Unprecedented Western sanctions imposed on Belarus for suppressing democratic protests after the 2020 presidential election and for complicity in the war between Russia and Ukraine have begun to affect the population’s income. Although Belarusian authorities claim that the average wage in the country is constantly rising, real wages – adjusted for inflation – have started to fall rapidly.

Furthermore, such a situation in the Republic of Belarus is observed for the first time since January 2017. DW asked economists about the industries in which the decline in wages is most noticeable and whether Belarusians will continue to get poorer.

Real wages and incomes of Belarusians are falling due to rising inflation

According to Belstat, the average nominal salary in Belarus has been growing for several months. So, in April 2022 it was 1,567.8 Belarusian rubles, in May – 1,573.4 rubles, and in June it increased to 1,626.5 (converted to about 620 euros at the current exchange rate. – Ed.). However, real wage statistics, adjusted for inflation, are far from optimistic. If in February 2022 statistics recorded an increase in real wages of 10.7% compared to the corresponding period last year, in March they have already fallen by 0.7%, in May – 5.7% and in June – 4.2 %.

In addition, the real income of the population also decreased in Belarus – they include not only wages, but also pensions, benefits, income from entrepreneurship and so on. In January-April 2022, they decreased by 1.2%. According to the director of the BEROC Center for Economic Research, Kateryna Bornukova, real wages in Belarus are falling due to the fact that prices are rising sharply and rapidly.

The situation is the same with pensions and benefits – on the one hand, they are paid regularly, on the other hand, they do not keep up with inflation in real terms. “As for the profits of entrepreneurs, they suffer sanctions – directly or indirectly. Many worked for the domestic market, and when people’s wages are cut and domestic demand falls, this affects the income of entrepreneurs”, explains Bornukova.

Gini index improves as well-paid workers leave

For ordinary Belarusians, this means that they are getting poorer, they can buy less food, goods and services compared to what they could buy before, adds Vladimir Kovalkin, expert on state budget income and expenditure project Kosht ​​Urada . And it points to a decrease in the Gini index in Belarus – an indicator that reflects the degree of inequality in the distribution of income between different groups of the population.

Vladimir Kovalkin

“The Gini index is better when the gap between the incomes of the richest and the poorest in the country is narrowing, and this is happening in Belarus. the best-paid workers leave the country, so it corrects the Gini index. The easiest way to explain this is classical communism – everyone becomes equal in poverty,” says Kovalkin.

The biggest drop in wages in under-sanctioned sectors of the economy

Specifying in which sectors wages are being reduced, Katerina Bornukova notes that, first of all, there is a fall in the areas that suffer sanctions: “If on average the fall in real wages is 4.2%, in carpentry it is 13% , petroleum refining – 8%, chemical industry – 15%. And if you look at the Minsk region, in April the decline in the chemical industry was 40% – this is mainly due to the situation in Belaruskali.

In addition, the director of BEROC continues, there are industries that are not directly affected by the sanctions, but wages are still falling: “Firstly, this is construction, where the drop was 8.5%. permanent trend, reflects the fall of the situation in investment.

In response to a question about whether there are sectors of the economy where real wages are rising, Bornukova named food production: “There is a small increase there, it is sustained by rising food prices, which are now everywhere. products are not exported in the EU, and Russia, where inflation is high, makes these exports quite profitable. In this context, it is even surprising that real wage growth in industry is so low – only 2.6%. On the other hand, why pay more if everyone around everything is bad.”

The number of poor may increase in Belarus

In this regard, Kateryna Bornukova, referring to a recent study by BEROC on the economic expectations of Belarusians, points out that the citizens of the country have negatively evaluated the economic situation of the country, and recently their sense of identity has worsened even more. “We did a study in December 2021 and April 2022 and saw that more people started talking about their families’ financial situation worsening – in December – 40%, in April – 52%. of the economy has not increased, people already have low expectations in this regard,” Bornukova said.

“Where will be the bottom in terms of income” of Belarusians will become clear in the autumn, experts say

Talking about the future, she predicts that improvements should not be expected, although the authorities are trying to maintain employment and income levels through support for state-owned companies: “We must understand that this situation will not last long – this can be maintained by several months, but not a year. More “We will have to adapt to the new economic reality, so we will have to cut wages. Maybe we will see cuts – first in the private sector and then in the public sector.”

Vladimir Kovalkin, for his part, predicts an increase in the number of low-income citizens in Belarus – those whose income is below the subsistence level. “As real incomes will decline and unemployment will rise, people who cannot go abroad will be at risk of falling into poverty. We will see where the bottom will be in terms of income in early autumn, when all the military shocks and sanctions. If, of course, these statistics are published,” Kovalkin believes.

Therefore, until September-October 2022, according to the Costa Urada expert, no positive outlook should be expected. “In the fall, the fall will stabilize and the local background will be clear. Based on this, it will be possible to predict whether the growth will start or the fall will continue. But in any case, now it depends more not on the economy, but on politics and war”, summarized Kovalkin.