In mid-1973 industry continued to expand, though at a significantly lower rate than in the mid-1960s. Industrial expansion was being increasingly restrained by the inadequacy of domestic raw material and skilled labor resources. Limits on an increase in imports of materials and essential machinery were placed by the insufficiency of foreign exchange reserve and by the need to reduce traditional exports of consumer goods in short supply on the domestic market. The Soviet Union continued to be the predominant supplier of raw materials, machinery, and technical and technological assistance.

To overcome the limitations on industrial expansion, the leadership of the Bulgarian Communist Party (BKP—see Glossary) and government sought to raise industrial productivity through concentration and specialization of production and through improvements in the management of material and labor resources. Strong emphasis was placed on the introduction of automation in both production and management processes. Heavy stress was also laid on the need to raise the quality of industrial products in order to increase their salability abroad and their acceptance in the domestic market.

The consolidation of industrial enterprises into a limited number of trusts, introduced in 1971 as a measure for increased centralized control in the search for greater efficiency, was being carried forward by means of further regulatory and clarifying edicts. The leadership's ultimate goal of an efficiently managed, technologically advanced, low-cost industry remained the driving force behind all industrial policy decisions.

ORGANIZATION AND STRUCTURE

Virtually all industry is state owned. In 1970 state enterprises possessed 98.6 percent of all industrial assets; they employed 88.8 percent of the industrial work force and produced 89.7 percent of the industrial output. Collective industrial enterprises owned the balance of 1.4 percent of the assets, employed 11.2 percent of the workers, and contributed 9.9 percent of the industrial output. Small private enterprises, mostly artisan shops, accounted for only 0.4 percent of the industrial output.

Organization

Size and Location

In 1970 the industrial establishment (excluding the private sector, information on which is not available) consisted of 1,827 state enterprises and 644 collective enterprises, employing about 1.02 million and 129,000 people, respectively. More than one-half of the enterprises in the state industry employed over 200 people, and almost one-fourth employed more than 1,000 people. Enterprises with large numbers of workers predominated in metallurgy; in the glass and china industry; in clothing manufacture; and in the leather, shoe, and fur industry. Beginning in 1971 previously independent enterprises were transformed into branches of countrywide trusts organized along functional lines (see ch. 12).

The territorial distribution of industry during the 1950-70 period was determined in large part by the priority development of heavy industry, the location of which was dictated mainly by the sites of raw material sources and the location of major consuming centers. In this process several cities and districts, including Sofia, Plovdiv, Varna, Burgas, and Ruse, experienced a large population influx from rural areas and attendant shortages of housing and public services. At the same time many villages were deprived of their inhabitants, and homes and public facilities were abandoned.

In 1970 the Central Committee of the BKP laid down guidelines for a program of regional economic development, with a view to attaining an optimal distribution of productive resources (capital and labor). The aim of the program was to arrest excessive urban growth and the associated demands on the country's resources for new housing and other amenities and, at the same time, to help develop backward rural areas. Within these guidelines, decentralization of industry has been undertaken, and plans are being worked out for the socioeconomic development of individual districts under the Seventh Five-Year Plan (1976-80) and until 1990.

In this context the construction of new industrial plants in heavily populated areas has been restricted. Further production increases in these areas are to be attained through modernization of existing facilities and the introduction of more advanced technology. Special measures have also been adopted to promote economic growth in the relatively underdeveloped districts. In part, this program is implemented through the transfer of industrial activities, equipment, and labor from the congested cities and districts to rural areas. Transfers of this kind decreed by the Council of Ministers Bureau in December 1971 and July 1972 involved 195 production units and 25,000 workers and an annual output of 225 million leva (for value of the lev—see Glossary). Under existing plans lasting until 1975, however, industry and employment will continue to expand in some of the most heavily congested cities.

Supply System

The organization of a smoothly functioning materials and equipment supply system for industry has been an elusive goal of the leadership ever since the inception of the controlled economy. Various approaches to the problem over a period of years have not succeeded in accomplishing the basic task of ensuring a dependable supply of material resources to industrial producers. As a result, the economy has been officially reported to suffer enormous losses through production shutdowns, substitutions of materials that lower quality and increase costs, and hoarding of scarce materials. Heavy losses have also been incurred through improper storage of materials, careless use that entails excessive waste, and pilferage.

Adequate information on the organization and functioning of the industrial supply system has not been available. The latest reorganization of the supply system was undertaken at the end of 1971 with a view to providing a normal flow of supplies for the economic trusts beginning in 1972. Until 1971 the supply organizations had dealt almost entirely with individual enterprises. The reorganization was accompanied by extensive consultations with producers of raw materials, importing organizations, and industrial consumers. The consultations were held in order to clarify the needs of consumers, ensure the availability of the needed supplies, and agree upon specific measures for timely deliveries of materials and supplies.

