Wage-cuts have not fully solved economic stability problems in Belarus

April 22, 2016 19:07

The average monthly salary in Belarus has reduced to USD 400. In 2015, the authorities changed their usual strategy of sharp pay-rises to the population before the elections. Wage cuts have somewhat improved economic stability in the country, however full stabilisation is only possible when Belarus makes all due public debt payments for 2015. 

According to the National Statistics Committee, in January 2015 the average salary in Belarus was BYR 6 million. Thanks to the devaluation, this amount is equivalent to USD 400 (average wage in April 2012). In most regions of Belarus, average wages do not exceed USD 350. Monthly wages were the highest in July 2014 – USD 625. 

Despite the pre-election period, wages in 2015 will not grow. Apparently, the authorities have learned their lesson from the past devaluations. Wages only grow in some industries amid lay-offs. For instance, in 2014, the largest industrial enterprises – MAZ, BelAZ, Atlant, MTZ laid off up to 10% of their workers. The outflow of specialists to Russia has declined due to sharp wage-cuts in Russia (USD 500 per month in January 2015). In addition, the labour market is under pressure because of migrants and refugees from Ukraine, leading to lower requirements by potential employees and increased number of applicants for a job. 

High wages exerted significant pressure on the currency and consumer markets in Belarus. In 2014, growth in consumer imports was more than 18% compared with 2013. Currently, despite the decline in wages, the Belarusian economy still faces significant risks.

 The main risk is the need to repay more than USD 4 billion of external debt. The only potential creditor is Russia, but she is in recession a result of economic sanctions and falling oil prices. As Moody’s is preparing to lower Belarus’ credit rating, she has fewer options to borrow on the international markets. Belarus will be unable to repay her public debt in 2015 independently. Amid anticipated closure of tens of thousands of entrepreneurs as of March 1st, 2015 in connection with the new marketing rules, the government is anticipating social tension due to a further reduction in the number of jobs in the economy. And the Belarusian economy is unable to create new jobs to meet the labour market needs.

 The Belarusian economy cannot sustain wages above USD 500 for a long time. The sustainability of the Belarusian economic model in the short term will depend on timely financial aid from Russia and successful neutralisation of social tension amid growing unemployment risks.

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The Belarusian authorities have launched a discussion on the moratorium or abolition of the death penalty under the pressure of Belarusian human rights activists and international community. Apparently, the authorities are interested in monitoring public sentiments and response to the possible abolition of the capital punishment. The introduction of a moratorium on the death penalty would depend on the dynamics in Belarusian-European relations, efforts of the civil society organisations and Western capitals.

In Grodno last week, the possibility of abolishing the death penalty in Belarus or introducing a moratorium was discussed.

The Belarusian authorities are likely to continue to support the death penalty in Belarus. During his rule, President Lukashenka pardoned only one person, and courts sentenced to death more than 400 people since the early 1990s. Over the past year, Belarusian courts sentenced to death several persons and one person was executed.

There are no recent independent polls about people’s attitude about the death penalty in Belarus. Apparently, this issue is not a priority for the population. In many ways, public opinion about the abolition of the death penalty would depend on the tone of the state-owned media reports.

That said, the Belarusian Orthodox Church and the Roman-Catholic Church stand for the abolition of the capital punishment, however their efforts in this regard only limit to public statements about their stance. Simultaneously, the authorities could have influenced public opinion about the death penalty through a focused media campaign in the state media. As they did, for example, with the nuclear power plant construction in Astravets. Initially unpopular project of the NPP construction was broadly promoted in the state media, and eventually, according to independent pollsters, was accepted by most population.