More wage cuts in Belarus
As of late August, the average wage in Belarus totalled less than USD 430. Wage cuts were due to negative trends in the Belarusian economy and on the Russian market. After elections, Belarusian enterprises may resume their lay-off policies and the gap between wages in Russia and Belarus may widen up to 25-30%.
According to the National Statistics Committee, the average monthly wage in Belarus in August was BYR 6,971 million, which is BYR 38,000 less compared with July 2015. This is the first reported wage cut in 2015. In US Dollar terms, wages in Belarus have fallen below USD 430 per month. The difference between the highest paid and the lowest paid jobs has increased. For instance, software developers are paid seven times better than house appliances repairers. In early 2015, this difference was 6.1 times.
Wage cuts only reflect the situation in the economy. GDP has fallen by 3.5%, industrial production has declined, the state budget is lacking funds to subsidise housing construction programmes, which is leading to a decrease in construction and installation works. Sanctions against Russia have reduced the investment potential of Russian companies, and falling oil prices have led to the sequestration of the Russian budget and reduction of subsidies to Russian farmers to purchase agricultural machinery, including that made in Belarus. The fall in global food prices has had a negative effect on the cost of meat and dairy supplies to Russia, prompting Belarusian producers to cut costs.
In the past, Belarusian workers responded to wage cuts with labour migration to Russia. However, in 2015, the average monthly wage in Russia fell below USD 500 and labour migration to Russia has lost its economic sense. In some areas, wages in Belarus are higher than in Russia. Amid considerable dependence of the Belarusian export on the Russian market, further convergence of wages in Belarus and Russia will reduce the competitiveness of Belarusian products. As a result, after the elections, Belarusian companies may be prompted to resume lay-offs and readjust wages if rouble is not devalued. The estimated average wage in Belarus would then be 75-70% of the average wage in Russia, i.e. USD 370- USD 380 per month.
Belarus’ high dependence on the Russian market has had a direct impact on the Belarusian labour market. The difference between wages in Russia and Belarus has reduced to 15%, leading to a deteriorated competitiveness of Belarusian products and further wage cuts in Belarus if rouble is not devalued.
Over the past year, military-political relations between Minsk and Kyiv have become complicated. Due to their high inertia and peculiarities, this downward trend would be extremely difficult to overcome.
The root cause of the crisis is the absence of a common political agenda in the Belarusian-Ukrainian relations. Minsk is looking for a market for Belarusian exports in Ukraine and offers its services as a negotiation platform for the settlement of the Russo-Ukrainian war, thereby hoping to avoid political issues in the dialogue with Kiev. Meanwhile, Ukraine is hoping for political support from Minsk in the confrontation with Moscow. In addition, Ukraine’s integration with NATO presupposes her common position with the Alliance in relation to Belarus. The NATO leadership regards the Belarusian Armed Forces as an integral part of the Russian military machine in the western strategic front (the Baltic states and Poland). In addition, the ongoing military reform in Ukraine envisages a reduction in the number of generals and the domestic political struggle makes some Ukrainian top military leaders targets in politically motivated attacks.
Hence, the criticism of Belarus coming from Ukrainian military leadership is dictated primarily by internal and external political considerations, as well as by the need to protect the interests of generals, and only then by facts.
For instance, initially, the Ukrainian military leadership made statements about 100,000 Russian servicemen allegedly taking part in the Russo-Belarusian military drill West-2017. Then the exercises were labelled quazi-open and military observers from Ukraine refused to provide their assessment, which caused a negative reaction in Minsk. Further, without citing specific facts, it was stated that Russia was building up its military presence in Belarus.
Apparently, the Belarusian and Ukrainian Defence Ministries have entangled in a confrontational spiral (on the level of rhetoric). Moreover, only a small part of the overly hidden process has been disclosed. That said, third states are very likely to take advantage of the situation (or have already done so). This is not only about Russia.
The Belarusian Defence Ministry officials are restrained in assessing their Ukrainian counterparts. However, such a restraint is not enough. Current military-political relations between Belarus and Ukraine are unlikely to stabilise without the intervention of both presidents.