Particular attention in the reorganization was paid to the problem of reducing the inventories of materials in enterprises and concentrating them in the supply organizations. Decisive measures were taken to halt the former practice of making deliveries of materials large enough to cover requirements for three months or longer. Under the new system, supply organizations are required to make periodic deliveries to consumers on guaranteed time schedules, at short intervals, and in quantities that do not exceed one month's requirements. Adherence to the regulation is to be used as a standard in evaluating the performance of supply organizations.

One of the basic elements in industrial consumer-supplier relations has been the annual contract for estimated material and equipment requirements needed to complete the annual production quota. For a variety of reasons both suppliers and users have often failed to honor these contracts, and the penalties provided for breach of contract have not been sufficient to deter this practice. Breaches of supply contracts have been an important cause of economic difficulties. Supply difficulties have been particularly disruptive because of the traditionally stringent nature of the production plans and the limited availability of resources.

In 1972 the Ministry of Supply and State Reserves planned to take energetic measures to strengthen contract discipline and to use contracts as legal and economic instruments for exerting pressure on both parties to fulfill their obligations. The minister considered it particularly important to put an end to the practice of contract cancellation, either under provisions of official regulations or by mutual agreement of the parties concerned—a practice that, according to the minister, caused huge losses to the national economy.

Structure

Manufacturing is the dominant sector of industry in terms of employment and output. In 1971 manufacturing accounted for 93.9 percent of the total industrial output and provided employment to 88.3 percent of the industrial labor force. Mining and energy production contributed 3.6 and 2.5 percent, respectively, of the industrial output and employed 10.3 and 1.4 percent, respectively, of the labor force. More than half the industrial establishment was devoted to the production of capital goods. In 1971 the capital goods sector employed 52.5 percent of the industrial labor force and produced 56 percent of the output. The relative importance of the capital goods sector had been rising over a period of years, from 36.7 percent of the output in 1948 and 47.2 percent in 1960. During the same period the contribution of the consumer goods sector to total output had declined from 63.3 percent in 1948 to 52.8 percent in 1960 and 44 percent in 1971. As a consequence of the priority development of heavy industry, the supply of consumer goods on the domestic market has been inadequate to meet consumer needs (see ch. 5).

In terms of their employment shares, the largest state industry branches in 1971 were: machine building and metalworking, 25.5 percent; food processing, 14.4 percent; and textiles, 11.3 percent. Next in importance, but with much lower levels of employment, were: timber and woodworking, 7.4 percent; chemicals and rubber, 6.1 percent; and fuels, 5.5 percent. Industrial branches that experienced the most rapid growth in the 1960-71 period included ferrous metallurgy, chemicals and rubber, machine building and metalworking, and fuels. Among the slowest growing branches were timber and wood processing, textiles, nonferrous metallurgy, and food processing.

FUELS AND POWER

Domestic resources of mineral fuels are inadequate for the needs of industry. Through the limitation that it places on electric power development, the fuel shortage—in the absence of a large hydroelectric power potential—may become a major factor inhibiting industrial growth. In 1968 the proportion of petroleum and natural gas in the fuel balance was somewhat more than 42 percent; it is planned to rise to about 60 percent in 1975 and to at least 65 percent in 1980. Virtually all petroleum and natural gas must be imported.

Coal and Lignite

Reserves of anthracite and bituminous coal are insignificant; their production amounts to less than 2 percent of the annual coal output. Brown coal deposits that can be mined economically are nearing exhaustion, and brown coal production declined by about one-third in the 1960-70 period. Low-calorie lignite remains the major fuel base for thermoelectric power stations. Reserves of this inferior fuel are large.

Coal deposits are scattered in about twenty small deposits. Because of difficult geological conditions, however, only a few of the deposits are exploited. Anthracite is mined in the Svoge basin, located in the Iskur gorge area of the Stara Planina, north of Sofia. Bituminous coal is mined in the same mountain range, in the area between Gabrovo and Sliven. The deposit at Sliven was reported to contain a very small quantity of coking-grade coal—a quantity far below the needs of the iron and steel industry. In addition to large annual imports of coking coal, Bulgaria has also imported from 250,000 to 465,000 tons of coke per year.

The main source of brown coal for many years has been the Pernik basin in the upper Struma valley, about nineteen miles southwest of Sofia. In the 1971-75 period brown coal mining is to be substantially expanded at the Bobov Dol deposit in the Rila mountain range, south of the Pernik basin. The Babino mine in the Bobov Dol coalfield is scheduled to become the largest underground coal mine in the Balkans. Reserves in this deposit, however, are equivalent to only about five to six years' production at the 1970 rate of brown coal output.

