Social protection is shrinking in Belarus, but social rhetoric remains
The government is planning to solve the budget deficit problem by cutting social guarantees, raising additional revenues from some population groups, and redistributing funds from the most profitable and successful economic sectors. Meanwhile, the authorities are not planning to revise the motto that Belarus offers effective social protection.
Last week, President Lukashenka once again reiterated his commitment to ensuring high employment levels, and put forward a rigid demand to prevent mass layoffs: "People who want to work must not be thrown out on the street. Criminal liability may be established for this”.
However, the state efforts to preserve the employment levels have negative impact on labour productivity and, consequently, lead to lower wages. The average wage in the country has been reducing for the second consecutive month and fell by 3.1% since early 2015. Simultaneously, employment in the economy has been declining since 2008, and lay-offs are consistently higher than recruitments.
In addition, President Lukashenka ordered the government to find ways to increase people’s wages in the next five years and clarified that it should not be done by turning on the printing press, but through productivity growth: "I am not saying how. All of you have to provide people with work and hold them responsible for productivity”.
The Belarusian authorities continue to probe public opinion regarding unpopular initiatives aiming to reduce social protection. Just before the presidential elections, high-level officials talked about raising the retirement age. However, due to extremely negative feedback, the president decided to postpone consideration of this issue until the post-election period.
Immediately after the election, the president and other senior officials initiated discussions about raising the retirement age: "I talked about this back in the pre-election period, that the retirement age should be raised. We need to raise it, but people do not want this. This is why we have small pension in our country. Today our pension fund is what it is”.
It should be noted that in recent years the state has already taken a number of measures to reduce the burden on the pension fund both by reducing the guarantees to the population, and by encouraging later retirement. However, despite the increasing imbalances, the state does not consider substantial reforms of the pension system, as well as other social spheres.
For example, according to the BISS research, the population regards healthcare as a priority area for reforms. In addition, society is ready for serious reforms in the healthcare and transition from budget funded to insurance healthcare. Meanwhile, at a meeting with Director of the WHO Regional Office Zsuzsa Jakab the president was only positive about the Belarusian healthcare system and virtually assured that he would not reform the medical field: "We have done a lot in the healthcare in those difficult times after the collapse of the Soviet Union".
In addition, the government intends to increase the share of payment for some utility services up to 100% by 2018. Simultaneously, Belarusian officials often refer to low utility services tariffs (compared with other European countries) as one of the main arguments in favour of the Belarusian development model.
The Belarusian authorities continue to search additional budget revenues. After the election, they have stepped up tax inspections and fines for individual entrepreneurs. This has led to some tension in the business environment, for example, to protests in Vitebsk.
As the state resources dwindle, the authorities will continue to cut social guarantees and milk some social groups. The state will go as far with cutting social benefits as society allows it. But, all these cuts will have no impact on the rhetoric of senior officials.
According to Belstat, in August 7,600 people were dismissed, including 4,800 civil servants. Dismissals of civil servants were due to the optimisation in the public administration by up to 30%. Some civil servants would retain their job however would lose the status of a civil servant. Vacancies on the labour market are likely to reduce in number, thanks to the optimisation, the state administration would increase wages for public servants. The payroll fund for retained employees is likely to increase and some former state employees are likely to get jobs in affiliated organizations. The optimisation of the state apparatus should complete by January 1st, 2018, and some former civil servants are likely to join the ranks of the unemployed.