Wages will grow and consumer imports restrictions will increase

April 22, 2016 18:32

On June 12th, Minsk City Executive Committee Chairman announced the strengthening of the import substitution policy in retail sales.

Active growth in consumer imports is due to increased real economy wages. Against the background of common economic space formation, curbing the wages growth results in labour outflow to Russia. The government addresses the problem by restricting access to foreign-made goods to make Belarusians buy domestic consumer goods.

Nominal wage in April 2013 was BYR 4 888.3 thousand and increased by 50.3% compared with April 2012. Even with inflation adjustments wage growth is impressive - real wages have grown by 24.2%. Greater incomes resulted in consumer imports growth. According to the National Statistics Committee, in Q1 2013 consumer goods imports were USD 1 589.2 million, and increased by 33.6% or USD 399.3 million compared with Q1 2012. Retail trade statistics shows that consumer preferences shifted in favor of imported refrigerators, washing machines, televisions, imported alcohol and fruit. Domestic consumer goods do not satisfy all consumers’ preferences, especially in terms of the high-quality goods in middle and high price range.

The average monthly wage in April 2013 in Belarus was USD 565, in Kazakhstan - USD 698, in Russia - USD 920 (calculated by National banks’ exchange rates). Belarusian specialists do not Kazakhstan as an attractive labour market, but given the wage gap, Russian labor market is particularly attractive for various specialists. Labour outflow to Russia from Belarus indirectly could be assessed by using official data on wages’ wire transfers to Belarus. If in 2011 USD 240 million was transferred to Belarus, by late 2012 the figure was USD 286.9 million. Please note, that the official data do not reflect the full picture due to greater popularity of cash transfers.

Belarus faces the choice dilemma. On the one hand, Belarus needs to raise wages in order to prevent the labour outflow, but it cannot increase wages significantly, since the economy already cannot cope with current payments and further wage increases could speed up the devaluation. On the other hand, Belarus cannot effectively restrict imports, due to open borders with Russia and potential claims from partners in the Customs Union. Therefore the government will implement tacit restrictions when there are no formal restrictions, but indirectly various assortment lists are formed with a share of domestic goods; or either oral or written orders would be issued to increase domestic products’ assortment in retailers. In the future, the most likely measure would be the introduction of preferential consumer loans for the population, available for domestically made appliances only.

Thus, Belarus will use the 2009-2010 tactics, when wage growth was a necessary measure, and imports were restricted unofficially. In the short-term, the consumer imports growth situation will hardly be solved, due to the domestic industry limited capacity to meet the increased consumer demands.

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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.