Goal 1 is concerned with raising incomes and curbing unemployment.

         In 2007, average incomes in Bulgaria reached 164.9 euros against the planned target of 280 euros by 2015. Annual income growth rates over 10%and high inflation, give reason to revise the average income target to 380 euros by 2015. Declining relative poverty implies revising that target indicator from 15% to 13% by 2015. Due to the gradual increase of the poverty line to 99 euros in 2007, this target is revised to 228 euros by 2015 from the current 170 euros.

         The youth unemployment target of 25% was practically overachieved in 2007 (15.1%) and calls for a more ambitious target of 10%. The long-term unemployment target of 7% was also overachieved (4% in 2007) and was redefined to 3% for 2015.

         In the coming years, Bulgaria will face less and less unemployment-related issues as they increasingly give way to shortage of skilled labor.  EU membership and the Lisbon Strategy in particular, make it necessary to expand the unemployment reduction target with specific additional indicators measuring employment, labor productivity and the relative share of employee compensation in GDP. A realistic goal for Bulgaria would be to achieve 45% of EU labor productivity by 2015. However, poor labor productivity is a result of overall business efficiency in Bulgaria and not only of workforce efficiency. Labor productivity measured in PPP is only 35% of EU average, while earned income is about 20% of EU average.

         The relative share of employee compensation in GDP, which is another indicator, was 34.5% in 2007. That is the lowest value in the EU and the second lowest in Europe, where only Turkey ranks behind Bulgaria at 20.1%. Regional and ethnic disparities continue to hold back total economic growth.

          The proportion of the poor at the municipal level varies from 1.8% in the capital Sofia to 53.8% in Boynitsa, Vidin district, and 38 municipalities report unemployment over 25%. Against the backdrop of low incomes, which place Bulgaria at the bottom of EU standards, luxury consumption is growing at a stunning pace and volume. Rural and urban disparities also constitute a major problem.

         Whereas urban poverty has to do with money, rural poverty is about lack of jobs, poor or inaccessible healthcare, education and social services. Unemployed people and Roma people face an extremely high risk of poverty. The poverty line in Bulgaria remains twice lower compared to the newly accessed countries and about five times lower compared to the old EU member states. The high share of the grey economy in the country also affects all monetary indicators. Data from a European Commission survey show that Bulgaria has the largest black labor market in the Community.

          Overall, 35% of Bulgaria’s GDP is generated from informal labor relations and incomes, for which no taxes and social security contributions have been paid. Economic growth should have a much stronger social focus on overcoming poverty and wider participation of low-income groups in the distribution of wealth. A new public consensus is needed based on more solidarity and justice, which are the fundamental democratic values of the European social model.