Future of Belarus in the EURONEST
On 21 April during a meeting with the Belarusian MPs in Minsk, the Head of the Parliamentary delegation of Azerbaijan to the Parliamentary Assembly of the EURONEST Ali Huseynov spoke against the policy of isolation of Belarus and called on other “Eastern Partnership” countries to defend full membership of Belarus in it.
The statement by the Head of the Azerbaijani Parliamentary Delegation is in line with the statements made by the Head of the Parliamentary Delegation of Armenia to the EURONEST Vahan Hovhannisyan, during an enlarged meeting of the Bureau of the European Parliament on 25-26 January. The position of the Armenian Delegation regarding Belarusian involvement in the EURONEST was also supported by an official representative of the Ukrainian Parliamentary Ddelegation.
One can argue that the official Belarus made progress in building up its “internal” lobby in the EURONEST, given it was originally excluded from it for non-compliance with the democratic standards of the OSCE. To date, the Belarusian lobby consists of the Heads of Delegations of Armenia and Azerbaijan with a moderate supported by the Ukrainian delegation. The Belarusian lobbying group is headed by Deputy of the National Assembly, member of the Communist Party and Head of the Parliamentary Commission for International Affairs and Relations with the CIS, appearing in the EU “black list”, Igor Karpenko.
On the other hand, Belarus failed to form “external” lobby in Brussels. The European Parliament in the person of EP Delegation to the EURONEST Kristian Vigenin, supported by the EP President Jerzy Buzek spoke emphatically that following the 19 December events in Minsk, Belarus could not be represented in the EURONEST at the official level. The following meeting of the EURONEST is scheduled for 3 May and most likely will be held without the official Belarusian Delegation.
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.