Updated at 18:07,08-09-2017

Wage growth is insufficient to prevent labour outflow from Belarus

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Wage growth is insufficient to prevent labour outflow from Belarus
As of June 2017, salaries in Russia were USD 279 higher than salaries in Belarus. When wages in Belarus decrease to 65% of wages in Russia, labour migration to Russia from Belarus increases. Provided that lay offs persist in Belarus amid labour shortage in Russia, the wage gap would increase and Belarusian workers in Russia would rise beyond 700,000 people.

In June 2017, wage paid in Russia totalled USD 713, while in Belarus – USD 424. Over the past 12 months, wages in Russia increased by 19% or by USD 114, in Belarus, the increase was USD 55 or 15%. In most economic sectors, wages in Russia were higher than at Belarusian enterprises and in some industries, such as oil extraction and refining and air transport, at least twice as high. In Belarus, wage growth was due to the president’s order and ensured by reduced working days. In Russia, wage growth was never a political task.

The ratio of salaries in Russia and Belarus has a significant impact on the labour migration from Belarus. Salaries in Belarus are 50% to 80% of those in Russia. When the ratio is some 75%-80%, labour migration to Russia reduces, which swiftly ends when another round of devaluation. When the ratio is 50% to 65%, labour outflow from Belarus to Russia grows again. As of June 1st, 2017, according to the FMS, more than 670,000 Belarusians were working in Russia.

In 2017, due to the economic recovery in Russia and higher oil prices, wage growth dynamics restored in both, Russia and Belarus. That said, the labour situation is different in both states. In Belarus, in January – June 2017, 35 700 workers more were laid off than hired. Those laid off had not registered as unemployed, so as official unemployment reduced from 0.8% to 0.7% by July 1st, 2017. Meanwhile, Russia has a labour shortage and the lowest unemployment rate since late 2015 (according to the ILO methodology). That said, wages in Russia are likely to grow at a faster pace than in Belarus and the ratio is likely to prompt labour migration from Belarus to Russia, as well as the preservation of the lay-off policy in Belarus, which could increase Belarusian labour migrants in Russia up to 700 000 people. In addition, most qualified workers from Belarus could consider labour migration to the EU, which offers a more attractive salary as compared with Belarus and Russia.

Despite administrative efforts, wage growth in Belarus is slower than in Russia. Amid labour shortage in Russia, the potential for wage growth on the Russian labour market is likely to boost labour migration from Belarus.