Leu Margolin: It is impossible to bring back the 500 dollars salary

The authorities will start pressuring businesses to make them raise salaries.

Lukashenka turned on the heat for a new obsession to return salaries to the level of 500 $.

On November 17 at a press conference for Russian regional mass media, Alexander Lukashenka, for the second time in a week, claimed that there is a need to increase salaries to 500$. “In 2017 we can die, but we have to reach 500$... I will do everything to ensure that we go to the level of 500 usd”, - he stressed.

Once the average salary in the country has reached 500 dollars, but that did not last long. Why would Lukashenka once again remind the unfulfilled promise?

Leu Margolin, economist, replied to the questions of "EuroBelarus" Information Service.

- Theoretically, you can return the salary to the level of 500$, but you need to dismiss a million and a half people. That is to close all inefficient enterprises and throw all workers into the street. It is obvious that the Belarusian authorities will not agree to such a massive job cut. Thus it is impossible to bring back the salary of 500$.

I’ve been thinking for a long time about what Lukashenka meant. He didn’t just say something once about 500$ but repeated his demand. The only explanation that came to my mind is that they will start pressuring businesses to make them raise salaries. But we could get away with such a focus in the early '90s when numerous entrepreneurs were given salary "in envelopes"; now there are no such companies among large enterprises, and little left even among the small businesses. In case of tightening the screws too strongly the opposite effect can be achieved - the further reduction of business.

There are no other ways to raise wages. Any first-year student of economic faculty understands that salary depends on productivity. To raise the salary, it is essential to increase productivity. Lukashenka had to clearly state how we can do that. But there is nothing to say.

- Nevertheless, Lukashenka set an unachievable goal. What aim does he pursue?

- A lot of Belarusians still believe that Lukashenka is able to get out of any situation. But now even the most ardent supporters say that the Lukashenko’s  star seems to have reached the hour of dawn. Probably, the Belarusian leader is trying to animate optimism and hope in people, although this technique is unlikely to work.

- Won’t it backfire? If people do not get what was promised, frustration and aggression can spill out?

- If we lived in a different country, I would have been thinking same. But I don’t really hope for a boost of activity in Belarus. The repression machine has been well set over the two decades and operates stably. Large enterprises, groups of MAZ, MTZ, operated in the 90s and made working man a real force. Now this force has become much weaker in Minsk and particularly in the regions and the strongest and most active workers get redundant. Often large enterprises have a very high proportion of retirement and pre-retirement age workers, or, on the contrary, young professionals, who struggled to find work and they are unlikely to be active.

  - Some experts are talking about Lukashenko starting a new political campaign to prepare for the next constitutional referendum.

- I do not see any connection between the salary of 500$ and preparations for a referendum. We are all well aware of the way elections and referendums are held in our country: any result can be pre-programmed. But then not vague promises should be given to people but real money.

There is only one way to raise the salary at the disposal of the authorities, which is to turn on the printing press and start massively throwing uncovered empty money into the economy. But the Belarusians have already worked out the perfect algorithm for such cases: people rush to buy currency, which leads to the collapse of the ruble.

I think it's an over complicated scheme for the authorities.