Minsk 12:16

Belarus at a crossroad: how demographic challenges are undermining nation’s economy

Aleś Hudzija
an economist

Demographic challenges have become one of the most pressing issues for modern economies and societies, affecting various regions across the world, including Europe and Belarus. For Europe as a whole, the demographic situation has become a dual challenge due to both natural and man-made factors. In Belarus, these challenges are particularly pronounced, with demographic trends negatively impacting the labor market and, in turn, the entire economy.

The analysis of how deteriorating demographic conditions influence the economy through labor market dynamics allows us to better understand the adverse experiences of Belarus. While it is common practice to study successful economic and demographic policies, an examination of negative examples can also provide valuable lessons. The experience of Belarus, in particular, serves as a case study that is both timely and underexplored.

Europe’s demographic situation presents a complex and varied landscape, with significant differences in population trends across countries. While some nations have managed to increase their populations by over 50 percent in the past 30 years, others have lost as much as a third of their inhabitants. A common trend across much of Europe, however, is the aging population, coupled with declining birth rates and increasing life expectancy. The divergence between countries often lies in the effectiveness of migration policies and their ability to attract foreign labor.

In contrast, Belarus is among the countries that have experienced a population decline over the past 30 years. The population has shrunk by more than 10 percent, which, while not as severe as some Baltic states or neighboring Ukraine, represents a significant loss of over one million people. This demographic decline has naturally affected both the labor market and the broader economic landscape.

The negative demographic trends in Belarus can be attributed to both natural causes—such as the aging population and the shrinking share of working-age individuals—and man-made factors, such as the absence of a clear demographic policy and recurring socio-political and economic crises, which have spurred emigration. The impact of these trends has not been evenly distributed across the country. Northern and eastern regions have experienced sharper population declines compared to southern and western areas. Meanwhile, the capital, Minsk, has seen its population grow by 20 percent, reflecting a trend of population concentration around the capital. The Minsk region has thus been less affected by population loss compared to other regions.

Along with these regional disparities, the timeline of population decline in Belarus has not been uniform over the past 30 years. The loss of approximately one million people can be attributed to a combination of natural and man-made factors. In the 1990s, the population began to shrink in the wake of Belarus’ independence and the collapse of the Soviet Union, which brought about an unfavorable economic climate. In the 2000s, labor migration to more prosperous countries, such as those in the European Union and Russia, exacerbated the decline. Another wave of migration occurred after the political crisis of 2020, which prompted a significant outflow.

This latest wave of migration has been the most dramatic in recent history. Official estimates indicate that between 2020 and 2023, the population of Belarus declined by more than 240,000 people due to a combination of natural demographic trends and political unrest. Unofficial estimates suggest that this number could be three times higher. The lack of an attractive immigration policy has further aggravated the situation, resulting in a persistently negative migration balance for Belarus.

The latest wave of migration has dealt a particularly severe blow to the Belarusian labor market. Across key economic sectors, there has been an increasing outflow of personnel, as evidenced by monthly data showing a widening gap between the number of new hires and the number of employees leaving their jobs. This negative trend has affected all major industries, including those critical to maintaining high standards of social services, such as education and healthcare. In these fields, the influx of young specialists from higher education institutions is no longer sufficient to compensate for the loss of experienced workers.

A particularly concerning trend has been observed in the information and communications technology (ICT) sector, which has seen a significant exodus of professionals. Given the sector’s importance for the country’s future growth, this development represents a critical challenge for the Belarusian economy.

The industrial sector, particularly manufacturing, plays a key role in the Belarusian economy. Examining the hiring and firing trends across various branches of the manufacturing sector reveals an overall negative picture. While data on employment dynamics in the ICT sector has been concealed by government authorities, broader statistics for the information and communications technologies industry as a whole show a similarly concerning trend. Three years into the current socio-political crisis, it is doubtful that the recovery dynamics in the ICT sector reflect a true turnaround, especially in the IT sub-sector.

The analysis of how the socio-political and economic crisis in Belarus has affected the labor market reveals several key conclusions. First, the negative demographic and migration trends have had an adverse impact on all sectors of the economy, with export-oriented industries such as ICT and various branches of manufacturing being hit the hardest.

Second, the current situation has also negatively affected socially significant sectors of the economy, such as healthcare and education. While the inertia of these sectors has so far prevented a noticeable decline in the quality of services, the accumulation of negative effects is likely to become evident in the near future. Addressing these issues will require significant time and resources, given the cumulative nature of the problems.

Third, despite the fact that several years have passed since the onset of the socio-political crisis in 2020, the negative trends in the Belarusian labor market have not yet reached their full extent. While the pace of workforce reduction may be slowing, this is largely due to natural limitations: the number of people able to leave the country in a short period is finite, and those who make the decision to emigrate now tend to do so with greater deliberation and preparation. Additionally, there will always be a portion of the population that, despite adverse conditions, remains in the country.

In conclusion, the example of Belarus illustrates how deeply a socio-political crisis can affect an economy, not only in export-oriented sectors but across the board. These issues extend into socially significant sectors, even though the negative effects in these areas may take longer to become apparent. However, the Belarusian economy and labor market have not collapsed entirely. This resilience is largely due to the adaptive functions of market relations, which, in the end, even those opposed to market-based economic organization must rely on.

This article was prepared in collaboration with the ForSet Data Communication Fellowship Program.

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