Belarusian society affirms its demand for a strong leader
Amid conflict in south-eastern Ukraine, Belarusian society is stepping up its demand for a strong leader and President Lukashenko is growing in popularity. However, regardless of Lukashenko’s growing popularity, the Belarusian authorities are concerned about the level of population’s loyalty to the government. The Belarusian government is undertaking measures to consolidate the population around the idea of Belarus’ independence and sovereignty however, so far, the authorities’ actions were non-systemic and often contradictory.
According to recent polls by IISEPS, the president’s popularity rating is on the rise.
Since early 2014, President Lukashenko’s popularity rating has been climbing: in December 2013 only 37.7% trusted him, 45.9% in March 2014, and 49.6% - in June 2014. The president’s electoral rating has remained unchanged at 39.8% (in response to an open-end question), and even slightly increased to 48.1% in response to a closed question. Interestingly, the growth of the president’s rating does not correlate directly with the people’s welfare growth. According to the Statistics Ministry, the average salary in December 2013 was USD 620.6, slightly decreasing in May 2014 to USD 604.1. In addition, the Belarusian authorities could not demonstrate any progress in socio-economic development.GDP growth in January – April 2014 was only 1.1%.
Events in Ukraine continue to have a significant impact on voters’ preferences in Belarus. Amid the armed conflict in south-eastern Ukraine, Belarusian propaganda has been focusing on praising the safe living conditions in Belarus provided by the authorities. However, the Belarusian authorities have been unable to counteract the Kremlin’s propaganda about events in Ukraine. Despite Moscow’s numerous attempts to draw Minsk into Russo-Ukrainian confrontation, the Belarusian leadership is trying hard not to spoil relations with the Ukrainian authorities and to adhere to neutrality.
President Lukashenko has reiterated the need to preserve Ukraine’s territorial integrity numerous times and recognised the new Kiev authorities. However, according to the latest national poll by IISEPS, most Belarusians support the Kremlin’s aggression against Ukraine - 62.2% of Belarusians uphold Russia’s annexation of Crimea as restoration of historical justice. It should be noted that public opinion in Belarus was partly influenced by the contradicting messages from official Minsk during the Russo-Ukrainian tension, and largely by the Russian media, which dominate the Belarusian information space.
The Belarusian government cannot but be concerned about the influence the Russian media has in Belarus. For the first time in two decades, President Lukashenko spoke Belarusian at a public meeting devoted to the 70th anniversary of Belarus’ liberation from the Nazis (Independence Day, July 3rd). In particular, he said, “This unity saved us during the war. It gave us the wisdom and strength to build an independent Belarus in the new times. Anyone who raises a hand against the nation’s unity is the enemy of Belarus”.
Nevertheless, the government sends confusing signals to the Belarusian society. For example, the only Belarusian-language teacher who was critical of the government’s policy was recently fired from Grodno Medical University.
The Belarusian authorities will take measures to boost the population’s loyalty to the government. Due to the lack of achievements in socio-economic development, the president will focus on the anti-corruption measures and Belarusian propaganda will exploit developments in Ukraine to maintain the authorities’ rating.
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.