Social protests could prompt changes in domestic security policy in Belarus

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February 20, 2017 10:22
Фото: Максим Мирович, maxim_nm.livejournal.com

Social tension in Belarus will grow inevitably and may affect the plans to downsize the Interior Ministry. In an effort to prevent the expansion of the social base for public protests, the Belarusian authorities are likely to resume ad hoc repressions against potential organisers and leaders of such protests. The Belarusian authorities are hardly ready to make any concessions.

The ‘March of Angry Belarusians’ held on February 17th, 2017, against the state’s socio-economic policy was the largest protest action in Belarus in the past five years. Amid deepening economic recession, Belarusians are likely to become more discontent with the authorities, which could influence the state’s security policy.

The Belarusian authorities are unable to find a way out of the economic crisis and the crisis of the Belarusian socio-economic model in principle. This leads to the growth in protest moods in Belarusian society. The political crisis in relations with Russia only exacerbates the situation. The Russo-Belarusian "Cold Peace" may become a "Cold War." In Minsk, people fear that external actors, notably Russia, could use the growing social instability in Belarus to provoke the political crisis to put pressure on the Belarusian authorities.

The Belarusian authorities are likely to take measures to pre-empt massive public protests, with that avoiding brutal and concentrated use of force. The authorities are likely to overestimate the risks of offering concessions to the protesters as it could create a precedent when open pressure on the authorities would have achieved its goals (whether social or political). This, in turn, on the wave of success, could lead to new protests and new demands. Meanwhile, it appears that these risks are actually negligible, and the decision to abolish the decree would be a simpler solution making economical sense.

Amid the threat of growth in protest mood in society, the authorities could revise the decision to downsize the Interior Ministry. The redistribution of funds within the agency in favour of the Interior Ministry troops is very likely. In addition, the authorities are likely to resume pointed repressions against persons and organisations, which are willing to organise and lead social protests in Belarus. Informal movements and their leaders are likely to become the most vulnerable social group (anarchists, autonomous nationalists, etc).

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Growth in real wages may disrupt macroeconomic balance in Belarus
October 02, 2017 12:12
Фото: Дмитрий Брушко, TUT.BY

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.

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