been churning out the company’s bestsell-ing vehicle since 1948. When the com-plex was rst opened a century ago to assemble the Model A in a revolution-ary closed-cycle facility, it employed more than 100,000 people. Today only about 6,000 punch in time cards; even though the workers look nothing like the bolt-wrenching drones from Char-lie Chaplin’s “Modern Times,” their productivity has increased immeasur-ably.

Since 2009, two telling develop-ments have occurred in this venerable production complex. First, President Barack Obama’s then-controversial bailout of the U.S. automobile in-dustry allowed Ford to remain on an even keel, eventually doubling

the manufacturing numbers of its pro table F-series. The second was an unlikely regulatory victory of the oft-maligned administration of the 44th president of the United States: since the Environmental Protection Agency (EPA) declared light trucks to be actually “cars” and not “trucks” that same year, F-150s had to conform to fuel-ef ciency standards, too. The automotive industry – predictably – grumbled at the time, but as a result Ford engineers came up with engine improvements and other modi cations that allowed the F-150 to cut its fuel consumption by a whopping 30% in about ve years.

To sum up what you just read about U.S. auto manufacturing: here is a prime example of a company on the verge of collapse that not only man-aged to survive bankruptcy with gov-ernment assistance (and – to buck the

Detroit to Trump: Slow Down

US President Donald J. Trump shakes hands with John Aubrey, sheriff from Jefferson County, Kentucky (R), as he arrives with U.S. Vice President Mike Pence (L) for a listening session with county sheriffs in the Roosevelt Room of the White House in Washington, D.C., USA, Feb. 7, 2017.

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9standpoint

idea that it was a “socialist” intervention – repaid its loans with interest), but also increase its sales and pro ts, and improve the quality (fuel ef cien-cy) all at the same time.

So, a wonderful outcome? Not completely, be-cause my example above also gives you a ballpark idea of how the work force in America’s industrial heartland has been decreasing. Those 6,000 union jobs are excellent to hold, no question, but they do not compare with the 25,000 that existed at the same River Rouge Plant during the 1980s. Some of these jobs have been moved to other locations in Michigan. Some have gone to Canada. Almost none have migrated to Mexico. Most of the decline can be directly attributed to the ever-increasing automatization of the conveyer line; to nifty ro-bots and computers, not to NAFTA.

I was more than skeptical of then-candidate Trump’s promises that he would “bring the jobs back,” as he said during his nal election night rally in Lansing, Mich. I was openly contemptuous of such cheap campaign rhetoric, if only because I knew well how complex the reasons behind the loss of decent blue-collar jobs had been.

I am still sneering at the formulaic promises to solve every problem by wishing it away with pompous words; apparently, this cannot be said of Michigan voters, though, who apparently warmed up to Trump’s promises more so than to Obama’s legacy.

The 45th president of the United States jumped into the job amid a seemingly incessant urry of controversy, embroiled in gaffes and swimming in various con icts of interests. One of the campaign promises that the business community – if not the blue-collar voters in Michigan – has been particu-larly happy about the expected rollback of vari-ous regulations. Given the unpredictability of the White House and its tendency to get from a faux pas to a scandal in the blink of an eye, this has ex-plained the general enthusiasm of the Dow Jones and other economic indices so far. Trump signed an executive order on Jan. 30 that stipulated two regulations must be stricken down for every new one issued. This is not the rst such attempt (Ron-ald Reagan had a similar order and Bill Clinton required the Of ce of Management and Budget to estimate the impact of government rules), but the new president went further. He said that his aim is to cut down about 70% of the existing federal regulations. This is probably way too ambitious, since the Federal Register published some 70,000 pages of regulations in 2016 alone. Such numbers

look onerous, until you consider that “regula-tion” is not a swear word by default. Some of the rules even make perfect business sense (as with the Ford F-150s improved fuel ef ciency, which became an unlikely selling point); many of them exercise control over the quality of our environ-ment (I live in Los Angeles, which breathes much healthier air today than in the 1970s precisely because of way stricter regulations); others still protect consumers, provide safety and security (does anyone remember how much the airlines ob-jected to the Bush-era requirement to strengthen cockpit doors?); and some are, yes, plain stupid and unnecessary. First signals are that the Trump administration will do whatever it can to disman-tle as many of the regulations as it can. But, again, as with campaign promises, I am sneering at the “I will do more than anyone else”-type of rhetoric. I would much more appreciate a careful analysis and slow, patient remodeling and improvement rather than the haphazard, Chaplinesque slapstick approach to governing that the White House has exhibited so far.

Analyst Paul Samuelson wrote in the Washington Post: “It would be nice if Trump and his critics could nd some common ground: Democrats ad-mitting that regulations have been carelessly over-used, Republicans conceding that the regulatory state isn’t going away. It needs to be governed better, neither abused nor abolished.”

Then there are certain laws than are beyond the power of the administration by itself since they need the Congressional imprimatur. Those range from the Dodd-Frank Act, which has had its pros and cons as a means to regulate the nancial industry after the 2008 bank crisis, but de nitely should not be pulled back too fast. Above all, the elephant in the room is the Affordable Care Act, or Obamacare, which cannot be repealed without an adequate replacement – and none exists so far. Blue-collar voters will be the most hurt by a rushed legislative attack on Obamacare.

Henry Ford used to say, “Whether you think you can or you think you can’t – you are right.” To him, thinking meant careful planning, meticulous execution and attention to detail above all. Best results are rarely achieved in a hurry, and you cannot have it all at once.

It is a lesson that Detroit’s grand industrial history could teach to the White House.

10

By Marina Tsvetkova

Bulgaria has emerged again on the global tourism map. The industry results are im-pressive. But it is not the geopolitical factors alone that are triggering a boom in the num-ber of tourists, experts say. The good news is that Bulgaria is on track to disprove the unpleasant stamp it has of a destination for cheap liquor and party tourism by offering a product of an increasingly high quality.

2016 was quite an unusual year for tourism – not only in Bulgaria but also in Europe and the world as a whole. The geopolitical crisis in the region of Turkey, Syria, Egypt and Tunisia and in the heart of Europe – Paris and Brussels – created a new situation: nearly 15 mil-lion tourists did not go to Turkey, 4 mil-lion – to Egypt and Tunisia, and some 100 million, to France and Belgium.

Cheaper than Spain and safer than Turkey – led by such pragmatic con-siderations, many German and Russian

tourists spent their vacation on the Bulgarian Black-Sea coast. With a rise of 13%, Bulgaria ranks third among the countries that have registered the big-gest jump in the number of tourists.

At the height of the season it emerged that the beaches near Varna were on the Top 10 list of German holiday-makers. At the same time during the whole season the media benevolently drew the public attention to the variety of tourism opportunities in this country.

The 2016 results show that Bulgaria is among the four European countries to have seen the strongest growth in the number of tourists. More than 8 million foreign tourists visited Bulgaria last year and revenue in the sector surged 15% to 6.4 billion Leva, which is an

absolute record Bulgaria has never reached before. The strongest rise is on the German

analysis

Tourism Breaks Records

During Christmas and New Year’s Eve holi-days more than 200 thousand foreign tour-ists visited our winter resorts. The expected growth of tourists over the whole winter season is between 5 and 7%.

11

market with the number of German tourists exceeding 750,000. The number of Russians to have visited Bulgaria reaches 650,000. Their average stay here is 10.2 to 10.5 days. At the same time, many Russians have a second home in this country and stay for more than 50 days. They are followed by holiday-makers from neighboring Ro-mania, Greece, Macedonia and Serbia. Their stay here is shorter. Then come British tourists, who are about 10,000

a year but they stay longer: 11.5 days. Scandinavian tourists reach similar parameters. Visitors from Poland, the Czech Republic, Hungary and Slovakia are about 10,000 in number. They stay at lower-budget hotels on the southern Black-Sea coast, though.

Surveys of British agencies Travelzoo and Holiday Barometer show that Bul-garia will be one of the most preferred destinations for British tourists in 2017.

The tourism boom, however, is possible thanks to the multi-billion investments made in the sector in the past 15 years: new hotels, catering establishments and infrastructure.

Tourism is an important sector of the national economy – it provides for about a tenth of the value added in Bulgaria. Hundreds of thousands of jobs are con-nected with tourism. This is not very different from Germany, where tourism accounts for 4.4% of the value added but the 3 million or so jobs it provides make up 7% of the employed.

Data of the World Travel and Tourism

analysis

You can plan your winter vacation to go skiing or just enjoy the beauty of the Bulgarian countryside. There are many good places for that. Following are the most popular destinations:Ski resort of Bansko, Pirin Mountain

Ski resort of Borovets, Rila Mountain

Ski resort of Pamporovo, Rhodope Mountains

Uzana, Balkan Mountains

Village of Chi ik near Troyan, Balkan Mountains

Best Destinations for

Winter Tourism in Bulgaria

10% increase in the number of visitors from Russia and West-ern Europe is expected this summer.

12

Council for 2015 show that the number of the directly employed in tourism in Bulgaria exceeds 92,000. The lack of full-year employment remains a key issue in the sector, however.

