According to economic think-tank Industry Watch, Bulgaria could end up spending close to BGN 1 bil this year if it meets all the wage hikes demands of the employees in state-run companies or local authorities.

The payroll of the state and municipal employees is 240,000 and most of them are employed in sectors like utilities, transport and mining, that badly need restructuring to become more efficient, Industry Watch said.

A wage hike of only 10% across the board would cost the Bulgarian budget BGN 190 mil, but most of the demands range between 30%-50%, which would result in additional expenditures of BGN 570-950 mil, according to the think-tank's calculations.

The cabinet is ready to cover the losses with state subsidies, repeating the pattern of the previous Socialist cabinet, which resulted in an economic crisis and street riots in January 2007, said Industry Watch.