Minsk ponders death penalty moratorium benefits
On April 11th, Alexander Hessel, Council of Europe Director for political issues visited Minsk.
Meetings in Minsk with CoE representative, Alexander Hessel, imply that Belarus is considering options to open an additional communication channel with the EU. In addition, Belarus may try to "swap" a moratorium on the death penalty with one of the conditions for the resumption of EU-Belarus dialogue.
In Minsk, Mr. Hessel gave a lecture at the Belarusian State University, met with Foreign Ministry officials and the Constitutional Court. Meeting at the Constitutional Court in particular, may be regarded as an implication that the Belarusian authorities are considering a moratorium on the death penalty as an option. Moratorium on the death penalty is an obligatory condition for the resumption of talks for Belarus’ accession to the Council of Europe.
The day after Hessel’s visit, Chairman of the Parliamentary Assembly of the Council of Europe Jean-Claude Minion made a statement about the Council of Europe’s readiness to continue talks with Belarus about its membership in the CoE, but only if the moratorium on the death penalty was introduced. According to Mignon, such a step would show that Belarus “shares European values”.
If Belarusian authorities see benefits from the resumption of the dialogue with the CoE, they might include the moratorium on the death penalty in the negotiations package put forward by the EU (release and rehabilitation of political prisoners, democratization of the political system, etc). In particular, the authorities may try to “swap” the moratorium with the demand of political prisoners’ rehabilitation.
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.