Crisis of 2011 in Belarus: impoverishment as a means to reduce inequality

This conclusion made the authors of the research “Poverty and social integration in Belarus” conducted by the IPM Research Centre with the assistance of the Centre for European Transformation (CET) and the International Consortium "EuroBelarus". The research was presented on December 17, Minsk.

The expert of the IPM Research Centre Hleb Shimanovich, who presented the results of the research, noted that the level of an absolute poverty assessed on basis of minimum subsistence level for different population groups has been rapidly decreasing for a long time in Belarus, starting from 2000.

“The main reasons for this decrease were high rates of the economic growth which were accompanied by tough regulation of the labor-market and considerate redistribution of income”, - noted the economist.

But in 2011 the situation has changed noticeably, and the level of absolute poverty has practically doubled in one year.

Together with it, the level of relative poverty that is assessed on the basis of shares of people with the income at 60% level of the average in the country, during the recessionary year of 2011 has actually reduced from 13,8% to 12,9% on the national scale of measurement. “The politics of income’s redistribution was conducted rather actively in 2011, and it resulted in the reduction of inequality in 2011”, - noted Hleb Shimanovich.

If we start talking about social groups that the crisis of 2011 affected most, then in the first place one should single out people of the retirement age (after 65 years), for whom the level of relative poverty has increased from 16,2% up to 20%. And yet, at large relative poverty in the country during the recession year has even decreased! And among children the level of relative poverty has decreased from 10,4% to 8,8%, which can be explained by the high effectiveness of child allowances as a means to combat poverty. At the same time, high level of the absolute poverty among children (12,6%) arouses author’s concern, as there is high probability that in future, when they grow up, it will be difficult for them to get out of the category of poor owing to the impossibility to get high-quality education.

If we turn to the criterion of the place of residence, then it is in the rural area where the level of absolute poverty has increased most – from 9,7% up to 11,5%. And among the citizens of small towns with the population less than 100 thousand people index of absolute poverty has decreased from 6,9% to 6,5%. The authors of the research explain this reduction with the fact that it is citizens of rural area who have most actively started to look for possibilities to earn money outside the country. And the main direction of their search was Russia, noted the director of the IPM Research Centre Aliaksandr Chubrik in his report on the problems of labor migration.

The problem of poverty within lonely people requires special attention. Thus, if we take a look on the households that consist of one person, then poverty risk before the crisis was practically absent among them (the level of absolute poverty made up 1,6%), and after the crisis this rate grew up above the average level (8,3%). “It is connected with the fact that the given category of households doesn’t have alternative sources of income. I.e. in case of unemployment, deteriorating of a situation on the labor market these persons immediately face poverty risk”, - noted Hleb Shimanovich.

What concerns lonely pensioners at the age of 65 and older, then, though the level of absolute poverty by results of 2011 among them is rather low (1,6%), however, the indicator of relative poverty makes up 46,7%. Thus, as Hleb Shimanovich marked during the presentation, pension rates in Belarus permit to survive, but don’t give possibility to feel comfortable in comparison with other classes of society.

All in all, the problem of poverty is urgent for Belarus as before. As the director of the Belarusian Economic Research and Outreach Center Dzmitry Kruk noted in the course of his speech, economic growth in the country is of low interest under tight money policy with a high level of refinancing rate. Whereas the reduction of the rate can endanger macroeconomic stability, which can lead to the repetition of the crisis scenario of 2011.