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Initial Attitudes Towards Mass Privatization, December 1995
 

Vitosha Research conducted a social survey to register the attitude of the Bulgarian populace towards mass privatization on the eve of its actual start. The data was collected in November 1995. The survey method was the standardized face-to-face interview. The sample size is 2652 and is representative for the population of Bulgaria aged 18 to 60. The sample is representative separately for the population of Sofia (N = 727), Plovdiv (N = 920) and Varna (N = 967) in the above mentioned age interval. This design of the first quantitative survey was preferred to the national representative sample, because according to preliminary data, information residents in small towns and villages had about the forthcoming mass privatization was extremely low.

The conducted survey is the first in a series of projects which aim to study the problems of privatization and economic reforms in Bulgaria. Basic problems which were revealed in the survey include:

  1. The level of information the populace has about the Government's plan for mass privatization.
  2. The Bulgarian people's readiness to participate in the mass privatization.
  3. Their estimation of probable consequences from mass privatization.
  4. People's readiness to entrust their privatization bonds to be invested by privatization funds.
  5. The population's level of trust in the financial institutions connected with the mass privatization.

The results of the survey can be summarized as follows:

  • As a whole, the level of information the population has about the mass privatization is relatively low. However, in comparison with preceding surveys we now have a trend towards heightening the level of information. This tendency could be explained with the more frequent discussion of mass privatization in the mass media. However, it is obvious that the majority of people still do not consider themselves to be a part of the privatization process, and thus it is still in the periphery of mass awareness.
  • Compared with the level of information people have, the readiness for participation in the mass privatization is relatively high. A very strong relationship exists between the information about the mass privatization and the readiness to buy privatization bonds: the greater the awareness about the process, the higher the probability of participation in the mass privatization.
  • The relatively low level of information about the bond mass privatization as a whole and the difficulties in foreseeing the course and consequences of the process are making many people skeptical about the overall results which could be expected. A significant number of people are convinced that the mass privatization is very likely to be a hidden process, over which Bulgarian society will not be able to exercise sufficient control.
  • One of the aspects of participation in the process of mass privatization is to entrust the privatization bonds to be managed by investment funds. People have a rather negative attitude to the management of privatization bonds by financial institutions. The popularity of having investment funds as financial institutions managing the privatization bonds is significantly lower than that of banks.

Vitosha Research conducted a social survey to register the attitude of the Bulgarian populace towards mass privatization on the eve of its actual start. The data was collected in November 1995. The survey method was the standardized face-to-face interview. The sample size is 2652 and is representative for the population of Bulgaria aged 18 to 60. The sample is representative separately for the population of Sofia (N = 727), Plovdiv (N = 920) and Varna (N = 967) in the above mentioned age interval.

The conducted survey is the first in a series of projects which aim to study the problems of privatization and economic reforms in Bulgaria. Basic problems which were revealed in the survey include:

  1. The level of information the populace has about the Government's plan for mass privatization.
  2. The Bulgarian people's readiness to participate in the mass privatization.
  3. Their estimation of probable consequences from mass privatization.
  4. People's readiness to entrust their privatization bonds to be invested by privatization funds.
  5. The population's level of trust in the financial institutions connected with the mass privatization.


1. Level of information about the Governmental project of mass privatization

As a whole, the level of information the population has about the mass privatization is relatively low. (Graph 1).

Graph 1:
Level of information about the mass privatization


However, in comparison with preceding surveys we now have a trend towards heightening the level of information. This tendency could be explained with the more frequent discussion of mass privatization in the mass media. However, it is obvious that the majority of people still do not consider themselves to be a part of the privatization process, and thus it is still in the periphery of mass awareness.

The level of information about the mass privatization in different social-demographic groups varies (Table 1). These findings are summarized as follows:

  • The level of information is highest for the respondents with university education and lowest for people with primary and basic education.

  • The most well informed are people of middle age - 30-49 years old.

  • In terms of social-professional groups, the most well informed are managers and civil servants. The awareness with the Governmental project is lowest for students, housewives and the unemployed.


