Wages will grow and consumer imports restrictions will increase

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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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Belarusian and Ukrainian Defence Ministries entangle in confrontation spiral
October 02, 2017 11:57
Фото: RFRM

Over the past year, military-political relations between Minsk and Kyiv have become complicated. Due to their high inertia and peculiarities, this downward trend would be extremely difficult to overcome.

The root cause of the crisis is the absence of a common political agenda in the Belarusian-Ukrainian relations. Minsk is looking for a market for Belarusian exports in Ukraine and offers its services as a negotiation platform for the settlement of the Russo-Ukrainian war, thereby hoping to avoid political issues in the dialogue with Kiev. Meanwhile, Ukraine is hoping for political support from Minsk in the confrontation with Moscow. In addition, Ukraine’s integration with NATO presupposes her common position with the Alliance in relation to Belarus. The NATO leadership regards the Belarusian Armed Forces as an integral part of the Russian military machine in the western strategic front (the Baltic states and Poland). In addition, the ongoing military reform in Ukraine envisages a reduction in the number of generals and the domestic political struggle makes some Ukrainian top military leaders targets in politically motivated attacks.

Hence, the criticism of Belarus coming from Ukrainian military leadership is dictated primarily by internal and external political considerations, as well as by the need to protect the interests of generals, and only then by facts.

For instance, initially, the Ukrainian military leadership made statements about 100,000 Russian servicemen allegedly taking part in the Russo-Belarusian military drill West-2017. Then the exercises were labelled quazi-open and military observers from Ukraine refused to provide their assessment, which caused a negative reaction in Minsk. Further, without citing specific facts, it was stated that Russia was building up its military presence in Belarus.

Apparently, the Belarusian and Ukrainian Defence Ministries have entangled in a confrontational spiral (on the level of rhetoric). Moreover, only a small part of the overly hidden process has been disclosed. That said, third states are very likely to take advantage of the situation (or have already done so). This is not only about Russia.

The Belarusian Defence Ministry officials are restrained in assessing their Ukrainian counterparts. However, such a restraint is not enough. Current military-political relations between Belarus and Ukraine are unlikely to stabilise without the intervention of both presidents.

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