The labour market plays an important role in the Belarusian economy. It is characterized by
state dominance, as the private sector is relatively small, and overregulation. The policy of
sustaining low wage disparities and excessive employment allows the authorities to eliminate
inequality and curtail poverty, thus includes important functions of social policy. However, the
economic costs of this policy are quite high, and are present in form of an inefficient allocation
of the labour force due to its low mobility and weak motivation.
Against this background, a number of challenges have arisen, which make a policy reaction
necessary. First, Belarus’ labour market is experiencing a shortage of labour supply due to
long-term negative demographic factors. Second, this problem is aggravated by labour migration,
which seems to have picked up recently, even though exact numbers are difficult to obtain.
A main reason for this outflow of labour is the significant wage differential with Russia,
which increased during the recent crisis in 2011. Russia is a key destination country, as there
is no language barrier and limited regulation barriers due to different integration agreements
between Belarus and Russia, the most prominent being the common economic space (CES).