Table 1:
Level of information about mass privatization by social-demographic groups

 


+---------------------+---------------------------------------+-------+


|                     |Information about mass privatization   | Total |


|                     |                                       |       |


|                     +-------+-------+-------+-------+-------+       |


|                     |I know |I know |Acquain| Not   |  No   |       |


|                     |nothing|  it   |ted in |interes|answer |       |


|                     |       |exists |general|ted    |       |       |


+---------------------+-------+-------+-------+-------+-------+-------+


|Age                  |       |       |       |       |       |       |


|18-29                |  22.8%|  46.6%|  23.1%|   7.1%|    .3%| 100.0%|


|30-39                |  14.8%|  44.5%|  33.7%|   6.7%|    .3%| 100.0%|


|40-49                |  13.5%|  44.8%|  33.7%|   7.2%|    .8%| 100.0%|


|50+                  |  14.9%|  50.0%|  27.5%|   6.6%|   1.0%| 100.0%|


+---------------------+-------+-------+-------+-------+-------+-------+


|Family per member    |       |       |       |       |       |       |


| income              |       |       |       |       |       |       |


|Up to 2200           |  29.1%|  42.6%|  17.4%|   9.6%|   1.3%| 100.0%|


|2201-3000            |  17.7%|  47.3%|  27.5%|   6.7%|    .8%| 100.0%|


|3001-4000            |   9.9%|  48.1%|  34.1%|   7.6%|    .2%| 100.0%|


|4001-5000            |  10.5%|  51.2%|  32.7%|   5.6%|    .0%| 100.0%|


|Over 5000            |  12.6%|  42.2%|  38.9%|   5.9%|    .4%| 100.0%|


+---------------------+-------+-------+-------+-------+-------+-------+


|Education            |       |       |       |       |       |       |


|Primary              |  67.6%|  13.5%|   5.4%|  10.8%|   2.7%| 100.0%|


|Basic                |  34.0%|  44.9%|  15.0%|   4.9%|   1.2%| 100.0%|


|Secondary/Semi-higher|  16.0%|  50.7%|  25.0%|   7.9%|    .5%| 100.0%|


|Higher               |   5.6%|  35.9%|  52.7%|   5.1%|    .7%| 100.0%|


+---------------------+-------+-------+-------+-------+-------+-------+


|Occupation           |       |       |       |       |       |       |


|Managers             |   6.6%|  40.2%|  48.8%|   4.1%|    .2%| 100.0%|


|Workers              |  17.8%|  51.0%|  23.7%|   7.0%|    .5%| 100.0%|


|Civil servants       |  10.0%|  41.4%|  40.5%|   7.7%|    .5%| 100.0%|


|Stud/Housewife/Unempl|  22.9%|  45.4%|  22.5%|   8.5%|    .7%| 100.0%|


|Pensioner            |  19.7%|  49.0%|  21.6%|   8.7%|   1.0%| 100.0%|


|Other                |  15.9%|  41.7%|  34.1%|   6.8%|   1.5%| 100.0%|


+---------------------+-------+-------+-------+-------+-------+-------+


2. Readiness for participation in the mass privatization
Compared with the level of information people have, the readiness for participation in the mass privatization is relatively high (Graph 2).

Graph 2:
Readiness for taking part in the mass privatization




Varying levels of readiness for participating mass privatization exist among different social-demographic groups. The data, showing this relationship, is presented in Table 2 and is summarized as follows:
  • The readiness for taking part in mass privatization is highest among people with university education and lowest among respondents with primary and basic education.
  • In terms of social-professional groups, the highest level of readiness is observed in those groups for which a high level of interest in mass privatization would be expected: managers, civil servants and workers.
  • In terms of income groups the highest relative share of people ready to buy privatization bonds are those with household income per member above BGL 4000.

