Industrial sector in Belarus loses workers and accumulates debts

    Industry flagships reported on production, employment and financial results. Not all of them can be referred to as successful cases.

    In 2021, the industry of Belarus showed a robust start. This was due to the low base of the last year. In the 1st quarter, the Russians did not supply the previous volumes of oil to the refineries, and in March – April the world economic crisis broke out. At first, industrial production grew by leaps and bounds. The manufacturers closed the 1st quarter with a plus of 9.2%, the 2nd quarter – with a plus of 11.6%. However, by the end of June, growth slowed down significantly – to 6.9% against 11.5% in May and 16.4% in April.

    Growth retardation continued in July. During that month, the production rate grew by only 2.7% compared to 2020. In the manufacturing industries, growth was even more moderate – by 1.5%. The industry gradually turned from a driver of GDP growth into an outsider.

    Industrial production growth accelerated during the autumn months of 2020. The low base factor keeps on disappearing completely. If nothing fundamentally changes, then by the end of 2021, the monthly rates may closely approach zero.

    In 2021, industry leaders are losing their workforce. For 7 months, large and medium-sized companies in the industry have hired 78.5 thousand people and have dismissed 87.6 thousand people. The outflow of personnel on a net basis amounted to 9.1 thousand people. For every 100 people dismissed in the industry, there were on average only 89.6 people hired.

    As of July 1, 2021, about 25.9% of large and medium-sized organizations in the industry did not have their own working capital, and 11.2% more had a turnover below the standards. The average profitability of sales in the production sector is still slightly higher than last year. In January – July 2021, it amounted to 9.6% against 9.4% a year earlier. However, the average profitability in the industry is formed due to large, highly profitable businesses. The median profitability is much lower. This can be seen by the example of enterprises with negative and low profitability.

    At the end of 7 months, about 18.8% of flagship companies had a negative result from sales, 30.1% showed profitability within the range of 0 – 5%. This means that the manufacturers’ median profitability of sales in 2021 is just slightly over 5%.

    As of August 1, the total debts of the industry flagships exceeded BYN 93.4 billion. The growth of liabilities of large and medium-sized enterprises since the beginning of the year amounted to 21.1%.

    Manufacturers’ payments to creditors for 7 months amounted to BYN 29.4 billion and increased by 11.1% compared to 2020. The industry had to use the equivalent of 32.9% of its revenue for these purposes.