ABSTRACT
This chapter examines the role of wage control in wage dynamics, and its impact on inflation in Bulgaria for the period from 1990-1993. It describes the introduction and development of the incomes policy in Bulgaria and describes its effect on the consumer price index. Bulgaria started to implement its liberalization and stabilization program under extremely unfavorable conditions. The main pillars of the Bulgarian stabilization program were restrictive monetary and fiscal policies, and an incomes policy that controlled the nominal wage bill for state enterprises and institutions. The conditions for a consensus and a successful incomes policy were relatively favorable in Bulgaria because of the uncertainty and high social homogeneity. Incomes policy continued to be an important instrument in the fight to control inflation and a factor for balancing real incomes, unemployment and inflation in the dominant public sector of the Bulgarian economy.
