Belarus – No Longer a Heaven for Mothers?
On 13 January 2016, Kiryl Rudy, an economic adviser to the Belarusian president and a representative of a young cohort of a pro-reform current within the Belarusian political milieu, suggested a decrease in the duration of maternity leave.
Currently Belarus allow mothers to take time off work for three years, with their workplace secured. This is the longest paid maternity leave in the post-Soviet space. Rudy argued that reducing the paid maternity leave to two years instead of three would lead to annual growth of GDP by 2.3 per cent.
Considering the challenges that the Belarusian economy is facing in 2016, with falling oil prices and the ongoing recession, the state is trying to find ways to optimise the inefficient social security system as a means of stabilising its expenditures.
Rudy's suggestion sparked a lively discussion in the media. It reflected the negative reactions of most Belarusians to the proposed amendment.
Motherhood and benefits
Mothers and babies in particular receive a number of benefits. The one-time family allowance for the birth of a child is about $750, while the average salary is around $340 per month. The state guarantees a maternity allowance (about $70) to every woman, provided she reports her pregnancy before reaching her 12 week term and follows medical advice. Finally, women receive 100 per cent paid maternity leave of 126 days during the final months of pregnancy and following childbirth.
New mothers can stay on paid maternity leave for up to three years. In this case, the monthly allowances for the newborn depend on the average salary in the country. Currently, the monthly allowance for the first child equals 35 per cent of the average salary, or slightly over $115. The monthly allowance for each subsequent child lies at 40 per cent, or about $130.
According to the UN, maternal mortality rates in Belarus are among the lowest in the world. Mothers can also be confident that they will not lose their jobs after having a baby. However, the family-friendly image of the country is not entirely reflective of reality. Child allowances barely cover basic needs, leaving families with babies in a disadvantaged position.
2015 Family Capital program
To improve the demographic situation in the country, in 2015 Belarus launched a 5-year family capital program. It supports families raising more than two children, providing them with a one-time cashless allowance of $10,000. By January 2016, the government had approved 11,600 families for this program.
It is too early to tell whether this new initiative will be successful. For the government it is a good publicity move. However, it does not provide an immediate solution for people who choose to become parents.
The experiences of pregnant women, particularly in provincial Belarusian hospitals, indicate a number of problems, often discouraging women from giving birth. Inadequate facility conditions along with rude and callous personnel turn childbirth into a traumatising ordeal, as in the recent case of Maryna Michnievič from Babrujsk which went viral on social networks in Belarus last month.
Realities of the Belarusian social state model
In 2015 Belarusian president Alexander Lukashenka promised full support to mothers and babies. However, with the October 2015 presidential elections in the past and the economy in recession, the government is now more willing to reconsider the system of social support, including the terms of the maternity leave.
Experiences of young families also show that many women return to their work duties sooner in order to keep their families afloat. The monthly child allowance combined with the salary of the partner (provided the woman is not a single mother) is not sufficient to guarantee subsistence.
The housing issue adds to the financial struggles of young families: many do not own any real estate and are forced either to live with their relatives or to rent an apartment. Renting expenditure can range from $100 to $400 per month.
Finally, those women who use up their full maternity leave allowance face challenges in reintegrating into work life. If they choose to have a second child within this period, they are most likely to lose their professional skills and qualifications, becoming less competitive on the labour market.
Unfortunately, Belarus does not promote the option of parents dividing the leave and having fathers taking care of the baby. The legislation also allows close relatives to take leave from work for childcare purposes. Neither the state nor society actually discusses these alternatives.
Stay-at-home moms vs. neglected daycares
At first sight, reducing maternity leave from three to two years appears to be a rational and timely reform. However, it needs to be accompanied by a corresponding overhaul and expansion of the existing pre-school facilities. Currently the state lacks the necessary infrastructure to organise adequate childcare.
Another problem is the underpaid and insufficient staff at daycare facilities, leaving doubts about the quality of these institutions. The news site Tut.by recently published a story of a former daycare worker who highlighted low incomes, hiring of random people, and a lack of professionalism. According to official statistics, the average salary in the education sector in 2015 was only about $200.
Finally, Belarusian society is not yet ready to accept that existing maternity leave might become shorter by a year. The prevailing view is that children need to stay with their mothers until they turn three and are more independent and less prone to fall sick, thus not forcing their mothers to take sick-leave.
It is evident that maternity leave reform will also require changes in mentality — society will need to free itself from patriarchal stereotypes. Women preferring to remain housewives after their children grow older should stop relying on state benefits. Shorter maternity leave should be accompanied by guarantees of good care in nurseries. Time will tell whether the Belarusian economy will be able to afford this.
