Average salaries on the up
Late 2012 average salaries reached $500 (in equivalent) countrywide, meeting state target
By Lilia Khlystun
Until recently, much scepticism was voiced over rising salaries, due to the fear of inflation. However, the first three months of the year have passed without catastrophe. In fact, the exchange rate is steady, with sales in foreign currency exceeding expenditure on imports. Inflation remains within state targets, despite the $500 salary equivalent having been met again. The last time this happened, in late 2010, the crisis year of 2011 followed. Vadim Iosub, a financial analyst and an official partner of Alpari (Minsk), comments, “I don’t think that citizens were at fault for the 2011 crisis, although rising incomes led to increased demand for foreign currency, which significantly reduced our gold and currency reserves.” He asserts, “This was not the key reason for the crisis.”
Rather, economists agree that a deficiency in the balance of payments was the root cause, inspired by growing domestic demand, which was inflamed by greater spending power (from salaries and accessible loans). The situation is now quite different. Last year, the current account deficit was just 3 percent of GDP; 16 percent was observed in 2011. Moreover, high interest rates on Rouble deposits transformed Belarusians’ financial priorities, raising Rouble deposits over 1.5-fold.
It’s true that salaries are hitting $500 again but enterprises are now funding themselves, rather than using bank loans. Economist Dmitry Kruk, of the Belarusian Economic Research and Outreach Centre (BEROC), explains, “Since 2010, we’ve observed a rise in labour production efficiency; accordingly, this has led to a rise in ‘real’ salaries. Everything is simple: if a company works efficiently and generates profits, it can pay good money to its employees: up to $1,000. In early 2011, only a few industrialists boasted such financial prosperity.”
The Government predicts that, this year, real salaries countrywide will rise 7.1 percent. Summing up 2012’s social-economic results, PM Mikhail Myasnikovich notes that labour efficiency can yet be raised, to ensure that rising salaries are earned and justified. He views industrial modernisation and business planning as key instruments in achieving this goal. Some regional heads have ambitious plans. Not long ago, the Chairman of the Vitebsk Regional Executive Committee, Alexander Kosinets, stressed that the region is to pay $750-800 in average salaries by late 2013. Mogilev also hopes to reach $700 in equivalent but such wages must be earned, reflecting raised industrial efficiency.