The government supports Lukashenko in wages growth

April 22, 2016 18:06

This year the Government of Belarus plans to increase the average wage in the industry up to $ 500, First Vice Premier Minister Vladimir Semashko told reporters in Minsk on March 21.

Comment

The Government simply repeats the main messages after Lukashenko to calm down the population. Lower standards of living and lower salaries amid rising prices cause serious discontent among the population. However, the government is aware that salaries cannot grow faster than the production rate. As a result, government officials say that “salaries will rise gently to keep them behind the production growth rates”. At the same time no one quotes the production growth rates (objectively not more than 2-3%), while talking about doubling of the salaries up to USD 500. This proves that the government is merely following the orders coming from the Lukashenko’s administration. First Vice-Premier Vladimir Semashko recently reiterated that Belarus had overcome the crisis. Such ungrounded complacency of the government can be costly for the economy by the end of the year. 

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Raising minimum wage in regions to BYN 1000 by late 2019 could prompt devaluation
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The country's leadership has instructed the local authorities to raise minimum wages at enterprises by the end of 2019 to BYN 1,000, which would lead to an increase in the average wage in the economy as a whole to BYN 1 500. The pace of wage growth in 2017 is insufficient to ensure payroll at BYN 1000 by late 2017 without manipulating statistical indicators. In order to fulfil the president’s order, the government would have to increase budgetary expenditures on wages in healthcare and education, enterprises – to carry out further layoffs and expand the practice of taking loans to pay wages and restrict investment in modernisation of fixed assets. In 2010, the artificial increase in wages led to a threefold devaluation in 2011, an increase in the average salary to BYN 1500 will not match the capabilities of the economy and would lead to yet another devaluation.