Table 2:
Readiness for taking part in mass privatization by social-demographic characteristics




+-----------------+---------------------------------------+-------+


|                 |     Would you make use of             | Total |


|                 |     privatization bonds               |       |


|                 +-------+-------+-------+-------+-------+       |


|                 |  Yes  |Hesita |  No   | Don't |  No   |       |


|                 |       |tion   |       | know  |answer |       |


|                 |       |       |       |       |       |       |


+-----------------+-------+-------+-------+-------+-------+-------+


|Age              |       |       |       |       |       |       |


|18-29            |  37.6%|  19.5%|  29.1%|  13.2%|    .7%| 100.0%|


|30-39            |  41.1%|  20.6%|  27.4%|   9.1%|   1.8%| 100.0%|


|40-49            |  41.2%|  20.9%|  27.6%|   9.5%|    .9%| 100.0%|


|50+              |  36.1%|  16.8%|  34.7%|  10.7%|   1.7%| 100.0%|


+-----------------+-------+-------+-------+-------+-------+-------+


|Family per member|       |       |       |       |       |       |


| income          |       |       |       |       |       |       |


|Up to 2200       |  28.4%|  18.3%|  34.2%|  16.4%|   2.7%| 100.0%|


|2201-3000        |  33.5%|  19.0%|  34.4%|  11.8%|   1.2%| 100.0%|


|3001-4000        |  39.5%|  21.9%|  29.2%|   9.3%|    .0%| 100.0%|


|4001-5000        |  48.9%|  20.8%|  23.0%|   6.4%|   1.0%| 100.0%|


|Over 5000        |  49.0%|  18.5%|  24.6%|   7.3%|    .6%| 100.0%|


+-----------------+-------+-------+-------+-------+-------+-------+


|Education        |       |       |       |       |       |       |


|Primary          |  22.2%|   5.6%|  33.3%|  38.9%|    .0%| 100.0%|


|Basic            |  26.4%|  15.4%|  38.2%|  17.5%|   2.4%| 100.0%|


|Secon/Semi-higher|  37.0%|  19.6%|  31.7%|  10.5%|   1.1%| 100.0%|


|Higher           |  52.1%|  22.2%|  19.7%|   5.0%|   1.0%| 100.0%|


+-----------------+-------+-------+-------+-------+-------+-------+


|Occupation       |       |       |       |       |       |       |


|Managers         |  50.1%|  21.1%|  23.0%|   4.8%|   1.0%| 100.0%|


|Workers          |  37.0%|  21.8%|  29.4%|  10.7%|   1.0%| 100.0%|


|Civil servants   |  43.2%|  23.2%|  23.2%|   8.6%|   1.8%| 100.0%|


|Stud/Hwife/Unempl|  36.2%|  16.5%|  32.8%|  13.6%|   1.0%| 100.0%|


|Pensioner        |  25.5%|  14.9%|  42.8%|  15.4%|   1.4%| 100.0%|


|Other            |  46.2%|  11.4%|  30.3%|  10.6%|   1.5%| 100.0%|


+-----------------+-------+-------+-------+-------+-------+-------+



As expected, a very strong relationship exists between the level of awareness of the mass privatization and the readiness to buy privatization bonds: the higher the self-assessment of one's knowledge of the mass privatization scheme, the greater the interest in participation in the process (Graph 3).

Graph 3:
Readiness for taking part in mass privatization by self-assessment about the level of information




3. Probable consequences of mass privatization

The relatively low level of information about the bond mass privatization as a whole and the difficulties in foreseeing the course and consequences of the process are making many people skeptical about the overall results which could be expected. From this point of view the most important problem of mass privatization is: who (individuals, groups or institutions) will benefit from the process. Such a question/problem should not be perceived literally. The assessment of that who is most likely to win from mass privatization is a sign of the way people are thinking about mass privatization, in which way they perceive its goals, objectives, probable results and legitimacy.
The data collected in November 1995 are quite similar to data from preceding surveys and shows the "dirty money" owners as the group which will benefit most from mass privatization (Graph 4). A significant number of people are convinced that mass privatization is very likely to be a hidden process, over which Bulgarian society will not be able to exercise sufficient control.

Graph 4:
Assessment of probable winners from mass privatization (%)



The opinions given as to those most likely to benefit from the mass privatization process are shown according to the social-demographic characteristics in Table 3 and are summarized as follows:
  • People with lower education generally face greater difficulties in identifying potential consequences from the mass privatization - 64.9 % of the respondents with primary school education were unable to answer that question.
  • In terms of occupation, age and household income per member, the respondents who are most informed and ready to participate in the mass privatization are those who think the "dirty money" owners will be the ones who would benefit most.

