“Superfluous people”. How to explain massive dismissals at enterprises
For a period of 10 months, on a net basis, staffing outflow from flagship enterprises has reached 58 thousand people. In January – October 2021, at large and medium-sized organizations, 633.9 thousand people were dismissed, and only 575.9 thousand people were hired. For comparison: for 10 months of 2020, the outflow of personnel amounted to 31.4 thousand people. The replacement rate, which shows how many employees were hired on average instead of every 100 people dismissed, fell from 94.9% (in 2020) to 90.9% (in 2021).
The Belorusy i rynok newspaper asked the experts about the situation on the labour market.
How many “superfluous people” are there in the economy?
Boris Zheliba, Doctor of Economics, admits that the economic situation forces enterprises to get rid of “superfluous people”. According to him, the replacement rate in Belarus is consistently negative: generally, there are more people fired than hired in the economy. There is a natural decline associated with retirement and conscription into the armed forces. But it’s not a secret for anyone that state-owned enterprises contain extra people, extra workforce.
“Perhaps, the economic situation forces us to get rid of unnecessary people, because due to the surplus of labour, our enterprises perform not so much an economic function but rather a social one. Think about it: official unemployment rate in total is only 0.2%. The general trend is, certainly, alarming: the number of people employed in material production is decreasing from year to year; we also need to resolve this problem. Many people keep on leaving in search of job, the way they always did”, says Boris Zheliba.
Despite the reduction of those employed in material production, the problem of “superfluous people” remains to be a topical issue:
– A case comes to mind of how a Chinese firm agreed to buy the majority share holding of Gomselmash for $500 million. Hwever, when the Belarusian side put forward a condition: not to lay off staff, to pay off the company’s debts, the Chinese immediately refused to make the deal. They put forward their own condition: to cut staff by a third. So, you can count how many extra people there can be in the economy, – he noted.
Former Labour Minister Aleksandr Sosnov is ready to agree that every third person employed in material production is superfluous.
– At one time, such studies were carried out, but I was a very long time ago, when there was still such a need for this. As the Minister of Labour I was engaged in such studies. Hidden unemployment and underemployment have always existed. Those in power explained this by the intention to prevent a social explosion. But sooner or later, such a policy led to the fact that industries that kept extra people became uncompetitive. Perhaps, in order to somehow survive, now enterprises are beginning to dismiss unnecessary people: only two out of three employees are need now. This is latent unemployment, – said Aleksandr Sosnov.
At the same time, the ex-minister is not sure that “layoffs at an accelerated pace are associated with an increase in labor productivity, as it should be.
Where do “superfluous people” disappear to?
According to the Ministry of Labour, as of July 1, 2021, the official unemployment rate in the country was 0.2%. The question is: where does the released labor force disappear to?
– Some people go to the private sector, which is still operating; some specialists create teams and work for themselves. And many people simply go abroad: wages are too low here. The number of people who left the country is very difficult to calculate. Besides, most of our activists who participated in civil protests have left the country, – said the Chairman of the Free Metalworkers’ Union Aleksandr Bukhvostov. – And unemployment reflects only those who are registered with employment centers. The rest of the unemployed survive at their own peril and risk, without registration with employment centers.
The trade union chairman believes that the economic situation is now forcing many enterprises to get rid of ballast. But this is done quite clumsily. Businesses are getting rid of specialists, but they do it in the wrong way. There is already a shortage of qualified personnel in the technological and design sector. “Very soon, the industry will face a more critical shortage of specialists: there’s a shortage of staff at design departments at many enterprises; dismissed professionals are replaced by young inexperienced employees. The management of enterprises understand the situation, but they are not in control of the ongoing processes”, Aleksandr Bukhvostov stated.