Minsk’s interest in putting foothold on international arena could induce some liberalisation
Civil society and the Belarusian opposition have benefited from the OSCE PA summer session in Minsk and under the pressure of the international community, launched negotiations with the Belarusian authorities on ongoing issues. The state has been forced to extend political freedoms during the OSCE PA session, significantly curtail repressions and demonstrate an attempt to launch an internal political dialogue with the assistance of the European parliamentarians. Amid attempts to updated their peacekeeping image on the international arena, the Belarusian authorities are likely to continue a strictly dosed liberalisation and step up contacts with the opposition.
The authorities, the opposition, Western ambassadors and the UN special rapporteur presented their claims to each other during the seminar on human rights in Belarus.
Despite the conventional rhetoric about the absence of human rights violations, the Belarusian authorities decided to hold a joint event with civil society and opposition on human rights issues. Participants in the seminar included human rights activists, Tell the Truth leaders, leaders of the centre-right coalition, and oppositional MP Anna Kanopatskaya. For many years, the Belarusian leadership was ignoring the political opposition and ruled out such a dialogue inside the country or, in rare cases, independently selected participants for discussions.
The presence of foreign delegations and Minsk's attempts to shape a positive image for Western diplomats has limited the actions of security forces. Members of the Belarusian National Congress headed by Statkevich held several unauthorized protest actions in the centre of Minsk, apparently without any consequences for them. The authorities have repeatedly demonstrated their readiness to allow unauthorised opposition protests with political slogans. As a rule, such activities are punished with fines imposed on most active participants and organisers post factum.
Apparently, if the authorities engage in a dialogue with civil society and the opposition, those supporting street protests would decrease in number and consolidate in the BNC. Some opposition representatives, who participated in protests with social and economic demands in February-March 2017, would be ready to mitigate their positions should the authorities become more open to contacts. Nevertheless, street protests could enhance if inconsiderate actions of the authorities cause an increase in tension in society.
Overall, Minsk’s foreign policy initiatives to strengthen its foothold on the international arena have prompted the authorities to revise their domestic policy approaches. As never before, the Belarusian leadership is interested in boosting its international authority, which could lead to limited political liberalisation.
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.