The problem is that for the past 20 years some 18 billion Euro has been invested in tourist facilities, while higher schools have trained only 12,000 tourism specialists. There is an acute shortage of guest service staff: bellboys, maids, waiters, receptionists, bartend-ers etc. On the other hand, there is a signi cant de cit concerning special-ized staff for new and rare positions

(golf, gourmet, spa services etc.).

Bulgaria is really a four-season destina-tion and has an excellent tourist prod-uct. Now is the time for it to position itself on the main European and non-European markets. We should realize that

developing tourism is the key to improving the local economy and ensuring people’s wellbeing, says the chairman of the Institute for Analy-ses and Assessment in Tourism Rumen Draganov.

He sees a big future in spa and balneol-ogy tourism, as well as in golf tourism, which attract well-off visitors. Cultural, rural, extreme and gourmet tourism are also growing. Bulgaria needs ve airports to service regular charter ights and low-cost airliners ying to this country, Draganov added.

The revenue from winter tourism is ex-pected to reach some 970 million Leva. Winter tourism is becoming more and more attractive, even though it gener-ates a third of the summer revenue. There are also fall and spring tourism seasons emerging that attract about a million new tourists.

analysis

I Love Bulgaria

Lonely Planet, the lead-ing international travel guide, included the city of Plovdiv in the list of best places to travel in October 2016, Plovdiv Municipality said. According to the review, with cool but pleasant days, October is a great time to ex-plore the southwestern mountains of Bulgaria. “Start in Plovdiv, the ancient city on seven hills that’s packed with art galleries, bohemian cafes and impressive 19th-century architec-ture, and offers an en-grossing stroll through history,” the popular guide reads. It also advises tourists to visit Rila Monastery and Melnik, as well as take a ride on the narrow-gauge railway from Bansko to Septemvri.

13analysis

10,376,694 is the number of deposit accounts in Bulgaria by the end of September 2016 with an average amount in each account of 4,224 Leva.

During the last years of instability and economic uncertainty Bulgar-ians have started putting their money into banks so that they have cash to count on if the wave of “staff optimization” reaches them, says Hristo Hristov, sociologist and analyst.

Earlier, banks used to offer more than excellent return with pro-motional terms at the heart of the crisis of more than 10% annual interest rate. Today the situation has changed dramatically. Euro-pean Central Bank has ooded the markets with cheap money. Thanks to the recovery of both Bulgarian and international economies banks reduced their demand for funding which led to lower interest rates.

Bulgarian National Bank statistics show that the average deposit rate with maturity in Leva decreased by 0.78 percentage points to 0.64% in November 2016 on an annual basis while the average deposit rate with maturity in Euro for the same period dropped by 0.68 percentage points to 0.51%.

On a monthly basis, the aver-age deposit rate with maturity in Leva decreased by 0.03 percent-age points, while the drop for the accounts with maturity in Euro is 0.05 percentage points. The situa-tion is similar when it comes to the deposits with maturity between a day and a year.

Clearly the greatest enemy of the savings is in ation.

The sound drop of deposit rates shrank the gap between return and in ation. This in turn led to the fact that putting your savings in stand-ard deposit accounts can guarantee their safety but not their value.

National Statistical Institute data show that the in ation rate in July 2016 was 1% while the average deposit return with maturity be-tween a day and a year was 0.55% for the same period. This means that the savings value has lowered to 0.45%. Prospects show that this trend will continue in 2017, too.

This said, we can expect that in order to keep the value of their sav-ings Bulgarians will start looking for alternative forms of investments with return above the in ation rate.

Such an investment – with high return and limited risk – can pur-chasing farmland. In recent years, the amount of EU funds for rural development and agriculture has grown, which in turn has led to higher demand of land. Only the value of farmland remained unaf-fected by the economic crisis and its price hasn’t stopped rising.

NSI data show that in the end of 2015 the average value of 1 decare (1,000 sq. m.) of agricultural land was 732 Leva. The most expensive plots are in Northeast Bulgaria – 1,040 Leva/dca.

Most of the land is cultivated not by its owners but by tenant farmers for which they pay to the owners an annual rent. It varies for the different regions and depends on a few factors.

The average annual rent for 2015 was 42 Leva/dca. The highest rent was in Northeast Bulgaria – 63 Leva/dca, and in the Dobrich re-gion it reached even 82 Leva/dca.

If we calculate the ratio of the farmland to its return in the form of annual rent, we see that land investment can bring a national average return of 5.7%, which is much higher than what you will get for your money from standard deposits.

Experts expect that in the next 5-10 years prices of farmland will not rise with the same rate as now and would rather stay at their current levels. Nevertheless, demand for agricultural land will be high for some time.

Bulgarians Advised to Invest in

FarmlandLow bank deposit returns will draw more attention to agriculture,

analyst says

Farmland is an investment with high returns and limited risk.

14the american college of sofi a

Future Learning: New Campus Center Transforms

157-year-old College

We shape our buildings; thereafter they shape us.

16interview

By Hristina Hristova

All employers in Bulgaria face the huge problems and disproportions of its labor market. On one hand, the country recorded low unemployment levels – about 7% - for the last quarter of 2016. On the other hand, structural unemploy-ment is a cause of serious concern: 14% of the jobless are university graduates; some 18% - almost all of them high-school graduates – cannot nd their rst job.

That means they have not been able to make the transition from school or university to employ-ment. Another 62% of the jobless in Bul-

garia are long-term unemployed, that is, out of job for more than two years.

A disturbing trend of the disproportion is that unemployment is falling but em-ployment is not increasing. That ratio is important for businesses. It has dropped

1.5% since the begin-ning of the year.

Youth unemployment is higher than the country’s average by some 4 or 5 percent-age points. Another disproportion is seen in the fact that while there is unemploy-

ment, there are some 11-15,000 vacant positions on average every month announced by employers that can-

Unemployment Falls But Employment

Does Not Rise

The state’s fi nancial plan has inevitably become part of the political

crisis and received harsh criticism

62% of the jobless are long-term unemployed

Hristina Hristova (Ph.D. in sociology) is a former minister of labor and social policy, professor at So a University and director of the Family Policy Institute.

17interview

not be lled with the staff they need. That speaks of a big discrepancy between the quality of the human resource and the economy’s needs. As compared with the early years of transi-tion, when Bulgaria had enough staff to offer, today there is a purely physical shortage of people in the

working age. The process of migration has not ceased, although there is some evidence that young people who have studied abroad may be returning and trying to make a career in Bulgaria.

Older people nd it hard to nd a job. Eurostat forecasts that in the next 20 years the share of the older people on the labor market will increase. The European Union has been trying to promote and nance the lifelong learn-ing process. A lot of jobs need to adapt ergonomically to the requirements of the older worker. The labor market is not prepared for the new challenge of older workers’ needs and the pension system is increasing the retire-ment age. We need to train and re-train those people.

There are two other vulnerable groups that have potential for the labor market. First, these are the disabled people who can be good legal advisers, account-ants, IT specialists. But we do not have such traditions, although those people are not a burden but a potential on the labor market. The other group of people that employers should not forget are the Roma. Most of them are poorly educat-ed due to inadequate policies during the transition period and shortcomings of the education system. Education should be the key focus of Roma integration and training for the labor market. A key issue is that businesses in Bul-garia do not have proper access to the system of secondary vocational and higher education in order to provide nancing and environment for trainee-

ship and practice. If businesses are not

involved in the education processes, the disproportions will only widen, as will the gap between their needs and the quali cation of the workforce.

A lot of EU countries plan the training of specialists that will consequently join the labor market. There are also state incentives for education in areas that are short on specialists. Today, Bulgaria has 51 universities with some 70,000 open seats for students, while the number of high school graduates is 50-53,000 a year. The need for human resources in the economy has to be planned. Lifelong learning with the participation of businesses is important too. The dual training system has not been very successful.

There are many prejudices related to the labor market and the different catego-ries of people in it. Employers show no interest in the reserve of the vulner-able groups. But the state is to blame

too, because it does not properly educate those people. Changes need to be made to the structure, subjects and philosophy of vocation education. A broad university education is not a must for every-one. What needs to be done is restoring the

role of vocational schools that teach jobs in demand on the labor market.

There remains the issue of salaries, where both the state and private em-ployers have more to do. The state always administers the changes in the minimum working wage in an arbitrary manner. Instead, it needs to create an automatic mechanism for changes and manage the labor relations and salaries more skillfully. This is very important for every business and is directly con-nected with the investment interests.

Bulgaria has 51 universities with 70,000 open seats

Business is not involved properly in the education process

18cover story

By Marina Tzvetkova

Well-paid jobs that remain vacant for months: there is such a paradox. Although unemploy-ment in Bulgaria exceeds 8%, key professional areas suff er from shortage of specialists.

An annual talent shortage survey conducted by ManpowerGroup Bulgaria shows that 62% of employers in Bulgaria have diffi culties fi ll-ing their vacancies. Th is situation raises a lot of questions, causes concern and speaks very clearly of the condition and prospects of the Bulgarian economy.

