News / 24.06.19

Fedynich: people impoverishment can't yield economic success

Alexander Turchin, First Vice-Premier of Belarus has "declared war" on small wages. First, the state will deal with the enterprises, where workers earn less that BYN 400 a month; then – with legal entities with wages and salaries below BYN 500.

"The first phase is to deal with the legal entities, where workers earn lass than BYN 400. We've set a target to have no such entities by July 1, 2019," Mr Turchin has declared.

The goal is set – but how to achieve it? The First Vice-Premier gave his recipe: "Each of such enterprises has its owner. If you see that a company is inefficient – make a managerial decision: merge, sell or liquidate, while ensuring people's employment, of course. But paying such low salaries is inadmissible!"

The state can liquidate enterprises. But what can it offer in return?

Gennady Fedynich, the leader of the REP Trade Union, offers the government a simple but worthy way out: to establish the worker's first-category tariff not lower than the minimum consumer budget (MCB), which today amounts to BYN 467.24 and at least somehow covers the minimum necessary physiological needs of a working person. All other bureaucrats' calculations (minimum subsistence budget or floor wage) have nothing to do with the real situation and fail to cover the vital needs of working citizens.

"Indeed, Mr Turchin's statement is alarming, to put it mildly: a year ago the country's leadership promised a salary of USD 500, and now they promise just BYN 400 by July 1. First of all, they should deal with inefficient enterprises (mostly, they are state-owned ones); why can't they pay decent wages to their workers? What prevents? Tax policy? Energy intensity of enterprises? Ineffective leadership from above? The impossibility of risk in business without falling under law enforcers' pressure? Or they pay salaries in envelopes to escape taxes? Company managers can't find markets for their products, or they are simply uncompetitive?"

"Merge, sell, liquidate," Mr Turchin advises.

"Well, suppose we merge a loser with a successful company; the management will be cut. But what prevents from cutting bureaucrats right now?"

"The government gives a great incentive: all the workers should be employed. But where and on what salary? You want to close a company? No problems, moreover that most of them are state-owned, so, the state has the right to liquidate them. It means that the state should employ (or retrain and then employ) a worker, a turner, a cleaner (with their consent) to work for the salaries not below but higher than their previous ones."

"But there is another problem, more serious than the one raised by Nice-Premier Turchin. If the economy exists for 6-12 months more in this operation mode, it's unlikely that when a serious order comes from abroad, the company will cope with it timely and with due quality. Today, it's impossible to deny a huge deficit of professionals: highly professional workers and managers."

They still try to command economy with declarations: once ordered from above – it should be promptly fulfilled.

"Sorry, but in what way? How many more Belarusians will leave the country after the closure of these enterprises? You close a company, and all the workers go to the MTZ, don't they? For example, they closed 'Krasny Borets' (Red Fighter) in Orsha, and worker rush to Baran (a dwelling settlement near Orsha. Alas, nobody is waiting for them there..."

"This is not a market-oriented and not an economic approach – this is manual ruling the economy that no longer works: the economy does not obey orders. Look at the sphere of housing and communal services: the number of bosses remained the same, and even went up, but why we see the dropping number of janitors, plumbers, electricians, etc.? The same thing happens at any state enterprise: bosses remain (family clans), but workers and other professionals are forced to leave."

"Or maybe there's reason to start with yourselves, the beloved ones? Why are there so many ministries, agencies, committees and other structures in the country? Why are there such bloated offices in all executive bodies? Why not revise the budget and reduce the costs of law enforcement bodies, donations to President's Funds, and send all the saved money to buy new technologies and create new jobs with decent salaries? Can you?"

"There's no need to cheat people: they want to earn money, not just to get it. Create conditions, so that a worker could earn at least BYN 800, including in the regions. If you can't do it – have courage to admit that the existing system of managing the economy doesn't allow not only creating new jobs and new facilities, but even to preserve the existing ones. There're no precedents in the world of achieving success in economy by impoverishment citizens. This is nonsense," Gennady Fedynich has concluded.

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