One Step Forward, Two Steps Back: Digest of Belarus Economy
The drop in oil prices in the first two weeks of January and the resulting volatility of the Belarusian rouble have taken centre stage.
The Belarusian government took some small steps towards reforms, but took no serious measures to reform the state-owned sector of the economy.
Instead, it continued to pump money into inefficient enterprises to keep them afloat. Meanwhile, trust in the Belarusian rouble and the banking system is declining, leading to significant deposits outflows.
Oil turmoil hits the Belarusian rouble
Despite the presence of much depressing economic news in January (such as the 3.9 per cent decline in GDP growth in 2015, or the small traders strike), the adventures of the exchange rate of the Belarusian rouble were making the headlines. From 1 January to 31 January 2016 the Belarusian rouble lost 12 per cent of its value against US dollar, as the exchange rate changed from BYR18, 569: $1 to BYR20, 823: $1.
The exchange rate reacted to the drop in oil prices, which affects Belarus in several ways. First of all, the Belarusian economy, in particular the exports, depends greatly on the Russian market and the exchange rate of the Russian rouble, which in turn is reacting to the oil price. Second, Belarusian oil refineries make greater profits the higher the price of oil, and there are similar consequences for tax collection.
The current Belarusian budget is based on a forecast average price of Brent oil at $50 in 2016. Prices in the first month of the year made clear that the government needs to revise the forecast down, and cut the expenditures it had planned.
The behaviour of the exchange rate in the next months will largely depend on the oil price fluctuation, and the Belarusian rouble might even appreciate if the oil price goes up. But given the uncertainty on the oil market, and complete inability of the National Bank (central bank) to stabilize the exchange rate fluctuations since the currency reserves are low, the rouble may see a lot of volatility in the future.
Reforms: two steps forward, one step back
In January the government took several important steps towards reform. As expected, the government started implementing IMF-recommended reforms with unpopular subsidy cuts. On January 1 heating tariffs increased substantially, along with increases in other utilities tariffs,and a VAT tax on utilities was introduced.
At the end of January the government announced that it was working on providing targeted support to those who will have difficulty covering their utilities bills. In another unpopular move, the government liberalised prices on some social goods like milk and bread.
At the beginning of January the government rolled out yet another plan for the economic development of Belarus. As many previous editions of similar documents, the plan contains a lot of well-intended policy initiatives, like creation of the same market conditions for private and state-owned companies. But it remains unclear if or when these policies will be introduced.
Continued financial support for loss-making state-owned enterprises is certainly a step backwards for the reforms. Read more
The Deputy Minister of Finance Maksim Ermolovich in an interview on January 26 also announced a change in the budgeting process, namely a shift to results-oriented budgeting, and equal opportunities for the state-owned and private firms to get financial support from the state.
On the other hand, at the beginning of January the government issued a series of documents offering financial support to several state enterprises. In particular, cement industry enterprises received significant support (around $300m) in the form of government debt guarantees.
Several glasswork factories received significant support, as well as light industry enterprises like Kamvol, one of the largest textile producers. Continued financial support for loss-making state-owned enterprises is certainly a step backwards for the reforms. The departure from directed lending and other forms of support for uncompetitive enterprises is one of the main recommendations from both independent experts and the IMF.
Rouble deposits of natural persons continue the decline that they started in August 2015. On 1 January 2016 people held BYR40,204bn in bank deposits, just slightly higher than the amount held a year ago, and much lower than on 1 August.
There are several reasons for this deposit outflow (which is very significant, especially given the average deposit rates of 20-25 per cent). The National Bank decree that came into force in November 2015 introduced income tax for the interest earned from transferable deposits to motivate long-run non-transferable deposits.
Several rounds of fast and unpredicted depreciation in August and November 2015 also contributed to the reduction of trust in the national currency. Combination of these factors also made it difficult to speculate on high rouble deposit rates. Another important factor in the deposit outflow is the decrease in real incomes – given the drop in wages people save less, and some of them probably had to spend some of their savings.
In January the depreciation of the rouble continued. No one expects real incomes to increase either, and the deposit outflow will most probably continue. The outflow of rouble deposits is not a huge threat to the banking system – the National Bank can print roubles and be the lender of last resort. However, if the outflow of currency deposits starts, it will be much more difficult for the National Bank to stabilize the situation.
Given the uncertainty in the oil price outlook, and the fragile state of the currency reserves, the Belarusian government and the National Bank have a difficult task to accomplish. Preserving financial stability without financial support from the outside seems impossible, and the IMF loan looks like the best option to both get the funds and receive impetus for reforms.
Kateryna Bornukova, BEROC
This article is a part of a joint project between Belarus Digest and Belarusian Economic Research and Outreach Center (BEROC)