If until recently the fi ght was to hire skilled peo-ple, now the eff orts are mainly directed to retain-ing them. What is more, the terms are more and more oft en dictated by the good specialists.

Shortage of skilled peoplePoor education, the gap between demand and supply of market qualifi cations and the so-called brain drain are the main reasons for the exac-erbation of the shortage of qualifi ed staff . Th e consequences for the economy are inevitable: the poor labor qualifi cation and the shortage of experts in a number of areas discourage many potential investors from putting their money in

this country’s economy.

Th e staff shortage problem is also a consequence of the demographic crisis. Th e Bulgarian popula-tion has decreased by 15% since 1995, statistics show.

One of the big shortcomings of the local labor market is low wages, which does not allow some companies to retain or attract qualifi ed staff . Companies are concerned that higher payment will aff ect their competitiveness. At the same time the shortage of experts has reached such proportions that it poses a no lesser threat to companies’ competitiveness.

Besides, the people with a higher-education diploma currently make up some 23% of the population. In comparison, this share exceeds 30% in the developed countries with advanced and high-tech economy. Th ere is a national pro-gram to increase the share of university gradu-ates to 36% by 2020. Th e market trend does not give ground for optimism, the more so that the number of students has been constantly falling. Added to this is the fact that the wages of the Bulgarian scientifi c intelligentsia is very low. A professor at the most prestigious scientifi c and research institution in this country, the Bulgar-

Labor Market in Bulgaria:

Between Paradox and Reality

19cover story

ian Academy of Sciences, receives a salary of 450 Euro per month.

Barriers and solutionsTh e main reasons employers name for the dif-fi culties they meet in fi lling vacancies are the following: lack of hard skills (qualifi cation for certain tasks, IT skills, language and math skills) (32%), lack of available applicants (30%) and lack of soft skills (professionalism, enthusiasm, interpersonal skills, fl exibility/adaptability) (13%). Th e lack of experience is identifi ed as a reason for the talent shortage by 12% of employ-ers. Only 11% of the recruiters say candidates expect more pay than is being off ered.

To address talent shortages, Bulgarian employers pursue several strategies. Most of them (50%) provide additional training and development to existing staff . Th e second most oft en used strategy is for employers to hire people outside the traditional talent pool: older or younger than the usual.

A third of employers (33%) outsource activi-ties, 30% off er higher salaries and 29% enhance benefi ts. Another 22% say that they change the existing work models, i.e. fl exible or distance job. Only 9% of the interviewed say they pursue no strategies whatever and 2% say they do not know.

As a matter of fact, to be successful, business or-ganizations should pay more attention to work-ing out and pursuing strategies to overcome and prevent the talent shortage. On the other hand, candidates should be ready to learn constantly and develop in order to be competitive.

Instead of a wishIt has oft en been said that Bulgaria should rely mainly on its human potential. In the modern conditions, however, intelligent growth is no less important.

In future, new technologies will require even more specialized skills from people and organi-zations but that is rarely talked about. Employees will have to pay more eff orts to remain suitable for their job. Our desire and capacity to learn and acquire new skills to remain adequate and fi t for hiring will be the major balancing tool.

It is true that the populism and polarization of the workforce are a standing issue. If no actions are taken for additional qualifi cation and re-qualifi cation of the staff , the gap between those who have and those who don’t will be widening. Th e people who have the right skills and those facing the threat of being forgotten will have fewer and fewer points of contact. Th e army of people who are not active on the labor market and need to be motivated is a separate problem. If that happens, the so-called revolution of skills will have taken place.

In its fi rst 2017 issue the Business Connect Mag-azine asked managers from the ICT, outsourcing and automotive industry in Bulgaria about their observations, experience and recommendations concerning the labor market.

Most in-demand jobs in Bulgaria in 20161.Skilled workers2.Engineers3.Drivers4.Workers in the hospitality industry5.Doctors and other health professionals6.Managers (management/corporate)7.Workers8.Production/machine operators 9. Accounting and nance staff10. IT staffThe ranking of ManpowerGroup Bulgaria is for 2016 but practically it does not differ substan-tially from the 2015 edition. That speaks of steady trends and not of temporary phenom-ena. And that is a reason for concern.

Cons of open-space of ces are more than pros.

20

People are prone to a number of cogni-tive psychological biases. One of them is myopia. It is the reason why we look into the most recent past – in relation to both the macroeconomic indicators and our private life. The unwillingness to make a bigger cognitive effort to examine more data, the proneness to myopia and inertia bias lead to a sys-tematic distortion of our notion of the past. The irrational understanding of the past leads to a wrong understand-ing of the present and future. In 2000 real GDP per capita in Bulgaria was 3,000 Euro, and in 2015, 5,700 Euro. For the same period total GDP grew

more than 3.5 times. Of course, the basis is very low, but the achievement is pretty good. Nevertheless, that irra-tionality leads to the fact that the Bul-garians cannot see that a new produc-tion site is opened every 3 months and that the average wage has increased more than vefold in the span of 15 years. They cannot see that there is a qualitative change in the gross value added and that the export pro le of the country is changing from industri-al to technological. The workforce has higher productivity and added value. Currently even the poorly quali ed Roma are employed, for instance in modern American factories for au-tomobile components. That means that in the future Roma children will have potential for normal economic activity. That differs from the wrong extrapolation of Bulgaria’s future as made for years by the World Bank. That extrapolation that does not take into account the soft indicators and is based on compromised quantitative prognostic methods, that do not take into consideration the possibility for qualitative changes. Another cognitive psychological bias – conservatism – intensi es the above-mentioned biases and compels people, including Bulgar-ians, to say that it is worse today than it used to be before… Worse than the socialist period?! When people were equal in the communist party farm? Is the workforce in Bulgaria over already? Not really. Labour market ar-bitrage and training enough workforce is inherent feature of the business. As I said, extrapolation is the worst way to forecast the future, especially the exponential future - we are already in. The outsourcing industry started do-ing business in Bulgaria with low-tech call centers. Today the outsourcing

cover story

Boyan Ivantchev:

Big, Smart Business and

Exponential Future of Bulgaria

We are destined to perform more complex jobs due

to the small size of the population

21cover story

industry has advanced employees with excellent skills. The added value produced by those same employees has increased manifold and generates own businesses and takeo-vers. The successes in the IT industry are even more impressive, with annual revenue of more than 1.1 billion Euro. That is - given the skills and workforce

are constant – either in ation of the workforce is induced or the workforce has started performing more complex activities, with higher productiv-ity and added value, as is the case in Bulgaria. We are destined to perform more complex tasks due to the small size of the population and its quality. If there is a substantial shortage of low-quali cation staff and the reserve of the unemployed is exhausted (given an of cial unem-ployment rate of 7% but actually lower because of the gray economy), there will be workforce arbitrage of Bulgar-ians from Moldova, Ukraine, Serbia, FYROM or workers from Poland. Mind you that the manufacturers of automo-tive components in Bulgaria pay about three times less per hour to workers than they produce hence there is a substantial reserve if more employees have to be attracted. Of course, the Government policy of dual education and changing the post-totalitarian higher education can help the process-es but that is not obligatory. Business can create and train on its own the staff it needs on an instrumental and fundamental level.

The radical change on the labor market will come from the Bulgar-ians – young and old – who are not burdened with memories of equal-ity in the party farm. But only if they realize on time that whole job sectors will soon disappear. In the near future

will disappear journalists and edi-tors, quant analysts, drivers, pilots, HR specialists, mechanics, bigger part of teachers and GPs, engineers in the area of classic physics, motor vehicle services and many more. That will happen because of the development of 3D printing, AI, telemedicine, cyber-netics and robotics, tele-education, smart health monitoring, self driving cars etc. How we can be ready for that change? Certainly not by saying, “The guy writing this is absolutely insane.” At the congresses of the World Future Society in the United States, where I participate as a lecturer, the change is seen as inevitable - and very cool. That is the question about the workforce in Bulgaria and we have to nd a solu-tion in the next ve to seven years. It also requires strategy – not mandato-rily by the Government – by the big and smart business. The rest will be

done by the market. Until then, let’s wish that the US factories will not be forced (the U.S. Democrats are joking) by Donald Trump’s administra-tion to leave Bulgaria (to Vladimir Putin’s delight, Russians are joking) for to pay more taxes in the US. I sincerely hope that

common sense will protect the impor-tance of international economics and the fact that the costs and damages of international trade barriers and economic disintegration are much big-ger than the damages of international economic cooperation and an interna-tional labor market.

Business can create and train staff on its own

3D printing and artifi cial intelligence can change future jobs

22cover story

Business representatives say that the labor market and the short-age of quali ed staff, especially in the IT, automotive and out-sourcing industries, is already a national problem. How do employers see that problem?

The shortage of qualified staff has always been on the agenda. Bul-garia is still defined as the most attractive outsourcing destina-tion and that makes satisfying the sector’s needs for personnel more difficult. Employers respond as they can – by raising salaries, looking more and more often to cities other than Sofia, interfering more actively in school curricu-lums, looking for cooperation with universities etc.

