Wage decrease: public sector loses its profitability
According to the National Statistics Committee the average nominal wage actually two-folded in 2011 (January 2012 to January 2011) from Br 1.409 million to Br 2.880 million (204.1%). However, the inflation during the period reached 209.7%, respectively, wages, adjusted for inflation in January 2012 amounted to 97.3% of the January 2011 wages.
Wages grew faster than inflation in the chemical industry (by 157.8% up to Br 7.683 million), in petroleum production industry (by 109.6% up to Br 6.35), oil extraction (by 115.7% up to Br 5.298), textile industry (by 105.6% up to Br 2.207 million), financial sector (by 101.0% up to Br 5.158) and some other (the highest wage growth has been registered in the IT sector – by almost 200%). However, analysis of this data makes it clear that a significant increase in the wages in the textile industry did not result in a substantial wage increase due to the industry’s low base effect – wages in the textile industry, which is dominated by women, have traditionally been the lowest in the industrial sector.
In some industries wages remained high compared with other sectors, regardless of the fact that their growth lagged behind the inflation, for instance, fertilizers production, production of vehicles, machinery and equipment, insurance business. Relatively high level of income has been retained by the staff of higher education institutions (Br 4 million) and doctors (Br 4.2 million).
Disproportions in wages were accompanied by staff cuts in almost all sectors of the economy, except trade, finance, education and healthcare. Moreover, unlike workers of trade and finance industries who retained and increased their incomes, employees of educational and health care industries (except for the above-mentioned two categories: doctors and university professors) suffered severe losses. The largest saff cuts were in the construction, textile and wood processing industry.
As a result, the “average salary”, i.e. nominal wage ranging between Br 2.5 - 3 million has been paid to 12% of employees only, more than a half (55.7%) of employees received less than Br 2.5 million and one third (32.3%) – more than Br 3 million. The average salary of public sector employees constituted Br 2.5 million (including military personnel, law enforcement, customs, etc.).
It is worth to mention that the incomes of the staff in the public administration have been affected the most (in January 2012 they received 71% of their January 2011 wages), nevertheless incomes of this group of employees fit into the “average”, closer to the bottom of the range (about Br 2.5 million). The overall number of employees of this economic group is relatively small – 84,000 (all in all the economy employs 3.4 million people) however the loyalty of these workers is an important pillar of social stability.
Low wages in the public administration reduce the prestige the government as an employer, create additional incentives for corruption and threaten the loyalty of state officials in critical situations. Among the government institutions, the lowest wages are in the local administrations, National Statistics Committee, Ministry of Taxes, Ministry of Justice, Ministry of Information and State Customs Committee.
It should also be noted that according to unofficial data (the National Statistics Committee has no data in this regard) wages of employees of the Ministry of Internal Affairs and of the Ministry of Defense do not keep up with the inflation, and generally fit into the “average”, closer to the top of the range (Br 3 million and a bit more).
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.