Belarusian industry to downsize workforce in 2015
Amid recession on the Russian market, lay-offs have become a major requirement for the survival of the domestic enterprises in 2015. In late March, official unemployment rate in Belarus reached 0.9%, a 73% increase compared with 2014. If Belarus wants to preserve the competitiveness of Belarusian produces, lay-offs should take a faster pace.
According to the Ministry of Labour and Social Protection, in late March, Belarus counted 39000 officially unemployed, which is 8.6% more compared with late February 2015. Over the past 12 months, the unemployment rate increased by 0.4%, while the number of unemployed – by 73%. In some Belarusian regions the unemployment has reached 1.7%. Official unemployment figures are 5-6 times lower as compared with the results of a sample survey of household held by the National Statistics Committee. It should be mentioned that unemployment benefits are extremely low – USD 14.5 per month in March 2015 and in order to receive it, one has to commit to community service.
Unemployment rates grow mainly due to lay-offs in the industry. In March 2015, 8000 industry workers lost their jobs. About 70,000 employees are working part-time. Industrial enterprises, in particular in machine-building, face problems with marketing of products on the Russian market and have to consider labour cuts. The World Bank estimates the excessive number of employees at state-owned enterprises at 10% of the current labour force. For instance, in late 2014 Belaruskali employed 18,000 people and Russian Uralkali – 11,000.
Allocations for wages and social needs account for about one-quarter in the economy cost structure. Downsizing is one of the few available ways for companies to reduce costs significantly. Some industrial enterprises have been ordered to downsize employees in 2015. For instance, one of the leading rubber producers in Belarus should be downsized by 850 people by the year-end.
The rise in unemployment is a consequence of economic problems in Belarus. All in all, by late 2015 70,000 – 80,000 industry workers may lose their jobs.
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.