Lignite is mined mainly in the Maritsa basin, near Dimitrovgrad in the Thracian Plain, and in the Sofia Basin. The Maritsa basin, particularly the area known as Maritsa-Iztok (Maritsa-East), has become the basic source of coal production, contributing about 50 percent of the country's output. Aside from planned new mine construction, the Maritsa-Iztok complex is to be rebuilt and modernized. Production problems at this mine have not yet been solved satisfactorily. Coal-bearing strata have not been fully identified; equipment is utilized to only about 40 percent of capacity; and the organization of labor is poor. Substantial improvement also remains to be attained in processing the coal for market, in view of its high ash and moisture content. Unsolved problems also remain in the manufacture of coal briquettes.

In the 1971-75 period substantial investment is to be devoted to the expansion and modernization of coal mines. New mines with an annual capacity of about 4 million tons are to be built. Three-fourths of the investment funds are to be concentrated on three major production centers. The relative investment shares of these centers were planned to be: Maritsa-Iztok complex, 41 percent; Bobov Dol complex, 25 percent; and the Georgi Dimitrov mine at Pernik, 10 percent.

Production of marketable coal increased by 83 percent in the 1960-70 period to a level of about 29 million tons. The rise in output, however, was confined to lignite production, which grew more than fourfold during the decade. Production of bituminous and brown coal declined by 42 and 32 percent, respectively. Output of anthracite in 1970 equaled the output in 1960 but was 9 percent below the production level in 1966. Production of both anthracite and bituminous coal amounted to less than 400,000 tons in 1970. Strip mining has steadily grown in importance and accounted for 73 percent of the output in 1970.

The Sixth Five-Year Plan (1971-75) calls for a rise in coal output to 33 million tons—an increase of about 13 percent. In the view of the minister of heavy industry, the planned increase is not large, but its attainment is difficult considering the character and condition of the mines. Experience has justified the minister's assessment. In the first two years of the five-year period, coal output rose by less than 1 percent.

Crude Oil and Natural Gas

Deposits of crude oil are located at Tyulenovo in the Dobrudzha region and at Dolni Dubnik, east of Pleven. Natural gas fields have been discovered near Vratsa and in the area of Lovech, south of Pleven. Reliable information on the magnitude of crude oil and natural gas reserves is not available. Statistics on current imports and official projections of import requirements, however, indicate that domestic production of oil and natural gas will continue to cover only a small fraction of needs.

Production of crude oil rose from 200,000 tons in 1960 to 500,000 tons in 1967 but declined thereafter to 305,000 tons in 1971. Natural gas output, which had increased to 18.5 billion cubic feet in 1969, declined to 16.7 billion cubic feet in 1970 and 11.6 billion cubic feet in 1971. Imports of crude oil, mostly from the Soviet Union, increased almost 3-1/2 times between 1965 and 1971 to a level of 7.5 million tons. In 1972 the Soviet Union alone provided 95 percent of the country's requirements for crude oil and petroleum products. Imports of natural gas from the Soviet Union, through a pipeline still under construction, are scheduled to begin in 1974 at a level of 35 billion cubic feet and to continue at an annual rate of 106 billion cubic feet beginning in 1975. The planned 1975 import volume represents about three-fourths of the estimated requirements in that year.

Crude oil is processed in two refineries, located at Burgas and Pleven, with daily throughput capacities of about 16,500 tons and 5,500 tons, respectively. Except for the small domestic output, crude oil for the Pleven refinery is moved by rail from Black Sea ports. A pipeline network that will connect the refinery with the ports is under construction and is scheduled to enter into full operation in 1975. By that date the capacity of the Pleven refinery is planned to attain 16,500 tons per day. A pipeline under construction for the transport of petroleum products from the Burgas refinery to consuming centers at Stara Zagora and Plovdiv is to be completed sometime in 1973.

The refinery output has not been sufficient to cover all the country's requirements for petroleum products. Net imports of petroleum products in 1970, including gasoline, fuel oils, and lubricating oils, amounted to 2.5 million tons. Ninety percent of the imports originated in the Soviet Union.

Electrical Energy

Installed electric generating capacity and production of electrical energy increased more than fourfold in the 1960-71 period but failed to keep pace with the country's growing requirements. Installed capacity in 1971 was 4.48 million kilowatts, including 3.65 million kilowatts in thermal and 0.83 million kilowatts in hydroelectric stations. During the period the proportion of hydroelectric capacity declined from 50 to 18 percent, and the production of electricity per kilowatt of hydroelectric capacity dropped by more than one-third. The utilization of thermal capacity declined by 13.5 percent.

