Why Belarusians Emigrate
On 12 July, Prime Minister Mikhail Myasnikovich proposed the introduction of a tax on non-working Belarusians.
Although official statistics show that the unemployment rate stands at 0.5 per cent, the prime minister acknowledged that 445,000 Belarusians do not work – about 9 per cent of the working-age population. The authorities avoid talking about it officially, but everyone in Belarus is aware that most of these people work abroad.
The majority of migrants from Belarus find jobs in Russia. Although most Belarusian workers perform low skilled work in Russia, the brain drain is becoming a threat to the country. People who are well-paid by Belarusian standards and have higher education and pro-European attitudes increasingly want to leave Belarus.
According to a recent study of the Belarusian Institute for Strategic Studies (BISS), 35.6 per cent of Belarusians think of emigrating. If all these people went away, the population of Belarus would be reduced from 9.5m to 6.1m, Belarus would lose its youth, business and public elites.
Who Leaves Belarus?
The Belarusian authorities decided to deal with people informally employed abroad, as the state receives no taxes from them. At the same time, families of Belarusian migrant workers employed abroad enjoy some cheap social services in the Belarusian system. For example, the monthly payment for kindergarten is just $10, and a litre of A-95 petrol is $0.88. However, the Belarusian authorities prefer not to emphasise the fact that migrant workers sent home about $913mln last year.
The International Organisation for Migration (IOM) announced bigger figures than the Prime Minister Myasnikovich. IOM’s data shows that up to 1.2 million Belarusian citizens work abroad. Belarus keeps no official statistics or independent studies on how many Belarusians leave Belarus, where they go and whom they are working for.
However, many Belarusians privately know a few people who have gone to Russia and earn their bread through heavy physical labor. The Belarusian media often convey the deaths of Belarusian workers in Russia. In general, Belarus has the awkward prospect of becoming a “second Moldova” – a country that supplies a cheap labor force.
The research conducted by BISS shows that the typical Belarusian migrant-worker is a divorced man aged between 30 and 44. He has secondary or vocational education and lives in Minsk or in small towns in Mahiliou and Viciebsk regions.
Who Wants to Leave Belarus?
In addition to people in low-skilled jobs, young people leave Belarus en masse. According to BISS, only 13.7 per cent of young people want to stay in Belarus, either to study or to work, or for a permanent residence in another state.
The youth sees no economic prospects in today’s Belarus and no chances for political change. Although going to Russia is the easiest route, the West also became a considerable destination point. If you look at the Belarusian-Polish border crossing Brest-Terespol, a significant proportion of the travellers are young people going to study in Poland. According to the Polish educational foundation Perspectives, 2,397 Belarusians are studying in Poland. It is difficult to find concrete figures on how many Belarusians were studying in Poland five or ten years ago, but the figure was definitely lower.
The study mentioned above also demonstrates another dangerous trend. People with economic education and higher education in general, as well as Internet users, have expressed a strong desire to leave Belarus. 42.2 per cent of people with higher education want to leave Belarus.
In fact, a significant number of mid-level managers want to leave Belarus. Those in the same positions in Moscow, for example, can earn much more. Although emigration for these people remains a heavy damping off, many of them wish to go through the changes to leave Belarus.
|Average Wages in Moscow and Minsk (USD)|
According to the BISS study, many businessmen also want to leave Belarus. Some of them recognise that Belarus remains a more corrupt country than even Russia. While in Russia, thanks to privatisation, corruption in business has decreased, in Belarus bureaucrats still manage large state-owned enterprises and prevent the development of Belarusian business.
Although the authorities of Belarus have carried out administrative reforms, government employees still earn little. In such circumstances, state officials find themselves emigrating or working in Belarus for Russian businesses. Last year former Minister of Foreign Affairs of Belarus Siarhei Martynau was appointed a special representative of the Russian oil company Russneft in Belarus.
Many other officials leave for Russia. For example, two former foreign ministers (Ivan Antanovich and Ural Latypov) emigrated to Russia, and two former heads of the KGB (Leanid Yerin and Siarhei Matskievich) were among many other former ministers and senior officials to leave for Moscow.
Turn Off the Lights at the Train Station
When a financial crisis exploded in Belarus back in 2011, many Belarusians joked that the last one to leave Belarus should turn off the lights at the train station.
Two years after the crisis, the flow of migration has decreased, but a lot of people still retain the mood of the émigré. According to BISS, every third person wants to emigrate. Moreover, 15 percent want to leave for permanent residence. The idea of “shovimg off” remains especially popular among young people, who have no particular social contracts with the state or deep attachments in society.
Belarusian business owners are still willing to leave, but they cannot. The Belarusian market remains familiar to them, and the competition there is not so high. For them, it is easier to stay in Belarus with Lukashenka and the bureaucrats rather than move to another country and build their business from scratch.
However, Belarusian business managers, who do not own businesses, are ready to leave. For them, emigration remains a new challenge that has the potential to bring them salaries several times higher than in Belarus. The average salary in Moscow is about $1,500, while in Minsk it remains two times lower.
