Authorities test the economy’s mobilization

On November 30^th, during a visit to Borisovdrev woodworks President Lukashenko urged to develop a regulation banning layoffs at the enterprise before the modernization was completed. Mr. Prokopovich was nominated Presidential Aide responsible for woodworking industry modernization.

The authorities’ desire to tighten labour discipline and rules is due to a significant workers’ outflow from the industry and jeopardized modernization programme. In addition, by taking strict measures, the president tests the social response for if the financial crisis of 2011 repeats.

Lukashenko’s statement prohibiting layoffs had a wide response the independent Belarusian media and was negatively assessed – as a “return to slavery”. In the meanwhile, the issue is about a draft decree, which probably will establish special labor terms at woodworking enterprises undergoing modernization. The state’s logic is that if an enterprise receives public money for modernization, it must achieve the projected output results, which is impossible with fewer employees.

These initiatives are explained by personnel and economic problems faced by the Belarusian government. It should be reiterated that during the currency crisis in 2011, Lukashenko was threatening to use harsh measures against Belarusian migrant workers in a very emotional manner (for instance, to make them pay 100% for utilities), but had not actualized his threats.

However, the government’s concerns about downsizing in the industry are well-founded. According to official data, the number of employed in the economy in January-October 2012 decreased by 2% compared with January-October 2011, and the highest rates of dismissals were registered in construction and industry. The difference in wages forces Belarusian workers to leave for jobs in Russia, or to change their main activity, for instance, to become “shuttle traders”, which is a particularly popular activity among the residents in the border areas. Therefore Lukashenko demands from the government officials to increase control over industries in the regions, threatening with dismissals.

In addition, the President started his field trips without Prime Minister Myasnikovich. He seems to keep PM away from the key economic policy issue – an industrial modernization programme – which implies that PM team’s influence continued weakening. The most likely successors of Myasnikovich in the short term are: former Lukashenko assistant for Economic Affairs Mr. Tkachev (who works for Amkodor machine-building holding), the recently appointed PA head Alexander Kobyakov or Mr. Prokopovich, who recently headed the National Council for Enterprise Development.