New power from generating plants scheduled to begin operation in the 1971-75 period totals about 3 million kilowatts. Major power stations to be commissioned include: hydroelectric stations—with a capacity of 1 million kilowatts—on the Sestrimo cascade, in the upper reaches of the Maritsa River and at the Vucha cascade, southwest of Plovdiv; a thermal power plant with a capacity of about 620,000 kilowatts at Bobov Dol, fueled by local coal; and an atomic power station with a capacity of 880,000 kilowatts at Kozloduy on the Danube River, in the northwestern corner of the country. According to government plans, total generating capacity is scheduled to reach 7 million kilowatts in 1975 and 12 million kilowatts in 1980. The more distant plans include the construction, jointly with Romania, of a hydroelectric power complex on the Danube, at Belene on the Bulgarian bank of the river and Ciora on the Romanian side. The Soviet Union has provided large-scale technical and material assistance in the development of the electric power system.

Production of electrical energy amounted to 21 billion kilowatt-hours in 1971, of which 90 percent was generated by thermal stations. Energy output in 1972 reached 22.3 billion kilowatt-hours. The Sixth Five-Year Plan calls for an energy output of 30.5 billion kilowatt-hours in 1975, which is equivalent to an average annual increase in output of 9.4 percent during the five-year period. In the years 1971 and 1972 energy output rose by an average of 6.9 percent per year, so that an average annual rise of 11 percent will be needed in the remaining years to attain the planned goal in 1975. Consumption of electrical energy in 1975 is planned to reach 33.5 billion kilowatt-hours. The planned deficit of 3 billion kilowatt-hours is to be covered by imports from Romania, Yugoslavia, and the Soviet Union.

The electrical transmission network is well developed, and further major improvements have been planned. The network is connected with the power grids of Romania and Yugoslavia. A 400-kilovolt power line from the Moldavian Soviet Socialist Republic in the Soviet Union was reported to have been completed in mid-1972. There was no evidence nine months later that power had actually been transmitted over that line.

Eighteen percent of the total electrical energy supply in 1971 was used by the power stations or lost in transmission. Of the remaining net supply, almost 70 percent was consumed in industry and construction; agriculture received only 4 percent; and transport and communications accounted for little more than 3 percent. Households were allotted about 16 percent of the net electrical supply, and the balance of 7 percent was consumed in trade, public institutions, and street lighting. The major industrial users of energy were metallurgical enterprises and the producers of chemicals and rubber; each of these industrial branches consumed one-fifth of the energy supply to industry.

Expansion of electric-generating capacity and energy output at rates planned by the government has been hampered by a chronic lag in new construction and by inadequate maintenance of existing facilities. The lack of preventive maintenance and disregard of technical requirements in the operation of equipment result in frequent breakdowns requiring major repairs. Such repairs, particularly those involving boilers, turbines, and transformers, pose difficult problems because of the shortage of technically qualified repair personnel and ineffective organization of repair work. Efficiency of operation is also adversely affected by a high labor turnover and the difficulty of finding qualified replacements.

The lag in the completion of new power stations, equipment breakdowns, and insufficient water reserves for hydroelectric stations have caused frequent power shortages, particularly at peak load hours. Elaborate official measures have been introduced to regulate the consumption of electricity and to eliminate waste, including a bonus system for saving electricity. These measures have not proved sufficiently effective, and some enterprises have been reported to earn bonuses by the simple expedient of overstating their requirements in the formulation of the annual economic plans. The State Inspectorate for Industrial Power and Power Control, it was stated by officials, was not in a position to solve the problem of economizing electric power without the active cooperation of every enterprise, plant, and trade union. Additional unspecified measures affecting industry were reported to have been taken in 1973 to reduce peak power loads, and the population was advised to use electricity more sparingly between 6:00 P.M. and 9:00 P.M.

RAW MATERIALS

In 1970 about 54 percent of the manufacturing industry's output was based on industrial materials, and 46 percent was derived from agricultural raw materials; the proportion of industrial materials in manufacturing continued on its post-World War II upward trend in the 1960-70 period from a level of 24 percent in 1948 and 49 percent in 1960. This trend was sustained by the relatively rapid rise in the production and imports of industrial materials compared to the slower increase in agricultural output and imports. Because of the limitation of domestic resources, further industrial expansion will necessitate ever larger material imports.