However, the Belarusian youth is growing like grass through asphalt. For example, a 22-year-old woman recently became the director Partisan football club, and another 20-year-old woman opened the third hostel in Minsk for the year. The only hope for Belarus is that not all young people leave.
The authorities should get the point that Belarus need economic reforms and to attract foreign investors. Without new innovative enterprises and new jobs, Belarusians themselves may become the main export of the country.
Belarusian Economy in Summer: Threats for Doing Business
Events that unfolded in June brought about new challenges for the development of the business environment in Belarus. Possible changes to the law on privatisation will impact the attractiveness of state assets and raise concerns regarding the level of property rights protection.
New requirements for goods certification will create severe additional pressure on entrepreneurship. Together with fluctuations in the currency market, an uncertain situation is developing from the perspective of private business.
Threats for Privatisation
The Belarusian Parliament approved, after its first reading, amendments to the draft law on Privatisation of State Property and Transformation of State Enterprises into Joint Stock Companies. It includes additional regulations to the legal statuses of joint companies that were the result of privatisation and other certain innovations in management.
According to the authorities this law aims at improving legislation in terms of possessory control and protection of rights of minority shareholders (citizens of Belarus, who own less than 2% of shares) as well as protecting the rights of Belarus as a nation.
The bill is galvanising the so-called “golden share”, which existed in Belarus from 1998 till 2008, when the President abolished it. The acceptance of these amendments during the second reading of the draft law, expected to occur in September-October 2013, will probably have a negative impact and decrease the interest of potential investors in assets, where at least some part belongs to state.
In case this document will come into force, the authorities will obtain a right to vote at meetings of joint stock companies by votes of minority shareholders. Moreover, the bill assumes the possibility to appoint state agents to take part in these privatised joint-stock companies, where share of the state equals to zero. In addition, it will be possible for state agents to suspend the decisions of shareholders meeting in case these decisions conflict with public safety and/or welfare and would bring damage to the environment.
Taking into account the quite difficult situation with the attraction of foreign investments into the economy, this bill might make it even worse. No large deals have occurred since the beginning of 2013. With the state having the right to take part in the voting process and suspend decisions of stakeholders’ meeting, it is clear that it will likely increase the level of corruption and non-transparency of doing business in the economy. This will further negatively affect Belarusian attractiveness compared with neighbouring countries.
A one-day strike of entrepreneurs from all over Belarus occurred at the end of June. During a forum of entrepreneurs they made the decision to carry out this strike due to the new technical regulations that oblige entrepreneurs, who operate in the Customs Union market, to certify all consumer goods produced by light industry and label them with a unified conformity mark. This procedure, however, is very expensive for individual entrepreneurs and can bankrupt their businesses.
The authorities planned for these regulations to come into force by 1 August 2013 for wholesale dealers and by 1 November 2013 for retail dealers. However, the reaction by entrepreneurs has forced the authorities to allow the sale of goods without the required certification till 1 July 2014. For their part, the entrepreneurs have to provide mandatory notifications about the absence of certificate and to terminate a contract of sale in case of their nonconformity with the quality standards established in the technical regulations.
Implementation of this regulation will negatively affect business environment in the country and may result in the enlargement of the shadow economy together with a growth in the level of unemployment. The introduction of new technical regulations looks less harmful for business in the cases of Russia and Kazakhstan, which also follow these rules.
Being exempt from the need to certify specific goods applies only to entrepreneurs who imported goods from other members of Custom Union and can prove it with the required documentation. However, entrepreneurs in other members of Custom Union do not take these requirements seriously and are avoiding them. As a result, Belarusian entrepreneurs, who buy goods for sale in Russia and Kazakhstan, cannot prove the quality of these products and will have to bear additional costs.
Therefore, implementation of these technical regulations only in Belarus increases the risks of entrepreneurs’ indignation and possible future strikes. Clearly, it is necessary to enforce and follow a rule in all three countries, or otherwise it could lead to the destruction of Belarusian small business.
Volatility of Exchange Rate
During the last months certain changes occurred in the currency market. USD grew significantly vs. BYR (Belarusian Rouble), reached its maximum since the beginning of 2013 and caused uncertainty and concern among the population.
However, the situation in external markets and deterioration of the economic situation in Belarus is the primary reason for this volatile environment. The Russian rouble was devaluated against the US dollar, causing changes in exchange rates. This also led to the reduction of RUB exchange rate with the BYR.
The exchange rate of BYR against these other currencies proves the statement that these fluctuations occurred due to the situation abroad and that national currency is still showing rather stable dynamics. However, due to close relations with Russia, Belarus will possibly have to slightly devaluate its’ currency in order not to lose its competitive positions in strategic Russian market. Therefore, the monetary authorities will have to take measures in order to reduce the devaluation expectations and avoid bank panic, which can negatively affect stability of Belarusian currency.
Maryia Akulava, Belarusian Economic Research and Outreach Center (BEROC)
This article is a part of a joint project between Belarus Digest and Belarusian Economic Research and Outreach Center (BEROC)