The Belarusians to Face Short Work Week

A "shock" therapy is already in action in Belarusian economy.

The government discusses the necessity of large-scale stuff cuts at state-owned enterprises. Experts of Deutsche Welle tell what is awaiting Belarusians.

The government of Belarus decides what to do with inefficient production and thousands of employees in the result of the planned reforms in the public sector. The 4th economic forum KEF-2016 had those issues discussed in Minsk. Deputy Finance Minister Maksim Yermalovich informed that "the Belarusian economy will shift off a load of loss-making state-owned enterprises".

According to economists, the population should be ready for hard times.

According to the official statistics, until the end of the third quarter this year about 91 thousand employees have been dismissed. In the same period last year more than 60 thousand lost jobs. In first six months 30% of industrial enterprises were awarded the status of economically irrational, the same indicator in agriculture almost reached 40%.

The number of employees at above mentioned enterprises equals to 10% of able-bodied population (4.5 million) and they are potential unemployed. They will be the first who face cuts. Cuts are being performed in all spheres, except IT and refining industry, economists of BIPART Internet project indicate.

The head of the project on reforms in the public sector Uladzimir Kavalkin warns that Belarusians will face short work week, unemployment growth and decrease in number of jobs in 2017.

Review of Social Policy

When talking to DW Kavalkin noted that resulting from deterioration of the economic situation the government reviewed its social policy for the first time in 15 years: "Earlier the main issue was to provide everyone with a job, now amid absence of such opportunity the government has started to develop legal acts to support the unemployed."

In particular, it is planned to grant an address social assistance - state subsidy to pay for housing and communal services for the poor, scholarships for professional training for registered at the labour exchange and the differentiated increase of unemployment benefits. Now it equals to $10 and is the lowest in the entire territory of the CIS.

According to the Labour Ministry and the draft decree which is being discussed in the government an unemployment benefit will be increased. For the people laid off due to the bankruptcy of enterprises it will amount to 100% of the subsistence rate (SR - about $83), those dismissed for good reasons including contract termination - 50% of the SR.

Staff Optimization

"Staff optimization is a coercive measure because enterprises are trying to improve their financial state amid cuts of state support, so the unemployment issue is extremely urgent," Dzmitry Ivanovich, economic observer of probusiness.by, comments on the situation. He recalls that the government's decision of October 31 approves the list of 400 agricultural organizations where 100 of them are subject to bankruptcy and 300 to reforms.

The wave of layoffs has come to state administration bodies. "There is a document under which up to 50 per cent of officials will be reduced; this is a sign that the state budget is unable to support all of them", expert says.

According to him, layoffs will touch upon the industry as well, as soon as the audit of state-owned enterprises is finished until the end of the first quarter of 2017. The main concern, according to Ivanovich, is that the government creates only few jobs:

"Officials' statements on the issue are profanation, enterprises are just hived off and new jobs exist only on paper."

IT-sector is the one which generates new jobs, and the forestry is the one in the public sector with an extended staff. Others cannot do it, the expert stresses.

In Ivanovich's view, "the shock therapy in the Belarusian economy is already been launched, still not everybody realizes it that the crisis will last long unlike previous ones."

Uladzimir Kavalkin agrees with this: "GDP and export slowdown, planned cuts in the public sector and sharp situation deterioration with the employment are the burden of the population. The shock therapy is better than a shock without a therapy."

"Let Business Be Free"

Kvalkin also believes that the government misses a clear plan for job creation. At the same time, the economist notes the matrix of government measures on cooperation with the IMF marks an improvement in the business climate.

The government relies on a private business which can reduce the unemployment level and promote the economy growth. "Until now only cosmetic measures are being taken to make small and medium business lift in spirits. But this is not enough," economist believes.

Analysts mention reduction of tax burden, clearly-worded laws and restricted functions of regulatory bodies as steps aiming at support of business. "Let business be free, it will find ways how to make money and create new jobs," Dzmitry Ivanovich believes.

He states that the Belarusians will have to get used to low income level, to take care of employment on their own and learn new professions until better times. The analyst of probusiness.by predicts that if the government takes reforms in the public sector as early as next year, positive results in the labour market should be expected no earlier than in 3-4 years.