70 000 new jobs unlikely to reduce unemployment in Belarus

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February 20, 2017 10:32

Over the past 12 months, unemployed in Belarus decreased in number by 3400 people amid 107 200 people being laid off. The Belarusian authorities used administrative means to alter employment indicators and demonstrate improvements on the labour market. New jobs in 2017 will be created by reorganising existing enterprises, while the overall employment in the economy is likely to reduce.

According to the Labour Ministry, as of February 1st, 2017, 39,900 people were registered as unemployed, which was 4 600 people more as compared with January 1st, 2017. The registered unemployment rate was 0.9% of the economically active population. Over the past 12 months, the number of unemployed in Belarus decreased by 3,400 thousand people, while in 2016, layoffs bypassed hires by 107 200 people at large and medium enterprises in Belarus.

In 2016, the unemployment rate reduced due to changes in registry methodology on the labour market. In 2016, the authorities introduced an unofficial limit on the number of unemployment registrations, and a requirement to confirm the unemployment status by doing paid work for at least one day per month. That said, the unemployment benefit is negligible - USD 11 per month as of December 2016. The unemployment status is only granted for 18 months, and the failure to fulfil the job-search requirements may strip the unemployed off unemployment benefits.

According to the 2016 government's plan, 50,000 new jobs should have been created in order to reduce tension on the labour market. In December 2016, the Government reported 54 000 new jobs, mainly in medicine, education and IT sectors. The majority of new jobs were created due to the reorganisation of pre-existing businesses, structural subdivisions of enterprises were transformed into separate legal entities, which hired most former employees. Some workers were laid off during the reorganisation to optimise production costs.

The government has tasked to create at least 70,000 new jobs in 2017. Investment climate in Belarus does not suggest a massive inflow of investors in the short-term, most businesses lack the financial resources to invest in new facilities, which could lead to an increase in demand for labour force. Amid likely further recession in the economy, new jobs are likely to be created following the scheme from 2016, and enterprises may lay off 6% - 10% of employees depending on the economic activity.

Overall, reduced official unemployment rate does not reflect the real labour market situation and is a mere declaration. Amid the absence of sufficient domestic resources, the task to create 70 000 new jobs could be fulfilled through the reorganisation of existing enterprises, during which most employees would rather be laid off.

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