Belarusian economy is unlikely to create enough jobs for all laid off workers in 2017
In 2016, 91000 people were laid off in Belarus, which is 1.5 times more than in 2015. The crisis in the economy led to layoffs in trade, construction and industry. The Belarusian economy is unable to create more jobs in the near future and those laid off are likely to join the grey market or look for jobs abroad.
According to the National Statistics Committee, in January - September 2016, 468 400 people were hired and 559 400 - laid off, meaning, that 91 000 people have lost jobs, which is 1.5 times more compared with 2015. Most layoffs were reported in industry, construction, wholesale and retail trade. Amid wage cuts, only two Belarusian regions reported more hires as compared with layoffs.
Partially, layoffs were due to natural demographic processes - those approaching the retirement age by 35 000 people pierced potential new employees in early 2016. However, the bulk of cuts in the economy were due to the growing economic crisis in Belarus. Retailers have faced with falling turnover and had to adjust their regional policy, abandoning loss-making facilities and activities. The construction sector was unable to find workload for workers amid a decline in the housing construction and a decline in investment in industrial fixed assets. Industry is attempting to optimise costs amid increasing competition, both on foreign and domestic markets, by laying off workers and redistributing responsibilities among the remaining employees.
In 2016, the budget sector stopped generating new jobs due to budget cuts. The IT sector is actively hiring, however, it is unable to provide jobs to all laid off workers due to the need to retrain them. The state-owned enterprises will be subject to audit to determine their real financial health, which may lead to a new wave of layoffs.
In the given circumstances, only foreign investment in various economic sectors could generate new jobs for the excess workforce. However, the investment climate in Belarus is unfavourable for foreign investors, there are no guarantees for the inviolability of private property and the government may suspend operations of any successful business at any time. The state will not make efforts to change and improve the business climate, therefore the excess workforce is likely to look for jobs abroad or join the grey economic sector.
Overall, mass layoffs in Belarus are the result of the ongoing recession. While looking for jobs, Belarusians are likely to consider the option of changing the country of residence or work out of sight of the authorities.
The Labour and the Tax Ministries are considering the possibility to include persons engaged in some economic activity without forming a legal entity in the social security system. When the decree No 337 comes into effect, the number of private entrepreneurs is likely to reduce due to the possibility of reducing the tax burden when switching to a tax payment as an individual. 95% of self-employed, including PE, pay insurance premiums on the basis of the minimum wage. The number of self-employed citizens is expected to increase, the number of insurance contributions to the pension system from PE will decrease, the number of citizens who will pay a fee to finance government spending will decrease by several tens. Self-employed citizens have the alternative not to pay social security fees and save resources for future pensions, which, given the gradual restriction by the state of pension requirements could be a more long-sighted option.