Iron and Steel

The main deposits of iron ore are located at Kremikovtsi, northeast of Sofia, and at Krumovo in the lower Tundzha valley. Other small deposits of little or no commercial value are scattered in the Strandzha mountains, in the western Stara Planina, and at several locations in the Rodopi (or Rhodope Mountains). The ore in the Kremikovtsi deposit is of low grade; it has a mineral content of about 33 percent and requires beneficiation. Reserves at Krumovo were reported to be of better grade but much smaller. Available evidence suggests that mining at this deposit was discontinued after the mid-1960s. Its site is far removed from the country's two iron and steel mills.

Reserves at Kremikovtsi were estimated a number of years ago to contain from 200 million to 250 million tons of ore. An official Russian-language survey of Bulgaria, published in 1969, cited a figure of 317 million tons for total iron ore reserves but mentioned only the Kremikovtsi deposit as one being mined. In a review of the country's natural resources, published in a Bulgarian technical journal in mid-1970, it was stated that known reserves of iron ore would last another fifty years. At the average annual rate of iron ore output in the years 1968 and 1969 the reported life span of the deposits indicates a reserve of only 133 million tons as of 1970. Whatever the actual reserves may be, domestic iron ore has had to be supplemented by imports of about 1 million tons per year from the Soviet Union and Algeria to meet the requirements of the metallurgical industry.

Reserves of steel-alloying minerals are reported to be available, particularly manganese, chromium, and molybdenum. The quality of the manganese ores, however, is low, and reserves of chromium are insufficient for the needs of the economy. Output data are available only for manganese ore. Production of this mineral declined by about 60 percent in the 1957-70 period, which suggests the depletion of known reserves. The metal content of the manganese ore mined in 1970 amounted to 10,300 tons. In that year the discovery of new manganese deposits in the Obrocha area was reported, the eventual exploitation of which, it was said, would not only provide for all domestic requirements but would also make it possible to export manganese for an entire century.

Although small amounts of ferroalloys are also obtained as by-products of copper, lead, and zinc smelting, imports must be relied upon to cover substantial deficits. Imports of manganese ores and concentrates in 1969 and in 1970 were more than double the volume of domestic production, and imports of chromium and chromite amounted to 3,400 tons in 1969. Nickel and titanium were also imported.

Steel is produced at the integrated Kremikovtsi metallurgical combine and at the smaller integrated Lenin Steel Works in Pernik. With Soviet assistance the Kremikovtsi combine is being expanded to a planned annual capacity of 2 million tons of steel and 2.2 million tons of rolled products by the end of 1975. A third coking plant was put into operation in the spring of 1971, and the production of coke is scheduled to reach 1.4 million tons in 1975, compared to an output of 837,000 tons in 1970. The steel mill at Pernik is to be modernized, also with Soviet assistance.

Production of pig iron and steel increased about sevenfold in the 1960-70 period, reaching levels of 1.25 million tons and 1.8 million tons, respectively. The same was true of rolled steel products, the volume of which rose to 1.42 million tons. Nevertheless, Bulgaria remained a net importer of iron and steel throughout the entire period. In 1970 the import surplus amounted to 272,000 tons of pig iron and 96,000 tons of steel.

Nonferrous Metals

Reserves of nonferrous metals are reported to be more plentiful than reserves of iron ore. Unofficial claims have been made that copper reserves will meet requirements during the next fifty years despite the planned rapid growth in output. Similarly, known reserves of lead and zinc ores were said to be sufficient to supply the needs of available smelters until 1990. A foreign observer, however, noted that plans for large-scale expansion of nonferrous mining and smelting may be frustrated by the deteriorating quality of the ores being mined and that metal output may not rise much beyond the level attained in the late 1960s. In fact, mine output of lead and zinc in 1970 was not higher than it had been in 1960, although the mine output of copper increased at an annual rate of 7.1 percent from 1967 to 1971. In this context it is noteworthy that data on nonferrous metals were omitted from the official statistical yearbook published in 1972.

In 1972 the minister of heavy industry pointed out that the relatively small planned increase in the output of the nonferrous metals industry in the 1971-75 period—22.8 percent—was dictated by inadequate supplies of raw materials. He stated that prospecting for new deposits would be intensified and stressed the urgent need to increase the degree of metal recovery from ores and the need to utilize fully all ore components. Nevertheless, the minister assured his audience that the requirements of the economy for copper, lead, and zinc in the 1971-75 period would be met from domestic production, except for 3 to 10 percent of certain types of rolled metal. He called for the construction of plants to extract the metal from the industry's tailings as a means for partially eliminating the troublesome shortage.

