Modernization of state media will have opposite effect
Most likely, merger of five Belarusian major state print media will have the opposite effect than intended and will increase the bureaucracy in a new media holding. It will reduce the state’s means for supporting government’s information policies in the eyes of the population and the international community.
The authorities’ plans to merge five state newspapers into a single media holding under the Presidential Administration, announced early January, are intended to cut down public spending. Exactly the same logic is behind the government’s personnel reform: costs cutting via staff lay-offs and functions’ reconfiguration.
In particular, based on Sovetskaya Belorussiya newspaper, it is proposed to establish a single holding company, which will include newspapers, published by various governmental bodies: Respublika, Narodnaya Gazeta, Belorusskaya Niva and Znamia Yunosti. As a result, all the print media will be controlled by the President’s Administration, which issues Sovetskaya Belorussia newspaper with the largest circulation.
In reality, this approach will result in the expansion of state bureaucracy in the new media holding (personnel department, marketing, logistics, etc.) at the expense of actual editorial teams. As a consequence, the number of ‘technical’ staff, who is not responsible for the implementation of the national information policy will increase.
The problem is that despite the impressive number of staff responsible for ideological work in the government and in the state media, the Belarusian authorities failed to elaborate proper state ideology, which would become an additional factor ensuring the civil servants’ loyalty. Even President Lukashenko acknowledged this problem during a meeting with students from the Presidential Administration Management Academy in September 2010.
The lack of “soft power” within the government during the last few years (it could be the state ideology) has resulted in the brain-drain of younger journalists from the state media to private information start-ups or international media (a group of journalists left Sovetskaya Belorussia, as well as popular hosts from BT TV, STV, ONT, and other TV Channels.)
Most likely, the priority budget cuts at the state-run media will become an additional factor impairing state’s functions, along with the declared reduction of the state apparatus by one-quarter. As a result, the state’s ability to control political elite and public opinion in Belarus will reduce in the next two years.
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.