The Russian public lobby is getting stronger in Belarus
The Constituent Assembly of the Public Association \"Eurasian Peoples’ Union\" (EPU) took place in Minsk on March 25. A former director of the Information and Analytical Center of the Academy of Public Administration under the aegis of the President of the Republic of Belarus Yury Baranchik was elected Chairman of the organization.
The establishment of the EPU is another attempt to create a social movement in Belarus which would represent an ideological and geopolitical alternative to European-oriented democratic NGOs. The authorities’ most likely response to this action will be a hidden opposition.
According to the charter of a new and not-yet-registered NGO, the main objective of the EPU is to promote the construction of the Eurasian Union of Russia, Belarus and Kazakhstan. This initiative is extremely timely, since it occupies a vacant niche in the Belarusian public and ideological support of Eurasian integration. Democratic NGOs operating in Belarus traditionally only support European integration of Belarus.
Voluntary work in the field of Eurasian integration is a new and urgent direction for Belarus. It has been monopolized by a small circle of government officials from the presidential administration mainly on projects of the Union State of Belarus and Russia. After the launch of the Single Economic Space the area of cooperation expanded rapidly, which the EPU made use of. The EPU has already announced plans to promote the state and public partnership between Belarus, Russia and Kazakhstan.
The EPU’s leadership is not associated with the traditional opposition movement and is known for its moderate criticism of the Belarusian authorities. Obviously, the EPU is planning a further transformation into a political organization, but it is also clear that the Belarusian authorities will have their counteraction, since they have no interest in the appearance of uncontrollable social and political actors, especially in the Eurasian area. The first test of the Belarusian authorities’ intentions will be the Ministry of Justice’s response to a registration request from the EPU.
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.