Lukashenka mobilizes territorial troops
Belarusian authorities are seriously afraid of growing social protests in the regions and started to take countermeasures. They don’t have enough resources to increase salaries, as demanded by people, so, in order to stop the wave of dissatisfaction they have started to use coercive measures.
On the 3rd and 4th of November, Lukashenka visited a number of centers of territorial defense in Minsk and Grodno regions.
Belarusian authorities are seriously afraid of growing social protests in the regions and started to take countermeasures. They don’t have enough resources to increase salaries as demanded by people, so, in order to stop the wave of dissatisfaction they have started to use coercive measures.
Belarusian authorities are seriously afraid of growing social protests in the regions and started to take countermeasures.
A number of loud statements from Lukashenka concerning mobilization of territorial troops, where the reserve military personnel is mobilized in case of danger, should be understood not in the military, but in the political sense. At the present moment, the largest threat for the Belarusian government is represented not by external military menace, but by social protests of workers at regional enterprises, which stand against a decline in welfare and demand an increase in wages, in order to compensate for the price rises.
It is the desire to keep control over the social situation on the local level that prompted the President to make a trip to the regions. In September-October, at least 3 cases of strikes took place at the enterprises of Vitebsk, Svetlogorsk and Borisov, also there was a pre-strike situation at the railway carriage repair works in Gomel. At the same time, the Belarusian Ruble continued to weaken at the stock exchange, the probability to receive external credit help is very low, and the level of prices in the country continues to grow.
The Belarusian authorities are losing the ability to control the situation by economic means and predictably resort to force – strengthening the control over the heads of the regions and directors of state and private enterprises. That is why on November 3rd, all Belarusian governors received the rank of major generals, and during the visit to Minsk Headquarters of Territorial Defense the President gave a clear signal to regional businesses that they need to cooperate with the state. After that, in Grodno, Lukashenka ordered the Ministry of the Interior and to KGB to prevent the unrests at enterprises.
The Belarusian authorities are losing the ability to control the situation by economic means and predictably resort to force – strengthening the control over the heads of the regions and directors of state and private enterprises.
In addition, the President is sending a clear message to his external and internal opponents that he is ready to protect his power even with a grenade launcher in his hands (the press-service made a corresponding picture of him). Also, the President de facto provided KGB and the Ministry of the Interior with a carte-blanche to make tougher their activity on prevention of extremism, without any respect to international commitments of Belarus in the sphere of Human Rights protection. The President stated that he takes upon himself all the responsibility for such actions.
The last statement should not be perceived as the beginning of a new campaign to eliminate political opponents – such a campaign has been going on at least since December 19, 2010. The words of the President Lukashenka aim to lessen the weight of responsibility of his subordinates for the violations of law and Human Rights. The symbolic transfer of responsibility for the activities of Belarusian law-enforcement and special agencies personally to the President, in opinion of Lukashenka, will help him to keep internal legitimacy and strengthen the loyalty of his subordinates.
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.