Real wages may fall in recession in Belarus in 2017
The government plans real wage growth in conjunction with the forecasted GDP dynamics. According to the draft socio-economic development forecast for 2017, both, GDP and wages should increase by 1.5%. Economic growth forecast is based mainly on higher returns from "traditional industries" - 0.75% of GDP growth in the coming year. Implementation of 74 investment projects, including state innovation programmes should ensure another 0.15% of GDP. And, according to the Economy Ministry plans, "the state bodies, corporations, and private businesses’ should add another 0.6% from investment projects. Given that the industrial production index is negative (- 1.6% in H1 2016), and that external environment remains unfavourable (foreign trade turnover decreased by 15.9%, exports by 18.8%, and trade deficit totalled USD 1.1 billion in H1 2016), the government’s forecast seems unreasonable. In addition, it should be noted that according the IMF estimates, problems in the industrial sector will not allow Belarus to overcome recession neither in 2016 (minus 3% of GDP), nor in 2017 (minus 0.5% of GDP).
According to Belstat, in August 7,600 people were dismissed, including 4,800 civil servants. Dismissals of civil servants were due to the optimisation in the public administration by up to 30%. Some civil servants would retain their job however would lose the status of a civil servant. Vacancies on the labour market are likely to reduce in number, thanks to the optimisation, the state administration would increase wages for public servants. The payroll fund for retained employees is likely to increase and some former state employees are likely to get jobs in affiliated organizations. The optimisation of the state apparatus should complete by January 1st, 2018, and some former civil servants are likely to join the ranks of the unemployed.