New jobs statistics in Belarus masks mass lay-offs

August 17, 2016 10:05

In Q1 2016, the new jobs target indicator was overachieved by 90%. This indicator was introduced in order to demonstrate improvements on the labour market and overcoming the negative trends. Most new jobs will be created due to the reorganization of old enterprises and creation of new legal entities, but not all workers subject to reorganization will receive a new job.

The Belarusian Prime Minister said that in Q1 2016 more than 15 800 new jobs were created, which overachieved the target by 90%. Simultaneously, the National Statistics Committee reported that in Q1 2016, layoffs exceeded hires by 30 800 persons. Industry, construction and wholesale trade reported the largest number of layoffs. That said, in H1 2016, layoffs persistently exceeded hires and overall the economy lost 80 500 workers.

The new jobs indicator was introduced in order to mask the real state of affairs in the economy on the labour market. According to the World Bank, about 10% of jobs in Belarus are redundant, which makes Belarusian produces less competitive on the domestic and external market, while preserving the employment rate. Amid persisting negative trends in the economy, by reporting about creating new jobs, the government is attempting to neutralise the negative trend with mass layoffs and reassure the population of their future employment.

The target indicator for new jobs will be met thanks to reorganisation of enterprises. Loss-making companies could merge into a single company or a holding of companies, while employees would be laid off and later recruited by the new enterprise. Large profitable organisations may curve out their structural divisions into independent entities. Formally, new jobs will be created, but in practice, not all employees will agree to transfer to a new place of work, or there will be fewer jobs in the new enterprises.

This approach, on the one hand will enable the government to report about new jobs created and on the other hand, to carry out necessary layoffs. Simultaneously, the employment services will restrict applications at the labour exchange, which will restrain the unemployment rate growth. Taken together, these measures will allow the government to report an improvement on the labour market, while, de facto, the number of employed in the economy will decrease and those laid off will be forced to look for a job either in the grey economic sector or outside the country.