Is the gap between education and the labor market widening?

Yes, such is the trend. The fac-tors for that are complex. On one hand, we have the culture and understandings of the public itself, where the value of education is substantially reduced. On the other hand, there is no visible connection between education and the pros-pects young people have. That has its roots in the family environment and in the quality of higher educa-tion.

The good thing is that the con-nections between universities and employers have strengthened considerably in an effort to bring education closer to the actual needs of the labor market. In most cases, however, this is the result of the individual efforts of companies and university representatives. Despite the many commitments to educa-tion reform and the development of various strategies, there is no real change. Universities are compelled to admit students with extremely low entrance results. That is con-nected with an outdated mecha-nism of funding educational estab-lishments that makes universities focus on the number of students, rather than on their quality.

How does the trend of staff shortage in key sectors affect economic growth?

Economic growth is not an im-aginary notion – it is an actual

Ilia Krastev:

Bulgaria Attracts Outsourcing – For NowStaff shortage makes Bulgaria’s export stagnate, increases personnel

costs and reduces companies’ profi ts

23cover story

result of the actions of economic agents. For a small country like Bulgaria growth depends on the export of goods and services and on at-tracting foreign capital, mainly in the form of foreign investment.

In an economy pretending to be knowledge-based, the availability of expert and highly-qualified human resource is a mandatory condition for competitive export orientation. When any given company cannot quickly find the human resource it needs, it directly loses customers. Those customers look for efficient solutions, often regardless of the location, and for suppliers equipped with teams and ready to offer solu-tions. Nobody will wait for months for such teams to be created, trained and formed. When there is deficit on the labor market, companies cannot make sufficiently competitive offers and lose pro-jects. Those missed opportunities are manifested in lower export and reduced potential for economic growth. Bulgaria can hardly com-pete with the large countries – not only India and China but even Ro-mania. The only thing that can im-prove Bulgaria’s export orientation is not the quantity but the quality of the workforce: the knowledge, skills and expertise of the teams, the high productivity and the higher added value they can offer.

Thus, Bulgaria’s export can remain high even if smaller-size boutique projects are carried out. The short-age of qualified staff directly affects Bulgaria’s capacity to implement that strategy.

Another real problem is that the staff shortage increases personnel costs much faster and reduces prof-its, which has a very strong effect on sectors with high human re-source expenses, e.g. services. That limits the possibilities for invest-ment in setting up and developing new business projects. That also reduces Bulgaria’s attractiveness as an investment destination, i.e. it leads to a drop in new foreign and

local investment or, worse, to relocation of already attracted investors.

The combined re-sult could be a drop in the main compo-nents of economic growth: capital for-mation and export, as well as in the size of tax revenue that

determines government spending.

What are the trends and how can we overcome the staff shortage in the outsourcing industries?

The current situation is likely to persist and even get worse. A posi-tive trend is the return of students who have studied abroad.

The outsourcing sector increasingly often resorts to hiring people from other countries – in and outside the European Union. The simplifica-tion of the procedures for hiring foreign citizens would help a lot.

Lack of human resource means lost customers

Quality of Bulgaria's workforce can improve our export orientation

24cover story

A possible solution is also the use of new and flexible forms of em-ployment that give possibilities for better “utilization” of the available resource on the labor market.

For the time being we are actually creating and training our manag-ers by ourselves. We cannot yet rely on hiring ready and trained people and especially as concerns key positions in the company we prefer training our own staff. That is an expensive process and it is not

always the most efficient solution.

What are the main achievements of your sec-tor in 2016 and what do you expect from 2017? In 2016 Bulgaria re-mained an important player in the outsourcing

industry. Bulgarian companies won international prizes as providers of outsourcing services. We saw the start of an initiative to award prizes for business achievements in the sector with the participa-tion of an international jury. A lot of international conferences were held. Bulgaria hosted the European Sourcing Summit 2016. It was in Sofia that the global outsourcing industry introduced a standard for the sector of outsourced services at the annual conference of the leaders of the European Outsourc-ing Association. “Outsourcing Destination Bulgaria: Technology, Innovation, Disruption” was held in Plovdiv in November and made the city an important pretender for an outsourcing capital. There is a growing trend for the outsourc-ing industry to be turning into an engine of economic development

outside the capital city.

What are your expectations and how does the Bulgarian market stand in relation to other Euro-pean countries?

We are still competitive as com-pared to the other countries. The combination of access to qualified workforce, relatively low taxation and social-security burden and the availability of proper infrastruc-ture (office areas and broadband internet) make Bulgaria an at-tractive destination. The sector is not always supported by the state practices, though; bureaucracy and lack of long-term policy for im-proving the quality of education. The demographic crisis may turn out a problem too.

The long-term intentions, plans and contracts in the sector require a sustainable and predictable busi-ness environment. The successful business cases and the investment of substantial amounts in Bulgaria in recent years have been based on companies’ expectations that basic financial and business frameworks will continue improving in the long run. A sustainable state policy in this aspect will allow Bulgaria to maintain its position of a top desti-nation in the high-tech segment on the global market.

On key positions we train our own staff

25cover story

Business representatives say that the labor market and the shortage of quali ed staff, especially in the IT, automotive and outsourcing industries, is already a national problem. How do employers see that problem?

Th e labor market of IT specialists in Bulgaria follows the common trends of the European Union. Th ere are more than 1 million vacant jobs in the IT fi eld in Europe and this num-ber is rising constantly. Th e staff shortage hampers the devel-opment of companies in the sector.

Th ere are almost always vacant posi-tions and fi nding a suitable candidate can take more than eight weeks, in some cases. Employers invest more resources in attracting and retaining highly-qualifi ed IT specialists. Th is creates strong competition for ca-pable employees among companies, which in turn leads to increasing salaries in the sector. Companies are trying to react to the new situation on the labor market by investing substantial amounts in edu-cation and employee development. Resources are allocated to structured training and internship programs. Companies look mainly for young talents and invest in their career development.

Is the gap between education and the labor market widening?

High-quality education is the major precondition for creating specialists for the ICT industry. Th e problem is connected with both the insuffi cient number of ICT graduates and the defi cit of necessary skills required by businesses. We need a modern, quality education that creates specialists who have not only acquired professional knowl-edge and skills but also who are intelligent and have the capability to think independently and analytically and to communicate. What needs to be done in order to achieve this is to update the educational programs,

Stoyan Boev:

Education Should Prepare Specialists

for the ICT IndustryThe shortage of qualifi ed staff limits the development of the ICT

industry, says the deputy chairman of BAIT’s managing board and

managing director of ICB InterConsult Bulgaria

26cover story

also training for university lecturers and to ensure more active and im-mediate participation of businesses in the education process. Alternative private education forms are being created in response to the inability of the education system to provide the necessary specialized ed-ucation. Th ey have gained popularity and are training and re-training staff for the ICT industry; however, they cannot replace school and university education.

How does the trend of staff short-age in key sectors affect economic growth?

Th e Bulgarian ICT sector is competi-tive, and has been showing constant,

export-oriented growth since 2005. Th e ICT industry has high added value and its develop-ment has the potential to increase GDP by 2 to 4%. Unfortunately, the compa-nies in the sector cannot reach their full potential due to the shortage of

qualifi ed staff . Th e annual survey of the Bulgarian Association of Soft ware Companies (BASSCOM) reveals a general trend of an annual increase by up to 10% of the employed in the soft ware sector. Th is year, however, many large companies have reduced their expectations for growth.

What are the trends and how can we overcome the staff shortage in the IT industry?

In the short-term, one of the pos-sible solutions to the staff shortage problem is attracting specialists from abroad. Th is means creating proper working conditions for attracting such employees, both for Bulgarians returning from abroad and highly-

qualifi ed professionals from other European countries. Th e industry organizations have joined their eff orts and are holding an active dialogue with the respective state institutions on easing the proce-dures for issuing blue cards for hiring specialists from countries outside the European Union. Some progress has been made in this area, i.e. no market survey is required when appoint-ing new specialists from abroad, but there are still substantial obstacles. Th e lasting and long-term solution is education. Th e industry organiza-tions of BAIT, BASSCOM, the Bul-garian Outsourcing Association and the ICT cluster are working actively to ensure that there is a state policy addressing the staff shortage prob-lem. Th ey have signed an agreement with the Ministry of Education and Science on eff ective cooperation in enhancing modern soft ware educa-tion. Th e measures envisaged in the agreement will meet the needs of the Bulgarian economy and the IT industry. A national program, “IT career training” (2016-2022), will be draft ed on the basis of that agreement. It is aimed at preparing enough qualifi ed specialists for the mid-term needs of the Bulgarian IT industry.In a bid to support the creation of a modern and adequate education standard, experts from the IT as-sociations also worked actively on creating a competence model for the job of an applied developer and it is now included in the list of jobs for vocational education and training. Th e curriculum is now being pre-pared and high-school teachers are also envisaged to pass training. Th e training centers are planned to start operating in 2017.

