THE shadow economy still poses a threat to the developing economy of Bulgaria, according to recent research by employment experts and state officials.

"Acts by which employers obstruct labour inspections should be criminalised," General Labour Inspectorate (GLI) executive director Totyu Mladenov told a news conference last Friday. This could be achieved by amending the Penal Code, he said.

Obstructions to labour inspections have become more frequent. The past few months had seen 30 such cases, Mladenov said.

The National Social Security Institute (NSSI) has recommended that employers who fail to pay particularly large amounts of social security contributions should be jailed, NSSI head Yordan Hristoskov said.

In an attempt to curb the shadow economy, the GLI, the NSSI, and the General Tax Directorate have made joint inspections. They found 100 million leva in concealed incomes earned by 450 companies in 2000-2001, Chief Tax Director Nikolai Popov said.

The authorities expect to collect an additional 53 million leva in taxes, he said.

The inspectors focused their attention on companies where the declared contributory income base equalled the official minimum wage in the country. The real size of the wages was often concealed by providing advance pay, business trip accounts, and food.

A total of 1 321 375 employment contracts already had been registered with the NSSI as at March 27, 2003. The Institute had registered 3003 new social security contributors and suspected that, before registration, most of them had operated in the shadow economy, Hristoskov said.

As a result of the registration of employment contracts and the introduction of different contributory income thresholds for different economic sectors, social security revenue in January 2003 increased by 37.5 million leva from January 2002, and in February 2003 grew by 32.8 million leva, compared to February 2002.

The introduction of contributory income thresholds resulted in a 10 per cent rise in total contributory income in January 2003 from January 2002, and a 9.4 per cent increase in February 2003 from February 2002. The measures have also produced a 4 per cent increase in base wage rates.

In 2002 the General Labour Inspectorate found 178 violations involving the employment of minors, after inspections of 993 firms, said Dimitar Dimitrov of the GLI.

State Agency for Child Protection chairperson Shirin Mestan and GLI chief Mladenov last Friday signed an agreement on the occupational safety of minors.

Last year the labour inspectorate issued 2300 permissions for employment of people younger than 18. These were mainly in the tailoring industry, the hotel industry and the catering industry.

The two institutions agreed to work jointly for the development of a legislative basis guaranteeing the occupational safety of minors.

Child labour results in children dropping out of school, Mestan said. In 2002 the Agency for Child Protection found that 35 children were living on the stre-ets without their parents, while 550 had homes and families to which they returned at night, but roamed the streets during the day.