Recent Trends and Challenges in the Labour Market in Belarus

The labour market plays an important role in the Belarusian economy. It is characterized by state dominance, as the private sector is relatively small, and overregulation. The policy of sustaining low wage disparities and excessive employment allows the authorities to eliminate inequality and curtail poverty, thus includes important functions of social policy. However, the economic costs of this policy are quite high, and are present in form of an inefficient allocation of the labour force due to its low mobility and weak motivation. Against this background, a number of challenges have arisen, which make a policy reaction necessary. First, Belarus’an labour market is experiencing a shortage of labour supply due to long-term negative demographic factors. Second, this problem is aggravated by labour migration, which seems to have picked up recently, even though exact numbers are difficult to obtain. Up to now response to these challenges has been limited to hikes in salaries and incomes, coupled with certain administrative measures to restrict cross-border mobility for certain industries. However, the key issue is to ensure productivity gains, which form the basis for subsequent wage increases. For this to happen, a wide-ranging liberalization of the labour market is a key condition. This implies also a de-coupling of social policy issues from labour market policies to a certain degree. Increasing the mobility of the labour force (relocation) across sectors will certainly have a positive impact in this respect, as a lot of potential is still underutilized.