Preparing for the 2012 Elections. Mogilev
The state of the ideological work in labor collectives of the city and measures to improve it were discussed during a regular meeting of the Mogilev City Council.
The Deputy Cchairman of the Executive Committee Igor Shardyko, said that a strategically verified system of ideological work was organized in Mogilev. Among other things, the Vice-Mayor expressed hope, “we can work out the 2012 elections in a proper manner" (at the same time he made a reservation that opposition is planning surprises).
Head of the Ideological Department of the Eexecutive Committee Alla Galushko reported that there were over 500 ideological workers in the city. In their work they use various means: traditional (lectures and seminars) and new (internet forums, etc.). Currently, the city has over 400 information and propaganda groups.
It is worth to mention that such preparations by the local authorities to the “minor” elections (i.e. Parliamentary elections in Belarus) well in advance could be explained by the reduced level of confidence of the administration in its authority. During the aforementioned meeting, the Chairman of the Mogilev City Council Stanislav Borodavko noted that “in many respects, our ideology is based on the material well-being of the citizens”, therefore he called for careful compliance with the wage growth plans. Note that the official makes this declaration when real salaries of employees of the leading regional enterprises are decreasing. Compared with salaries paid on the eve of the Presidential elections, current pay in Mogilev decreased by 300-400 thousand rubles. For instance, reduction of wages was reported by the following companies: Mogilev Heating Systems, Mogilevliftmash, Mogilev Plant Strommashina, etc.
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.