Belarus closes the border for the domestic opposition
On March 7, Belarusian border guards did not allow the Chairman of the United Civil Party Anatoly Liabedzka to leave Belarus en route to Lithuania. On the same day, the wife of Liabedzka became a subject to extended examination at the same border while traveling from Lithuania to Belarus. Also, Mr. Dobrovolski, Deputy Chairman of the UCP, was taken off the train en route to Lithuania.
The ban on leaving Belarus for the Head of the UCP Mr. Liabedzka without any explanation implies the Belarusian authorities had to improvise and had no clear action plan against the politician. Otherwise, the authorities would have referred to a formal pretext, for instance, a “criminal” case initiated against him.
Actions against Messrs Liabedzka and Dobrovolsky could represent a “symmetrical response” to the visa restrictions, imposed by the EU against Belarusian officials. However, unlike the ban on entry to the EU of foreign nationals, a ban on leaving the country for the citizens of the country is a more complicated task: it contradicts the Belarusian legislation in the first place.
These recent developments at the Belarusian-Lithuanian border confirm that the Belarusian authorities have not yet decided on the tactics in response to the demands and actions of the EU. They adhere to the tactics of passive retention of the status quo: political prisoners are not released, the CEC threatens not to invite OSCE observers to the parliamentary elections in the autumn, and in response to the visa sanctions against Belarusian officials the authorities introduced vague travel bans on opposition politicians.
These passive measures only meant to restrict the leadership of opposition parties (the UCP in this particular case) from maintaining their international contacts. It is worth mentioning that some governmental officials advocated for a “pro-active” response, i.e. to introduce penalties against those who call for sanctions against Belarus (it has been recently discussed in the Prosecutor’s Office). However, such pro-active response fits in badly with the existing trend towards “passive response” and therefore unlikely to be implemented.
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.