State employees’ salaries increased: a promise that had to be fulfilled
Canceled in August, the raise of the tariff rate for the first class workers would be implemented in September. Accelerated inflation in August made indexing of wages inevitable. Increased incomes will increase domestic demand and may result in greater inflation.
On August 20th, 2012 the Council of Ministers of the Republic of Belarus adopted a resolution No 769, setting the tariff rate for the first class workers at BYR 225,000.
On September 1st, 2012 a new tariff rate for the first-class workers will be BYR 225 thousand (increased by 7.1%), which will raise the salaries in the public sector by 6.1% on average. The regulation also increases differentiation among employees in terms of payment, depending on the complexity of work.
There are funds in the state budget to increase salaries in the public sector. Consolidated budget surplus in the first half of 2012 will beBYR 3.7 trillion. Belarusian companies earned BYR 41.9 trillion net profit. Additional budget revenues will thus be redistributed in citizens’ favour.
Increase in the tariff rate is lined to the inflation. In August, due to the increased utilities’ costs inflation accelerated. During the first two weeks in August, consumer prices rose by 1.5% compared with average prices in July. Indexation of wages is carried out if inflation reaches 5% and higher during a period. Thus, state employees’ salaries increase is a forced and inevitable measure.
The average salary in the public sector with the increase from September 1, 2012 will be BYR 3.2 million. Officials’ wages lag behind the average in the economy, and such disparity has a negative impact on employment in the public sector. The outflow of workers into other spheres can lead to a staff shortage for a number of vacancies.
However, there are some negative trends in the economy. Industrial growth slowed down. Labour productivity could not keep up with the growth of wages in the economy. Unfavorable trends in foreign markets for a number of Belarusian products can reduce profits.
In these circumstances, additional incomes of state employees may increase domestic demand, increase imports and result in a general price growth, including services cost, which will level incomes’ growth.
Amid budgetary cuts on social protection, the Belarusian public sector is experiencing a management crisis and a balance shift in the state resource redistribution system. The authorities are forced to revise their most unpopular decisions during the implementation due to the pressure from affected social groups. The state is unlikely to oppose to some civil society and opposition organisations in strengthening their role in society in order to retain touch with the population and to be able to respond to the most harsh criticism of state initiatives.
The Architecture and Construction Ministry has acknowledged that the decree No 585 on assistance to large and young families in building and buying housing was prematurely rescinded.
The authorities are often forced to revise their decisions on curtailing social assistance to different social groups during their implementation, without preliminary impact assessment and feedback from the population, so as they lead to the growth in social tension. Due to the centralised decision making, languishing state resources and the lack of public debate as a balancing instrument in issues related to social protection, the state administration is losing control of the population.
Perhaps, the compensatory mechanisms of the state apparatus lack the time to adjust to dwindling state resources for supporting the existing social model, even in a reduced form. The authorities have completely or partially paralysed operations of independent public institutions and representative bodies, through which they could monitor public moods and receive feedback from the population, such as local councils, the parliament, political parties and NGOs. Last year, under the pressure of the authorities, the last independent institute for measuring public sentiment, IISEPS, suspended operations.
President Lukashenka’s self-removal from the decision-making on current socio-economic issues, also could have affected the state apparatus’ operations. The president has always been very sensitive about adopting unpopular decisions which could lower his popular support, hence demanded a careful preliminary assessment of such decisions. However, recently, especially after the introduction of the tax on social dependants, the president has mainly focused on the foreign policy agenda.
Hence, a lacuna has formed in the state decision-making after the president reduced participation in the current socio-economic policy formation, which leads to an increase in manifestations of dysfunction in the public administration.