Friedrich Ebert Foundation forced to leave Belarus
Belarusian authorities refused to continue cooperation with a well-known global non-governmental organization from Germany. After the 2010 presidential election, the authorities deliberately narrow the range of alternative organizations inside the country that work closely with Western partners.
In December the Foreign Ministry of Belarus refused to renew the accreditation of the Friedrich Ebert Foundation in Belarus “because the foundation’s activities did not fully meet the criteria for constructive cooperation with governmental agencies of Belarus”. In 2012 Minsk office of the Fund will cease its operation.
There is a reason to believe that such a move by the Ministry of Foreign Affairs was a reaction to the resolution of the Conference of the OSCE Civil Society in Vilnius on December 6. The resolution calls upon the international community to cease all cooperation with the Belarusian authorities that provides for financial assistance to them. FES in Minsk was an active mediator between the government and non-governmental organizations of Belarus therefore Foreign Ministry’s decision meant to demonstrate to the international community their readiness to purge the entire field of active NGOs in Belarus.
In the broader context the non-renewal of the accreditation of the representation of FES is a logical continuation of the policy of freezing of relations between Belarus and its Western partners, which were the most active partners in the program of liberalization of Belarus in 2008-2010, and in particular, during the campaign of legitimation of the 4th term of President Lukashenko in autumn 2010.
In particular it concerned Poland and Germany, as their foreign ministers visited Minsk in November 2010. It is obvious, the suspension of the lease agreement for the Polish Embassy premises building in 2012 and the non-renewal of the accreditation of the Friedrich Ebert Foundation for 2012 are links in one chain.
By restricting cooperation, Belarus narrows the range of non-governmental organizations that receive support from the West considered by the Belarusian authorities as agents of influence. In turn, the scope of international organizations which have the ability to directly influence the situation in Belarus is restricted simultaneously. Finally, the authorities start implementing the new legislation, which significantly tightens the rules of the game for theBelarusian civil society organizations with foreign funding.
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.