ICT sector shows constant export-oriented growth

27

The shortage of quali ed work force, the current state of the labor market is already a national prob-lem, according to business associations’ experts. What

is your point of view as an employer in the IT eld?

The most common misperception is that there is an abundance of workforce for the labor market. In fact, there is quantitative and qualitative labor shortage. Even more, Bulgaria is facing drastic shortage of workforce with the right skills and experience. It is fairly acute in certain areas and it is going to become worse. This is particularly true in the Informa-tion Technology (IT) sector, where the labor demand signi cantly exceeds labor supply, resulting in lowest levels of unemployment rate, which is equivalent of a full employment economy sector.Today, the IT companies in Bul-garia are contributing to over 4% of Bulgaria’s economy and em-ploys more than 40,000 specialists

(hardware engineers, software de-velopers, IT service management experts), but still IT companies are struggling to nd thousands more in the next few years.As a country that wants to position itself as an information technology leader in the region, Bulgaria is nding it dif cult to keep up with the accelerating pace of demand for skilled workforce.

The gap between the qual-ity of education, labor mar-ket requirements and HR is deepening. What kinds of measures are needed to reverse the trend?

In many sectors the skill mis-matches are the most prevalent cause of quali ed workforce shortages. The healthcare, automotive parts industry, manufacturing and tour-

cover story

What are the main achievements of your sector in 2016 and what do you expect from 2017?

Regardless of the mentioned prob-lems, the ICT industry is sustainable and successful. It is expected to cre-ate 2.2% of Bulgaria’s gross domestic product for 2016 and annual revenue in the soft ware sector is projected to reach approximately 2 billion leva. Some 70% of the activity is export-oriented. All that makes the sec-tor one of the most effi cient in this country.Th e sector employs some of the most highly qualifi ed and well-paid special-ists. Th e average salary of developers is four times the average salary in the country. BASSCOM expects that the number of people employed in the

sector will increase by 5 to 6% this year, which – due to the shortage of staff – is less than in previous years. Th e soft ware industry is more and more shift ing its focus from “cod-ing” to covering all phases of modern soft ware production, such as analysis, design, architecture, quality control research and development; this cre-ates the conditions needed for turn-ing Bulgaria into a regional innova-tion center. Th e main achievement of the IT industry is the digitalization of all business sectors. Th us, the success-ful development of IT ensures the development and competitiveness of the Bulgarian industry.

Iravan Hira, general manager, Hewlett-Packard Enterprise:

Bulgaria Can Reinvent Itself and

Overcome Stagnation

28cover story

ist sectors are experiencing seri-ous dif culties to nd quali ed workforce. School teachers, truck drivers and constriction workers are also short of what the labor market is demanding. It is obvious, that the Education is not producing enough specialists with the right skills to meet the needs of the Bulgarian employers. Furthermore, the skills that our graduates get are much below the levels of employers’ expectations. Education should rethink the way it de ne workforce skills, and reconstruct the current training systems to strengthen the talent pipeline. Of course, the education reforms are important but are not the only answer. Businesses have a role to play too. Education and the businesses must join forces to produce graduates who meet the chang-ing needs of industries. Good practices show that when training initiatives are coordinated and set-up in partnership between education (Schools/Universities) and employer (Business) they can leverage large funds and additional expertise bene tting the upskilling of future work-ers. Also, equally guiding young people towards educational choices leading to employment in shortage sectors or occupations can be a relevant solution. Such measures can greatly increase the number of students choos-ing an education, which leads to quali cations needed by the labor market. Another good practice is the employers to invest in their employees’ skills to increase the resilience of its people and organ-izations. This may be achieved through internal or external train-ing programs.Additional measures would be offering internships programs to the graduates and supporting education systems. As a short-term measure some employers may consider obtain-

ing the needed skilled workers from abroad (e.g. outside EU through Blue Card program). Some other employers may put measures to increase the pro-ductivity of their employees (e.g. through automation or outsourc-ing).

The industries transformations, technological shifts and globaliza-tion requires a new mindset for both employers and for indi-viduals. Individuals also need to further develop their learnability: their desire and ability to learn new skills to stay relevant and remain employable.

What are your expectations for developments in the IT sector for 2017 year based on your company experi-ence?

We are living in an era of techno-logical revolution that is disrupt-ing and transforming societies, governments and businesses. In today’s business environment, new ideas can quickly turn into new business opportunities.Startups quickly become serious competitors. The ability to turn an idea into a new product or even a new business has never been easier or more accessible. Today, entrepreneurs with a good idea has access to all of the infra-structure and resources that a traditional large company would have. They can rent computer on demand, get an ERP or CRM or any other system as a service, use online systems for transactions, and have marketing using social media. The days of needing mil-lions of dollars to launch a new

product or bring a new idea to market are fading fast. Now the businesses need to gure out how to innovate

quickly, accelerating time to value. According to IDC, by the end of 2017, revenue growth from information-based products will be double that of the rest of the product/service portfolio for one third of all Fortune 500 compa-nies.

We witnesses that many of the Bulgarian companies have al-ready recognized the importance of innovative IT for a success of their business. Most of those com-panies have already steeped in technology and are learning fast about how IT and digital innova-tion can transform their business-es. But securing the IT baseline will simply be not enough. To respond, the IT must trans-form from a cost center to a value creator. In the past, the IT roles were typically about controlling costs, business processes, mainte-nance and other back of ce tasks. “IT was not seen as a strategic part of the business, and that re ected on the perception of the CIO, who was seen as a support role rather than a strategic role, rarely seen on board tables dis-cussing methodologies, paths to follow or how revenues were to be achieved. That time is over”. IT executives and experts will take more and more strategic leadership role in the near future. IT and especially the CIO will soon become strategic partners of the business side to drive innova-tion and growth. In one hand, having the IT sector as one of the most promising in-dustry that has potential to yield high, and on the other hand, the technological revolution provides Bulgaria with unique opportunity to reinvent itself, overcome the stagnation and make the economy innovate and prosperous. The world is changing fast. Old solutions no longer work.

IT must transform from a cost center to a value creator

29

The shortage of quali ed work force, the current state of the labor mar-ket is already a national problem, according to business associations’ ex-perts. What is your point of view as an employer in the IT eld? A new wave of digital technologies is changing the rules for competitive-ness. Policy makers need to confront the new im-peratives for skills forma-tion, labor market regula-tion and worker mobility because economic success

depends on the ability of workers and employers to pivot to the new oppor-tunities. Cloud technology is enabling new business models and is transform-ing business processes into digital services. IBM’s Institute for Business Value (IBV) found that 80 percent of business leaders are experiment-ing with or considering new business models.Like IBM, many companies are report-ing persistent vacancies at the same time as high youth unemployment prevails. In the EU, two in ve employ-ers have dif culties nding people with the right skills. IBM’s IBV found that higher education institutions are not equipping enough students with the skills they need to become effective employees. Courseware and classes need regular updating to stay in alignment with employer needs rather than teaching for jobs that no longer exist. Partner-ships of employers and educators are a necessary means to this end. Forward-looking employers like IBM invest heavily in worker training as a competitive imperative. For incumbent

workers, ongoing learning is essential to maintain employment, and govern-ment support that defrays employer costs for this training can attract job-intensive investments. The same technology wave has in-creased the premium for ef cient labor markets. Overly restrictive rules in ar-eas such as hiring and separations, and non-traditional work models reduce the incentive for businesses and work-ers to adapt and succeed. By slowing resource reallocation, these rules also increase skills mismatches. Demographics too is a catalyst for labor market reforms. Younger workers and late career workers alike need employ-ment alternatives, such as xed term contracts, project work, shared jobs, freelancing, and cloud working. Many workers are adopting mobile work pat-terns to improve quality of life.

The gap between the quality of education, labor market require-ments and HR is deepening. What kinds of measures are needed to reverse the trend?

IBM’s policy recommendations are de-signed to maximize the advantages to be gained from contemporary informa-tion technology trends. Policymakers should adopt the overarching principle of protecting the worker and not the job. Speci cally, governments should: 1) Improve the alignment of learning with market needs. 2) Enable worker transitions to growth areas and im-prove labor market adaptability. 3) Reduce barriers to high skilled foreign workers. These policies will enhance economic success and encourage sustained em-ployment in well-paying jobs that are relevant for the new era of cognitive computing. If you allow me shortly to specify a bit

cover story

IBM Believes Cognitive Technologies

Will Transform Our Personal and

Professional Lives

Iva Todorova, government and regulatory affairs executive, IBM Bulgaria:

30cover story

what do these measures mean for us:

• Improve the pipeline of work-ready graduates by better aligning what is taught with the needs of employers using improved mapping of the edu-cational curriculum with those needs.

• Incent educational institutions to collaborate with employers through programs such as internships, men-toring, apprenticeships, participation in curriculum design and other train-ing support.

• Allow new employment models in addition to traditional full-time and non-regular models. A broad set of arrangements including those based on tasks, key performance indica-tors, process, and other measures are made possible by technology and are attractive to many workers.

