Government set to save on low-profit households

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The Ministry of Labor has reduced the minimum living rate, citing lower costs for vegetables. But independent economists reckon the government is looking for money.

On October 1, Belarus lowered by 0.5 percent the minimum living rate. This value is used to calculate pensions and other social security assistance programs for low-profit households. Tamara Krak from the Ministry of Labor and Social Security told the European Radio for Belarus that the measure was influenced by lower costs for vegetables in the third quarter of the year.

Tamara Krak: “The lower minimum living rate is associated with cheaper prices for fruit and vegetable produce which are taken into account when calculating the minimum living budget. In September, there were seasonal sales of potatoes, beats and carrot. Naturally, compared to June, vegetables have become cheaper, and this is not for the first time. In 2006, there was a similar situation”.

Does it mean that all social assistance programs will now be scaled down? No, reassures Tamara Krak, because there is a law which sets the living minimum rate at the allegedly previous level.

“Nothing will change. It means that pensions and social aid packages will neither be increased nor reduced”, she said.

But it sounds too good to be true, says economist Leanid Zlotnikaw. Nominally, the size of social aid payments may have remained the same. But because of inflation, is has in reality dropped by 4 percent.

Zlotnikaw: “Inflation is high. By the end of this year, it will have amounted to around 15 percent. It is hard to expect that it will be reduced. This means that the minimum living rate will have actually dropped not by 0.5 percent but around 4 percent.  We are in dire financial straits. There is a shortage of money. The government thus agrees to lower the living standards, because there is no way out”.

Leanid Zlotnikaw recalled an interesting thing. The State Control Committee that recently inspected Belaruskaliy (potash fertilizers giant) stated that potash costs should not be reduced because foodstuffs prices were soaring around the world. It means that the State Control Committee reckons that prices are growing. The Ministry of Labor enjoys an opposite opinion.

In conditions of the world financial crisis and Belarus’s debt to Russia, the lowering of the minimum living rate is one of the sources to save money, notes Leanid Zlotnikaw.

“Huge amounts are being saved, because the minimum living wage does not depend only on the size of the social packages. Given that there are over 2 million pensioners in the country, it becomes significant when pensions are not raised by 3-4 percent”, he says.

The minimum living monthly budget currently amounts to Br 223,660 (roughly $100). This sum includes a daily food ratio (Br3974), 25 public transport tickets, $16 to pay utilities bills and around $10 for household goods and medicines.

Photo by: Zerkalo Nedeli