Price for increase of labour discipline may prove too high for authorities
The main current objective of the authorities is to maintain the social stability, a condition to what is seen in the high employment and in the raise of salaries. However, the proposed severe measures could limit the sector of the informal employment, the most important sector for the stability of the current political regime. This would reduce the standard of living of citizens and increase the political risks.
On December 14th, while visiting the wood-processing enterprise of the Open Joint Stock Company “Vitebskdrev”, President Lukashenko demanded “to work day and night like in the war-time”. On December 13th Vice-President A. Tozik during the round table organized by “SB” (“Sovetskaya Belorussiya”) spoke for the introduction of the obligatory income declaration for all citizens.
The mobilization measures suggested by the leadership of the country caused again in Belarus and abroad harsh assessments, among which the most spread one is the accusation of President Lukashenko in irrationality and inadequacy. However, in the plans of the authorities one could see at least one rational aim: to maintain the level of employment in the wood-processing enterprises and increase the wages of their employees (over USD 800 in equiv. by 2015).
According to official data, the number of workers in the wood-processing industry of Belarus is steadily declining: from 50, 3 thousands in 2009 till 47, 9 thousands in 2011. The average salaries of the workers of the industry as of October 2012 are in the range of 290 USD in the equivalent (of "Borisovdrev") to USD 540 (UP "Kalinkovichi furniture factory"). Thus, for the period 2009-2011 the enterprises of the Group "Bellesbymprom" (wood-processing, production of pulp, paper) received from the state budget in equivalent almost 180 USD million of financial support.
Therefore, the most logical explanation for the emotional statement of President Lukashenko is the following: the authorities are trying to prevent the withdrawal of the labor resources from the state control and thus attract the workers by the higher-waged payments. In particular, on November 30 in Borisov Lukashenko explained the necessity of Decree № 9 in the following way: "And then we joke to the point that tomorrow they will walk along the streets of Minsk and Borisov with pitchforks to stab each other."
One should note that the selected harsh measures in the framework of the Decree do seem excessive in reality. They not only violate the rights of citizens for work, but they affect first of all a number of workers, and not the management of the enterprises which is responsible for the implementation of the modernization program. On the other hand, such an approach of the authorities could point out to a very serious concern of the leadership of the country with the economic situation, namely the increased fear of social unrest.
It should be particularly noted that the proposed measures on tightening labor in the wood-processing industry and in other areas (especially if the government introduces mandatory declaration of income for all citizens, and especially - a reconciliation of income and assets) will hit the broad sector of informal employment and informal incomes of Belarusians.
The authorities have been turning a blind eye for a long time to the informal employment, as it had been providing a boost to those revenues which the state guaranteed by the official instruments: wages, pensions, social benefits, subsidies and others. The informal employment had been enabling citizens to maintain an uninterrupted employment record in the main place of work, and did not spoil the employment statistics of enterprises. In this case, the employee could with the consent of his/her management take a long "working leave» in order to earn some additional money elsewhere (for example, this is the common practice at a large rock processing enterprise "Granit", and in other organizations).
Thus, the attempt to increase the official income of workers by tightening the labor discipline in the framework of Decree № 9 may have the opposite effect: a decrease of the informal income, which will reduce the overall standard of life of citizens and in the end may disrupt the social stability all over Belarus.
The Labour and the Tax Ministries are considering the possibility to include persons engaged in some economic activity without forming a legal entity in the social security system. When the decree No 337 comes into effect, the number of private entrepreneurs is likely to reduce due to the possibility of reducing the tax burden when switching to a tax payment as an individual. 95% of self-employed, including PE, pay insurance premiums on the basis of the minimum wage. The number of self-employed citizens is expected to increase, the number of insurance contributions to the pension system from PE will decrease, the number of citizens who will pay a fee to finance government spending will decrease by several tens. Self-employed citizens have the alternative not to pay social security fees and save resources for future pensions, which, given the gradual restriction by the state of pension requirements could be a more long-sighted option.