• Remove regulatory barriers to busi-ness restructuring and transforma-tion. Reasonable notice periods and compensation when combined with an effective safety net and reskilling pro-grams can ease worker transi-tions.

• Encourage intra-company transfers of high skill foreign workers, and high skilled immigration an, perma-nent residence. Reduce the friction including quotas that impedes the movement of these valuable workers across borders.

What are your expectations for developments in the IT sector for 2017 year based on your company experience?

Industries and professions are being transformed by data as it becomes the new natural resource. Cloud and cognitive technologies are shifting business processes into digital services and enabling new business models. IBM’s Institute of Business Value (IBV) research shows that most enterprises have implemented or are planning to implement technologies that were non-existent as recently as ve years ago.

Now, cognitive computing is augment-ing human skills, creating new jobs, and is changing the way we work.

"Cognitive computing will make many processes cheaper and more ef cient. It will also do some things better than humans. What has always happened is that higher value is found in new skills, and humans and our institutions adapt and evolve. There is no reason to believe it will be different this time. Indeed, given the exponential growth in knowledge and discovery opened up by the Cognitive Era, there is every rea-son to believe that the work of humans will become ever more interesting, challenging, and valuable", Dr. John E. Kelly III, Senior Vice President, IBM Research and Solutions Portfolio said. As a result, jobs are changing unusu-ally quickly. Change is creating new

jobs that are dif cult to ll, and stoking an immediate and unmet demand for new skills and competencies that current employees might not possess. IBM is deeply com-mitted to cognitive technologies and their ability to augment hu-

man intelligence. We believe strongly in their potential to bene t society, and to transform our personal and profes-sional lives. The key challenge for policy makers is how to increase the adoption of the powerful tools of cognitive computing, and to assist workers’ transitions to the in-demand job opportunities. Work-ers in such a period of turbulence need to remain employable and employers need the freedom to pivot with new processes and technologies. For cognitive computing and arti cial intelligence such as IBM's Watson to succeed, companies need to build the trust of prospective users, Ms. Rometty said at a World Economic Forum panel in Davos, Switzerland. "It's not man or machine," she said. "It's a symbiotic re-lationship. Our purpose is to augment and be in service of what humans do."

Change creates new jobs that are diffi cult to fi ll

31cover story

Business representatives say that the labor market and the shortage of quali ed staff, especially in the IT, automotive and outsourcing industries, is already a national problem. How do employers see that problem?

Bulgaria has its historic chance. Th ere is a growing interest in investment and localization of operational business units in Central and Eastern Europe from diff erent geographical regions: the European community, NAFTA and China. Th ere are fi nancial resources available for construction of capaci-ties that are not connected with the limited Bulgarian market only. Th at is an objective and long-term process but the speed of reaction is of crucial

importance. Th e world is changing; information technology and techno-logical companies are off ering new opportunities for trade, communica-tion with consumers and organization of production. Regretfully, those trends are not in line with the developments in this country. Th e demographic problems, the migration processes and the education system do not further Bulgaria’s role in this regional process. Th e chances to speed up their industri-al development belong to those nations and territories that off er staff with the necessary qualifi cation, desire for per-fection, ethics and labor morals – and within a certain fi nancial framework. Bulgaria is not competing with the countries in the region only. Southeast Asia, Continental China and South America are fi ghting for the same share of the pie and they will probably be joined by North Africa too. Increased demand for workforce in these indus-tries has side eff ects too. Staff turnover is increasing, the investments in staff training are at risk and the success of large-scale projects is uncertain.

Is the gap between education and the labor market widening?

In Bulgaria, the staff with special and vocational secondary education is scarce. Unfortunately, a lot of that staff leaves the education system unpre-pared to create value. It needs addition-al investment and time to be able to meet the expectations of the industry.

Alexander Milanov:

Developing Dual Education System

Is KeyOur chance is in attracting international investors and supporting local

investors in industries that are strongly dependent on the workforce,

says the general manager of BMW Group Bulgaria, Alexander Milanov

32cover story

Th e situation is not very diff erent with university graduates. Decisive changes are needed for integration of the dual education system aft er the example of all West European and already some East European countries. Th e industry and education need a statutory foun-dation for successful platforms. Many young Bulgarians study abroad. Most of them acquire practical skills and knowledge that give them a chance for fast integration in the Bulgarian economy. Th ose people, however, are mobile and have high requirements for work conditions, motivation systems and prospects. All we – industry, state administration and education system – have to do a lot of work to overcome the existing disproportions.

How does the trend of staff short-age in key sectors affect economic growth?

Bulgaria is not rich in natural re-sources, nor is it a highly industrial-ized country with substantial capital resources. Our chance is in attracting international investors and support-ing local investors in industries that are strongly dependent on the work-force. However, Bulgaria also needs a lot of qualifi ed staff in the service area. Regretfully, there is no proper education platform for training sales staff . Consumers see that every day. Economic growth can only be sustain-able and signifi cant when it is based on parallel growth in various unconnected industries. Solving the problem of staff shortage in various areas is a precondi-tion for that.

What are the trends and how can we overcome the staff shortage in the automotive industry?

Th at question can be split in two. Th e fi rst question is related to the active investment in the area of development and production of components for the

automotive industry in Bulgaria. Th ose investments are not connected with the Bulgarian market. Th e entry of such investors creates additional national income and offi cial economy. Th e rise in automobile sales on a global scale is a precondition for expansion of those investments. Such investors are ready to allocate money for training the workforce they need. What is impor-tant for them is the availability of staff ready to pass the necessary training but also ready to achieve labor productivity that is equal to or higher than that in neighboring countries. When we watch the processes in Poland, the Czech Republic, Slovakia, Romania and Hun-gary we see what potential for GDP growth Bulgaria has. Th e other part of the staff – the one needed for sale and service of automobiles in Bulgaria – is faced by similar challenges. Besides the high fl uctuation of the workforce, there are also problems connected with its productivity and qualifi cation. Th e wide-spread gray economy in these sectors is a typically Bulgarian problem that poses an additional burden on investors through unfair competition.

What are the main achievements of your sector in 2016 and what do you expect from 2017?

Th ere is increasing consumer demand for automobiles in Bulgaria. Unfor-tunately, it is mainly for second-hand automobiles that are imported. Th at does not help much for improving traf-fi c safety, the environmental picture, especially in the big cities, economic effi ciency and reducing the shadow economy in that type of trade. Of course, the sales of new automobiles are also growing but the ratio still remains 9:1 for the old fl eet. Against that background the main achieve-ments of the authorized sales centers for automobile are contained in im-

cover story

34cover story

Business representatives say that the labor market and the shortage of quali ed staff, especially in the

IT, automotive and outsourcing industries, is already a national problem. How do employers see that problem?

Recently I have seen a trend of strong candidates applying for management positions at the companies I manage. Th ey have the training, strength and desire to start their career with us. Th ey are people with strong characters who like communicating, inspire confi -dence, like dynamics and are not afraid of taking risks. Th ey are purposeful and persevering personalities with stra-tegic thinking. Th is is not always the case with the lower-qualifi cation staff but we are highly motivated to become a preferred employer in our sector

Is the gap between education and the labor market widening?

proving the quality of service, expand-ing the range of services and off ering attractive pricing conditions. Various modern models for fi nancing the need for mobility are becoming increasingly widely spread with the help of Bulgar-ian banks or leasing institutions. As for now, the entry of the automotive industry in terms of development and production in Bulgaria is happening at a two-digit growth rate. We expect that the trend towards an increase in automobile sales will be preserved in 2017.

What are your expectations and how does the Bulgarian market stand in relation to other European countries?

Th e sales of new automobiles are rising throughout Europe with particularly strong growth seen in Poland, Roma-

nia, Hungary and Greece. Practice shows that the transport picture and safety improve much faster in countries where the renovation of the fl eet and the promotion of environmentally-friendly vehicles, including e-vehicles, is a national priority. Th e average age of the automobile fl eet in Bulgaria is above 18 years: it is the oldest fl eet in continental Europe. Without a focus on the part of institutions and policy-makers, without adequate legislative and fi scal measures, we cannot expect a change. As a matter of fact, the size of the local market of new automobiles and its sustainable development are an important precondition for speeding up investment in production capacities and quality sale and service centers. Th at will create new and attractive jobs too. Th e circle closes.

Stoyan Zhelev:

Businesses Must Cultivate Own StaffEmployers should start defi ning more precisely the profi le of the

employees they need

35cover story

I do not think it is a matter of education only. Th e focus should be on developing staff and shar-ing practical experience – that is a very essential, responsible and meaningful undertaking that can help. People should have the pa-tience to train and pass on their experience. All people should strive for personal development and the passing on of personal experience enriches you and al-lows you to enter a new phase in the hierarchical career develop-ment. People forget that things do not have to happen at any cost and immediately. Every day is a new step. In the process of climbing you gradually acquire all the qualities, habits and skills necessary for success.

How does the trend of staff shortage in key sectors affect economic growth?

