No surprises in the new Parliament

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April 22, 2016 18:19

Basic informal quotas in the Parliament’s composition have been respected, which demonstrates deputies’ loyalty and controllability. The number of the “Belaya Rus” quango members is very high in the new Parliament however there is no reason to expect independence from these deputies.

On September 28th the Central Election Commission approved the list with 109 registered members of the House of Representatives of the 5th convocation and the upper chamber, the Council of the Republic. 

The main sign of preserving the old parliament’s role in the Belarusian system of government is adherence to informal quotas in the formation of the new Deputies corps. In particular, the succession quota (20-25%), proposed by Lukashenko a while ago has been fully observed: 21 member of the Parliament’s 4th convocation was successfully nominated, registered and elected to the 5th convocation. Gender quota was also well respected: 26.6% of MPs are women. Finally, Parliament is completely sterile from the opposition, and the number of party members is the lowest - 4.6%. 

Compliance with these quotas means that the new parliament will remain loyal and fully accountable to the Presidential Administration and will rubber stamp the legislation proposed by ‘higher’ power echelons. The high number of “Belaya Rus” members is somewhat surprising (63 Deputies, i.e. the majority), in particular, given the floating discussions about its likely transformation into a political party.

However, one should keep in mind that so far all attempts of “Belaya Rus” members to raise their status in the Belarusian political system were successfully suppressed by the government, which is not interested in political reforms.

Finally, “Belaya Rus” had its lobby in the Parliament before, inter alia at a high level: Mr. Huminski was Deputy Speaker of the House of Representatives, and Deputy Batura was a member of the Council of the Republic and the Minsk Region Governor, etc. However, this had no impact on changing the organization’s status.

Elections results to the upper Parliament chamber, the Council of the Republic, on September 25th were totally predictable. 56 candidates, 8 from each region, were nominated, registered and approved in a festive atmosphere without any intrigue. Eight other members will appointed by President Lukashenko. In the Belarusian political system Council of the Republic plays an even more symbolic role than the lower parliament’s chamber. Therefore no political surprises should be anticipated from this body.

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Growth in real wages may disrupt macroeconomic balance in Belarus
October 02, 2017 12:12
Фото: Дмитрий Брушко, TUT.BY

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.