Will Child Labour and 'Tax on the Unemployed' Help Lukashenka Avoid Economic Reforms?
This November a budget deficit and the lack of a labour force for state enterprises compelled the Belarusian authorities to initiate several controversial laws to help overcome the economic crisis.
The government plans to recruit teenagers to underpaid unskilled jobs and to complicate the procedure for their dismissal and hiring which, in turn, will help to strengthen control over the labour force. The 'tax on unemployed' became the most controversial recent project of the Belarusian authorities. The law is to force Belarusians working unofficially and employed abroad to pay taxes.
Those who do not work officially more than 6 month during the year will have to pay USD 280. In addition the tax should force the “unemployed” to get officially employed.
On 8 November Alexander Lukashenka publicly sacked key top officials during his visit to Barysaudreu. To “fix a mess” a working group was sent to verify how things were in areas where industrial enterprises are established. Very soon Barusaudreu announced three subsequent Saturdays to be 'Subbotnik' obligatory for all employees. 'Subbotnik' remained from Soviet Union and means unpaid work at day off.
In the subsequent week the information about child labour at that enterprise broadcasted in independent media. Teenagers from Barysau schools were forced to clean up the area of Barysaudreu for free. That is not the single case when media reported about child labour. The same was commonplace in the USSR when schoolchildren were forced to work at state agriculture enterprises in autumn when labour shortages became common due to the harvesting season.
Very low salaries at state enterprises for unskilled jobs resulted in reduced numbers in the labour force. The Labour Ministry sees one of the ways of solving the problem in expanding the list of jobs 14-18 year old teenagers can do. According to the chief of social, educational and ideological work of the Labour Ministry Raisa Sidarenka, the ministry can offer teenagers work as tissue cleaners, to produce parts for bicycles and motorcycles, to manufacture souvenirs etc.
Belarusian officials have stated that teenagers must work despite their young age. For instance, the Minister of Education Siarhey Maskevich believes that it is preferable that the free time of young people should spent working. On 18 January 2013 the government adopted the resolution which provides for reopening of 'labour and recreation' summer camps for children to let teenagers work during summer holidays.
In the camp children will have an opportunity for both: to relax and to work. Such camps previously functioned during Soviet times. It is important to add that recreation camps can host only children under the age of 15.
Contracts system toughening
To strengthen the control over labour force Alexander Lukashenka plans to toughen the contract system introduced in 1999. Previously, the contract system allowed state enterprise managers to lay off labour union activists. Now it should complicate the procedure for their dismissal and hiring.
At the time of his visit to Keramin, a ceramic factory, on 12 November Aleksandr Lukashenka demanded the re-introduction of character letters. The document shall be issued at the previous workplace and should be presented while getting hired somewhere. This practise was in use in the Soviet Union and allowed managers to recommend the worker for the next workplace and, thereby, to influence the future career of an employee.
In addition, the president ordered them to extend the contract system in all enterprises. According to independent labour union leader Henady Fedynich, today around 95% of workers in Belarus are employed under conditions based on the contract system. He claims that the purpose of character letters is to intimidate workers.
Tax on the unemployed
Perhaps the recently announced 'tax on the unemployed' announced that is the most controversial recent project of Belarusian authorities. Officials plans to launch the tax on 1 January 2015. Those Belarusians who are not officially working for more than 6 month during the year will have to pay the government $280 annually.
One of the tax's initiators and a member of the Belarusian Parliament Zinaida Mandrouskaya identified three groups of people who do not pay taxes: 'we have people who have become alcoholics, they do not work and do not pay taxes; there are people who work in Belarus and hide it from the authorities, finally, there are people who work abroad and also hide it. None of these people pay taxes.'
Vice-Minister of Labour Piotr Hrushnik declared that 445 thousand Belarusians do not work and make no contribution to the economy. Officials claim that all these people enjoy such social benefits as free health care, communal services, public transport and for that reason have to pay taxes.
By introducing the tax, the government expects that the budget will receive $43 million. Also the tax would force the “unemployed” to become officially employed.
According to Canadian financial expert Evheny Olkhovsky, the intention to introduce this tax proves that Belarus, unlike European Union countries, chose its own way to overcome the crisis. While Greece, Spain and Italy, on the recommendation of IMF and World Bank, drastically reduce expenses, Belarus aims to replenish the budget without cutting social benefits but increasing its revenues.
The project provoked discussion in the independent media. Lots of independent experts remain very sceptical about the project. The founder and an expert council member of the state project '100 ideas for Belarus' Siarhey Latyshau claims that the tax can provoke Belarusian citizens working abroad to change their nationality. The mechanism of how the government will force those people who do not have official income to pay the tax remains unknown.
Avoiding economic reforms
For a long time many experts have proclaimed the necessity of economic reform in Belarus. But everything suggests that Belarusian political elite today seem incapable of initiating real reform for the economy.
Understanding that reforms mean the transformation of the whole management system of state enterprises, unpopular economic measures and liberalisation, the authorities strive to preserve the status quo. The controversial laws aim to help the Belarusian economy to stay afloat during hard times.
It remains to be seen whether teenagers working at factories, character letters and tax on the unemployed will be able to save the 'Belarusian economic miracle'.