The law on social dependency will punish those who really need help during the economic crisis

The latest round of ill-conceived legislation clearly demonstrates that the authorities are helpless when it comes to adverting further economic decline, writes Ryhor Astapenia.

On 2 April, Alexander Lukashenka signed a decree against “social parasites”. From now on, individuals who do not pay taxes will lose be forced to submit around $240 annually into the state’s coffers.

This law is designed to help stimulate employment and fill any number of budget gaps, but it should be viewed in terms of how it reflects the nation’s rising unemployment rate and inability to collect taxes.

Despite its good intentions, it is almost certain to harm many individuals who are in real need of assistance. According to the IPM Research Centre, in the near future the unemployment rate in Belarus will rise to a historic high of 8-9%. Moreover, many Belarusans are presently working either part-time or have been laid off as the economy struggles to recover.

The rising level of unemployment has only extended the gap between the authorities and society. Lukashenka’s approval rating has dropped by more than 10% over the last six months. The latest round of ill-conceived legislation clearly demonstrates that the authorities are helpless when it comes to adverting further economic decline.

The Belarusan fairy tale of full employment

The pre-election campaign programme of Aliaksandr Lukashenka in 2010 claimed that by 2015 “everyone will be guaranteed a job”. According to official statistics, the Belarusan authorities have gotten pretty close to reaching their prescribed goal over the past couple of years. As of 1 March, for example, only 0.8% of Belarusans are officially registered as being unemployed.

This figure does not reflect reality. The majority of Belarusans does not apply for social welfare assistance and do not officially register as unemployed for a number of reasons.

First of all, unemployment benefits continue to be miniscule and amount to roughly $8 a month. Second of all, to obtain this financial support, the average Belarusan must perform poorly paid public monthly work like street cleaning. Both of these issues make it pretty clear why only a small percentage of Belarusans have registered themselves as being unemployed with the officials.

Despite unreliability of the state's data, the unemployment rate in Belarus is much lower than in neighbouring countries. A low unemployment rate has allowed the Belarusan economic model to remain attractive for many Belarusans, many of whom have been reluctant struggle through economic liberalisation, a path that has dominated the policy agendas of all of its neighbours to some degree.

Unemployment in Belarus and its neighbours in 2013 (%)

Data: World Bank

A high employment rate largely explains why Aliaksandr Lukashenka has quickly become a popular president, not only among Belarusans, but also in neighbouring countries. As of late, however, a rapid transformation is under way - a chance that challenges this dominant paradigm.

Belarus prepares for high levels of unemployment

Unemployment in Belarus is very likely to reach historic levels in the near future. A recently published study by the IPM Research Centre, for example, shows that an unemployment rate of 8-9% may be just around the corner.

Even official statistics have shown a growing level of unemployment - from February to March it officially increased 0.1%. The number of laborers has steadily declined in Belarus even in traditionally strong sectors like construction and trade.

Unemployment is only the tip of the iceberg. Many businesses have closed their doors and are sending their employees home. Near the end of March the Minsk Automobile Plant shut down its main conveyor belt. Some enterprises, like the Minsk Tractor Plant for instance, literally have no place to store their finished products. Many enterprises are currently working only two or three days a week as a result of the ongoing economic slump.

Businesses have huge debts that they owe banks and, by all appearances, are unable to satisfy them in the current economic climate. Many of them are unable to pay their employees' salaries at present, like the Homel Agricultural Plant. Data from the Independent Institute of Socio-Economic and Political Studies shows that more than two thirds of Belarusans believe that the Belarusan economy is in a state of crisis.

The economic decline of Russia has made Belarus' problems even more acute. Since the disparity between Belarusan and Russian salaries has decreased, Belarusans have fewer incentives to go to work in the east. Many Belarusans will stay at home and look for a job, even though the number of positions has declined. One collective farm director told Belarus Digest that refugees from Ukraine have created additional pressure on the market and lowered local salaries due to competition.

A Decree on “social parasites”: A goofy means of meeting budget demands

The Belarusan authorities are trying to encourage Belarusans to take up any job they can find. A recent law, more popularly known locally as a decree on "social parasites", forces Belarusans to pay a tax for being unemployed. This law is unique to Belarus and many individuals question how it will be enforced given the current climate.

Belarus has problems with collecting taxes and largely appears to be unable to punish tax evaders in the usual way, so it has been forced to create push out nontraditional measures. According to Aliaksandr Chubryk, Director of the IPM Research Center, the presidential decree on the issue largely avoids the main issues and will help tax evaders profit and develop into the next generation of "social parasites" all while avoiding paying usual taxes, which are much higher.

The law will, however, punish people who really need help during the economic crisis. People, who really cannot find a job and make ends meet, will receive adequate financial support from the state.

Unemployment is already changing Belarus

Aliaksandr Lukashenka is paying for the economy's ongoing decline. According to the Independent Institute of Socio-Economic and Political Studies, in September 2014 his electoral rating was sitting at 45.2%, and in March 2015 only 34.2% of Belarusans were behind him. If not for the war in Ukraine, Lukashenka’s rating would likely be even lower than this.

As the Belarusan economy will continue to be in crisis for at least another two years, Lukashenka’s ratings may yet reach new historic lows. Although mass demonstrations are unlikely at the moment, the situation will open a larger window of opportunity for other forces inside and outside of Belarus.

Originally published at BelarusDigest