Government plans to significantly limit population’s wage growth in 2014
In 2014 wage growth is projected at 3%
Rapid wage growth in 2012 and 2013 was one of the reasons behind economic imbalances in Belarus. In 2014, the authorities plan to limit wage growth in order to remedy the economic situation. A formal approach to implementing this initiative might result in the outflow of highly skilled specialists from Belarus.
High wage growth against low productivity growth has led to the need to limit wage growth in 2014 to 3% (forecast of socio -economic development in 2014). It is projected that productivity will increase by more than 9 %, which will allow for faster growth in labour productivity over wages. These plans will be fulfilled due to a smaller number of those employed as a result of Belarus’ deteriorating demographic situation.
In 2012, real wages grew by 35.2 % (not taking devaluation into account). , In August 2013, real wages were 17.7 % higher than in August 2012. In January – August 2013 net incomes in the economy dropped by 37.7 % compared with the same period in 2012.
Meanwhile, a forecast for wage growth in the public administration and industry suggests that the gap between the salaries of state employees and employees at industrial enterprises will increase. In the public administration, wage growth is projected at the cost of layoffs and optimization. However, unlike public administration, the social sphere has an acute shortage of staff. In healthcare and education, staff shortages are alarming. Many specialists have relocated to other countries where their work is much better paid.
The authorities have spotted the problem with rapid wage growth and plan to address it. The government should pay better attention to improving the situation in certain economy sectors and limit wage growth by taking into account the sector’s specifics in order to prevent further loss of human resources.
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.