Labor market and social Security: who bears the burden of the economic downturn?

In 2015, the natural population decline was further reduced in Belarus, and net migration gain further increased; however, those two trends were not enough to stop the reduction of the workforce and the decrease in employment. Structural problems in the labor market still remain unresolved and will continue limiting the increase in the contribution of human capital to economic growth. Wages went down for the first time ever; however, employers’ unit labor costs decrease slower than labor productivity. Social aid was intensified amid the recession; however, the welfare system is not designed to work in conditions of economic contraction, and the coverage and targeting accuracy of social programs in the least well-off quantile dropped, while poverty in rural areas was reported to have increased. Trends: • Reduction in the workforce and ageing of the employed population; • Slower creation of new jobs; • High labor turnover and ‘brain drain’; • Slower reduction in labor costs compared with labor productivity, which may affect competitiveness; • Increase in the pension age due to the deficit of the Social Security Fund; • Failure of social programs to meet the new requirements of the economy in a recession.