Moldova and Ukraine Overtake Belarus in Minimum Wage

Belarusian workers can now receive less money than anyone else on the continent.

Now Belarus lags behind even Ukraine and Moldova in terms of a minimum wage. Banki24.by estimates where the situation will go further and how bad it will be in Belarus.

An employer should not pay the wage lower this level to a full-time employee. By 2021, the minimum wage in Belarus became 400 BYN. In early 2020, the minimum wage was 375 BYN.

Until recently, Belarus was in the top three countries in Europe with the lowest minimum wage. Last year, the situation worsened, and Belarus fell behind Ukraine and Moldova. From now on, Belarusian workers can receive less money than anyone else on the continent.

Our estimates show that in 2021-2022, the average wage will also suffer challenges. The situation here is similar to the minimum wage: Moldova and Ukraine are still behind.

However, the prospects of economic growth differ. The IMF and the World Bank promise Moldova and Ukraine sustainable recovery growth amid recovery from the crisis, while the scenario for Belarus is sad - stagnation in the absence of structural reforms.

The growth rate of wages directly depends on the growth rate of the economy. The slower the economy grows, the slower wages change. It is possible to increase wages in isolation from labour productivity. But this steadily leads to pressure on the foreign exchange market and high inflation.

Belarusians have already experienced this in 2011 and 2014. By the way, even in nominal terms, the average wage in the country has not returned to the dollar level of 2013-2014.

There is no need to talk about real purchasing power; it is significantly lower in dollars. Today, Belarus has a lost decade in wages and the worst prospects for wage growth in the region.

The low standard of living is visible in the abnormally high share of food in the expenditures of the Belarusians. Authorities estimate that on average, households in RB spent 27.2% of all cash expenditures and 36.8% of consumer spending on groceries in 2020.

In 2020, Belarusians spent 378 BYN per month on groceries. The lowest share of expenditures on food was in Minsk - 25.2% of cash expenditures. In regions, the share ranged from 26.9% in Minsk to 29.6% in the Vitsebsk region. At the same time, the affordability was higher in Minsk - 475 BYN per month against 341-372 BYN in the regions.

In the structure of consumer expenditures, the share of food was even higher: 34.7% in Minsk and 36.3%-39.4% in the regions. If one considers certain demographic groups, pensioners generally spent 44.7% of consumer money on food.

Even the wealthiest Belarusians spent most of their money on food in 2020. If the poorest 20% of households spent 42.4% on food, the richest 20% spent 29.8%. By comparison, the share of money spent on food in Central and Western European countries is 2-4 times lower than in Belarus.