c. _Gini Index of equivalized disposable income, Bulgaria, 2009-2021_ d. _Gini Index of equivalized disposable income, EU27, 2021_ <!-- Start of picture text --> 43.0<br>45.0<br>38.4<br>41.0 40.0<br>39.0 35.0 29.6<br>37.0 30.0<br>25.0<br>35.0<br>20.0<br>33.0<br>15.0<br>31.0 10.0<br>29.0 5.0<br>27.0 0.0<br>25.0<br>Bulgaria EU-27<br>Gini Index Ginin Index<br>SlovakiaSloveniaCzechiaBelgiumNetherlandsPolandFinland HungarySwedenDenmarkAustriaIrelandCroatia GermanyCyprusLuxembourg France Malta GreeceEstoniaPortugalSpainRomaniaItalyLatviaLithuaniaBulgaria<br>Euro area – 20 ...<br>European Union<br><!-- End of picture text --> Source: Panel a and b: World Bank estimates based on 2007-2021 EUSILC. The income year is reported here, not the survey year. Panel c and d: Eurostat.

Note: For panels a and b figures, 2021 estimates are still unavailable. All figures reflect income year, not survey year.

**Moreover, while there has been a slight reduction in inequality in recent years, the country still retained**

**the highest income inequality among EU countries in 2021.** Between 2015 and 2018, income inequality in the country increased, but it has been decreasing since then. The per adult equivalent Gini Index, a measure of income inequality, rose from 37.7 in the income year 2015 to 40.8 in the income year 2018, in contrast to the overall stable trends of inequality among EU countries (figure 1, panel c). Nevertheless, while there has been a recent decline in income inequality, the level of inequality remains persistently high, positioning the country as the most unequal within the European Union (figure 1, panel d). Despite experiencing strong income growth among poorer households, this growth has not been inclusive enough to narrow the income gap. The at-risk-of-poverty rate (AROP), which reflects income inequality rather than absolute poverty, has shown an upward trend, with 22.9 percent of the population falling below the national poverty line in 2021 (income year), ranking one of the highest within the EU. Persistent disparities in labor market outcomes, insufficient coverage of the social protection system, and a fiscal system characterized by limited progressivity have all been identified as reasons for the persistently high inequality rates (Vaughan & Cabrera, 2022).

**Despite some policy initiatives at the EU and national level, child poverty is a significant issue in Bulgaria, reaching among the highest rates in the EU, with potential long-term implications.** The EU Strategy on the Rights of the Child and the European Child Guarantee is the main European Commission’s policy to protect children and ensure their rights are observed (UNICEF, 2022). Bulgaria has implemented various policies to address child poverty, including means-tested allowances, such as social assistance and child benefits, to protect the poor and those at risk of poverty (Tasseva, 2016). However, as of 2023, the National Strategy for Children has not been updated. The sustainable development goal (SDG) 1 includes a commitment "to reduce at least by half the proportion of men, women, and children of all ages living in poverty in all its dimensions by 2030 according to national definitions" (UNICEF, 2022). Bulgaria aims to reduce child poverty between 2015 and 2030 from 25.4% to 12.7%<sup>2</sup> , using as an indicator the AROP poverty rate for the population under 18 years, implying a substantial poverty reduction. Despite these

> 2 2015 is the survey year. This is measured with the at-risk of poverty rate, not anchored at a fix point in time.

3