The number of employed people in Belarus is shrinking. Since unemployment is officially decreasing and the labor market has many vacancies, obvious questions arise – where do people disappear? Do they only go abroad? Or are there other trends that are not yet too obvious?
And more generally, how bad is the ongoing brain and labor drain for the country?
Vacancies are plentiful
The number of employed people in Belarus fell by about 13,100 from August to 4,137,900 at the end of September, the National Statistics Committee (Biełstat) reported.
Over the past 12 months, the number of employed people has dropped by about 56,000. A similar decline is expected for 2023.
If we count from 2020, when Belarus plunged into a socio-political crisis, the picture is grim. In 2020, the number of employed people decreased by about 30,200; in 2021, by 46,100; and in 2022, by 67,700. In four years, Belarusian economy will have lost about 200,000 people if the trend continues.
The numbers do not correlate with the plentiful vacancies available in the labor market. The National Vacancy Bank shows more than 140,000 job offers, up by about 13,000 since last week.
In other words, there are enough jobs, but not enough people to take them.
Mass unemployment is not typical of the Belarusian economy. The official unemployment rate is very low.
According to the Eurasian Economic Commission, at the end of August only about 5,100 people (0.1 percent of the work force) were registered with employment services. According to a more relevant methodology used by the International Labor Organization (ILO), the unemployment rate is also quite low, about 3.4 percent.
In Belarus, jobless people are reluctant to apply to employment centers because unemployment benefits are very low, said Anastasija Łuzhina, of the Belarusian Economic Research and Outreach Center (BEROC). She noted that the above-mentioned household survey based on ILO standards has also shown a very low unemployment rate.
“It is expensive to be unemployed in Belarus because, according to the Law on Unemployment, you can be forced to pay additional costs and higher utility rates,” she said.
She also questioned “the state’s policy of preventing mass layoffs at all costs, especially at state-owned enterprises. Not to lay off people, to use them as much as possible so that everyone has a job and at least a small salary, even if the business is inefficient.”
People are leaving the country, government recognizes it
Vašy Hrošy Telegram channel experts consider the employment crisis a key issue for the economy and a headache for officials.
“Falling employment without higher productivity inevitably leads to a decline in production and services. While even obvious failures can be disguised as victories by manipulating statistics in production parameters, it is difficult to hide the decline in employment,” Vašy Hrošy economists said in their express analysis for November.
Łuzhina cited several reasons for the crisis, including a low birth rate.
“There was a crisis in the 1990s, and now this generation is entering the labor market,” the expert said.
But emigration has also taken its toll. “People are leaving the country. The peak was in 2021-2022, but people are still leaving,” she said.
Officials are talking about brain drain at all levels.
“The government recognizes the problem, which is evident from its intention . . . to extend the length of obligatory work at government-designated jobs for graduates of budget-funded departments, and to introduce obligatory placement for fee-paying students. Following the same logic, they want to introduce five years of compulsory work for doctors after internship,” Łuzhina said.
The economist noted that emigration accelerates population aging. “As a rule, it’s the young people who leave, often with children. The elderly are less mobile, and their share in society is growing, according to the Social Security Fund.”
Łuzhina also mentioned the IT industry facing a major brain drain. “The process may have slowed down a bit, but has not stopped. Due to sanctions and reputational risks, clients from Europe and the United States do not want to work with Belarusian companies, so we are currently witnessing the redirection of the Belarusian IT sector to the East, to Russia.”
Those who have not redirected their operations to the East continue to relocating their staffs abroad, the economist said.
Handcuffing to workplace is no solution
The government sees the problem, but fails to solve it effectively. In health care, for example, it has moved to introduce a new form of serfdom – the five-year mandatory work period – to mitigate an exodus of doctors. In education, it simply plugs holes: this year it employed pensioners to fill vacancies of teachers in schools. Obviously, this is not a solution.
How badly is the economy affected by the labor market losing steam?
“If we consider a person as an element of the economic system, then we face shrinking resources,” Łuzhina noted. It “negatively affects economic performance . . . No doubt, the economy will continue to function, it will somehow adapt. But . . . the outflow of labor force means missed opportunities.”
She is critical of the government’s approach.
“Efforts to lock people into certain jobs and institutions are not conducive to professional development and self-realization. Skilled and self-confident professionals will certainly think about leaving the country, and young people, today’s schoolchildren, will consider studying abroad,” she said.
The government could mitigate the labor outflow, political emigration, and the aging of the population through systemic policy decisions – by ending reprisals, improving business regulations, and restoring horizontal ties.
Obviously, Alaksandar Łukašenka does not want to do it, because he sees it as a threat to his personal power. He is tightening the screws to cement his rule.
Downside of low unemployment
It is easy to see the political aspect in the low official unemployment figures. The statistics look attractive, officials can brag about it on evening TV, but the numbers are not based on a healthy strategy.
The chronic problem is that the Belarusian labor market offers mostly low-paid jobs. In this context, labor migration helps to keep unemployment low.
Minsk boasts of pay rises, low inflation, and GDP growth, but fewer and fewer Belarusians are willing to work in their homeland.
The government has already announced a loosening of price controls in 2024 in a move that is likely to accelerate inflation. Experts say the economy is overheating due to inflated wages and a weak currency, expecting an economic slowdown.
All of these factors will inevitably have a negative impact on the labor market and can only exacerbate the negative trends.