Th e staff is at the basis of any business and economic growth. Th e complete hegemony of effi ciency has been here for a few years. Certain habits have had to be changed radically. To cope with the staff -shortage cliché together, employers need to start defi ning more precisely the profi le of the staff they need in order to optimize the process of reaching it. Muscles are built with workouts: the selection is the most important process for securing the right people that will stand the workouts.

What are the trends and how can we overcome the staff shortage in the automotive industry?

I will tell you what our individu-al contribution is to overcoming that shortage.

At Auto Bavaria for instance earlier this month we launched Trade Academy: an intern program for seeking talents. Th at process will be mirrored in Service Academy, a program that will start in two months. Students will have the opportu-nity to try their skills and plan their career development. Young people will have the opportunity to continue working at Auto Bavaria as employees. Th e Trade Academy will con-tinue for two months and each intern will have a clearly de-fi ned program to focus on the various activities in our business: sale of new BMW and MINI automobiles, sale of Motorrad motorcycles, sale of second-hand automobiles, marketing. Th e program will include both prac-tical experience and lectures by the heads of the diff erent depart-ments: post-sale activities, spare parts, logistics. Interns will have the opportunity to off er solutions, attend meet-ings, participate in the draft ing of the corporate correspondence, perform cold-calling acquisition. Th e initiative will help young talents get a better idea of their future career development.

What are the main achieve-ments of your sector in 2016?

2016 was a challenging and successful year. For Sofi a France Auto, IsuBus and Auto Bavaria the achieved results and the suc-cessful completion of a number of important projects are the result of collective eff orts. Th e systematic and effi cient utilization of a large set of trade instruments and programs for

sale expansion was crucial for our success as offi cial distributor of Peugeot, ISUZU buses and au-thorized dealer of BMW, MINI and Motorrad. Th e active off er-ing of the fi nancial instruments of Leasing House Sofi a Leasing also substantially increased the sale of such type of services in our group.

What are your expectations and how does the Bulgarian market stand in relation to other European countries?

Th e Bulgarian automobile market is lagging behind other markets in Europe, both in terms of volume and in per-capita terms. Th at will hardly change in the next few years due to the lack of technical control and fi nan-cial stimuli for renovation of the hopelessly outdated car fl eet. We project a rise in sales as com-pared to the previous year, based on the results achieved in 2016 and the potential of our region. Th e forthcoming premieres of new models in 2017 will be strong preconditions for success-ful market presence. Th e 2017 priorities of the brands we represent will be expanding our market presence, both in the mass and the luxury segment, preserving our leadership on the bus market, increasing the share of corporate sales, high client satisfaction and constant im-provement of servicing at every point of contact and during the whole sales and post-sales pro-cess. All that will defi nitely help attract more and more custom-ers of used cars to the market of new automobiles.

36cradle

By Chaika Christova

In fact our bodies do regenerate. All of our 50-75 trillion cells are renewed every 10 years. Our skin cells are replaced by new sells every 15-28 days. Our red blood cells die and are replaced every four months and the white cells live about an year. The annual rate of replace-ment of bone cells is 10%. Brain cells (neurons in the cerebral cortex), optical lens cells and female gametes are for life – they do die, but are not replaced, at least as far as contemporary science is aware of. Thanks to these body abilities haircut

businesses exist, our wounds heal and more than that – when young we can re-grow a cut ngertip; even if we somehow lose part of the liver, it is regenerated.

But why can’t we regenerate a lost limb, or a damaged kidney, or a heart? We do have the same genes as the salamander that can regrow an amputated leg. At the fetus stage in the womb we can regrow anything that gets damaged, but not later. Evidently later on the human body loses some trigger “information” to start up these genes.

Since the 1990s, when the regenerative medicine began to develop, a growing number of scientists believe that human body parts regeneration is achievable. Over 3,000 investigators around the world try to nd the key for that. Some are studying the cells and the molecules in the humans and try to gure out how they form, change, react and commu-nicate between themselves. Other are looking for “scaffolds” that can make the body produce the right tissue and replace the damaged. Much effort, talent and hard work is exerted in studying the bioactive molecules – the growth factors, the biochemical and biophysics processes in the body. At some point, collective knowledge gained in all those three main spheres will lead to success, scientists

Can Human Bodies Regenerate?

Not yet, is the short answer

We have the genes, but we have forgotten the fetus capability to regrow lost limbs.

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How soon human bodies will be taught to regenerate damaged organs?

37cradle

say. In 5-10-15 years? No one dares to predict...

At skin-deep level researchers succeeded to mend a wound without scarring. The team of Profes-sor George Cotsarelis at the University of Pennsylvania managed to do that by inducing fatty cells to form. The report of the study was published this January in Science magazine.

The scar-forming cells, called myo bro-blasts, were “instructed” to transform into fatty cells, or adipocytes, in the lab. Research on mouse and human scar-forming tissue grown there found that hair follicles were crucial in healing a wound to scar-free skin; or regenerat-ing scarred skin to healthy one. The signal, the “information” they released is a BMP molecule (bone morphogenetic protein).

“The secret is to regenerate hair follicles rst. After that, the fat will regenerate

in response to the signals from those follicles,” Professor Cotsarelis said in the magazine.

Creating skeletal muscle and bone scaffolds is the eld of Miqin Zhang, professor of materials science and engineering at the University of Washington. She and her team are working to make a synthetic, porous, biologically compatible scaffold that mimics the normal extracellular en-vironment of skeletal muscle. In this 3-D architecture prototype cells are “seeded” (such as stem cells), which are then sup-

plied with the proper signals – proteins, growth and transcription factors – to differentiate into muscle bers or calci- ed bones.

The “scaffolds” are fabricated in the lab and then implanted where needed; mechanical, chemical and/or electrical stimulation can be used to help their maturation in the human body. The con-structs can be engineered with custom architectures – not only tailor-made in the needed dimensions, but they may in-corporate patients’ own cells to promote tissue regeneration.

There are still some problems and dif- culties to overcome, as most part of the

work is on the nanoscale, but the team published their report in November 2016. Beyond tissue regeneration in the lab, the researchers also used the scaffolds to study certain cancer cells, such as stem cell-like cells in glioblastoma, Dr. Zhang said in an interview.

“It uses the same principle—using nanoscale scaffolding polymers—but to nd better ways of doing the opposite:

inhibit cell growth rather than promote it. That really demonstrates the utility of these technologies. And we’re at the right time to combine biological and engineer-ing approaches to make it happen”, she said

This endeavor of the team builds on dec-ades of work into the growth, repair, and behavior of normal skeletal muscle, but also relies on knowledge of engineering and materials science.

In-vivo bio-scaffoldsare the goal of Dr. Stephen Badylak, pro-fessor of surgery at the University of Pitts-burgh School of Medicine (UPMC) and deputy director of the McGowan Institute for Regenerative Medicine. His team has succeeded in inducing the regeneration of muscle tissue in injured limbs. What they use for the treatment is extra cellular matrix (ECM), made from pig's bladder.

The ECM is naturally present between cells in various tissues. Adding the arti- cial one at the injured body site serves

two main purposes. First, it prevents the immune system from responding with in ammation and scar tissue. Next,

Stephen Badylak

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38cradle

it provokes patient's own stem cells to become muscle cells and regenerate the lost tissue.

Last spring the team conducted a small study, in which ve male patients, including two U.S. soldiers, whose legs were badly injured in Afghanistan, with some 70-80% of muscle loss. No previous surgeries and other treatments, includ-ing stem cells therapy, have worked to improve their condition. In one case, the patient had previously undergone 15 operations.

The study results, published in the journal Science Translational Medi-cine, proved for the rst time that regeneration of functional muscle in people with major muscle loss is pos-sible. Six months after the implanta-tion three of the patients, including the soldiers, were at least 20 percent stronger in ve categories – and often by far more than that. The other two men also showed improvement, the researchers said.

Last summer another group of 13 patients were treated with the same technique. Six months after implantation they showed an average improvement of 37.3% in strength and 27.1% in range of motion tasks. CT or MRI imaging showed an increase in post-operative soft tissue formation in all 13 patients.

ECM is an “information highway be-tween the different cells,” Badylak said. “It is rich with information, it tells cells where to go and what to do.”

“We can teach the body to regenerate,” he added.

Professor Michael Levin, director of the Center for Regenerative and Develop-mental Biology at Tufts University,

goes much deeper into the matter. His team has been researching the complexity of intercellular signals – the communication that governs cells ac-tivities and coordinates their actions: to differentiate, move here or there, reshape or cluster to form an organ. Those signals are biochemical and bioelectrical mes-sages, so the researchers use techniques of molecular genetics, biophysics, and computational modeling. Their inter-disciplinary effort has led them to the regeneration of legs of matured frogs (normally only very young frogs can regrow lost limbs), to the persuasion of a atworm to form a second head at the amputation site of its tail, and so on.

Molecular biology deals mainly with biochemical signals, Professor Levin explains in an interview, while biophysi-cal signaling is scarcely studied. And that's part of his team's work. Seventeen years ago he already knew that bioelec-tricity drives the intercellular signals, but he needed to know more about how it works.