Table 3:
Opinions about the "winners" from mass privatization




+-----------------+--------------------------------------------------------------------------+------+


|                 |                 Who will benefit from the mass privatization             | Total|


|                 +------+-----+------+------+------+------+------+------+------+------+-----+      |


|                 | Every|The  |State |"Dirty|Priva-|Politi|The   |  Work|Nobody|  Do  | No  |      |


|                 |body  |banks|admini|money"|  te  |cians |foreig| ers  | will |not   |answer|     |


|                 |will  |     |strati|owners|  busi|      |ners  |      |  win |know  |/Refu-|     |


|                 |win   |     |on    |      |ness  |      |      |      |      |      |sal  |      |


+-----------------+------+-----+------+------+------+------+------+------+------+------+-----+------+


|Age              |      |     |      |      |      |      |      |      |      |      |     |      |


|18-29            |  8.7%| 6.0%|  8.0%| 24.3%|  6.8%|  6.5%|  2.2%|  5.7%|  2.2%| 27.4%| 2.1%|100.0%|


|30-39            |  8.2%| 7.4%|  9.0%| 28.9%|  6.1%|  6.3%|  1.5%|  5.2%|  1.3%| 22.8%| 3.2%|100.0%|


|40-49            |  7.4%| 9.6%|  9.3%| 30.2%|  6.4%|  5.7%|  1.4%|  5.1%|  2.3%| 19.7%| 2.9%|100.0%|


|50+              |  6.7%| 7.4%|  7.5%| 33.2%|  6.0%|  4.6%|  1.9%|  3.8%|  2.4%| 23.4%| 3.2%|100.0%|


+-----------------+------+-----+------+------+------+------+------+------+------+------+-----+------+


|Family per       |      |     |      |      |      |      |      |      |      |      |     |      |


| member income   |      |     |      |      |      |      |      |      |      |      |     |      |


|Up to 2200       |  3.8%| 6.1%|  8.2%| 24.4%|  7.6%|  6.1%|  1.3%|  5.1%|  2.9%| 30.5%| 4.0%|100.0%|


|2201-3000        |  5.9%| 8.8%|  9.5%| 28.8%|  4.2%|  6.4%|  2.8%|  4.7%|  1.6%| 24.4%| 2.8%|100.0%|


|3001-4000        |  8.4%| 8.0%|  8.2%| 32.9%|  7.3%|  6.3%|  1.0%|  5.7%|  1.7%| 18.2%| 2.3%|100.0%|


|4001-5000        |  8.4%| 6.7%|  7.4%| 33.0%|  7.1%|  5.2%|  2.0%|  4.2%|  1.5%| 22.2%| 2.5%|100.0%|


|Over 5000        | 12.1%| 8.2%|  9.5%| 28.6%|  6.8%|  4.7%|  1.4%|  5.6%|  2.7%| 18.7%| 1.6%|100.0%|


+-----------------+------+-----+------+------+------+------+------+------+------+------+-----+------+


|Education        |      |     |      |      |      |      |      |      |      |      |     |      |


|Primary          |   .0%| 8.1%|   .0%|  8.1%|  2.7%|  5.4%|  2.7%|   .0%|  2.7%| 64.9%| 5.4%|100.0%|


|Basic            |  4.9%| 6.9%| 11.0%| 16.7%|  4.9%|  6.9%|  1.6%|  2.4%|  2.8%| 37.4%| 4.5%|100.0%|


|Secon/Semi-higher|  6.5%| 7.1%|  8.3%| 31.5%|  6.8%|  5.8%|  2.1%|  4.9%|  2.1%| 22.2%| 2.8%|100.0%|


|Higher           | 13.0%| 9.8%|  8.4%| 29.7%|  6.0%|  5.1%|   .7%|  6.3%|  1.7%| 17.0%| 2.2%|100.0%|


