Prospects for leftist parties’ coalition in Belarus
On February 17th, a meeting of representatives from a number of left-wing parties and movements took place in Minsk.
Centrifugal processes continue developing inside the opposition, reflected in formation of different coalitions. Special feature of the newly forming leftist coalition is its promising ideological core - protection of workers’ rights - and the corresponding target group, which is poorly represented at the political level.
The event was attended by representatives of the Belarusian Green Party, the Belarusian Left Party “Fair World”, the Belarusian Social Democratic Party (Gramada), independent trade unions and informal media and youth projects. The meeting discussed the possibility of nominating a single candidate from the leftist forces in the 2015 presidential elections.
Despite of its ‘framework’ nature, the meeting of the Belarusian leftists was significant for several reasons. First, it was an attempt by a number of political actors to come together based on an ideological issue, and not based on resources or leaders’ personal connections. Second, participants positioned themselves primarily not against Lukashenko’s regime, but in relation to a particular social group, i.e. wage workers whose social rights should be protected from successive narrowing.
Such an “ideological” principle for coalition building is, at least, non-conventional. Other opposition coalitions today are built primarily on the basis of resources and personnel, as well as through boycotts or dialogue with the authorities. As a result, ideologically close counterparts find themselves on different sides of the political divide. For example, the UCP party and the organizing committee of BCD on the one hand, and the “Tell the Truth!” movement and BPF on the other hand, let alone the “European Belarus” campaign, which is controlled from abroad and is the most radical vis-à-vis the current government, and their colleagues in the opposition.
The potential leftist coalition’ success depends primarily on the resources and personal factors: whether the participants will be able to find the necessary human and financial resources for the local and presidential election campaigns, and whether they will develop loyalty, sufficient for long-term cooperation.
The financial crisis in Belarus in 2011 demonstrated that the left-wing parties and independent trade unions in Belarus were not able to mobilize employees, whose standards of living had fallen sharply. In 2012 they also had not increased their activities after the scandalous Decree No 9 took effect.
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.