Belarusian opposition declares consolidation
On 29 June in Minsk representatives of six opposition parties and democratic movements have signed an agreement on conditions of participation in the upcoming Parliamentary elections.
They have put forward demands to the authorities: to release political prisoners and guarantee free elections. The agreement was signed by the leaders of UCP, BChD, BPF, “Fair World” party, “For Freedom” movement and “Tell the Truth!” civil campaign.
On the one hand, the Belarusian opposition demonstrates consistency in the coordination of their positions and step by step approach to forming a consolidated view on key policy issues: resolution of political crisis after 19 December and the Parliamentary elections of 2012. The most topical issues include the release of political prisoners and a likely boycott of the Parliamentary elections, depending on the reaction of the authorities.
However, this event should be regarded as tactical rather than strategic step. Regardless of the obvious progress in the rapprochement of positions, representatives of political parties and movements emphasize that the signed document is an agreement, not an action programme. Also a joint statement by the leaders of political parties and movements should not be considered as establishment of a new coalition.
Therefore the agreement has no “added value” in political sense and represents yet another formal document, repeatedly voicing usual claims to the Belarusian authorities. The more so, one of the signatories of the agreement, the leader of the “Fair World” Party Mr. Kalyakin talked previously at the party congress about the Party’s participation in the Parliamentary elections on condition of democratization of the electoral system.
In the first place, the agreement is not addressed to the authorities, rather to other democratic partners and represents a „trial balloon”. Its main objective is to test the grounds for potential future coalitions. At the same time, optional and tactical nature of the agreement provides a strong reason to doubt that it will be signed by new parties.
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.