Belarus is ready to relax business environment to boost employment

April 17, 2017 13:07

Drafts amendments envisaging simplification of rules for doing business have been published in Belarus. If adopted, the amendments would introduce a notification procedure for starting some kind of businesses; a moratorium on new taxes and fees would be announced for 2018-2020; proposals to further reduce the tax burden on business would be developed. The amendments are likely to be adopted following consultations with business representatives. If adopted, the amendments could lead to an increase in new regional SMEs in trade, catering and agro-ecotourism. In the short-term, the amendments are unlikely to have a significant impact on the labour market. In addition, a reduction in the number of audits and inspections would not affect government’s plans for listing penalties in the budget. Attempts to liberalize business could be linked to the inability of the state bodies to ensure full employment in Belarus. By relaxing business environment, the state is attempting to stimulate self-employment among the population in order to reduce the burden on the budget in anticipation of further layoffs at state enterprises.

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Erik Sigerud, Post Mortem, 2009, oil and vinyl on canvas, 74.8” x 177.” Courtesy of the artist.

Amid budgetary cuts on social protection, the Belarusian public sector is experiencing a management crisis and a balance shift in the state resource redistribution system. The authorities are forced to revise their most unpopular decisions during the implementation due to the pressure from affected social groups. The state is unlikely to oppose to some civil society and opposition organisations in strengthening their role in society in order to retain touch with the population and to be able to respond to the most harsh criticism of state initiatives.

The Architecture and Construction Ministry has acknowledged that the decree No 585 on assistance to large and young families in building and buying housing was prematurely rescinded.

The authorities are often forced to revise their decisions on curtailing social assistance to different social groups during their implementation, without preliminary impact assessment and feedback from the population, so as they lead to the growth in social tension. Due to the centralised decision making, languishing state resources and the lack of public debate as a balancing instrument in issues related to social protection, the state administration is losing control of the population.

Perhaps, the compensatory mechanisms of the state apparatus lack the time to adjust to dwindling state resources for supporting the existing social model, even in a reduced form. The authorities have completely or partially paralysed operations of independent public institutions and representative bodies, through which they could monitor public moods and receive feedback from the population, such as local councils, the parliament, political parties and NGOs. Last year, under the pressure of the authorities, the last independent institute for measuring public sentiment, IISEPS, suspended operations.

President Lukashenka’s self-removal from the decision-making on current socio-economic issues, also could have affected the state apparatus’ operations. The president has always been very sensitive about adopting unpopular decisions which could lower his popular support, hence demanded a careful preliminary assessment of such decisions. However, recently, especially after the introduction of the tax on social dependants, the president has mainly focused on the foreign policy agenda.

Hence, a lacuna has formed in the state decision-making after the president reduced participation in the current socio-economic policy formation, which leads to an increase in manifestations of dysfunction in the public administration.