Wage decrease: public sector loses its profitability

April 22, 2016 18:04

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).

Similar articles

Raising minimum wage in regions to BYN 1000 by late 2019 could prompt devaluation
August 14, 2017 12:02

The country's leadership has instructed the local authorities to raise minimum wages at enterprises by the end of 2019 to BYN 1,000, which would lead to an increase in the average wage in the economy as a whole to BYN 1 500. The pace of wage growth in 2017 is insufficient to ensure payroll at BYN 1000 by late 2017 without manipulating statistical indicators. In order to fulfil the president’s order, the government would have to increase budgetary expenditures on wages in healthcare and education, enterprises – to carry out further layoffs and expand the practice of taking loans to pay wages and restrict investment in modernisation of fixed assets. In 2010, the artificial increase in wages led to a threefold devaluation in 2011, an increase in the average salary to BYN 1500 will not match the capabilities of the economy and would lead to yet another devaluation.