KGB continues manipulating using terrorism threat
On May 25th, the Belarusian KGB informed about a criminal case on terrorism charges initiated against a man who unsuccessfully tried to blow up a police station in Zhlobin.
As before, when explosions in Gomel and Kobrin occurred, the KGB sent detailed operational reports about the incident to the media and shared working leads, which was unusual until 2011. Intelligence services believe all these terrorist acts could involve criminal groups that smuggle illegal immigrants from Asian countries into the EU via Belarus. Regarding the Zhlobin incident, the KGB stated that the alleged terrorist was wearing a mask with an inscription in Arabic and the National TV Channel showed a corresponding report.
Our previous assessment should be reiterated, that such information policy of the intelligence agency and the media objectively increase the feeling of danger in the society. Most likely, that above all, it is the KGB, who is interested in such disclosure, as high risks to public safety increase this body’s importance as the country’s main anti-terrorist shield.
It should be emphasized that the number of terrorist threats has increased in the Gomel Region. A likely explanation for this phenomenon could be that regional security forces staff could thereby attempt to counteract the ongoing reform in the security agencies, particularly in the KGB. Earlier, President Lukashenko made a number of new appointments in the central offices the KGB and in Vitebsk regional KGB Department.
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.