+-----------------+------+-----+------+------+------+------+------+------+------+------+-----+------+


|Occupation       |      |     |      |      |      |      |      |      |      |      |     |      |


|Managers         | 10.3%| 9.9%|  8.6%| 32.4%|  5.5%|  4.6%|   .8%|  6.1%|  1.1%| 17.0%| 3.8%|100.0%|


|Workers          |  5.2%| 6.4%| 10.1%| 28.3%|  7.2%|  6.1%|  2.1%|  5.2%|  2.9%| 24.0%| 2.5%|100.0%|


|Civil servants   | 13.2%| 8.2%|  8.2%| 29.2%|  4.6%|  3.7%|  2.3%|  5.9%|  1.8%| 19.6%| 3.2%|100.0%|


|Stud/Hwife/Unempl|  7.7%| 7.6%|  7.4%| 26.5%|  7.4%|  7.6%|  1.9%|  3.8%|  1.7%| 26.3%| 2.2%|100.0%|


|Pensioner        |  5.3%| 6.8%|  5.3%| 33.5%|  4.4%|  4.4%|  1.0%|  2.9%|  2.4%| 30.1%| 3.9%|100.0%|


|Other            | 11.5%| 8.5%|  7.7%| 32.3%|  4.6%|  4.6%|  2.3%|  3.8%|  1.5%| 21.5%| 1.5%|100.0%|


+-----------------+------+-----+------+------+------+------+------+------+------+------+-----+------+



4. Willingness to entrust the management of the privatization bonds to investment funds

One of the aspects of participation in the process of mass privatization is to entrust the privatization bonds to be managed by investment funds. The most frequent response was from those respondents who are not amenable to this opportunity (Graph 5).

Graph 5:
Willingness to entrust the management of the privatization bonds to investment funds



The answers of respondents, in terms of age, level of education, household income per member and occupation exhibit a common tendency. In all groups the share of those who would not entrust their privatization bonds to management by investment funds, is the highest. As would be expected, groups which have a direct interest in the privatization process show a greater willingness to submit their bonds to an investment fund. The share of respondents who have no information about the process, and that is why they do not know whether they would prefer that opportunity for participation in mass privatization, is high, too.


5. Confidence in financial institutions as prospective participants in time of mass privatization

The unwillingness to submit purchased privatization bonds to investment funds is confirmed by the response to the question: "Would you let one of the following institutions manage your privatization bonds?". The responses are presented in Table 4.

Table 4:
Willingness of respondents to submit their privatization bonds for management to one of the following financial institutions (%)

 
Yes
No
Will not participate
State Savings Bank
55.0
30.3
14.7
First Private Bank
32.7
51.9
15.4
United Bulgarian Bank
24.1
60.1
15.8
"Mollov" Commercial Bank
15.4
68.4
16.2
Post Bank
15.3
68.7
16.0
European Investment Fund
13.2
70.0
16.9
Tourist Sport Bank (TS Bank)
12.6
71.3
16.9
Investment Fund "Razvitie"
11.8
71.3
16.9
"Biochim" Commercial Bank
11.7
71.2
16.1
Bulgarian-American Investment Fund
6.6
76.5
16.9
"Chimimport" Investment Fund
4.5
78.6
16.9
First Investment Fund
3.4
79.6
15.8

The Bulgarian public has a rather negative attitude towards the management of privatization bonds by financial institutions:
  • Banks are trusted more than investment funds. The State Savings Bank enjoys the highest degree of confidence.
  • The popularity of investment funds as financial institutions handling privatization bonds is much lower than that of banks. The "Razvitie" Investment Fund and the European Investment Fund enjoy a relatively high popularity.
  • The First Investment Fund, the "Chimimport" Investment Fund and Bulgarian-American Investment Fund rank lowest in popularity.
In order to gauge the knowledge level of the respondents about the existing investment funds, the interview included non-existent institutions such as the European Investment Fund, in which a relatively large share of the respondents expressed confidence. This suggests only one possibility for manipulating the public - advertising the titles of high quality institutions.
The confidence in different financial institutions in Sofia, Plovdiv and Varna shows different dimensions. The specific configuration is shown in Table 5 and is summarized as follows:
  • State Savings Bank, First Private Bank and United Bulgarian Bank are among the most trusted. The confidence in these institutions is higher in Varna and Plovdiv compared to Sofia.
  • The respondents in Plovdiv show less interest in the mass privatization process compared to those in Sofia and Varna.
  • In general, the respondents in Plovdiv and Varna are less inclined to submit their privatization bonds in the newly established investment funds than the respondents in Sofia.