Copper is mined south of Burgas; in the Sredna Gora mountains near the town of Panagyurishte; and in the western Stara Planina mountains, south of Vratsa. A deposit is also being developed at Chelopets, near Sofia. The ore is concentrated locally and is smelted and refined in plants at Eliseyna, Pirdop, and the Medet complex near Panagyurishte. Production of refined copper from ores and reused scrap increased from 14,000 tons in 1960 to 24,000 tons in 1965 and 41,000 tons in 1971. More than half the copper output is processed into copper profiles, sheet, and wire at the Dimiter Ganev plant in Sofia—the only plant for manufacturing rolled products. Bulgaria has both imported and exported copper and copper products.

Lead and zinc are obtained from mines near the towns of Madan and Rudozem, in the eastern Rodopi, and in the western part of the Stara Planina, at Eliseyna and Chiprovtsi. A new lead mine is under development at Erma Reka, in the vicinity of Madan. The Rodopi mines account for the major portion of the ore output. The ore is processed in flotation plants near the sites of the mines and is refined at Kurdzhali, Plovdiv, and Kurilo.

Production of refined lead and zinc rose rapidly in the first half of the 1960s but leveled off in the second. Substantial amounts of these metals have been exported, mostly to Western Europe. Exports, however, have been declining both in volume and as a proportion of output. The decline has been more pronounced in the case of lead, and lead exports dropped from 65 percent of output in 1960 to 22 percent in 1970. The volume of lead exports fell from 53,500 tons to 22,100 tons in the 1965-70 period. Zinc exports declined from highs of 78 percent of output in 1965 and 58,100 tons in 1966 to 64 percent of output and 48,100 tons in volume in 1970.

Bulgaria also possesses small reserves of gold, silver, and uranium. Gold has been found near the town of Trun, not far from the border of Yugoslavia. Silver and uranium deposits are located in the western Stara Planina. The uranium ore is processed by the Rare Metals Combine near Sofia. Gold and silver are also obtained as by-products in the smelting of copper, lead, and zinc. Information on reserves and production of these metals is not available. Aluminum and tin must be imported.

Other Raw Materials

There are reported to be adequate resources of nonmetallic minerals for the production of cement and other building materials, glass, and ceramics. Asbestos, salt, sulfur, and cement are produced in quantities large enough to allow some exports. The quality of asbestos, however, is low, and better grades must be imported for some uses. Exports of cement declined from 715,000 tons in 1965 to 153,000 tons in 1970. Timber and wood pulp from domestic sources are in short supply. Under an agreement with the Soviet Union, Bulgaria has supplied 8,000 workers to the timber industry of the Komi Autonomous Soviet Socialist Republic for the development of Siberian timber resources, in return for which the Soviet Union has undertaken to export to Bulgaria about 900,000 cubic yards of timber in 1973 and up to 2 million cubic yards per year after 1975. Similar arrangements exist with regard to paper pulp, iron and steel, natural gas, and other raw materials.

Domestic agriculture provides ample raw materials for the food processing industry, but only a fraction of light industry's needs for fibers and hides. In the 1968-70 period average annual imports of these materials included cotton, 60,000 tons; wool, 2,900 tons; synthetic fibers, 26,000 tons; and cattle hides, 7,700 tons. In addition to the raw cotton, cotton textiles in the amount of 63,000 tons were imported annually.

Because of the general shortage of domestic raw materials and the need to conserve scarce foreign exchange, strong emphasis has been placed on recycling waste materials. A decree on this subject was issued in 1960, and a special Secondary Raw Materials State Economic Trust was created in 1965. Another comprehensive decree was issued in November 1971 because, as stated in its preamble, the importance of collecting and using waste materials had been underestimated, and the needs of the economy were not being met. The new decree was intended to organize the collection and processing of waste materials, including metals, paper, rubber, textiles, and worn-out machinery and household equipment, on a modern industrial basis under the direction of the waste materials trust. Special provision was made in the decree concerning the handling of unused machinery and surplus materials held by economic enterprises, and sanctions were provided for failure to surrender or refusal to purchase such surplus equipment and materials.

INVESTMENT

Industry's share of total annual investment rose steadily from 34.2 percent in 1960 to 47.3 percent in 1969 but declined in the next two years to 43.9 percent. In absolute terms and in current prices, annual investment in industry increased from 466.3 million leva in 1960 to 1.6 billion leva in 1970 and declined to 1.58 billion leva in 1971.More than four-fifths of the industrial investment in the 1961-71 period was devoted to the expansion of producer goods industries. The proportion of investment funds allotted annually for this purpose was slightly lower in the 1966-71 period than it had been in the preceding five years; it ranged between 84.7 and 87.8 percent in the 1961-65 period and between 81.2 and 85.5 percent thereafter, except for 1970, when it declined to an atypical low of 78.5 percent.