This newly achieved knowledge is start-ing to pay now. The exotic two-headed tapeworms, tadpoles with an eye on the abdomen, practically immortal mice that can regenerate every damaged tissue or organ in his lab are not Franken-crea-tures fabricated to fascinate the public. They are the proving grounds that allows the researchers to transcribe their dis-coveries and actions into mathematical models and software, which then help scientists to nd ways to instruct cells what tissues to build. This might trans-late to humans sooner than many expect. For instance, in certain cases the Tufts University team can suppress the pro-liferation of tumors; they can persuade cells that are ready to become tumors to turn to other structures.

“We still have a long way to go,” Levin said.

Michael Levin

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Right Rental –

the Partner of Event Managers

40

By Mario Arabistanov Technology, Media and Telecommunications AssociateKambourov & Partners Attorneys at Law

What’s new?In 2016 Bulgarian Parliament passed a new bill on electronic identi cation, aiming to digitalize public administra-tion services and making them faster and more accessible for people. The so called Electronic Identi cation Act was passed with a delayed effect and shall enter into force gradually, allowing the state to have enough time to implement the hard- and software needed for the functioning of the entire system.

Goals of the new lawBy 2018 all Bulgarian citizens and residents shall be able to identify them-selves in digital environment through an electronic identity certi cate and to do various actions – including obtaining certi cates from public authorities, le documents, authorization, etc.

State governance and state outsourcing The Minister of Interior will be the state body which will administrate the

electronic identi cation processes on a state level, but the complicated software and hardware infrastructure within the issuance of the electronic identi cations brought the need to outsource certain processes to third parties- Electronic Identi cation Administrators.

The Electronic Identi cation Admin-istrator will be a third party – a com-pany- which will assist the Minister of Interior for issuing electronic identi ca-tions. These companies will be a subject to strict requirements on the available technical equipment, data protection, staff quali cation and nancial criteria.

What will be the Electronic Identi cation?From technical perspective, the electron-ic identi cation will be similar to the current quali ed electronic signature. It will contain two cryptographic keys – a public key, which will be held at the public authority and a private key, which will be held by the owner.

In practical terms the electronic identity may be stored on a smart card which will be issued with the personal ID card and will be protected by a password or another security method.

advice corner

Electronic Identifi cation for

Public Services

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At a later stage it may be technically possible that the electronic identity is embedded in a smartphone SIM card, which would increase mobility and accessibility of personal identi cation. This would supposedly be accompanied by legislative updates within the elec-tronic communications.

Storage and security of Data for Electronic Identi cationThe electronic identi cation would engage the government in a concen-trated storage of information of citizens. Any leak of such information may lead to different personal and legal conse-quences.

In the light of such a risk, it would be understandable if the government chooses to store the data in a cloud environment, which would allow dif-ferent authorities to access the required information for matching the public and the private keys.

For security reasons, log history will be held, enabling to identify each and every check of a corresponding elec-tronic identity. The information will be stored for a term of 10 years. Each holder of the electronic identity will be

enabled to request information on the persons, who have made checks on their electronic identity.

Electronic AuthorizationThe part of the Electronic Identi cation Act with regards to electronic authoriza-tion will enter into force in November 2017.

It will enable fast and easy authorization of a proxy to represent a person before public authorities. The authorization may be done through a simple entry of the proxy’s unique identi cation num-ber in a registry and the representation powers will be considered to have been granted automatically. The Electronic authorization will be an equivalent to a written form signed with notary veri ed signatures.

First steps to Electronic JusticeDigitalization of public services may be considered as rst step to electronic justice. The electronic authorization alongside with all other services which will be made available online, would prepare the citizens and the state bodies for a heavy transformation of our judi-cial system into a modern electronic one.

advice corner

42amcham events

AmCham Adds 8 New Members

Founders Foundation

is an entrepreneurship organization, representative of Founder Institute in Palo Alto, Calif., which is the world’s premier idea-stage accelerator, said Milen Ivanov, chairman. The aim is to help aspiring entrepre-neurs and big companies with corporate entrepreneur-ship build tech businesses and products to reach global markets. This will now be the largest such start-up supporter in So a.

Foundation Global Libraries

is part of a world-wide network supported by the Bill and Melinda Gates Foundation Global Libraries initiative, said Spaska Tarandova, executive director. GLBF works in partnership with government institutions, non-government organizations and private funders to create favorable conditions for equal access to information, the Internet and electronic services for the citizens and to encourage information literacy, life-long learning, civic participation, and community development.

Georgiev, Todorov & Co.

is established in 1991 and is a leading Bulgarian law rm with a full scope of services for both a large domestic cli-ent base and a range of foreign investors, said Tsvetelina Dimitrova, attorney-at-law. It is a top-tier rm in some elds like dispute resolution, and technology, media and telecommunications law.

Ingram Micro SSC EMEA EOOD

delivers a full spectrum of global technology and supply-chain services to businesses, explained Edoardo Peniche, managing director for Global Shared Services & Business Processes. Solid expertise in technology solutions, mobility, cloud and supply-chain solutions enables its business part-ners to operate ef ciently and successfully in the markets they serve.

43amcham events

The Institute of Internal Auditors (IIA)

is the exclusive representative of the International Institute of Internal Auditors for Bulgaria – a global association of the internal auditors, established in 1941 and uniting more than 175,000 professionals all over world, said Jordan Karabinov, chairman of the governing board. IIA Bulgaria is established in June 2003 and has some 500 members – professionals in the elds of internal audit, nancial con-trol and risk management.

McGregor and Partners

is a boutique commercial law rm in South Central and Eastern Europe, with of ces in Bucharest and So a, said its manager Julian Spassov. The rm is staffed by experi-enced Bulgarian and Romanian lawyers, headed by a British solicitor with some 16 years of experience of living and practicing in the region.

Refan Bulgaria Ltd.

was founded in 1991 and is a leading producer of per-fumery and cosmetics, said Velina Evtimova, sales man-ager. The product catalog includes over 250 perfume fra-grances for men and women, more than 550 high-quality cosmetic products for face, body and hair, handmade glycerin soaps, boutique candles and home perfumes.

Techceramic-M

Techceramic - M Ltd. is a developer, manufacturer and worldwide supplier of ceramic components with a broad and ever growing range of applications, said Preslav Hristov, R&D manager. Widely used in automotive cast-ing, the mechanical, structural, petrochemical, electrical, electronics and textile industries ceramic components deliver cost cutting advantages over more mainstream materials.

44new members

Eldrive is a regional integrated platform for electric mobility and clean transport solutions, devel-oped by eMobility International AD. The company is operating in the following main directions:

Investment in charging stations network for electric vehicles (EV); Operation and management of charging stations; Rental of electrical vehicles, EV eet management and other EV related services; E-car sharing solutions.

The company plans to install up to 500 charging points in Bulgaria, Romania, Greece and FYROM. The electric vehicles park will grow up to 200 vehicles until the end of 2017. In relation to the charging structure operations Emobility International AD is in close col-

laboration with Fortum Charge & Drive, the provider of a software solution for the charging network with over 20 000 users on international scale. After register-ing on the platform client get access to the entire charging infrastructure and services via mobile appli-cation and / or personal RFID tag. NEVEQ – a venture capital fund, investing in technological start-ups is among major shareholders in Emobilty International AD.

Contacts:Daniela Assenova, Procurist

Tel.: 02 421 05 03of ce@eldrive.eu

http://www.eldrive.euAddress: 18 Krakra Str., .2

1504 So a

Janev & Janev is a leading strate-gic communica-tions consultan-cy, established

in 1993. We provide a full range of communication services for local and international companies. The company has gained extensive experience in the corporate, political and non-governmental sec-tors. We have a successful track record in projects, supporting the reforms in the banking, health care and pension sectors and funded by the EU Commis-sion, the World Bank and the USAID in Bulgaria. The company is a member of the international PR group

– The Worldcom Group ® and is a co-founder of the Bulgarian Association of PR agencies. anev & Janev specializes in the elds of crisis management, public affairs and strategic planning. In a world of informa-tion overload good public and business communica-tion is essential for building and maintaining a brand, a team and a successful global or local company.

Contacts:Todor Ianev

Managing PartnerTel: +359 2870 0519

http://www.janev-janev.comAddress: 17 Todor Stoyanov str. So a 1113

Petar Ivanov, Board member of AmCham Bulgaria. Twenty years of domestic and interna-tional experience in Held GM and Director roles in three Global US corpo-ration. 3Com/US Robot-ics, Cisco Systems and

Microsoft. From 2010 to 2012 was Executive director of Russia board inside Cisco Systems. He has worked and lived for two years in UK as Director Operations Global strategy for BRIC countries. Petar had been working with all governments since 1999 and has

closed the biggest ICT projects for US companies in Bulgaria. Petar has been always an active member of US community in the country and region and have been board member of Junior Achievement and AmCham. He had working experience with board members of Exim bank and TDA of US. He had a very special focus on CSR education and startup com-munities.

Contacts:Mr. Petar Ivanov

petari@outlook.com9B Latinka Str.

1113 So a