Gap between top managers and executives widens
Lukashenko’s top managers remain loyal to him. However, the gap between top and mid-level managers widens. Ministerial and National Bank specialists realize that the existing Belarusian socio- economic model has been exhausted, but are not yet ready to promote an alternative.
A small group of senior managers has formed in Belarus. It mainly includes officials of retirement or nearing retirement age who started their careers in the Soviet times. They lack ambition and desire to change the existing socio- economic model.
From time to time, president Lukashenko reshuffles senior officials horizontally in order to prevent the formation of close relations/clans among the top nomenclature. For example, the transfer of Shapiro to the position of the Minsk Oblast Executive Committee chairman could be linked to his activities as the former governor of Grodno region. He attempted to nominate his own staff to key positions in the Grodno region. Namely, in 2013, Sergey Lozhechnik (born in 1981), Shapiro’s protégé, was nominated as Shchuchyn Region Executive Committee Chairman and became the youngest chairman in Belarus.
Security forces are fully controlled by president Lukashenko. Various secret services are in constant competition for resources and influence on the head of state. The president often reshuffles heads of security agencies horizontally.
In addition, the president uses harsh but populist rhetoric against officials to keep up his approval rating. As a rule, threats “to ‘cut off’ manager’s heads” do not result in concrete actions. Very often the dismissed officials are returned to high managerial positions. Lukashenko has a serious shortage of trusted top management staff. For example, former National Bank Chairman Prokopovich was sent for retirement during the 2011 currency crisis. However in 2013 the president returned 70 - year-old Prokopovich to the civil service, appointing him as his assistant and then Deputy Prime Minister.
Lukashenko understands the importance of nomenclature’s integrity and loyalty for the stability of their power. According to the National Statistics Committee in summer 2013 wages in the public administration increased by 43.1 %. Moreover, the income gap between civil servants at different levels has significantly increased, while the ‘administrative reform’ has affected only average executives.
Simultaneously, National Bank and ministerial specialists have prepared an effective economic policy strategy. However, these documents are used by the authorities only to declare the reform intentions while seeking external funding, without finding support at the highest political level.
Thus, there are currently no reasons to believe that Lukashenko and his top managers have conflicting interests. Mid-level executives, without the support from the ‘top’ and without pressure from the ‘bottom’ are not ready to promote socio-economic reforms.
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.