The bulk of industrial investment was channeled into heavy industry, including fuel and energy production, ferrous and nonferrous metallurgy, chemicals, and machine building and metalworking. In the 1960-65 period fuel and energy production were the major recipients of investment funds; in subsequent years machine building and chemicals became the primary targets of investment activity. Ferrous metallurgy was among the five largest investment recipients through 1967, but nonferrous metallurgy dropped from this group after 1964. Beginning in 1967 substantial investment funds were also devoted to food processing—the major export industry and earner of foreign exchange.

Investment allotments to consumer goods industries ranged between 12.2 and 18.8 percent of industrial investment, except for an unusually high allocation of 21.5 percent in 1970. In 1971, however, the investment share of consumer industries dropped sharply to only 14.5 percent. The predominance of investment in heavy industry reflected the leadership's basic economic policy tenet that, with minor temporary exceptions, the production of capital goods must develop more rapidly than the output of consumer goods.

Construction of industrial plants has frequently fallen behind schedule, causing losses of planned production and disruption of the five-year plans. The situation became critical in the fall of 1972 because of the failure to commission on time new facilities that were counted upon to produce in 1973, among other products, 0.5 million tons of rolled steel; 0.4 million tons of mineral fertilizers; 30,000 tons of synthetic fibers; 20,000 tons of cellulose; 11,000 tons of polyethylene; 0.3 million kilowatts of electric generating capacity; and a large volume of machinery and equipment.

The main reasons for the construction lag were delays in the supply of materials and a shortage of construction workers. In an effort to expedite the completion of the most essential projects that were under the direct supervision of the Council of Ministers because of their national importance, the council created a special operational bureau for the coordination and control of the construction activities associated with these projects. At the same time 6,000 workers were transferred to the priority projects from less important construction jobs. These measures did little to solve the basic problems and merely shifted the incidence of construction delays from one category of projects to another.

LABOR

The labor force in state and collective industry numbered 1.17 million workers in 1971, of whom 542,000—or 46 percent—were women. The labor force had increased by 54 percent compared with its size in 1960, and the number of women workers more than doubled. About 88 percent of the workers were employed in manufacturing; the remaining 12 percent were engaged in mining and energy production. Production of capital goods provided employment for 52.5 percent of the workers, and consumer goods industries absorbed the remainder. One-fourth of the labor force was concentrated in machine building and metalworking, and another one-fourth was occupied in food processing and textile production (see Organization and Structure, this ch.).

By far the largest proportion of women workers—26 percent of their total number—were employed in the textiles and clothing branches of industry, where they constituted 77 percent of total employment. Women constituted the majority of workers in food processing—53 percent—and accounted for 21 percent of the workers in machine building and metalworking. Substantial numbers of women were also employed in chemical and rubber plants, in logging and woodworking, and in the production of leather shoes and furs. Four-fifths of all women working in industry were in blue-collar jobs.

According to official statistics, 95 percent of the workers in 1971 were directly engaged in production; the rest were employed in various auxiliary occupations, such as maintenance and warehousing. Yet in outlining means for raising industrial labor productivity in the fall of 1972, the minister of labor and social welfare included as an objective a reduction in the proportion of auxiliary personnel to about 30 or 35 percent of the number of production workers in industry. About 17 percent of the production workers were in white-collar jobs; information on the total number of white-collar workers has not been published.

The majority of industrial workers are paid on a piecework basis, but the importance of piecework has been declining and has varied widely among industrial branches. In 1971 almost 62 percent of the workers were paid on this basis—a significantly smaller proportion than the 80 percent of workers remunerated in this manner in 1957. The proportion of workers employed on the piecework basis in 1971 was highest in the manufacture of clothing—89.5 percent—and lowest in the production of coal and petroleum—25.2 percent. In construction, 84.6 percent of the workers were paid on the piecework basis.

The average annual wage of all industrial workers in 1971 was 1,526 leva, compared to an average of 962 leva in 1960. On the whole, wages of production workers were somewhat higher than wages of auxiliary personnel, and the pay of white-collar production workers was higher than that of blue-collar workers. The average wage of workers in capital goods industries was 21 percent higher than the wage of workers in consumer goods industries. The wage was highest in mining and lowest in manufacturing. Within the state industrial branches, average annual wages ranged from 2,009 leva in the production of coal and petroleum to 1,196 leva in the manufacture of clothing. Wages in collective industry were generally lower than in state industry; the difference between the average annual wages in these sectors was 12 percent.

Industrial productivity and growth have suffered from a shortage of trained workers and technical personnel. The supply of skilled workers in the fall of 1972 was reported to be only half the number needed to fill available positions. Responsibility for this situation has been placed, in part, on the lack of coordination between the industrial ministries and the Ministry of National Education concerning technical and vocational training programs. There has been a pronounced disproportion in the numbers of trainees in the various technical specialities, and technical training generally has not been up to the level demanded by modern technology. Enterprises themselves have been slow in undertaking to train their own workers. The scarcity of skilled personnel has been accentuated by the export of trained workers to the Soviet Union to help develop the exportation of mineral and timber resources in return for raw material imports.

