Labour market situation as factor of socio-political uncertainty

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April 22, 2016 19:13

As of May 1st, official unemployment rate almost doubled compared with 2014 (amid half as many vacancies) reaching 1% of the economically active population. Official unemployment figures neither reflect the real situation, nor stimulate the government to seek ways to stabilise the labour market. By the year-end, labour market situation is likely to become a factor of social tension. 

Belarus still has a record low number of officially unemployed. Until recently, there were no practical implications for economically active persons to be registered as unemployed. Unemployment benefits make only USD 23 and are paid only 6 month a year for three years, while administrative and bureaucratic burden is huge. The vast majority of jobs available through unemployment centres are low-paid jobs for unskilled workers. Overall, unemployed registration requires a lot of time and effort, but does little in helping to find a job or providing even a minimum income for the search period. 

Naturally, unemployed citizens until recently preferred to look for jobs independently or engage in informal jobs, rather than register with the employment service. The Decree No 3 on ‘social parasitism’ has changed such practices by prompting unemployed people to register as unemployed in order to avoid payment of fees envisaged by the decree, which has led to unemployment rate growth. On March 1st, 2015 there were 35,900 registered unemployed people, on April 1st – 39,000 and on May 1st – 43,400, which is 92.9% more than a year ago. 

In the future, the employment situation will only deteriorate. The state employment programme envisages up to 180,000 registered unemployed by the year-end. However, governmental experts forecast that circa 280,000 people will be looking for jobs in late 2015, which is 6% of the working population. Meanwhile, as of March 1st, 2015 216,000 people from officially employed in the economy were on leave or worked part-time. 

Tension on the labour market might increase due to labour migration flows: Belarusian workers return from Russia due to economic slowdown in Russia and job seekers influx from Ukraine – due to the recession in Ukraine. The IISEPS poll suggests that Belarusians assess the growing tension on the labour market adequately by putting the unemployment threat in the top three problems that the country faces (along with the production decline and impoverishment of the population). 

Meanwhile, the government has not taken and does not plan to take steps to prevent growth in social tension. It assumes that heaviest burden for lay-offs would be on employers. However, the government has no coercion instruments vis-a-vis employers and no funds to encourage them to retrain laid-off workers. The government can only somewhat put off mass lay-offs in the public sector before the elections, which is not a very effective strategy.

Overall, the number of job seekers might increase sharply up to 300,000 people in Belarus by late 2015. This is fraught with higher social tension and with growth with crime rates in particular. 

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