Political reformists offer a deal to the authorities
Pro-state political parties offer Belarus’ authorities to reform the current majoritarian electoral system. High probability of low voter turnout in the next election campaign makes President Lukashenko’s entourage take this proposal seriously.
In the September issue, Belaruskaya Dumka, a Presidential Administration magazine published an article about a roundtable, in which representatives from three pro-governmental political parties and a quango “Belaya Rus” took part. Discussions focused on the parliamentary elections’ results.
The discussion about the need to reform the electoral system has moved up a level. Such a publication in the President’s Administration magazine immediately after the elections implies that Lukashenko’s surroundings continue to lobby for electoral reform. Undoubtedly, the First Deputy Head of the Presidential Administration, Mr. Radkov, who also chairs quango “Belaya Rus” is aware of this initiative and supports it.
The most important part of the discussion focused on the need to reform the current [majoritarian] electoral system into a proportional or mixed one. All the roundtable participants, Deputy Chairman of the quango “Belaya Rus” Mr. Orda, Secretary of the Central Committee of the Communist Party of Belarus Mr. Atamanov, Chairman of the Republican Party of Labor and Justice, Mr. Zadnepryany, Chairman of the Liberal Democratic Party, Mr. Gaidukevich, have called for a reform.
Of particular interest were arguments voiced by Mr. Gaidukevich, who in fact openly offered a deal to the government: 50% of seats in the Parliament could be assigned to pro-government deputies, and other deputies should be elected by party lists. In Mr. Gaidukevich’s view, it would make it easier to ensure international recognition of the elections’ legitimacy and to avoid social unrest in the future.
The issue of low voter turnout in the recent parliamentary elections has not been raised during the discussion, but, clearly, the problem is recognized by the authorities and requires solutions, particularly in the light of the 2015 presidential campaign. Theoretically, the electoral reform will help the authorities to tackle this problem, as transition to a proportional or mixed electoral system will reduce the turnout requirement needed to validate the elections.
Today the minimum required turnout in Belarus is 50%, which is associated with certain costs for the authorities. In particular, each campaign requires society to be mobilized, including various kinds of repression and coercion. Moreover, each campaign entails turnout and voting rigging, as indicated by independent observers on a regular basis.
In these circumstances, especially given the extremely low voter turnout in the 2012 campaign, the authorities have an objective interest in reducing their own costs. Representatives of pro-state political parties and social movements (“Belaya Rus”) attempt to gamble on this interest. However, the President’s entourage calculate not only the risks from low voter turnout, but also the risks of having a fractional parliament in Belarus, and until recently the latter have been assessed as greater.
It should be noted that the Belarusian opposition’s main electoral tactics – boycott or participation – suit the interests of the two conventional and far more powerful groups: president’s entourage and nomenklatura. The boycott tactics aimed at reducing voter turnout, is fully consistent with the interests of “reformists’” from the pro-state parties and quango “Belaya Rus”, while the ‘participation’ tactics, which increases the turnout, corresponds to President Lukashenko’s interests, who has no interest in political reform. In this conflict of interests the Belarusian opposition has a ‘pathfinder’ role in a complex game between much more powerful political actors.
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.