Poor labor discipline and excessive labor turnover have aggravated the shortage of skilled workers. The turnover has been particularly high among younger workers. Dissatisfaction with the job, or with living and transportation conditions, and the search for better pay have been cited as the main reasons for the turnover. Progressively severe measures have been introduced to enforce stricter labor discipline, but their effectiveness has been weakened by lax application. One of these measures concerning movement of labor gave workers the right to quit their jobs freely but stipulated that any worker seeking reemployment had to do so through district labor bureaus set up for that purpose. The bureaus would direct the job applicants to industries and positions where labor was most urgently needed. Because of the shortage of skilled labor, however, enterprise managers continued to hire new labor without regard to the requirements of the law.

The shortage of adequately trained personnel adversely affects the utilization of available capacity; it entails frequent breakdowns of machinery and inhibits multishift operation of plants. More than 20 percent of worktime is usually lost through idling, and equipment is used at no more than 50 to 60 percent of capacity. New plants completed in 1967 had not reached full production in 1972. Productivity has also been kept low by the lack of mechanization of auxiliary activities, such as loading and unloading, inter- and intrashop transport, and warehousing. In 1972 the minister of labor and social welfare stated that labor productivity in Bulgarian metallurgy was only half as high as in some of the advanced industrial states.

The presence of unemployment has never been officially admitted, but a certain degree of unemployment and underemployment, nevertheless, exists in several rural areas of the country. Recognition of this fact was evident in the decision of the BKP Central Committee plenum, published in March 1970, on the territorial redistribution of production forces (relocation of industry) and in subsequent economic studies concerning this subject.

PRODUCTION

Gross industrial output amounted to about 13.9 billion leva in 1970 and reached 15 billion leva in 1971. According to official data, industrial output more than tripled in the 1960-71 period. The high average annual growth rate of 11.1 percent was accounted for, in part, by the low initial level of industrial development, as a result of which relatively small absolute increases in output were equivalent to high percentage rates of growth. The contribution of industry to national income (net material product) rose from 46 percent in 1960 to 50 percent in 1969 but declined to 49 percent in 1970.

The most rapid growth occurred in basic industries that were given priority in the allocation of investment and labor. Production of the iron and steel industry rose almost ninefold, and the output of fuels, chemicals, and rubber increased more than sixfold. The output of machine building and metalworking industries increased 5-½ times, and the production of electric power, building materials, and cellulose and paper rose about fourfold. Preferential development of basic industries continued through 1972.

The lowest growth rates among basic industries were attained by the timber and woodworking industry and nonferrous metallurgy. Some foreign observers have wondered when the available nonferrous ore reserves have not been exploited more intensively. As for timber production, its volume has been restricted by the limitation of forest resources. Production by consumer goods industries generally increased by from 2.1 to 2.7 times, except for glass and porcelain wares, the output of which rose almost fivefold.

By far the most important industries in terms of output value in 1970 were food processing, and machine building and metalworking; these industries accounted for 25.4 and 20.2 percent of total output, respectively. Next in importance, with 9.1 percent and 7.5 percent of the total were the textile and the chemical and rubber industries. The output of the clothing industry—4.9 percent of total output—surpassed the production of fuels. The contributions of other industries to the total industrial output ranged from 0.9 to 3.7 percent. The structure of industrial output in value terms reflects, in part, the system of prices used in valuing the output.

Although the country's industrial development has had a history of only two decades, industry produces a wide variety of industrial and consumer products, including machine tools, ships, computers, automatic telephone exchanges, and television sets (see table 20). Bulgaria was also reported to possess the largest plant in Europe, and second largest in the world, for the production of electric forklifts and similar industrial vehicles. The quality of many products, however, though improving, has not measured up to average world standards. In 1972 the chairman of the Administration for Quality Standardization, and Metrology stated that his organization was confronted with a difficult long-term task of developing an effective quality control system and of catching up and keeping pace with the constantly rising world quality standards. In his view, attainment of these goals required a fundamental improvement of domestic quality standards, effective organizational and technical measures, well-conceived incentives, and an enormous amount of indoctrination of the personnel involved in production. The chairman was confident, nevertheless, that the country's industry would eventually outstrip the qualitative standards of developed industrial nations in the same way that it had succeeded in outstripping these nations' industries with regard to quantitative growth.

Table 20. Output of Selected Industrial Products in Bulgaria, Selected Years, 1960-71