President appointed top management of the Investigative Committee
The major challenge President Lukashenko faces while deciding on the personnel of the Investigative Committee is how to keep the balance among the power elites. The key for the continuation of the political career of Lukashenko is not to become a hostage of the elites, close to his eldest son, Viktor.
On 28 November President Lukashenko appointed three deputy heads of the Investigative Committee and 5 heads of its regional offices. Heads of the IC branches of Mogilev and Gomel have not been appointed yet.
As anticipated, while deciding on the staffing of the IC, Aleksandr Lukashenko rests upon the law enforcement agencies the least influenced by his eldest son, Viktor, i.e. on the General Prosecutor’s Office and the Ministry of Interior. Representatives of these two agencies occupied the above mentioned positions in the IC.
Another agency which is not influenced by Viktor Lukashenko, where Alexander Lukashenko seeks for additional support, is the Ministry of Defense. Since summer 2011 the President has been increasingly and cautiously active in this regard, for instance, he discussed with military officials an idea of creation of an informal “Captains’ Club”, as well, he promotes career advancements of officers of the military justice.
As we have noted, the desire of Lukashenko to ensure support inside the military was reflected in the appointment of a former military judge A. Konyukov as the Prosecutor General and a curator of the IC on 20 September. Lukashenko’s stake on the military is indirectly manifested by the appointment of the top management of the IC on 28 November, when he also stated that the IC should become a paramilitary structure ensuring the national security of Belarus.
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.