Kremlin started information campaign to sow seeds of strife between Minsk and Kiev
The Kremlin has stepped up the information and political-economic pressure on the Belarusian authorities. So far, the Belarusian authorities have not thought about replacing aggressive Russian content in the Belarusian media with domestic products. The Kremlin is attempting to create difficulties for Minsk and Kyiv (and Western capitals), and devalue Belarus’ foothold as an international negotiation platform.
The Russian First Channel aired ‘Time will tell’ last week, a talk show, which discussed the influence of history on relations between Belarus and Ukraine on the one side and Russia on the other.
The Kremlin has stepped up pressure on Minsk in the information space, international and trade relations. After freezing the oil and gas dispute, Moscow started insisting that Belarus gave in some of her sovereignty and agreed to a common visa space.
The information pressure could imply that the Kremlin is against strengthening international position of Minsk. Meanwhile, the Belarusian authorities are attempting to revive the negotiating platform over Ukraine and step up their status of a peacekeeper. Ukrainian media were alarmed by the news in the Russian and Belarusian media about the Russian Defence Ministry plans to increase cargo transportation through Belarus by 2017. Analysts pointed to this fact as a possible strengthening of the Russian military presence in Belarus. In addition, the Russian Defence Ministry’s media are attempting to build tension between Minsk and Kiev by talking about possible provocations against the Belarusian authorities from Ukraine.
Perhaps, the Russian media have stepped up criticism of the Belarusian authorities in response to the press tour for the Russian regional media organised by Belarus. Minsk used the press tour to influence public opinion in Russia and ensure a positive attitude towards the Belarusian government. Such an initiative could have been zealously interpreted in the Kremlin amid lingering tension over oil and gas in the Belarusian-Russian relations. By drawing parallels between Belarus and events in Ukraine, Russian propagandists aim to neutralize rosy perceptions of Belarus by inhabitants of the Russian province.
Nevertheless, in the case of a full-scale information war, Minsk could start censoring media content from Russia and switch on Internet filters.
The rapid increase in wages has led to a decline in the ratio between labour productivity and real wages to one. Previously, the rule was that enterprises, in which the state owned more than 50% of shares in the founding capital, were not allowed increasing salaries if this ratio was equal to or less than one. The authorities are unlikely to be able to meet the wage growth requirement without long-term consequences for the economy. Hence, the government is likely to contain wage growth for the sake of economic growth.
According to Belstat, In January – August 2017, GDP growth was 1.6%. The economic revival has led to an increase in wages. In August, the average monthly wage was BYN 844.4 or USD 435, i.e. grew by 6.6% since early 2017, adjusted for inflation. This has reduced the ratio between labour productivity and real wages from 1.03 in January 2017 to 1 in the first seven months of 2017. This parameter should not be less than 1, otherwise, the economy starts accumulating imbalances.
The need for faster growth in labour productivity over wage growth was stated in Decree No 744 of July 31st, 2014. The decree enabled wages growth at state organizations and organizations with more than 50% of state-owned shares only if the ratio between growth in labour productivity and wages was higher than 1. Taking into account the state's share in the economy, this rule has had impact on most of the country's key enterprises. In 2013 -2014 wages grew rapidly, which resulted in devaluation in 2014-2015.
Faster wage growth as compared with growth in labour productivity carries a number of risks. Enterprises increase cost of wages, which subsequently leads to a decrease in the competitiveness of products on the domestic and foreign markets. In construction, wholesale, retail trade, and some other industries the growth rate of prime cost in 2017 outpaces the dynamics of revenue growth. This is likely to lead to a decrease in profits and a decrease in investments for further development. Amid wage growth, the population is likely to increase import consumption and reduce currency sales, which would reduce the National Bank's ability to repay foreign and domestic liabilities.
The Belarusian government is facing a dilemma – either to comply with the president’s requirement of a BYN 1000 monthly wage, which could lead to new economic imbalances and could further affect the national currency value, or to suspend the wage growth in order to retain the achieved economic results. That said, the first option bears a greater number of negative consequences for the nomenclature.
Overall, the rapid growth in wages no longer corresponds the pace of economic development. The government is likely to retain the economic growth and retrain further growth in wages. Staff reshuffles are unlikely to follow the failure to meet the wage growth requirement.