Resources raised to repay wage arrears in Belarus will last for one month

In September, wage arrears in the economy have fallen by a factor of ten. Problems with timely wage payments were mainly reported in agriculture, industry and construction. Administrative resource has been used to pay wage arrears; in the coming months, however, their growth will resume.

As of October 1^st, 2015, the number of organizations with wage arrears in Belarus has reduced by 13 units, and the volume of overdue debt totalled BYR 27,9 billion. In early September, 432 enterprises had wage arrears and the volume of overdue debt was BYR 276 billion. By early October wage arrears have reduce to a minimum in 2015, with some outstanding debt repaid in early October.

Wage arrears have emerged in 2015 as the result of the economy’s performance. Most wage arrears have been reported by the agriculture. Without the state support, about 65% of agricultural organisations would have been unprofitable. In 2015, unfavourable weather conditions had a negative impact on the yield of grain, which deteriorated financial health of agricultural enterprises and generated wage arrears. Construction deteriorated in 2015 due to the reduced volume of housing construction, fewer investments in fixed assets and decreased volume of contracted works, which led to deteriorated financial health and emergence of wage arrears. Industrial production in 2015 is falling, employment is only preserved thanks to the financial support from the state, and one third of enterprises are loss making.

Enterprises were unable to repay wage arrears, therefore, the state had used the administrative resource in order to reduce wage arrears before the elections. On September 30^th, banks worked until 9 pm instead of usual 3 pm in order to make all the payroll payments. Even insolvent enterprises have received loans to repay wages. Ministries and state agencies requested subordinate organizations to give out loans and credits to institutions with overdue wages. Industrial enterprises have received instructions to pay for agricultural products supply in a timely manner. As a result of all these measures, wage arrears have reduced dramatically.

In the coming months wage arrears will re-emerge so as the authorities will no longer need to demonstrate that they are in charge of the situation to the electorate. Some enterprises, which obtained loans to pay off wage arrears, may have problems with repayment of these loans, thus increasing the number of enterprises with the debt problems and wage arrears. The National Bank will support the banking sector. In December 2015 the situation will somewhat improve due to the peak budget flow for various purposes and state programmes, however after that wage arrears will resume.

The authorities have sued the administrative resource in order to ensure that most wage arrears are paid off. In the coming months, growth in wage arrears will resume and only few enterprises will receive assistance from the state to close those arrears.