Table 5:
Willingness of respondents to submit their privatization bonds for management to investment funds
in Sofia, Plovdiv and Varna


+---------------------+-----------------------------------------------------------------------+


|                     |               Name of the city                                        |


+---------------------+-----------------------+-----------------------+-----------------------+


|                     |         Sofia         |       Plovdiv         |         Varna         |


+---------------------+-------+-------+-------+-------+-------+-------+-------+-------+-------+


|                     |  Yes  |  No   |Won't  |  Yes  |  No   | Won't |  Yes  |  No   | Won't |


|                     |       |       |partici|       |       |partici|       |       |partici|


|                     |       |       |pate   |       |       |pate   |       |       |pate   |


+---------------------+-------+-------+-------+-------+-------+-------+-------+-------+-------+


|First Private Bank   |   8.8%|  14.1%|   3.0%|  11.2%|  19.3%|   8.1%|  12.7%|  18.5%|   4.4%|


+---------------------+-------+-------+-------+-------+-------+-------+-------+-------+-------+


|Post Bank            |   4.9%|  18.7%|   3.1%|   5.7%|  24.8%|   8.2%|   4.7%|  25.2%|   4.8%|


+---------------------+-------+-------+-------+-------+-------+-------+-------+-------+-------+


|State Savings Bank   |  12.1 |  11.0%|   2.9%|  18.0%|  11.9%|   7.7%|  24.8%|   7.4%|   4.1%|


+---------------------+-------+-------+-------+-------+-------+-------+-------+-------+-------+


|Investment Fund      |       |       |       |       |       |       |       |       |       |


| "Razvitie"          |   3.0%|  20.4%|   3.3%|   3.5%|  26.7%|   8.6%|   5.4%|  24.2%|   5.0%|


+---------------------+-------+-------+-------+-------+-------+-------+-------+-------+-------+


|Bulgarian-American   |       |       |       |       |       |       |       |       |       |


| Investment Fund     |   1.6%|  22.1%|   3.3%|   2.6%|  26.8%|   8.6%|   2.4%|  27.5%|   5.0%|


+---------------------+-------+-------+-------+-------+-------+-------+-------+-------+-------+


|Investment Fund      |       |       |       |       |       |       |       |       |       |


| "Chimimport"        |   1.3%|  22.3%|   3.4%|   1.7%|  27.9%|   8.5%|   1.5%|  28.3%|   5.0%|


+---------------------+-------+-------+-------+-------+-------+-------+-------+-------+-------+


|European Investment  |       |       |       |       |       |       |       |       |       |


| Fund                |   3.9%|  19.6%|   3.3%|   4.0%|  25.5%|   8.6%|   5.3%|  24.8%|   5.1%|


+---------------------+-------+-------+-------+-------+-------+-------+-------+-------+-------+


|"Mollov" Bank        |   4.3%|  19.0%|   3.1%|   5.8%|  24.6%|   8.1%|   5.4%|  24.7%|   4.9%|


+---------------------+-------+-------+-------+-------+-------+-------+-------+-------+-------+


|Tourist Sport Bank   |   3.5%|  19.7%|   3.1%|   5.6%|  25.0%|   8.1%|   3.5%|  26.6%|   4.8%|


+---------------------+-------+-------+-------+-------+-------+-------+-------+-------+-------+


|First Investment Fund|   1.5%|  22.3%|   3.3%|    .8%|  29.2%|   8.5%|   1.2%|  28.1%|   5.2%|


+---------------------+-------+-------+-------+-------+-------+-------+-------+-------+-------+


|United Bulgarian     |       |       |       |       |       |       |       |       |       |


| Bank                |   5.6%|  17.8%|   3.1%|   7.6%|  22.5%|   8.1%|  10.8%|  19.9%|   4.5%|


+---------------------+-------+-------+-------+-------+-------+-------+-------+-------+-------+


|"Biochim" Bank       |   2.6%|  20.4%|   3.2%|   3.2%|  27.1%|   8.2%|   6.0%|  24.5%|   4.8%|


+---------------------+-------+-------+-------+-------+-------+-------+-------+-------+-------+
 

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